HC Deb 14 May 1969 vol 783 cc1425-531

4.26 p.m.

Mr. Graham Page (Crosby)

I beg to move Amendment No. 7, in page 50, line 11, leave out '1969' and insert '1967'.

The Chairman

With this Amendment we can discuss Amendments No. 8, in page 50, line 11, leave out '1969' and insert '1968'; and No. 16, in page 52, line 6, at end add: (2) To the extent that levy has been paid which would not have been payable had this section been in operation on and since 6th April, 1967, a sum equal to the amount of such payment shall be repaid to the payer or his personal representative with interest thereon from the date of such payment to the date of such repayment at the rate prescribed for the purpose of this section by the Treasury.

Mr. Page

I am grateful to you, Mr. Irving, for saying that we can discuss Amendments Nos. 8 and 16 with Amendment No. 7. These are all Amendments to Clause 36 which proposes exemption from betterment levy of transactions of a market value of not more than £1,500.

The exemption is stated in the Clause to date from 5th April, 1969. Betterment levy is payable in respect of chargeable acts or events—that is, the sale or the development of property. The date, 5th April, 1969, relates to chargeable acts or events occurring after that date, so for some time to come owners of property will be paying betterment levy on these small transactions which have taken place in the past. I say "small transactions". They are referred to as small transactions in the White Paper announcing the exemption, and the Minister has referred to them as small cases. Therefore, I presume they are intended to deal with plots of land rather than land and buildings.

The fact that owners of property or those who have disposed of property before 5th April, 1969, will still be called upon to pay betterment levy, whereas their neighbours who dispose of land now, if the transaction does not exceed £1,500, will not be called upon to pay the levy, will cause bitterness and resentment—a sense of injustice between citizen and citizen. For example, those who sold on 4th April and those who sold on 6th April will not see why or what principle applies to distinguish between them in the payment of betterment levy. The Amendment seeks to remove injustice by altering the date from 5th April, 1969, to 5th April, 1967, on which date the Land Commission Act, 1967, came into operation.

Amendment No. 16 seeks to provide for the repayment of the levy which has already been paid. This is of great importance, because a sense of injustice will be felt by those who have paid the levy and will now see others receiving exemption from levy in future. If it is right to relieve hardship occurring after 5th April, 1969, it is surely right to relieve the same hardship if it occurred in the two years before 1969 while the Act has been in operation.

Constitutional purists may be horrified at the idea of retrospective legislation, but it is constitutionally sound to pass retrospective legislation which benefits the subject. Otherwise, we should never pass indemnity Bills, we should never pass pension and superannuation Bills, we should never pass many of the marketing schemes, and so on. There is no constitutional objection to retrospection, as in this case, to benefit the citizen.

At any rate, it does not lie in the mouth of the Government to cry, "No retrospective legislation" because the Land Commission Act itself reeks of retrospection, and not for the subject, but against the subject. The introduction of betterment levy was legislation by White Paper. It took effect—to the detriment of the owners, the purchasers, and the vendors of property—one year and 130 days before it received the Royal Assent, not just back into the life of one Parliament, but back into the life of another Parliament. It was that backdating which was the trouble. It caused hardship in so many cases, and it gave rise to the need for two extra-statutory concessions by the Government to cure that sort of hardship.

4.30 p.m.

The hardship arose to certain people who bought property during that period between September, 1965, and April, 1967. The hardship arose out of the fact that they could not use the purchase price of that property as the base value on which to calculate the development value on which the betterment levy would be chargeable. The Minister said that the hardship arose because those people had not been given proper advice professionally. What should they have been advised about? This was a White Paper. Is every owner of property to order his affairs by reference to a White Paper? Are his legal advisers to crystal gaze about whether a White Paper will become a statute? To accuse the professions of wrongly advising their clients about what may or may not go from a White Paper into legislation is merely passing the buck. I hope to show that the only fair thing to do is to treat the exemptions which are now sought to be made as dating back to 1967 and to repay those who have already paid the levy.

We are here dealing with hardship cases, and hardship falls equally upon those who have paid and are liable to pay, as upon those who would have to pay in future if the exemption in the Clause were not granted. The exemption in the Clause was introduced in broad principle in the White Paper, Modifications in Betterment Levy, Cmnd. 4001, and the Minister explained it in the debate on 28th April. If the Committee will bear with me, I should like to quote the paragraph of explanation which the Minister gave. The right hon. Gentleman said: The first proposal in the White Paper deals with another form of hardship which was perhaps of more frequent occurrence. This was where a person who owned a small plot of land which was suitable for development decided to s[...]ll it and realise the increased value arising from planning permission with the intention of devoting the proceeds to some personal expense, essential repairs to his house, for example, or repayment of outstanding mortgage. There is no doubt that if many people who took this course had been properly advised professionally, they would have realised that the scheme of betterment levy would impose a liability upon them. But unfortunately this often did not happen. Pausing there, when the Government produce an unintelligible Act and then blame professional advisers for not understanding it, I think that it is a little unfair. The Minister went on to say: The White Paper acknowledges that an exception can be made in future for these small cases, and we propose that any leviable occasion whether it be a sale or development where the market value does not exceed £1,500 shall be exempt from levy."—[OFFICIAL REPORT, 28th April, 1969; Vol. 782, c. 1078–9.] It is clear from those quotations that the Government consider that this Clause 36 provides relief from hardship.

The Bill proposes to deal with that hardship by inserting a section in the Land Commission Act, 1967. That Act already contains a number of exemptions. In Sections 55 to 62 there are exemptions for local and public bodies, for charities, for statutory undertakers, for housing associations, and so on, but there were two exemptions in that Act not unlike those which now appear in the Bill, and not unlike the one to which this Amendment applies. The exemption in Section 61 of the Land Commission Act relates to building a single dwelling-house for one's own family on a plot acquired before 23rd September, 1965, and that in Section 62 to building houses by a house-builder on plots of land which he owned before 23rd September, 1965.

Those exemptions were not very different in kind from that which is contained in this Clause. The beneficiaries under Sections 61 and 62 of the 1967 Act have never had to pay levy. They were let off as it were from the start by an exemption in the Act. The victims of the Government's failure to make exemptions such as now appear in the Bill should be put in the same position as those who were granted exemption by the 1967 Act itself. It is the same kind of exemption, and those people should be put in the same position. The Government ought to have made these exemptions in the Act. They were warned, but they pigheadedly went on and ignored the warning.

Although in many respects I agree with what Sir Henry Wells said about concessions, in one respect I do not agree with what he said in a broadcast on 22nd April last: I have made already the point that you can't get modifications or concessions until you have actually got the number of cases to demonstrate. In another broadcast, he said: … I think it is also fair for me to say, and perfectly truthful for me to say, that I anticipated that we would have these hardship cases, because you can't get hardship cases put right in advance. You have to have them first. I think that that is a little defeatist. After all, the Government were warned when the Land Commission Act was still a Bill that these hardship cases would arise.

Since the Act there have been two further hardship concessions, and they were made extra-statutorily. First, the Act said that when land was purchased after 22nd September, 1965, development value on which the levy is charged would be the difference not between the purchase price and the sale price, but between the Land Commission valuation and the sale price. That was causing hardship, and that was put right in April, 1968, when the Minister conceded, by an extra-statutory direction, that the purchase price should be the starting price for calculation if a person bought a plot for building a single house.

The second concession, made in July, 1968, allowed the purchase price to be the starting point when the land was bought for building anything other than a house but only up to £2,500 of the purchase price. The significant thing about those two concessions is that they were both retrospective. They both dated back to the commencement of operation of the Measure. I cannot recollect whether we have ever been informed if anyone who was given exemption by those extra-statutory concessions had paid the levy during the first 12 or 15 months of the operation of the Act and, if so, whether the money was returned to him—and if it was, whether there was any great administrative difficulty in doing so.

When considering the present exemptions to be granted by the Bill it is relevant to consider what is to happen to these retrospective extra-statutory concessions when they are placed alongside the Bill's non-retrospective exemptions. If the present concessions are not made retrospective in the same way as the previous ones were, there will be some extraordinary anomalies. In one case we have a limit of £2,500 for the purchase price and in the other a limit of £1,500 for the sale price.

Recently, someone writing in a legal journal said, in effect, "for heaven's sake do not amend the Act. It would only make confusion more confounded. Better scrap it altogether", with which sentiments many of us would entirely agree. But we have to live with the Act while this Government remain in office, and we are doing our best to remove much of the confusion which has followed from the passing of the Act.

So we approach the present exemptions in the Clause—exemptions for hardship cases—in the light of two similar hardship exemptions in the Act and two hardship exemptions made since the passing of the Act. There will be a bitterness and resentment on the part of those who have paid or have become liable to pay—by reason of the Government's mistake—when similar hardship cases have been exempt since the Act started, or since a period in 1968.

There will be the following five categories of hardship—three of which will qualify for relief and two of which will not. The first category consists of those who were let off from the beginning by being exempted in the Land Commission Act; the second category consists of those who have been let off in the past and will be let off in the future, under the 1968 extra-statutory directions; the third category consists of those who will be let off, under the Bill, in respect of future chargeable acts or events.

Those three categories will get relief. There are two categories which will not, unless the Amendments are accepted. The first category consists of those who would be exempted if they had sold in future, but who have already paid the levy, and the second category consists of those who have become liable to pay the levy even though if the chargeable act or event occurred after 5th April, 1969, they would, under the Bill, be exempted. When such different treatment is dealt out for the same kind of hardship the public will come to detest the Government for their inefficiency and inhumanity.

The Amendments, removing the anomalies and the injustices, could not possibly cost the Exchequer more than £1 million, and they would probably cost very much less. This is not an enormous sum, within the limits of the Budget, to pay for righting a wrong and remedying an injustice. This matter ought not to be decided on the pounds, shillings and pence of the budgetary equation—the argument that £1 million may unbalance the Chancellor's Budget. It is a decision which should be made politically.

4.45 p.m.

Here again, I want to quote what Sir Henry Wells said in his broadcast on 22nd April, 1965. He said: I don't know why they have not been made retrospective. This was a political decision. He was later pressed by the interviewer, who said, "You are demanding that they be retrospective", and he said: I am not demanding retrospection. This is entirely a matter for the politicians to decide. It is. It is not for me to suggest how the Government should try to save themselves and improve their image, or dig themselves out of the mud or curry public favour, but in this case I should be happy—because of the happiness it would bring to many unfortunate plot-owners—to lose the advantage of continually criticising the Government for their obstinacy in sticking to their own follies in this way.

If a political decision would be administratively impossible to carry out it would merely be another folly, but again we have been told by the man who will have to administer this that it is administratively easy. I want to quote again from what Sir Henry Wells said—not from newspaper reports; I have a transcript of his broadcast, because I wanted to make certain that I had his words right. He said in his broadcast on 22nd April: I see no difficulties from the Land Commission's point of view in making the major one retrospective. I have often heard it said that there are administrative difficulties. Well, this was said by the Press as a result of an alleged leak from a private meeting of the Parliamentary Labour Party. Of course I wasn't there, so I don't know what really was said"— that is rather a non sequiturbut I want to make it very clear that from our point of view, that is the Land Commission's point of view, we see no insuperable difficulties about making these retrospective. He was quite definite about that.

Again, when pressed by the interviewer, he said what I have in part already quoted, namely I am not demanding retrospection. This is entirely a matter for the politicians to decide. All I'm saying is that administratively we see no insuperble obstacle. To sum up, to remove liability—which has already accrued on these small transactions, not exceeding £1,500—to pay back the levy already paid in respect of such transactions, as if the exemptions had been in operation since the commencement of the Act—as they should have been—is administratively possible, it is not financially prohibitive, and it is fair and just to the levy-payers.

Mr. Eric Lubbock (Orpington)

There is little difference between myself and the hon. Member for Crosby (Mr. Graham Page), because although my Amendment backdates the concession only for one year and his goes back to the commencement of the Act, I go along with him in saying that retrospection, if accepted in principle, should apply to all the transactions subject to levy since the commencement of the Act. The only reason that I put down a date one year before 6th April, 1969, was that I thought that the transactions in the first year of the operation of the Land Commission must have been so minute in number as to make very little difference one way or the other.

The First Annual Report of the Land Commission shows that the amount assessed in the way of betterment levy was £462,000. If we take the 10 per cent. figure which the Minister for Planning and Land quoted in the debate, we realise that we are talking of a sum of only about £46,000 in terms of the amount collected on transactions of less value than the £1,500 top value in the first year of operation. I agree with the hon. Member for Crosby that, if there are no administrative complications, in all fairness the concession should be backdated to the beginning, and if Sir Henry Wells says that this can be done, I should be prepared to go into the Lobby in support of that proposition.

I am only trying to give the Government a face-saver which they can accept. If they are not prepared to back-date the concession to the beginning, they might be prepared to accept my Amendment as a compromise, provided that one has agreed with Sir Henry Wells, who is the expert here, that it is not administratively impossible. The broadcast to which the hon. Member referred is authoritative. If Sir Henry Wells tells us that there is no practical difficulty, the Minister cannot say that it is not feasible. He is not the one who must operate it. It is Sir Henry Wells who must carry out the details, assuming that the political decision had been made.

The hon. Member for Crosby put his finger on the point when he said that Sir Henry Wells has handed us a decision and told us to make up our minds. That is why I am pleased that this part of the Bill is being taken in the House, since hon. Members have had so many constituency cases of suffering drawn to their attention. I hope that the Minister will see reason, even at this late hour.

The only thing with which I disagreed in the speech of the hon. Member for Crosby was about advice. Here, the Minister has a point. In all the cases which have been drawn to my attention, constituents have said that the solicitors who advised them did not draw their attention to the possible consequences of the Act. I am not talking about the period before the Bill had been published, when they had only the White Paper, but about recent dates, including one case, which I mentioned in the previous debate on 28th April, of a transaction which took place only last year.

It is disappointing that, although I mentioned this case in some detail and asked for a reply at the end of that debate, because I thought that it was of some importance, considering the personal circumstances of my constituent, which might have applied to many others—I do not pretend that it was unique—the Minister failed to reply. I wrote to him on 30th April, and have not yet had a reply about whether this constituent will get a concession from betterment levy. This is rather a poor show. I do not make a big point of it, because it is one constituency case, but I am drawing it to the attention of the Committee.

It is our right, when discussing the Finance Bill on the Floor of the House, to raise grievances before voting taxation. That is what the Finance Bill is about. So I make no apology for detaining the Committee over one individual in my constituency, a person of 79 living on social security and supplementary benefit, about whose case I have not been able to get an answer from the Minister, although I raised it in the last debate and wrote to him immediately afterwards. It is shocking that a Minister should ignore an individual case, which may not be of much importance to him but which is important to me. I am trying to defend the interests of my constituent. That is why I am taking part in this debate.

Of course, I am as interested in the general principle as the hon. Member for Crosby, and I have agreed that there should be some retrospection. I do not agree with the Minister's argument in the debate on 28th April, that, if we introduced retrospection, we should only produce other anomalies in legislation—not that it was administratively impossible. This should be underlined so that we know what we are deciding when we vote on this matter.

The right hon. Gentleman said in that debate: I need mention only the case of someone who sold land for just over £1,500 and who might well prove to be substantially worse off than if he had accepted a lower price and was then given retrospective exemption."—[OFFICIAL REPORT, 28th April, 1969; Vol. 782, c. 1082.] If the Minister accepted the arguments, either of the hon. Member for Crosby or of myself, and back-dated this exemption to 1968 or 1967, there would then be people who had sold land for £1,600, who would continue to be liable to pay the levy but who, if they had known that the exemption was going to be made retrospective, would have taken £1,499 and thereby escaped.

But the amounts in these instances are bound to be very small, because we are talking not about the difference between the top value and the base value, but about the top value itself, and where someone has sold a piece of land for £1,600, that is not the amount on which the levy will be assessed. One must first deduct the base value from that, so the person who had failed to take advantage of this retrospective concession would be only a few pounds worse or better off.

The Minister for Planning and Land (Mr. Kenneth Robinson)

indicated dissent.

Mr. Lubbock

The Minister shakes his head. No doubt he can mention cases. I should like him to do so, because it is important that we should know, when making up our minds on how to vote on the Amendment.

As I understand it, the people exempted from the payment of levy would still have to pay capital gains tax. It is important that the Committee should be well aware of this provision. Therefore, we are arguing only about the difference between 40 per cent., the present amount of levy payable, and the 30 per cent. which a man would have had to pay if he had been liable to capital gains tax or, in the case of a person on a low rate of tax, two-thirds of his marginal rate. So we are not saying that large amounts would have been collected from these individuals—

Mr. Graham Page

To correct the hon. Gentleman on that point, if it were part of the garden of the residence, such a person would be exempt from capital gains tax, I think.

Mr. Lubbock

But we are talking purely about £1,500 exemption. Such a person would have to pay capital gains tax if the property were not part of his garden. Thus, in the vast majority of cases, these people will not escape liability to taxation altogether. They will be paying at some different rate, so the loss of revenue is insignificant.

I have already mentioned the total collected by the Land Commission in 1967–68, and I dare say that it was not much more in 1968–69. One of the criticisms of the Commission is that, far from being the useful revenue raiser which the Government presented it as, it has been a very poor bargain for the taxpayer. The costs of collection have vastly exceeded the amount collected.

We are not asking the Government to forgo an immense amount of revenue, which will upset the International Monetary Fund. We are dealing with a minute sum, which Sir Henry Wells says can be coped with within the administrative procedures of his Commission. That is what he said authoritatively in the broadcast quoted. We are merely arguing about the principle of retrospection. We can produce examples, if the Minister wants to hear them, of retrospection which has benefited the taxpayer. That is conclusive for me.

Particularly when I consider the individual cases of hardship to which my attention has been drawn in my constituency, and which may be paralleled all over the country, I beg the Minister, even at this late date, to think again and come up with a generous concession, back-dated to the beginning or to the year before this Bill was published.

5.0 p.m.

Mr. K. Robinson

I think that it would be helpful if I intervened now to deal with the general issue of retrospection, although I am ready to speak again later to deal with any subsequent points.

I have already said, in the debate on 28th April, something of the justification for the £1,500 de minimis provision in Clause 36—at any rate, some of the reasons for not making that concession retrospective. The £1,500 exemption is a generous one, because it will exempt from betterment levy roughly half the cases which are currently giving rise to assessment of levy. It will do this for a loss of revenue of only 10 per cent. of the current yield.

The answer to the point of the hon. Member for Orpington (Mr. Lubbock) about costs of collection is that this will significantly, of itself, reduce the costs of collecting each £ of levy.

The issue of whether the change should be made retrospective involves matters both of administration and of principle. It would also give rise to further anomalies. On each of these three counts, the case against retrospection is a strong one, but, taking them together, the case is conclusive.

The issues of administration are, in themselves, complex. If the change were made retrospective, it would involve a cost to the Exchequer, disregarding consequentials for capital gains tax, not of the figure quoted by the hon. Member for Crosby (Mr. Graham Page), but of £2¼ million. This is the £1,500 de minimis exemption. If all the changes in the White Paper were made retrospective, the cost would be about £3¾ million. So we are not talking of "insignificant" figures, as the hon. Member for Orpington described them—

Mr. Lubbock

In quoting these figures, has the right hon. Gentleman taken account of the amount of capital gains tax which would otherwise have been payable?

Mr. Robinson

I said that, in connection with the de minimis provision, I was not taking it into account, but the hon. Member has a mistaken idea about this. He said that the vast majority of these cases would be liable to capital gains tax. In fact, experience shows that a good part of them would not be liable to capital gains tax at all—

Sir Derek Walker-Smith (Hertfordshire, East)

Has the right hon. Gentleman caused any analysis to be made before he ventured on this estimate?

Mr. Robinson

Naturally. I have sought the advice of the Land Commission. The advice is that approximately half the cases will not be liable for capital gains tax, because approximately half relate to the sale of land forming part of the vendor's private residence.

Mr. Keith Stainton (Sudbury and Woodbridge)

But that is half the number. We are talking in financial terms. There is a significant difference.

Mr. Robinson

I was answering the hon. Member for Orpington, who said that the vast majority of cases would be liable to capital gains tax, because that was inaccurate—

Mr. Peter Walker (Worcester)

We are in Committee and it is, therefore, reasonable to intervene. This is a very important point. There could be a great discrepancy between the figures which related to gardens and are, therefore, likely to be the smallest cases, and the actual amount of money. The right hon. Gentleman says that he has made an analysis. Would he now give us the percentage in terms of money?

Mr. Robinson

I have made the analysis of the number of cases. There is no reason to believe that the difference in money would be significant. These parts of gardens, if they give rise to development value, are sold as building plots. We are talking about sales of £1,500 and under.

There were about 20,000 assessments of levy during the first two years of the operation of the Act. On the basis that about half of these have been of cases where the market value was not above £1,500, it would mean that the Land Commission would have to reconsider half of those cases again; that is, about 10,000 of them. This would be a substantial job, although it would not be insuperable.

Hon. Gentlemen opposite have in past debates made great play with purported statements by Sir Henry Wells, Chairman of the Land Commission, on this issue. The hon. Member for Crosby was a good deal more careful today. He quoted the precise words of Sir Henry. I hope that hon. Members who have travestied Sir Henry's remarks will have read his letter in today's issue of the Daily Telegraph.

Sir Henry Wells recognises, as he has made clear publicly on many occasions, that both the issues of the amount of this exemption and the date from which it operates are matters for the Government to decide. He has given the Government advice on the administrative problems with which the Land Commission would be faced and his advice is that if it was necessary for the Commission to apply the change retrospectively to 1967, this would raise difficulties but these would not prove insuperable. There are, of course, few administrative problems which are literally insuperable, given the necessary resources and staff.

But this is only part of the administrative problem. One of the necessary aspects of the proposal is the bringing of proceeds of disposals not exceeding £1,500 into full liability to capital gains tax. This is justified not only to meet the dangers of avoidance, but also because it would be wrong in principle to exempt these transactions from capital gains tax when other transactions at £1,500 or less are subject to that tax.

If, therefore, the change in betterment levy were to be back-dated to 1967, the liability to capital gains tax would have to be made retrospective to the same date. Admittedly, about half of the cases which have been liable to betterment levy at £1,500 market value or less will fall within a group which are exempt from capital gains tax because they are dispositions by residential owner occupiers of their principal residence or part of it, but this would still leave a substantial number of cases where there would be a liability to capital gains tax.

Although bringing these cases into charge would ordinarily leave the taxpayer better off overall than if none of these changes were being made, there could be some cases, not many, where there would be a higher tax liability in total. This could arise in those cases where capital gains tax, as on companies, is charged at the corporation tax rate, of 42½ per cent. This, therefore, could lead to a higher total tax liability in those cases where the amount of the capital gain and of the net development realised were the same.

5.15 p.m.

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

Is the right hon. Gentleman trying to persuade the House that companies which are liable to the 42½ per cent. capital gains tax have sold land for under £1,500? What have they been selling—chicken coops?

Mr. Robinson

Yes. I am trying to persuade the House that they have sold land. I said that there were, perhaps, not many such cases. However, this is only one leg of an argument which has many legs.

Mr. Costain

Chicken legs?

Mr. Robinson

This particular difficulty apart, there would be complications for the Inland Revenue in having to reopen a large number of past cases. The number which would need to be assessed would not be as high as the number which would need to be reviewed by the Land Commission, because gains tax is assessed a year in arrears while assessments to betterment levy follow some months after the chargeable act or event.

The House will be aware of the very great pressures which are placed on the staff of the Inland Revenue at present. My right hon. Friend the Chief Secretary, when moving the Second Reading, told the House that the Chancellor of the Exchequer's proposals in the Budget were tailored, among other things, to the capacity of the taxing machine of the country. The proposal of hon. Gentlemen opposite would put a considerable additional burden on the Inland Revenue. It is, therefore, not just a question of the Land Commission looking up its back files.

Another complication would arise from the way in which the exemption would operate. I mentioned this in an earlier debate and I do not think that the hon. Member for Orpington is fully seized of this point. In the absence of tapering provision beyond £1,500, it would be almost impossible to operate a transaction without either one getting the benefit of the exemption or being liable to pay levy at the normal rate. This would not cause trouble for the future because people would be able to arrange their affairs so as to take advantage of this new provision. Where development value was being realised, they would be able to avoid transactions of just over £1,500. In any event, the application of capital gains tax at what is usually a lower rate than the levy has the effect that gains are taxed at progressive rates.

But these arguments would not apply to the past. Sales which have occurred during the two years from April, 1967, to April, 1969, could not have been carried out with the knowledge that this change was to be made. People who sold at just above £1,500 and realised development value would, therefore, find themselves substantially worse off than if they had sold for £1,500 or for just less. They would, in the context of retrospection, have a strong and justifiable grievance which I could see no way of meeting. Anomalies would, therefore, be created for which there would be no means of providing redress.

Mr. Walter Clegg (North Fylde)

The right hon. Gentleman implied that one would be able to choose; either to keep a transaction above or below £1,500. What about compulsory purchase? There is no element of choice there.

Mr. Robinson

There is. If the vendor decides that at £1,600 or £1,700 he would be worse off because of betterment levy, he could sell for £1,500. He is not bound to accept the district valuer's figure. There is, therefore, a complete element of choice.

Sir John Foster (Northwich)

The right hon. Gentlemen says that he has no way of answering the problem that arises when somebody has sold for above £1,500 but could have sold at below that figure. Does he know what the answer is?

Mr. Robinson

indicated assent.

Sir J. Foster

There can be only one answer. It is to say in the Bill that anybody can decide to accept a sale price of £1,499.

Mr. Robinson

I am not sure that I appreciate what the hon. and learned Gentleman has in mind, but it seems clear that he does not have the faintest idea of what we are talking about. I nodded in assent to assure him that I was able to answer the question. I naturally assumed that he was talking about the intervention of his hon. Friend the Member for North Fylde (Mr. Clegg). We are talking about retrospection. I do not know whether the hon. and learned Gentleman is now suggesting that people who have paid levy should be put in an advantageous position compared with others.

Sir J. Foster

indicated dissent.

Mr. Robinson

I do not think that the hon. and learned Gentleman has advanced the argument one iota. As this is the Committee stage, he will have ample opportunity to develop whatever point that he has in mind.

Taken together, these administrative difficulties and the potential anomalies provide substantial arguments against making this change retrospective. Furthermore, these are arguments which apply to a large-scale general change in the application of the levy such as the £1,500 exemption but which do not apply to the small technical correction such as will be made by Clause 37 on gift cases and on which the Government have already announced that past cases can be identified and that retrospection will be applied. However, these arguments of administration are essentially secondary to the main argument, which is that of principle.

It is a long and well-established rule that general changes in taxation should not be made retrospective and should, therefore, apply only to liability to tax arising from the beginning of the current financial year. This argument applies just as much to this change in betterment levy as to any other tax change. The betterment levy is a well established and permanent part of our tax system. The Opposition have been careful not to commit themselves to the repeal of the betterment levy and, indeed, have positively pledged themselves to have a system of taxing gains made from sales of land.

There is no analogy with minor corrections of anomalies which may be made shortly after a tax has been introduced, where past cases can be identified and where the change does not apply generally to the application of that tax. This is relevant to the point raised by the hon. Member for Crosby about extra-statutory concessions. As he knows, these are applied solely in respect of the interim period. He asked if there were any cases where people had paid and had had their money refunded. The answer is that there have been a few such cases, perhaps about 100.

Such changes, like the proposals in Clause 37, which we are not at present discussing, for dealing with gifts, can be applied back to the introduction of the tax for a short period after its introduction. The same doctrine was followed with certain minor changes in capital gains tax made not more than two years after its introduction in 1965. But these arguments do not apply to a major change in the application of a tax. The exemption for small amounts of capital gains tax which was introduced in the Finance Act of last year was not made retrospective to the introduction of capital gains tax in 1965. Nor was there any Opposition campaign for that retrospection such as hon. Gentlemen opposite have mounted for the retrospection of these betterment levy changes.

The two situations are the same. Inevitably, after any tax change there must be, to put it mildly, a feeling of disappointment for those who would have benefited if their action giving rise to liability had occurred somewhat later in time. But this is no different in the case of betterment levy than in any other tax change.

The Liberal Amendment, No. 8, in the name of the hon. Member for Orpington, seeks to secure one year's retrospection rather than two. If this proposal were accepted the administrative difficulties would be fewer, but they would not be eliminated. However, the same sort of anomalies would arise, together with what I consider would be a new sense of grievance on the part of those who sold in, say, March, 1968, and who would regard the choice of April 6th, 1968, as very arbitrary indeed. Above all, the arguments of taxation principle apply with precisely the same force to the Liberal Amendment as they do to the Amendment moved by the hon. Member for Crosby.

To sum up, retrospection, which is what is called for by the Amendments, would give rise to formidable, though possibly not insuperable, administrative difficulties. It would create new anomalies and new grievances in seeking to deal with old ones. Above all, it would run counter to the long and well-established principle of not making general changes in taxation retrospective.

For all these reasons, and particularly for the last one, I ask the House to reject the Amendment.

Sir D. Walker-Smith

We have listened to a very disappointing speech; particularly disappointing, coming from a former Minister of Health. I have some interest in having good performances in the House from former Ministers of Health, and I was, therefore, very disappointed, more particularly as this disappointment reinforces the disappointment we felt at the speech of the right hon. Gentleman on 28th April.

On that occasion the right hon. Gentleman incurred a good deal of well merited criticism on two counts; first, because of the weakness of the arguments he deployed and, secondly, because of his insistence in reading to the House a prefabricated paper and failing to answer the points put to him. Undoubtedly, he has repeated both these defects in the speech to which we have just listened. One of my hon. Friends murmurs, "Rather worse than before", but I am a man of infinite charity and will not seek to make any precise evaluation of the degree of defect and disability contained in the two speeches. It is, however, a very base value at its best.

The right hon. Gentleman made three arguments, but he said that the main point on which he resists the Amendment is what he called the point of principle—the point of retrospection. It is to that point that I wish primarily to devote my argument, but I will just say this about the administrative arguments which he advanced. It was, perhaps, significant that although the Minister said more than once that this matter really turns on the point of principle, the greater part of his speech was devoted to a desperate effort to dredge the barrel and try to produce administrative argument's which might give some colour of persuasiveness and respectability to the case he seeks to put forward. Of course, they did not.

The right hon. Gentleman said, "Well, the cost will be £2¼ million." He was asked: "Is that a gross figure, or net after taking account of the capital gains set off?" He replied, "No. It is true that I have given the gross figure; I take that into account, but, of course, half of this would not be liable to capital gains." He was asked, "Is your half a numerical or a financial moiety?" He had to confess that it was only a numerical moiety—

Mr. K. Robinson

Perhaps I can help the right hon. and learned Gentleman by telling him that we reckoned that about £¾ million might be recovered by capital gains tax, so that would reduce the £2¼ million to £1½ million cost to the Exchequer.

Sir D. Walker-Smith

The right hon. Gentleman has done some very quick research and arithmetic. If he knows now, why did he not know then? I am always sceptical of these figures. It would have been more convincing if they had been produced earlier—

Mr. K. Robinson


Sir D. Walker-Smith

Out of courtesy to the Committee.

Mr. K. Robinson

The right hon. and learned Gentleman is not talking about courtesy but about conviction, which is a very different matter.

Sir D. Walker-Smith

I have found from some experience of the matter that the two quite often go together. The right hon. Gentleman was lacking in conviction, we know, but I hoped that he would not be lacking in courtesy as well. Be that as it may, there is a substantial diminution of the figure of £2¼ million which he earlier gave to the House. He did not intend to supplement it or explain it, but relied on a figure which did not take account of any offset from the capital gains position.

The Minister refers to administrative difficulties. He has been put in a considerable difficulty by the conscientious chairman of the Land Commission who has given a very proper opinion. All the chairman says is that there would be difficulties, but they would not be insuperable. "Ah", says the Minister, "it is really very unusual to have an insuperable difficulty." Equally, it would be very unusual for any bureaucrat, even a temporary bureaucrat like Sir Henry, whom some of us knew and respected in earlier days, to say that there were no administrative difficulties at all in any course. Of course, there would be some difficulty, but administrative difficulties are made to be overcome in the interests of justice and equity. That is one of the reasons for the House of Commons being here. The right hon. Gentleman cannot say that because there might be some additional administrative inconvenience, albeit not alleged to be insuperable, that is a convincing argument in this case.

The Minister then said that in some cases it might result in a greater liability. That statement puzzled most of us until he explained that it would be in the case of those companies dealing in these tiny plots of land. It is true that 42½ per cent. as corporation tax is greater than 40 per cent. in levy—that much we would admit—albeit, as the Minister can increase the rate of betterment levy merely by Statutory Instrument, even that argument might not last for very long.

But his argument was that there might be cases involving companies. We are talking here about hardship—about, in the main, inequity suffered by humble citizens—and the sort of argument we get is that if a company were involved and had corporation tax at 42½ per cent. it would not be a good bargain to exchange that for betterment levy at 40 per cent. If that is the best the Minister can do in his arguments on administrative difficulty and anomaly, I am not surprised that he puts his main argument, or seeks to put it, on the point of principle.

I say nothing about the anomalies. I do not want to pre-empt the excellent arguments that my hon. and learned Friend the Member for Northwich (Sir J. Foster) is bursting to give to the Committee with all that analytical power for which he is justly famed. I will deal with the question of principle.

The Minister has argued the point of the principle of retrospection. There is no lack of lawyer Members in the House—there are quite a number of eminent lawyers sitting on the benches—but I should comment on the absence on this occasion of the Law Officers. Where are they? Why are they not coming to give the Committee the benefit of their light and learning on these difficult legal and constitutional questions of retrospection?

The principle of retrospection is of vital importance to the Committee, and we have argued it many times. Those of us who have spoken against the principle of retrospection in legislation, as my hon. and learned Friend and I have on more than one occasion, have been concerned with not having retrospective legislation as a result of which the citizen or taxpayer who has made his arrangements in reliance on the law as then existing would be penalised by a retrospective adjustment.

We are now in a different position from that which existed when this matter was discussed on 28th April, when much of the argument turned on the question of whether it was proper or possible to make retrospective a Section 63 Order. That argument has no relevance here today, because we are concerned with legislation; with whether it is proper and in accordance with principle to introduce a retrospective element into the Finance Bill so as to extend the area of exemptions.

[Mr. ARTHUR PROBERT in the Chair]

5.30 p.m.

The question therefore arises: what inhibitions, if any, exist to restrict retrospection by Statute? The answer is that legally and constitutionally there are none. There could not be, because that would involve a fetter on the sovereignty of Parliament in its law-making capacity. Some confusion may exist. It evidently exists in the mind of the Minister for Planning and Land. That is perhaps excusable in the absence of any assistance he has had from the Law Officers.

The so-called presumption against retrospection is in fact a rule of construction. It means, in effect, that there is a presumption against interpreting a Statute retrospectively unless the retrospective effect is clearly expressed. That appears quite clearly from Maxwell on the Interpretation of Statutes, Eleventh Edition, page 204: It is a fundamental rule of English law that no Statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act or arises by necessary and distinct implication … That does not and cannot mean that Parliament has not the right to legislate retrospectively. Indeed, Maxwell goes on to say this: But if the language is plainly retrospective it must be so interpreted. So the first matter is that the so-called presumption against retrospection is a rule of interpretation only and not a fetter on Parliament's jurisdiction. The second matter is that there has grown up a constitutional principle against making retrospective legislation, but only when such legislation would operate to the prejudice of accrued rights in a citizen. That again I think emerges from Maxwell, page 206: It is chiefly where the enactment would prejudicially affect vested rights or the legality of past transactions or impair contracts that the rule in question prevails. Every Statute it has been said which takes away or impairs vested rights acquired under existing laws or creates a new obligation or imposes a new duty or attaches a new disability in respect of transactions or considerations already past must be presumed out of respect for the legislature to be intended not to have a retrospective operation. Even this principle is not binding on Parliament. It could not be, for the same reason. But it is constitutional practice not to have retrospective legislation where it will cause hardship to the citizen. That clearly has nothing to do with this matter today, because legislation here will benefit the citizen.

On to these principles a third principle has been grafted or sought to have been grafted by the Executive—not actually a principle, but merely a proposition based on administrative convenience. It is what the right hon. Gentleman has said this afternoon, that changes in taxation should not be made retrospective and should apply only to liability to tax arising from the beginning of the current financial year.

I have three comments on this. First, that it is proposition which clearly is not binding in any legal or constitutional sense and cannot be so. Secondly, the proposition, even as enunciated by the right hon. Gentleman, is clearly confined to what is properly called taxation. Thirdly, and equally clearly, it does not come within the basic reasons for the principle against retrospection—that is, the desire not to prejudice the lawfully accrued rights of the citizen.

I noticed that the right hon. Gentleman said categorically this afternoon that betterment levy is in the realm of taxation, but the hon. and learned Member for Derby, North (Mr. MacDermot), who was Financial Secretary at the time of the Bill's passage through Parliament, when the right hon. Gentleman the Minister was concerned with other matters, told us precisely the opposite on 28th April: I agree that betterment levy is not a tax—that has been made clear throughout. But occasionally Homer nods and it is wrongly referred to as a tax. Homer not merely nodded. It is a positive nightmare. Cannot we have the benefit of the presence of the Attorney-General to arbitrate between the Minister for Planning and Land and his hon. and learned Friend, whom we all respect so much for his legal acumen as well as for his administrative abilities and his conduct of the Bill through Parliament? The views of the Minister and of the hon. and learned Gentleman are diametrically opposed.

Mr. Oscar Murton (Poole)

In that same debate the right hon. Member for Sunderland, North (Mr. Willey), who introduced the Bill, said: I emphasised, speaking for the Government, that this was not taxation."—[OFFICIAL REPORT, 28th April, 1969; Vol. 782, c. 1040–47.]

Sir D. Walker-Smith

The right hon. Member for Sunderland, North (Mr. Willey), whilst not a right hon. and learned Member in the technical sense of the word, is in the position of the medieval judges, who said, "We know what the law is, because we made it." Here, even on a counting of heads, it is now two to one on the other side. So the Minister should send for the Attorney-General, or perhaps resign—that might be more appropriate—and take his colleagues with him.

Even if it were a matter of taxation—I submit to the Committee, on the evidence we have, that it was not intended so to be and this proposition, again, is simply an argument which has been dredged up to bolster and seek to justify the Government's obstinacy—I would still submit to the Committee that the Minister's proposition is not supported on any point of principle. It is one of naked administration, and Parliament should not be disposed to let the administrative convenience of the Executive, especially in a case such as this, where it is admitted that there is no insuperable administrative difficulty, override the basic principles of justice to the citizen. Parliament would betray its historic rôle if it did so.

I submit, first, that there is nothing to stop Parliament from legislating retrospectively in this case if principle dictates the propriety of its so doing. I submit, secondly, that principle does so dictate in the circumstances of this case. After all, the question is a simple one: should there be one law and one principle governing this exempted category of otherwise chargeable events, or should there be two categories arbitrarily divided at 6th April, 1969? If it is to be on the second of those bases, on what principle is the division to be made? What logical, equitable or philosophic principle could justify a division of the cases arising after 6th April, 1969 from those before? The case for treating them as one is clear. Betterment levy is charged on the development value accruing from chargeable events. These are defined in Section 27(3) of the Act. By reference to what? By reference to the first appointed day, by reference to the date 6th April, 1967, set out in the Amendment.

There is, therefore, a clear consistency and logic in defining the liabilities and exemptions alike by reference to that date, and the onus must be on the Government to show cause why it should be otherwise. That is an onus which they could discharge only if they could show an inherent difference between the nature of the chargeable events before and after 6th April, 1969. In fact, there is no inherent difference, and there could not be one. The difference arises not in the nature of the chargeable events but merely in the Government's degree of awareness of the facts and implications. The test is whether the Government would have legislated for exemption in the Bill given the advantage of knowing then what they have now found out. The answer to that is patently, "Yes"; and, if that is the answer, equally clearly the Government should not penalise people for its own lack of foresight.

Cases where retrospection should apply in Statutes are certainly and properly rare, but there is no exclusion in a proper case. There is no exclusion in principle, as the right hon. Gentleman would have us believe. There is no exclusion where, so far from prejudicing the rights of the citizen, retrospection will operate for his benefit. This is such a case, and one in which, happily, the period of retrospection is short.

Therefore, retrospection should be applied here in spite of the argument to the contrary, which is based primarily on no better reason than the administrative convenience of the Executive. Principle supports the Amendment. Justice demands it. And I ask that it be made.

Mr. Charles Mapp (Oldham, East)

I have listened to the whole debate and enjoyed the speech of the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith). Both sides of the Chamber always appreciate a contribution from him, and on this occasion it was humorous as well, which made it that much more enjoyable.

I am not a lawyer. I was taught many years ago that, like a finger that is caught between the shafts of a pair of scissors, it is the fellow who is caught between the shafts of the legal scissors that gets hurt. Therefore, I am not anxious to line myself up with too much legal argument, but I do line myself up with the general tone of the Amendments. If my right hon. Friend resists the Amendments, as he probably will, I want him to look at the whole question again and at an appropriate stage introduce new proposals dealing with the manifest hardships that the Act has brought about.

I should first like to raise one question on whether retrospection is right or wrong. When both sides of the House, including the Minister responsible, were preoccupied with the complexities of the Act two or three years ago, as far as I know not a single Member raised the point that we are now dealing with of whether or not there should be a lower ceiling, and whether it should be confined to owner-occupiers if there was a lower ceiling.

Mr. Peter Walker

The hon. Gentleman is mistaken. The Opposition moved an Amendment in Committee to this effect.

Mr. Mapp

I accept the correction, but I did not then notice it. I suppose that it was my duty to notice it. At any rate, in the country generally and among those who feel they had some knowledge of the matter this point slipped through without being the subject of real discussion.

I believe that it was an omission by the Government not to make provision at the lower end of the scale for exemption. I do not share all the indignation of hon. Members opposite, because that concerns a far wider range of exemption than I want. Hon. Members opposite want a vast area exempted, but I am indignant purely about the situation of the small owner-occupier who has been caught in this machinery. It was never intended that he should be caught, and therefore it is a mistake that he has been caught. Accordingly, and as the legislation is so recent and the amount involved so small, there should be a measure of retrospection.

5.45 p.m.

I listened with great care to what my right hon. Friend said about his administrative difficulties. Amendment 16 in effect says what I have been thinking for the past fortnight or so on this subject. I am not too concerned about capital gains tax. People who are caught by that are people with wealth and I am not specially interested in them. But in the sensitive area of real hardship with which we are concerned I can see no reason why a cheque for the same amount as was paid by a person in the limited category of owner-occupiers that I would exempt could not be sent to him, and he would then include it in his income tax for the year in which the cheque was received.

I am totally unconvinced by my right hon. Friend's argument about the complexity of administrative difficulties. If a Minister really intends to run his Department he can balance the pros and cons and insist on getting over administrative difficulties. We are concerned with a case that warrants such action.

The principle of the first Amendment, giving retrospection to the commencement of the Act, is one that we should accept to correct both a political mistake and a mistake in the legislation in including this category in the first place.

The Minister has not told us how the figure of £1,500—

The Temporary Chairman (Mr. Arthur Probert)

Order. The hon. Gentleman now seems to be dealing with Amendment No. 9, and we are not yet discussing that Amendment. We are on the principle of retrospection, not amounts.

Mr. Mapp

I am sorry, Mr. Probert, that I have stepped out of order. I merely intended to question how the figure had been arrived at, and to say how the appropriate amount could carry in different regions. The sum of £1,500 can buy substantially less land in the capital city than in other parts of the country.

I have lived long enough and had enough experience to know that one should never make law on an individual case, but having heard the Minister's argument I cannot dismiss from my mind the case that I now want to tell the Committee about. Two or three months ago I spoke to the senior sixth form at a school and subsequently I had a letter from a teacher at the school, who told me: We bought a plot of land in April, 1967, specifically on which to build our own home. He then said from whom he bought the land and added: … we did not receive the deeds until August. We paid £400 … Because of the time factor and our financial circumstances … we could not possibly have built that summer … I spent many evenings and weekends, however, measuring into piles 80 tons of second-hand stone ready for the building. The building society would not make any initial grant in respect of that sort of "do-it-yourself" work. He goes on to say that he had to borrow money in order to arrange the first part of the building operations. Finally, he tells me that he is a schoolteacher— … we now have a net income"— this is since his marriage— of £73 per month, although this may be a little more when our first child is born this month. That man is now asked to pay £40 purely because he had had his eye, when a single man, on a small piece of land in an area near Oldham and he did as we all like to do, that is, arrange that his home should be where he wanted it. It was never the intention of the House that people of that kind should be treated in this way. In every constituency throughout the land, one finds such people in greater or lesser numbers.

Mr. Niall McDermot (Derby, North)

I am trying to follow my hon. Friend's argument. What I cannot follow at the moment is why there is any liability to levy. Was not this man an owner-occupier?

Mr. Mapp

The premises have been occupied as a new bungalow by the teacher and his family. The land was bought for £400, and it is now valued for betterment levy purposes at £500.

Mr. MacDermot


Mr. Mapp

One may ask, "Why?" My constituent has asked me that. I have told him what I imagine other hon. Members would probably tell him—"Be awkward about it. Do not pay. Ask for a second valuation, and fight it." The fighting of it, of course, will be done at the expense of the taxpayer because it is properly chargeable under the Act.

Mr. MacDermot

I am not questioning the amount. I am questioning the liability. What were the circumstances which gave rise to any liability to levy at all?

Mr. Mapp

The land was contiguous to, but not necessarily spoiled by, an industrial building. The individual had a certain attachment to the area. That is not unusual. We all have attachments to one area or another. He bought this piece of land. After some effort on his own part, he had his bungalow built. He is now asked to pay £40. I tell the Committee frankly that, on my suggestion, he is not likely to pay for quite a long time. All that is offered him is that he need not pay any interest for the time being.

I put it bluntly to the Minister that, with all the political mistakes we are making, this is another one. I find no comfort in saying that sort of thing. I have said it in correspondence to my right hon. Friend, and I say it here now. In my view, there is an area here within the compass of these Amendments in which something should be done. Whether the Amendments are lost or not I am not much concerned. But I beg my Government and this Minister, who has always been known on this side to be humane, and, I believe, in many respects, is so accepted by hon. Members opposite, to recognise that there was not in this piece of legislation any venom ever intended either by Government or Opposition Members in wishing to catch small fry of this kind.

Mr. John Hall (Wycombe)

I think that the hon. Gentleman is wrong in saying that there was never any intention to catch small fry of this kind. In all the correspondence which I have had with the Minister personally, it has been made quite clear that it was the intention of the Act so to catch transactions of that kind.

Mr. Mapp

I accept the hon. Gentleman's correction. We cannot each, on every occasion, follow all the details of the business of the House on every Bill. But I suppose that each one of us is alerted, as I am, by problems which are put to us. I am alerted here to the injustices which are created. They are injustices, and they were never intended by either side of the House. They should be corrected by the Minister at the proper stage in such a way as to deal with the limited problem of the hardships suffered by owner-occupiers.

Mr. Julian Ridsdale (Harwich)

The case for retrospection here has been ably set out by my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith). It is of the utmost importance that retrospection in this case would be of benefit to the taxpayer. There having been no fault save by the State itself, everything should be done to help.

I am particularly concerned because I have had put to me many cases of hardship, most of them suffered by retired people, of whom there are many in my constituency, who have been hit because they wished to sell a small piece of land in order to meet the greater expenses put upon them by the rise in the cost of living. If we bring the date back to 1967, a great number of these people will be helped.

I cite one case, which I have already raised with the Minister, of a small owner-occupier, retired, living on a fixed income of £10 a week, with three children. My constituent writes that the family are "completely broke"; the children are ill-clad; they do not have enough fuel. He bought the piece of land 12 years ago, he developed it with his own hands, doing as much as he could, yet the Government have charged him betterment levy of £724 on a £1,800 plot. He needed the money in order to protect himself against the harsh rise in the cost of living.

If we introduce retrospection in this case, taking the date back to 1967, the result will be of benefit to the taxpayer, and people of that kind will be covered. I have four other cases which I could put to the Committee, giving details of exactly the same sort. I am sure that the Government never intended to act harshly on such people. Yet it is happening. The Act has proved harsh, unjust and inhuman. Speaking from the human side, not the legalistic side, I beg the Minister to think again. If he does, he will bring great benefit to many people who at present are being harshly and unjustly treated.

I reinforce the plea made by my right hon. and learned Friend. There should be a Law Officer of the Crown here to explain the legal case and answer the clear and forceful points which have been put to the Government about the principle of retrospection where it is of benefit to the citizen.

Mr. Frederick Wiley (Sunderland, North)

As I find myself again in rather unusual company, perhaps I should explain at the outset that I am speaking for myself. I believe that I was the only Member taking part in the Budget debate who said that this provision should be made retrospective. I mention that because it was my immediate reaction to the generous provision which my right hon. Friend has made.

I accept all that the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) said, speaking as a lawyer, about retrospection, but I think that we are mainly concerned about retrospection here as politicians. I have vigorously opposed retrospection in the past because, invariably, the retrospection in those cases was to the prejudice of the citizen. The situation is entirely different, however, when the retrospection can be to the advantage of the citizen.

That is why I incorporate in what I say all that the right hon. and learned Gentleman said, since, when one considers the advantage of the citizen, one has to consider the question in a wider context.

6.0 p.m.

I imagine that all hon. Members will concede that retrospection in this case would be to the advantage of the citizen. It would be hard to think of a case in which it might be to his disadvantage. Therefore, I would say that we ought to be favourably disposed towards making what is a generous provision. We should remember that this is recently-introduced legislation, and that many of the apprehensions that lawyers have about retrospection do not apply in these circumstances. In addition, this legislation has been subjected to public debate. We are considering hardship cases, but we have to remember that many have been debated here. It is clear that the Minister could have taken action to deal with those cases under the Act.

We are considering hardship cases that we have debated, which have been under consideration by my right hon. Friend for some time, with which he could have dealt, and it is not acceptable to say in the light of this experience, "Well we are obliged to those who have suffered hardship for calling attention to circumstances which we are now putting right". We must deal with those other cases, if only the cases which we have discussed here. It would be quite wrong for us to shrug our shoulders and say that because we have chosen to deal with this in the Finance Bill we are not therefore responsible for these other cases.

I share the disappointment of the right hon. and learned Member for Hertfordshire, East at my right hon. Friend's reply, in that he cannot make this retrospective. When I referred briefly to this in the Budget debate I spoke tentatively because I had not then heard the opinion of Sir Henry Wells. It is all very well to say that this ought to be retrospective, but if there had been real administrative difficulties, if Sir Henry had called our attention to them we would have had to reconsider this. As has been emphasised, Sir Henry has made it quite clear that the Land Commission is in a position to deal with these cases administratively. We should accept not that there are difficulties that cannot be overcome, but that Sir Henry and the Land Commission can deal with these cases without any great difficulty.

Retrospection has been precedented already. My right hon. Friend referred to a hundred cases of retrospection. If there is precedent, there is all the more reason for following it now. There is the question of cost, although I would rather decide this on grounds of hardship and principle within the terms of the legislation. If we have to consider costs then my right hon. Friend can deal with this by increasing the levy. I know that this may not be popular with hon. Gentlemen opposite but if we are talking about equity and relieving hardship cases, it would be fair at the same time to say that if my right hon. Friend's difficulty is that there should be no overall loss of revenue, then the levy should be raised Just as we have to accept that there are no administrative difficulties, it does not lie with my right hon. Friend to say that he cannot afford to do this. He can use the means he has already to increase the levy. There is one remaining argument, the force of which I accept, which is that there is a consequential difficulty with capital gains. I have heard my right hon. Friend, but I am not convinced that this is an insuperable difficulty. We can deal with this and I hope my right hon. Friend will look at it again. He has been obdurate before, but at the end of the day he has had to change his mind. I hope that on this occasion he will change his mind with greater alacrity.

This is largely a political question, and it distresses me, when we get a generous provision at the end of a long and prolonged debate, that we should allow that provision itself to cause resentment and bitterness because we are not fair across the board. I appeal to my right hon. Friend to look at this again and, for goodness sake, not through Treasury eyes. We know what the views of the Treasury were about this. I join with other hon. Gentlemen who expressed surprise at the persistence with which my right hon. Friend talks about this as being taxation. If this is so, it is a change in concept. This was not, as hon. Gentlemen know, the way in which the betterment levy was originally put forward. However, I do not want to cause trouble by stirring up debates about matters which are not really germane.

I want to appeal as strongly as I can to my right hon. Friend to recognise that there are hardship cases. Adjustments must be made to see that all these cases are dealt with, not just those which arise subsequent to the passing of the Finance Bill. We must deal with all of those hardship cases, many of which we have discussed in our debates on the betterment levy.

Sir J. Foster

I have to dispose of an interest. I was chairman of a company in the division of my hon. Friend the Member for Nantwich (Mr. Grant-Ferris) which sold 27 sq. ft. for £25. I do not put this forward as a hardship case, but as a case which would come within the Amendment if it were retrospective. After this transaction the Land Commission sent four pages containing 14 or 18 questions, asking what the severance was and what the land had been previously used for. As it was a Government document I abstained from four-letter words but I did point out that the land had previously been used for cow defecation.

I tried to shame the Land Commission by writing back and saying, "Surely you do not want to use tens or hundreds of pounds finding out about these 27 sq. ft.?" It was unshamed. I then wrote a more insistent letter, but it was still unshamed. I then had an Adjournment debate about this, but unfortunately it came on at 4 o'clock in the morning and there was not much publicity. The Minister came down to the House then but never answered my point. He just said what a wonderful Commission it was.

We then paid 40 per cent. of £25, assuming that the land was worth zero, and assuming that we had a 100 per cent. gain on the sale of the land. I did think of appealing to the House of Lords about it—we could have fought it for year after year. Some questions of retrospection are concerned with quite ludicrous, absurd and lunatic things. Why the Land Commission should ask a company all these questions and waste its time when it had sold 27 sq. ft., God alone knows! In what was an envious point—in other words, it was based on one of the motives which activates the Cabinet and the Government—the Minister said that it created an anomaly. He said that a person who sold land for the future could have arranged his affairs so that he sold it for under £1,500. He said that there would be an anomaly if the Amendment were passed because some owners could have paid betterment levy and lost money by not selling for £1,500. That is quite true, unless the right hon. Gentleman finds the answer which, I believe, can be found. When I vouchsafed an answer, the right hon. Gentleman, slightly discourteously, said that I was not seized of the point and that my answer, in effect, was nonsense. Let me try it out on him.

The way to deal with it is to say that if anybody sold for over £1,500, he can serve notice on the Commission that he would like the amount to be £1,499. Then, the amount of levy will be returned to him minus the increase in the purchase price. Let us see how that works out. Suppose that land is sold with a betterment levy of £1,600. Forty per cent. of £1,600 is £640.

Mr. K. Robinson

I am sorry to interrupt the hon. and learned Gentleman, but I really do not think that he has understood it. The de minimis exemption applies to transactions of £1,500. He is talking about betterment levy or development value of £1,600. It is the value of the transaction.

Sir J. Foster

I need only amend my figures. Let us assume that the land was sold for £2,000 and the betterment levy was £X. If the betterment levy is more than the excess of the purchase price, the person concerned gets it back. It is a very simple formula. I cannot understand why the Minister does not understand it. He shakes his head. I imagine that he still has not understood it.

The right hon. Gentleman pointed out that in the case of any excess over a transaction of £1,500, the man concerned would feel that there had been an anomaly because had he known that there would be an exemption for transactions up to £1,500, he would have fixed the transaction at £1,499. The right hon. Gentleman said that that was how people henceforward would not be caught because they would so arrange their affairs. People who would lose by having a transaction over £1,500 would reduce the figure to £1,499.

All that I propose is that if the Amendment were carried and a further Amendment were made, the vendor should decide that the price should be £1,499 and an adjustment should be made for the excess purchase price. The person in question would not do it if he lost money by crediting a greater purchase price but he would do it if the excess of the purchase price was less than the development levy. It is as simple as that.

It is wrong for the right hon. Gentleman to assume that somebody else has not put forward an answer in good faith and one that might work. He should examine it instead of jumping up and saying that one is talking nonsense when one obviously is not. I see the right hon. Gentleman's lips moving but I cannot lip-read. If he were to talk to his advisers and come to the conclusion that this formula would work, if he understood it—as, I think, his advisers do—I hope that he would have the courtesy to say, "I am sorry, I did not understand what the hon. and learned Gentleman was saying, but he has explained at length and I now see that it would work in theory, but I do not like it in practice".

The right hon. Gentleman advanced two arguments against retrospection. One was the envy point. How can it hurt a man who does not recover because somebody else does recover? The other argument was that anomalies would be created. It is not difficult to overcome this objection. For those reasons, I hope that the Committee will agree to the Amendment.

6.15 p.m.

Mr. MacDermot

As one of those who did not understand the hon. and learned Member for Northwich (Sir J. Foster) at the time of his earlier intervention, but who understands it now, I am grateful to him for his lengthier intervention and for making the point clear. I will refer to it later in my argument.

I am one of those who, in the recent debate on the subject, urged the Minister to look closely at the question of retrospection because I thought that there was a good deal to be said in favour of the suggestion of retrospection. Having heard my right hon. Friend the Minister and having thought more about it, I think that he is right. I should like briefly to say why I have come to that conclusion.

First, may we clear away the legal argument. I do not think that there is any dispute between the lawyer Members of the House about the propriety from a legal point of view in legislating retrospectively. I also agree entirely with all that the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) said on this subject. There is from a legal point of view a general dislike of retrospective legislation but there are exceptions to that.

It is a subject which I had to go into with care at the time when I had to answer for the Government on the War Damage (No. 2) Bill, which we inherited from the previous Conservative Administration and which concerned acutely the principles of retrospective legislation. One of the exceptions—it applies principally in the taxing field—is that where retrospective legislation would be for the benefit of the subject, there is nothing improper in legislating retrospectively.

That, however, is not the end of the argument. Another and much wider principle—I agree with my right hon. Friend that it is a political and not a legal matter—is that, in general, legislation should not be made retrospective for a quite different reason. It is desirable to have certainty in the law and when Parliament, after due consideration, has passed a law, that law should, stand unless and until it is repealed. Unless there are overpowering reasons for saying, as the right hon. and learned Gentleman said in his peroration, that justice demands that it be made retrospective, the starting point must be a prejudice against retrospective legislation simply so that citizens will know where they stand in the arrangement of their affairs. [Interruption.] I hope that hon. Members will do me the courtesy of listening to the argument.

The Minister, in basing his case on that principle, illustrated it by saying—

Sir Frederick Bennett (Torquay)

He must be after "Sunny Jim's" job.

Mr. MacDermot

The hon. Member for Torquay (Sir F. Bennett) is notorious for interrupting other people's speeches. I hope that he will listen. The Minister supported his argument by pointing out that anomalies could arise if this legislation were made retrospective. He gave an example, to which the hon. and learned Member for Northwich has given an ingenious reply by way of a suggested solution of the person who had sold for just over £1,500 and who might feel that he was unjustly done by because he could have sold for a lesser amount and made a greater net benefit. I agree with the hon. and learned Member that one could think out ingenious ways by which there could be an adjustment as between the individual in question and the Land Commission.

That, however, does not get to the root of the problem. The point is that as a result of the legislation which we passed, we stated that certain consequences would flow from certain acts—for example, that if a person built on a particular piece of land he might make himself liable to betterment levy; if he disposed of a piece of land, he might make himself liable to a certain amount of betterment levy.

We have been hearing a great deal about those who were not properly advised about their rights and their liabilities. What we have not heard about, and surely they are the majority, are the people who were properly advised and knew. Many of those people will have said to themselves, "If this is to be the consequence, if I am to be liable for the levy, I will not sell. I will keep my piece of land or I will not develop it." If we now make all this legislation retrospective, they will feel a sense of injustice.

Several Hon. Members

indicated dissent.

Mr. MacDermot

Hon. Members shake their heads, but they will. They will feel that if they had known that Parliament was to repeal this legislation, they would have acted differently.

Mr. Daniel Awdry (Chippenham)

Surely the answer to that argument is that they may sell now.

Mr. MacDermot

They may or may not be able to sell now, but the point is that they took that decision which may have been important to them at that time. They may forgo benefits which they would otherwise have received because they thought that the liability which they would incur would make it not worth their while to sell. They would feel, "This Parliament cannot make up its mind; it is constantly changing its mind". [Laughter.] Hon. Members cannot get away from that.

The subject regards it as legislation which Parliament has passed, and it is because people's decisions in their daily lives will be affected by what is the law in force at a particular time that we must think carefully before we pass sweeping measures, and this is a sweeping general measure, of retrospective legislation which will vitiate and alter the effect of many completed transactions of which we cannot know all the details and of which we cannot see all the effects.

This is very different from dealing with a narrowly defined range where one knows that all the transactions have gone one way and have produced a certain given effect which is against the citizen, so that one must say, "We do not mind retrospective legislation in this respect, because it must be and will be purely to the benefit of the taxpayer" as in the example of retrospective taxation legislation.

What we are dealing with here, and this is the essence of the Minister's argument, is a general provision, not a specific provision aimed at dealing with specific cases of hardship such as one is familiar with in retrospective taxation legislation. I made the point in our previous debate that what the Government have done is to go far further than they were asked. Instead of producing a series of little measures to deal with particular established hardships, they have said, "We will take a broad sweep and for the future we will wipe out the liability to levy in 50 per cent. of the cases". Because of the wide nature of that provision, it would not be right to make that retrospective.

Mr. Stephen Hastings (Mid-Bedfordshire)

The hon. and learned Gentleman seems to be making a false comparison. He is comparing the case of someone who has lost money, cash, from paying betterment levy with that of someone who has simply lost an option to sell which he may now exercise if the legislation is made retrospective.

Mr. MacDermot

The hon. Gentleman is taking too commercial a view of the matter. [Laughter.] I know that hon. Members opposite always think of everything in commercial terms, but there are other factors which enter into these matters. [HON. MEMBERS: "Hardship."] Let us come on to hardship.

The whole of the case for retrospection is on the basis that it is legislation in order to cure hardship which has been established. If that were true and that were the essence of the provision, I should agree with hon. Members opposite, but it is simply not true and it has not been established, and that is why I attack the argument succinctly and clearly put by the right hon. and learned Gentleman when he ended his speech by saying, "Justice demands it".

We hear much about hardship cases, and it is conceded that there have been some individual cases which one could describe as hardship cases, but I confidently assert that the great majority of the cases which will be left out in future as a result of this wide and sweeping concession are not hardship cases in the slightest.

If a well-to-do person who has a large garden sells off an acre or two for development of that garden and makes a substantial profit, as can frequently happen, if he has to pay betterment levy he does not suffer any hardship. In future, he will not have to pay it if it is within the £1,500 limit as established in the concession. But there are two reasons for the concession which the Government have made. One is that in a narrow percentage of cases covered by the change hardship will be prevented. The other is that, looking at the broad structure of the administrative work entailed in collecting this money and the amount of annoyance caused to people who have to pay it, the Government have decided that it is not worth going on trying in future to collect the levy in this broad class of cases, and so they have made this sweeping move and taken out of liability 50 per cent. of the cases which account for only 10 per cent. of the money.

I do not know whether the Minister is able to make an estimate of how many in this 50 per cent. he or the Commission would regard as in any true sense hardship cases, but I suspect that it would be very few. The main class of hardship cases about which we hear when analysed is shown those where people were not advised of what would be their liability to levy if they completed the transaction. One hears in many of these cases that they were advised by solicitors and that the solicitors did not advise them what their liability to levy was. All I can suggest to such people is that they should consider going to another solicitor to take advice as to whether they have an action for negligence against the solicitor who failed to advise them properly.

Mr. Peter Walker

I understand the logic of the hon. and learned Gentleman's case—that the reason is administrative and that—

Mr. MacDermot

But the hon. Gentleman has not understood my case. I have not mentioned the administrative arguments in the whole of my speech. I am not putting my case on the administrative argument; nor, as I understand, is the Minister.

Mr. Peter Walker

The hon. and learned Gentleman is arguing that hardship is of minor relevance and that there has been a wide concession to overcome the administrative problem. I will not quote the whole of it, but if the hon. and learned Gentleman examines the Minister's winding-up speech in the last debate he will find that the right hon. Gentleman made it perfectly clear that he came to the conclusion that this change should be made after a study of all the hardship cases concerned. Therefore, the Minister's conclusion is based on hardship. Does not the hon. and learned Gentleman agree?

Mr. MacDermot

I invite the hon. Gentleman himself to study the Minister's speech and to have listened to the passage in the Minister's speech which the hon. Member for Crosby (Mr. Graham Page) quoted when the Minister made it perfectly clear that he was not conceding that there was hardship in the majority of these cases. He agreed that there were some cases of hardship and he made the very point which I am now making—that when these cases are analysed, it is seen that the probable source of hardship when the hardship was genuine resulted from wrong advice or lack of proper advice to the person who entered the transaction which rendered him liable to the levy.

Mr. Peter Walker

As the hon. and learned Gentleman has challenged me, may I quote the Minister's words? Referring to the previous debate, he said: The House will recall that on that occasion I invited hon. Members to let me know of cases which they received from constituents where the incidence of betterment levy was operating with undue severity. Having said that he had studied those cases, he went on to say: I have considered this problem intensively, and the White Paper 'Modifications in Betterment Levy', published on 15th April, is the result of that consideration."—[OFFICIAL REPORT, 28th April, 1969; Vol. 782, c. 1077.]

Mr. MacDermot

That does not in the slightest contradict what I have said. The hon. Member for Crosby cited the very passage from the Minister's speech making the point which I am now making.

Mr. James Dance (Bromsgrove)

The hon. and learned Gentleman is advocating that people should take more and more legal advice. If I am fortunate enough to catch the eye of the Chair later, I shall quote the instance of a constituent of mine who was not allowed to charge legal expenses against the levy. It is most unfair of the hon. and learned Gentleman to advise my constituent to take more legal advice and to incur more expense when he is not allowed to deduct those expenses from the levy on the price obtained for the land.

6.30 p.m.

Mr. R. T. Paget (Northampton)

Of course he is not.

Mr. MacDermot

I agree with the intervention of my hon. and learned Friend the Member for Northampton (Mr. Paget). Of course he is not.

I suggest that the basic case for making it retrospective has not been established, namely, to show that the Amendment falls within the class of cases which are proper for retrospective legislation. It goes far wider than the mere relief of particular hardship cases.

The Minister does not rely on the administrative argument as the primary argument. But the House should not sweep it aside as lightly as it has sought to do. It is administratively possible for the Land Commission to repay the amount, but Sir Henry Wells is concerned only with that aspect. That is not the end of it. The House accepts that, if it were made retrospective, it would be necessary to make retrospective the provision that these transactions, except where otherwise exempted, should be left to the capital gains tax. That would happen in something like half the cases.

What will be the reaction of people who have had to pay betterment levy on relatively small sums if they are now to be told that Parliament has passed retrospective legislation to abolish that liability? They will breathe a sigh of relief and think that they are exempt. But later they will find that the Inland Revenue will assess them to capital gains tax. They will then have to start again on a quite different set of arguments, with a different base value, they will need to seek fresh professional advice and, in the end, they will find that they will have to pay a similar sum or a slightly smaller sum.

This will create an enormous amount of administrative work. It will mean administrative work not only for the civil servants involved, but administrative work by the taxpayer in having to take professional advice about his liability. The hon. Member for Orpington (Mr. Lubbock), in trying to push aside the Minister's anomaly, tried to make out that the amount of levy in any individual case was only a few pounds. But it may sometimes be a few hundred pounds. The administrative procedures involved are not just the simple action of getting a repayment. In half the cases there will be administrative trouble for all concerned in finding out the amount of the alternative liability.

The Conservative Party has attacked the betterment levy. Hon. Members opposite have constantly pointed out that in the early stages of the levy the costs of collection are heavy in proportion to the amount collected. If this provision were made retrospective, the result would be that in 50 per cent. of the cases to date there would be a net collection of about £750,000 capital gains tax in relation to the levy. The administrative work involved in repayment and the work of assessing liability to capital gains tax would produce a figure of £750,000. There is certainly something in the administrative argument.

I would not rest the case on that basis if I were satisfied that all the Amendment did was to put right established cases of hardship. The Amendment goes far beyond that. The general principle should prevail that our legislation should not be made retrospective.

Mr. James Allason (Hemel Hempstead)

A bad mistake has been made by the Government at the expense of humble citizens. This is not a case of rich land speculators claiming that they have been hit by the Land Commission. We warned the Government at the time that the people who were going to be hurt were the humble citizens carrying out small transactions. But the Government refused to listen. It is no good their saying that they did not have advance warning that this would happen; they have not the excuse that they were not warned. Having had the warning, they have made the mistake, and they must now put right the damage that has been done.

The Press has done an excellent job in exposing the evils of the levy on small transactions. The Minister has been bombarded from both sides of the House with the evil cases which have occurred. He remains quite unmoved about the past. He seems only to be concerned with further discomfort to citizens in the future.

Those who have already been caught by the charge may not yet have paid it. There is no obligation upon the Land Commission to collect the levy until six years after the event. For many people the levy may lie in the future. It would be intolerable if, four years from now, the Commission came along and tried to collect levy on the basis of a charge recognised to be objectionable.

Mr. Hastings

We will abolish it.

Mr. Allason

We will abolish it, but we shall have to put the matter right. I am concerned about what will happen during the rest of the time that the present Government remain in office.

The Minister gave four reasons for not making the provision retrospective. First, he said that it would cost £2¼ million, plus £1½ million in regard to the consequential effects flowing from Clause 37. Is this a reason not to right injustice? If 90 per cent. of the levy has been collected, and 10 per cent. has been unreasonably collected, is that a reason for not refunding any sums of money? The fact that the money cannot be spared is a totally inadequate reason.

The Minister then gave the further reason that only 10,000 cases were involved. Are 10,000 cases of injustice too small for the Government to worry about? That surely is a ridiculous attitude. We were then given the example of hardship to those who entered into transactions just above the £1,500. How unfair that would be. We have heard from both sides of the House how this situation could be dealt with. But even if it could not be dealt with, is that a reason for not giving justice to people concerned with transactions under the £1,500 mark? It is the good, old Socialist doctrine of equal misery for all.

Finally, there was the difficulty about the capital gains tax. I suggest that those who have suffered from having been pursued by this ridiculous levy on small transactions have already had enough worry. It would be possible for the Inland Revenue to forget about these cases. This is the most sensible method, since the capital gains tax problem would arise in only 5,000 cases.

Justice demands that these Amendments must be made. It is intolerable that Parliament should condone an indefensible injustice.

[Mr. HARRY GOURLAY in the Chair]

Mr. John Lee (Reading)

If we were discussing an Amendment relating to a capital levy instead of a betterment levy, I suspect that the volume of indignation from hon. Gentlemen opposite would be much greater than it has been so far, but it would be a good deal less justified, and my right hon. Friend would be in a much easier position to reply than he is at the moment. It seems strange that the Minister's reply should have been so largely concerned with the technical and somewhat abstruse arguments of the merits and demerits of retrospective legislation.

Mr. John Nott (St. Ives)

Would the hon. Gentleman explain the subtle distinction between a betterment levy and a capital levy in this instance? It seems to me that they are precisely the same.

Mr. Lee

If the hon. Gentleman does not know that, he ought not to be taking part in the debate.

I was concerned with this particular Clause. I prefer the good old robust radical phrase "soaking the rich". I am sure that the hon. Gentleman understands that, because he and his hon. Friends have been fighting against the possibility of a Labour Government doing just that for some considerable time. Unfortunately, their fears have largely proved groundless. I do not want to quarrel with the hon. Member for St. Ives (Mr. Nott), unless he wants to quarrel with me, because in this instance I find myself in a large measure of agreement with him and his hon. Friends on this matter.

I share the anxieties that have been expressed about the way that this levy is operating. One hears far too many cases of people writing to one's constituency neighbours raising questions and showing quite understandable incomprehensible exasperation with the operation of the law which is, to say the least, complicated for lawyers to understand, but is baffling in the extreme for those not so qualified.

One of the many unfortunate consequences of the delay in introducing a low level of exemption, or any level of exemption, is that we shall lose a great deal of the political kudos that would otherwise accrue for the idea of making something which approximates to a capital levy, though not as much as the hon. Member for St. Ives would have us believe. It would not be the first time that the Government, even when they do something approaching the radical, have managed to muff it in such a way that they do not get the benefit of the credit for having done it.

While we are criticising my right hon. Friend the Chancellor of the Exchequer, it is only right to give him due credit for at least having shown, a little belatedly, some sensitiveness on this point and having introduced this provision. I should have been prepared to see a higher level of exemption—no doubt hon. Gentlemen opposite would like a very high level of exemption—but it would be countered in return by a higher levy up the scale if we are to have this tax in the way that it is constituted in the Bill.

Having settled at the level of £1,500, I cannot see how anyone can argue that if it is right to exempt people henceforth from the operation of these provisions because there may be anomalies or hardship, it is wrong to provide the same level and measure of relief for those who were unfortunate enough to be caught in the period between the Act becoming operative and the operation of this Budget.

I cannot see how my right hon. Friend can hide behind a constitutional argument. I do not wish to go over all the arguments put forward by the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith), but there is all the difference in the world between retrospective legislation which operates or militates against the citizen and retrospective legislation which relieves him of a liability or a disability. It seems somewhat disingenuous to raise one's hands in mock horror at the concept of retrospective legislation, which is not new, though rightly regarded with suspicion whenever it is proposed and subject to a great deal of scrutiny. But to treat the two the same is not realistic.

I was not in this House when the War Damage Bill was introduced, with a provision about the Burmah Oil Company. Had I been here, I would certainly have voted against that provision. Not from any tenderness towards the Burmah Oil Company, whose shareholders had, no doubt, done very nicely from their assets, but because I believe that monkeying about with a judicial decision really is an outrage. It is not putting it too high to talk of it in those terms.

There have been many instances when changes made in the course of a Finance Bill have had the effect of retrospectively, albeit for a short time, reducing or abating a person's tax liability and he has been granted a refund. Those instances are just as much retrospective or retroactive operative pieces of legislation as this. It is true that the period to which it refers would be somewhat longer, though not I think unconscionably longer.

I agree with the hon. Member for Hemel Hempstead (Mr. Allason) that it is difficult enough when people are to be visited with a tax demand, the possibility of which they have probably forgotten all about six years hence. But if people find themselves in peril for even the most minor transactions, it strengthens the case for treating this matter with more flexibility than my right hon. Friend has so far been willing to show.

I should have thought that the object of this levy was to catch the big boys—I do not mind how hard they are hit—but I think that the Government have once again muffed the situation. The Government somehow cannot bring themselves to make a really radical frontal assault on inequality of wealth or, indeed, on any of the other inequalities that disfigure our society. They furtively probe a situation and, generally speaking, end up by getting the worst of the skirmish which takes place afterwards.

I hope that my right hon. Friend will give further consideration to this matter, which will undoubtedly be used by the Opposition as a stick with which to beat the Government if they do not do it. That is not the most important or most admirable reason for changing it. But it would not be worth the fuss and bother for my right hon. Friend to stand pat on the situation as it is. I think that he may well gain a great deal of credit if he and his right hon. Friends swallow their pride and give way on this matter.

Mr. Costain

I intervene for a few moments because I cannot resist the temptation offered by the hon. Member for Reading (Mr. Lee). The purpose of the Land Commission Act was primarily to enable land to be made available, not to soak the rich, as he so often wants to do.

The argument has been put forward very clearly by my hon. Friends on this side and, indeed, by hon. Gentlemen opposite, except for the hon. and learned Member for Derby, North (Mr. MacDermot). I thought that he put up an extraordinarily good argument for a very bad case. It reminded me of the time when he was on the Front Bench. I used to admire then how he could put over a poor argument for a bad case. I do not know why the hon. and learned Member has intervened at this time. I feel that the bells will be ringing in Downing Street because at last they have somebody to support the Minister.

Basically, the purpose of the Land Commission Act was to obtain land. By not accepting the Amendment the Minister is saying that those who helped the Government to obtain land by selling it to them were fools because they had to pay the tax. If the Minister does not make this provision retrospective, he will penalise those who patriotically made their land available to the nation. This is much the same as the Government have done with War Loan, and with everything else. Once they get someone to do what they want, they soak him, and if the Government do not accept the Amendment they will soak these people once again.

Mr. Paget

I intervene because I have had a constituency case about which I have been in correspondence with the Minister.

I am strongly in favour of the principle of taxing development gains. Of all forms of enrichment, they are the least defensible. I speak with some personal interest in the matter, because I think that it was my great-great grandfather who had a vanity. He liked to have the best cattle which made the highest price at Leicester Market, and so that the cattle would be fresh he bought the farm nearest to that market.

For two generations that farm has developed at an enormous profit which I am still enjoying. None the less, it is obviously utterly indefensible. We did nothing to increase the value of that land. It was increased by the public effort of the people of Leicester and their expanding city. All that we did was to impede that expansion by hanging on to the farm.

Mr. Graham Page

It was a shrewd investment.

Mr. Paget


Mr. F. P. Crowder (Ruislip-Norwood)

It must have been a shrewd investment by mistake. In any event, I hope that the money will go to the Pytchley Hounds.

Mr. Paget

A shrewd investment by mistake, equivalent to backing the wrong horse and finding that it has won.

Efforts to tax these development benefits have been tried and found extremely difficult. This latest is the most promising yet, but it did at the low levels disclose cases—and too many cases—of hardship. The Minister then took the attitude, "If you show me that this is really producing many cases of hardship I shall reconsider the matter". He did reconsider it, and I am sure that we all thank him for having done so. However, having reconsidered the matter, to say, "Because I have found a number of cases of hardship I am going to amend the provision as to the future, but I shall leave all the hardship where it is" does not seem to me to be a good argument either in logic or in morals.

I am told that the Amendment cannot be accepted because there is an objection to retrospective legislation. I have argued this on previous occasions. I am an enthusiast for retrospective legislation. I would have in every Finance Bill a retrospective Clause which picked up the bright ideas which the accountants had had in the previous year and said to them, "Boys, you have been ingenious, but it is not going to work. You will have to pay the tax anyway". If that were done, an enormous amount of effort which is at present devoted to finding ways of avoiding tax would be saved, because people would not go in for that exercise if they knew that they would waste their money after they had done it. I believe that retrospective legislation is far and away the most efficient deterrent to tax avoidance, and also that it results in an enormous saving of accountants' work, so much of which is engaged on that kind of thing.

The argument that we must not penalise retrospectively cuts no ice with me.

Sir J. Foster

Would the hon. and learned Gentleman make the betterment levy retrospective to his great-great-grandfather?

Mr. Paget

I think that there could be limits. I do not want to go back three or four generations, but retrospection in the context which I have in mind would have the effect of preventing the various tax avoidance devices which are thought up every year and which are stopped in succeeding Finance Bills. Instead of having to stop these devices every year, we would have a most effective deterrent and not have so many holes to stop.

I can see no argument against retrospection to correct admitted hardships. I see no reason why we should not alleviate hardships which are known, and which are the occasion for making the alteration. The argument against doing this does not make sense to me. It was the administrative argument which impressed me far more than any argument about ethics and morals, and that is the confusion which capital gains tax would involve. All property has increased in value a great deal since 1965, and probably much the greater part, if not all, of these betterment payments would be added value which would probably attract capital gains tax.

Let us deal with this in a rough and ready way. Let us not return the whole amount, but only two-thirds of it. Assume, on a rough and ready basis, that most of this gain is anyway liable to capital gains tax. I suggest, therefore, that we take off one-third, and return two-thirds. I wonder whether the Minister would consider a compromise on that basis? I feel that the people whose hardship occasioned this change, and who should have been excluded from this levy, will feel very bitter and have a justified sense of injustice unless something is done for them.

Mr. Oscar Murton (Poole)

This is a most extraordinary debate. The right hon. Member for Sunderland, North (Mr. Willey), who, I think, has gone to refresh himself, after listening to all the arguments, pleaded with his right hon. Friend the Minister for retrospection. It was, after all, the right hon. Member for Sunderland. North who brought the Land Commission Bill before the House in the first place.

The Minister has throughout been obdurate. In defence of the line which he has adopted he has used the argument which he has used on previous occasions. We have heard nothing new today.

At the beginning of his speech, I thought that the hon. and learned Member for Derby, North (Mr. MacDermot) intended to plead one way, but he cleverly turned it round and pleaded the other way. I suggest to the hon. and learned Member that his speech, too, was specious in some respects, especially when he said that anybody who fell into trouble would probably do so because he did not take legal advice.

My right hon. Friend the Member for Bromley (Mr. Hunt) is not here at the moment, but if he comes in later he will be able to tell the Committee about an appalling case, reported in the Daily Telegraph this morning, in which levy has been raised even though there is no question of any development having been allowed. The Minister talks about a matter of principle. I would say that it is a matter of un-principle. A great preponderance of these cases are cases of hardship. The country will take note of the obduracy which the Minister is showing tonight and it will not do his party's already tarnished reputation any good.

7.0 p.m.

Mr. Dance

Most of us were horrified at the intervention of the Minister earlier. He gave no hope of any relaxation of his obstinacy. I support the Amendments, because in certain circumstances retrospection is essential. It was a bad idea to set up the Land Commission in the first place. If it were catching the big fish in its net there might be some argument for it, but recent evidence proves that the only person caught is the small man who wishes to have his own home on a little plot of land. Far from discouraging him we should encourage him, so that he does not become a further liability upon the local council.

Far from the Land Commission's accepting retrospection it seems from recent pronouncements that it intends to jump the gun. The hon. and learned Member for Derby, North (Mr. MacDermot) said that people wanted to be clear in their minds what the future held for them. I want to read a quotation from a report that appeared in this morning's Daily Telegraph, spelling out clearly the way in which we are going wrong in this matter. The report is headed "Lunatic Levy" and it says: You sell your house. The new owner has no intention whatever of developing the site; he just wants somewhere to live. Indeed, if he did want to develop this particular site, he could not; the council would refuse planning permission. And then along comes the Land Commission and charges you betterment levy. You rub your eyes in amazement. The Commission explains that levy is charged wherever there is a prospect of the land being put to more valuable use. You point out that there can be no such prospect. Ah, says the Commission, but the council might change—who knows?—and planning permission might then be granted. How clear are people's minds about what may happen in the future?

I want to refer to a case of grave hardship in my constituency about which the Minister knows. It concerns the question of the cost incurred in selling a plot of land. A widow sold the land finally for £4,750. The base value put on it, after a certain amount of argument, was £825. The widow then incurred the following expenses: £31 10s. for planning permission; £191 for advertising and commission and £70 for solicitors' charges. As far as I can see, she has also incurred further expenditure, in the form of agreeing the base value, of £32, making a total amount of £326. We have always prided ourselves on the fact that British law is just. Surely it is not just when there are hundreds who pay the levy on money which they do not receive. These costs are essential. The money does not go into the old widow's pocket. She receives an amount only after that money has been paid out.

I took this matter up with the Minister and he gave me a very unsatisfactory reply. He said: The only provision in the Land Commission Act which permits an allowance to be made for costs is contained in paragraph 19. The Minister then pointed out that these costs are allowable and he ended by saying: You will have seen the recent White Paper on Modifications in Betterment Levy—Cmnd. 4001. It is proposed that in future costs incurred on the disposal of land liable to levy should be allowed in the assessment of levy". My constituent will not benefit since, as is customary in cases where there are changes in taxation, the provision is not retrospective.

Mr. MacDermot

Can the hon. Member explain what hardship the widow suffered? It seems to me that she must have made a profit of between £800 and £900.

Mr. Dance

She had to pay out a 40 per cent. levy of £1,570 and the base value was £825. In 1962 her husband refused £1,000 for the land, and the land was finally sold for £4,750. But the widow had to find alternative accommodation. She was not all that much in pocket.

I am arguing that it is only fair and just that when a person sells land and makes a certain profit it is only right to bear in mind that the profit does not consist of the money for which he sells the land; it is the amount of money that he receives finally. A certain amount has to be paid out in legal charges.

Mr. MacDermot

The hon. Member appears to be basing his argument on a case of hardship, but he has not told us what the hardship was.

Mr. Dance

I should not have given way. I am trying to be brief. I am pointing out that the widow is being charged this large sum of money but that she has to find alternative accommodation. She wanted to live in smaller premises, and I believe that it is utterly unjust that people should be compelled to pay levy on money they do not receive.

Sir F. Bennett

I shall speak for only two minutes. I would have thought that, looking back over past Finance Bills for many years, the Minister would feel a sense of shame at the realisation that although the arguments on this subject have been made across the Floor of the House he has found only one supporter. I cannot recall any occasion in recent years when a Minister has been able to find only one supporter—and that supporter an ex-Minister who, at the end of his speech, seemed to have made the Minister's case weaker than it was when he began speaking in his right hon. Friend's defence.

Does the Minister accept his hon. Friend's suggestion that his motive is that it was administratively difficult for the relief of these small taxes, or is his motive the more creditable and honourable one of remedying cases where genuine hardship has occurred? There was one case mentioned by my hon. Friend the Member for Hemel Hempstead (Mr. Allason) to which not enough attention has been given. Many people have been informed that they will have to pay levy at a future date. Some have started to appeal and others have not. At the moment I have told all those who have written to me that they would be extremely foolish to pay and that they should go on resisting, because I cannot believe that in the last resort the Government will not give way on retrospection.

The worst thing that the Government can do, unless they note the warnings that we have given them tonight, is to insist that these people pay the levy and then give way at a later date, when we shall be told that it is administratively too difficult to refund those who have already paid. The Minister should make it clear whether he is saying that in the future he will take people to court and penalise them, and make them pay sums which they are not liable to pay under existing law. Will he answer that question clearly tonight?

Mr. Awdry

The hon. and learned Member for Derby, North (Mr. MacDermot) chided us for taking a commercial view of this matter, but it is a commercial matter. We are talking about finance; it is not a general philosophical argument. I hope that the Minister has been impressed by the fact that, in the last three and a half hours, only one speech has been made in his support. The whole of the weight of the argument has been against him. I have never heard a worse speech from the Front Bench. His deplorable case rested on two pillars, both shaky, both of which have collapsed.

The first is the question of administration costs. He started with a figure of £2¼ million which, after cross-examination, he reduced by 30 per cent.—

Mr. K. Robinson

I am sorry, but I cannot let this go on. If the hon. Gentleman will consult the OFFICIAL REPORT, he will see that I specifically used the words "disregarding the capital gains consequentials".

Mr. Awdry

At the beginning of his speech, the right hon. Gentleman said nothing about the capital gains side of it. It was only on cross-examination from this side that we discovered that there was a reduction of 30 per cent., or £750,000. He treated us with little can-dour on this question. It is purely as a result of our probing that this came to light. But, whatever the figure, even if it is £1½ million, surely the sum is not important. If there is to be justice, no sum should stand in our way. So I reject the administration argument.

On the matter of principle, the second pillar, the Minister said that he regarded this as a major change of taxation, which should not be retrospective. But it is not a major change: it is a small measure to remove a gross injustice. All hon. Members would agree that there is an objection to retrospection if it gives the taxpayer a greater burden, but there is nothing obnoxious about it when it decreases his burden. The Socialist Party has always claimed, if nothing else, that it believes in justice. If the Government do not accept the Amendment, after this full debate, they will demonstrate that they do not practise what they preach.

Mr. Paul Dean (Somerset, North)

I wish to thank the Minister for the careful and courteous way in which he has investigated a large number of constituency cases which I have sent to him. It is the more disappointing that he should take his present attitude, in view of the way in which he considered those cases, all of which involved substantial hardship and in none of which will there be any relief from interest payments under the present proposal.

I want to describe some of the cases which I have put to the right hon. Gentleman. The first concerns a widow and an exchange of property. No money changed hands. The only way in which she can pay the levy is by letting the house which she now occupies. This is a good case of obvious hardship, which will not be helped by this proposal. Another case concerns a widow of 83, who will inevitably suffer considerably in paying the levy, amounting to over £500. Here again, these proposals will give her no help.

Another is the case of a widow and her son who live together. To pay the levy, they have had to take up a bank loan in addition to their existing mortgage. Can the Minister clarify one point? How will a bank loan taken out to pay the levy be affected by the Bill? Will it still be eligible for tax relief? If not, this is an additional element of hardship which the Bill puts on the existing hardship of paying the levy.

Another case, towards which the Minister was sympathetic but in which he said that he could do nothing, concerned a young married couple who were sold a plot of land by their father, at below the market rate to build a house. They will also have to pay the levy, because the house has been built. They have a mortgage on the house and have spent all their other savings on furnishing it and getting it into order. Again, there will be no help from this so-called concession.

The final case concerns a modest levy, on a market value well below £1,500. In this case, the levy is not even due for payment yet. There has been argument with the Land Commission about it, and it is not due until 5th May this year. This is a classic case. How can I possibly persuade this person that there is justice in a levy when the Minister makes changes without making them retrospective, when the payment is not even due until this month?

Those are just a few of the cases, many of which the right hon. Gentleman has seen, in each of which there is substantial hardship and to which this so-called concession will be of no help.

Mr. Crowder

I give my Front Bench an undertaking that I will not speak for more than one minute. The hon. and learned Member for Northampton (Mr. Paget) said that prices have gone up, as they have, but when considering the real prices, a good example is the daily newspapers. In 1947, we paid 1d. for the Daily Express; today, we pay 5d. So, on the basis of the betterment levy, and so that prices should keep pace with inflation, would it not be just to divide every betterment levy by five?

Mr. Nott

I give an undertaking to my Front Bench that I will take a quarter of a minute. An old lady wrote to me complaining about the betterment levy and saying, "Why should a Socialist Government bring this hardship on my shoulders?" I said to her that I could only quote the words of the Lord Chancellor in another place. The right hon. and learned Gentleman said: My Lords, for too long the property speculators have bled white those of our people who have wanted a home to live in at a price or at a rent they could afford. I commend this Bill to the House as a means by which this racket will be ended …"—[OFFICIAL REPORT, House of Lords, 14th November, 1967; Vol. 277, c. 1088.] This widow now understands why the Socialist Government want her £100, in words which combined all the pompous righteousness of some lawyers with the naivety of the Socialist. If the Minister cannot agree to the Amendment, he will never again be able to explain away the Socialists' philosophy.

Mr. Paul Hawkins (Norfolk, South-West)

I give no promise to my Front Bench, but I will not be long. First, I want to thank the Minister for the courteous letter which I received late last night on six cases about which I wrote to him. On the other hand, I was shocked to hear that there could be no retrospection. I took up one case of a levy of only £65 faced by an elderly lady who sold off the back of her garden to put the roof of her cottage into repair. Having spent all the money on the roof, she suddenly realises that she must pay £65. She has only an old-age pension; she does not have the money.

I was glad to see that Sir Henry Wells said that there could be no insuperable administrative difficulty about repaying money which has been paid, or waiving these payments. If the Minister refuses to accept what Sir Henry Wells said, I hope that these small sums, which cannot be waived because the Bill does not come into effect soon enough, can be collected on the date of death from the estates of those concerned, instead of these people being taken to court. I hope that the Minister can give these people some assurance, so that they will not be worried, as they are being, by these charges during their lifetime.

Mr. K. Robinson

We have had an extended debate, although not one in which many new issues have been raised—not surprisingly, perhaps, in view of the number of times that we have debated betterment levy in recent months. But I will do my best to answer those points which have been raised. Most hon. Members have naturally concentrated on the area of hardship. I had better deal with this aspect first.

My hon. and learned Friend, the Member for Derby, North (Mr. MacDermot) is perfectly right in this issue. In his extremely cogent speech, arguing the main case about retrospection, he reminded the House that vastly more than any possible hardship cases will be exempted by this £1,500 de minimis exemption. I said that, because this took care of the smaller cases, it would embrace certain cases of hardship or alleged hardship. Both nothing I said ever conveyed the impression, I think, that most or any substantial number of the cases which would be exempted would be hardship cases.

Indeed, the greater number of what we would all agree are cases of hardship come under the heading of gifts of land, which are taken care of by the separate gifts concession, which we cannot discuss today because it is in that part of the Bill which is going to a Standing Committee. But I said that that was one concession where it has been possible to give retrospection.

My hon. and learned Friend asked what number I thought would be regarded as hardship cases. The Land Commission told me some time ago that, in all the assessments, some element of hardship had been claimed in rather less than 3 per cent. of the cases. From my experience—I have had a substantial postbag during the last few months on this matter—I can say that, out of nearly 10,000 assessments which would have come within the £1,500 concession, fewer than 500 claiming hardship have reached me, either directly from the public or through hon. Members. I hope that that helps to put the matter in some perspective.

As to what is to be done with what we might call outstanding cases of hardship, I should like to say something about the Land Commission's rôle. Quite properly, the Act gives the Commission power to do nothing but make assessments according to law, but the Commission has power to adapt the method of payment to the circumstances of the levy payer. It can agree to accept payment by instalments, or to postpone payment, and it is making full use of these powers where it is satisfied, after the necessary inquiries, that hardship would be caused if the levy payer were asked to pay the whole of the levy at once.

Mr. Lubbock

I wondered whether this rule covers the case which I raised with the right hon. Gentleman on 28th April, of a person assessed for levy who was living on supplementary benefit. Would she be excused from payment permanently under this rule?

Mr. Robinson

I hope that the hon. Gentleman will let me finish. I was about to deal with his personal case. I am sorry that he thought that I ignored the case because he failed to get a reply within a fortnight of writing. I agree that this is longer than I would like, but the Land Commission is under some pressure on individual cases at the moment—not surprisingly—and I have to seek its advice before replying. I can assure the hon. Gentleman that he will get a reply before the end of this week on that case.

The waiver of interest in cases where the amount of levy is not more than £1,000 will help the Land Commission considerably in enabling it to make concessions for instalments without increasing the ultimate amount to be paid. In particular, it will make it possible for the Commission to agree to long-term postponements, subject to examination at intervals, in cases where amounts are to be paid off the debt over a reasonable period. I am sure that the Commission will exercise these powers with great humanity and understanding, as I believe it has done throughout.

The speech of the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith), a former Minister of Health, included a fascinating discourse of some length on the constitutional aspects of retrospective legislation and its effects on the vested rights of the citizen. He admittedly, later in his speech, turned only briefly to the question of retrospection in the context of taxation changes. He dealt with this matter in far less depth than he did the broader question, which was not the case that I was trying to make.

I noticed that, at the end of the day, the right hon. and learned Gentleman, with his vast experience both political and professional, did not cite one instance of a general change in taxation, as this is, which has been made retrospective. Nor do I believe could he have done so.

The hon. and learned Member for Northwich (Sir J. Foster) will appreciate why I did not originally understand the proposition he tried to make in an intervention during my earlier remarks. There were two reasons why I did not understand him: first, because he tried to explain it in shorthand, so to speak, as one often does in an intervention; and, secondly, because he did not fully understand the nature of the de minimis provision. However, I got the point he had in mind when he spoke later.

I am not saying that the administrative difficulties in the way of such a solution would be insuperable. However, they would be extremely difficult to overcome.

Sir J. Fosterrose

Mr. Robinson

The hon. and learned Gentleman said that he would be interested to know what I thought about his idea. I trust that he will allow me to tell him without interrupting.

The hon. and learned Gentleman suggested a form of tapering.

Sir J. Foster

I did not.

Mr. Robinson

It was a form of tapering which we do not have for the future. It would, indeed, be odd to have such a concept for the past, particularly as we do not have it for the future. Another complication which would inevitably ensue is that we do not have tapering because of the capital gains tax consequentials. They are difficult enough to manage for the future. They would be very nearly impossible for the past and for that reason his proposition is not an acceptable answer.

Sir J. Foster

The rule would be that where a person entered into a transaction for a sum of more than £1,500 before 5th April, 1967, he could elect to say, "This is a transaction valued at £1,500" and he would get back the betterment levy which he had paid, minus the excess on the transaction over that sum. By this means the Land Commission would be pleased, because it would get something extra and the man would be pleased because he will have saved a little money.

Mr. Robinson

I heard the hon. and learned Gentleman perfectly, but I fear that I am no wiser after that intervention. Perhaps I, too, was speaking in shorthand in calling his proposition a tapering one. However, I am sure that he will agree that it would be a crude form of tapering, so that my argument against it stands.

Sir J. Fosterrose

Mr. Robinson

I will not give way again.

The hon. and learned Member for Northwich made another objection, although I thought that this one was somewhat odd. He said that we were considering a point of envy. I hope that I am not misrepresenting him by saying that he said that it could not harm somebody who did not benefit if somebody else did benefit. Is not the hon. and learned Gentleman aware that this whole debate on the question of retrospection is concerned with that very point? I was indeed surprised to hear him make that suggestion in this connection.

A number of hon. Members have raised personal cases which they will not expect me to deal with in the context of a Committee discussion of the Bill. However, if there are cases about which I have not heard before, or to which I have not had time to reply, I assure the Committee that those matters will be dealt with.

The hon. Member for Poole (Mr. Murton) briefly mentioned a case which has had a certain amount of publicity. He may be interested to know that no assessment whatever has been made in that case. The district valuer has merely given an opinion about the current use value of the property. I invited the gentleman concerned, Mr. Dutt, to enter into negotiations with the district valuer. The offer is still open, but Mr. Dutt has not taken it up. There is no question of any assessment having been made and it is, therefore, a little early for one to condemn the Land Commission or the district valuer on that point.

I have given the reasons which led the Government to advance these proposals, including the one which we are discussing. There is, of course, an incidental advantage—perhaps it is more than that—in terms of the administrative savings which will be capable of being made by eliminating 50 per cent. of the cases of levy. However, the fact that we are putting forward these proposals carries no implication that the collection of levy in all such cases in the past was a gross injustice, such as most hon. Gentlemen opposite have continued to assert and have thereby based most of their argument for retrospection.

We have made improvements in the levy for the future and they are substantial improvements going well beyond the concessions which were being demanded, at least by those who were not calling for the total abolition of the levy and the Commission.

Mr. Dean

A constituent of mine has taken out a bank loan to pay his levy. Will he still qualify for tax relief on the interest?

Mr. Robinson

That is a matter for my colleagues at the Treasury. I am sure that the hon. Gentleman's question has been noted and that he will get a reply.

Mr. Peter Walker

Not only my hon. Friends feel disappointed at the Minister's opening and closing speeches. It is clear that hon. Gentlemen opposite are equally disappointed over the attitude that he has taken in this matter.

The Minister had only one defender, and that was the hon. and learned Member for Derby, North (Mr. MacDermot), although he conceded the legal validity of the cogent remarks of my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith). The hon. and learned Gentleman clung to a thin argument which was primarily based on the fact that this was a concession which would be far more widely spread than those cases of hardship to which reference had been made and that such a concession should not be made retrospective.

In his early remarks, the Minister did not make that point. However, in his closing speech he, too, clung to that argument as the one straw of hope for getting support. He argued that only a minority of cases involved hardship, but if he examines his comments he will note that he has constantly argued on the basis that this concession is being made to eliminate hardship. Indeed, he said: The House will recall that on that occasion I invited hon. Members to let me know of cases which they received from constituents where the incidence of betterment levy was operating with undue severity. Later he went on: This was to supplement the factual information I had already gathered from a close study of the operation of the Act, which I began shortly after taking up my present office. This enabled me, in time, to formulate clear ideas about what should be done to give some relief in future to private individuals of small means, particularly to those for whom a transaction chargeable to levy was an occasion which occurs once in a lifetime".—[OFFICIAL REPORT, 28th April, 1969; Vol. 782, c. 1077.] The right hon. Gentleman is now saying that those who have suffered most severely from the impact of the levy in the past will receive no help from the Government. He also argues that cases involving owner-occupiers are the most severe cases of hardship.

Mr. K. Robinson

indicated dissent.

Mr. Walker

I do not want to misrepresent the right hon. Gentleman. He referred to gifts and pointed out the concession which was being made, the hardship that had arisen and the fact that the principle of retrospection would apply in those cases. However, when dealing with the question with which we are concerned, he said in the debate in April that the first proposal in the White Paper dealt with another form of hardship—and that is the very type of hardship with which we are dealing. It is a form of hardship for which he will give no help.

The hon. and learned Member for Derby, North made a remarkable point when he asked, in effect, "What about those who decided not to sell their land because this levy existed? Will not they feel hard done by if this concession is made retrospectively, remembering that they could have sold their land lone ago?"

Considering that the hon. and learned Gentleman was once a Minister and was concerned with this type of matter, he should be aware that the Act was designed to bring land forward for development. Now he speaks about people being stopped from allowing land to come forward for development because of the existence of this levy.

In referring to a case which had been raised by my hon. Friend the Member for Poole (Mr. Murton), which has obtained a great deal of publicity recently—the case of Mr. Dutt and his family—the Minister said that an assessment had not yet been made and that the district valuer only given his view of the position. Does not this illustrate how difficult it is for people to obtain professional advice about how they will be hit by the levy?

The hon. Member for Reading (Mr. John Lee), another lawyer, pointed out how difficult it was to understand this legislation. Why blame people if they do not take legal advice or if they get bad legal advice when even the lawyers do not understand the Act? This legislation is so badly drafted that even they cannot interpret is provisions.

Among hon. Gentlemen opposite who spoke against the Government in this matter was the hon. Member for Oldham, East (Mr. Mapp), who is not noted to be a rebel among his colleagues. He pleaded with the Minister to give way on this point. We had the hon. Member for Reading, representing the Left, and the hon. and learned Member for Northampton (Mr. Paget), representing the Right, both pleading with the right hon. Gentleman to give way.

Most significant of all was the speech of the right hon. Member for Sunderland, North (Mr. Willey), who must have a guilty conscience today. He introduced this legislation under which 10,000 people would not have paid levy had he given a little more thought to the Act before introducing it. At least he has had the sense to admit his mistakes. He pleaded with the Government to remedy his mistakes, but they refused.

As my right hon. and learned Friend the Member for Hertfordshire, East pointed out, the most important argument adduced by my hon. Friends received little attention from the Minister. Nobody has argued that the Government should never be allowed to pass retrospective legislation if it benefits the individual citizen, and this is the principle we are discussing.

The administrative arguments which the right hon. Gentleman adduced at length were remarkable. He said that the Inland Revenue was already working under terrible pressure. Whose fault is that? It is partly the fault of the hon. and learned Member for Derby, North who, in conjunction with the present Chief Secretary, did more to complicate the work of the Inland Revenue than any other two hon. Members. But to plead that such is the overburdening of the Inland Revenue, as a result of four years of Socialist legislation, that it cannot perform the administrative task of eliminating hardship caused by the Government is a very hollow plea indeed. The Minister quite rightly mentioned that the sum involved was free of capital gains deduction, but he did not know what the figure was. It was only a cross-examination and a hurried consultation with officials that gave us the information that the sum to be saved was not £2¼ million but £1½ million.

He later pleaded that because of complications some might pay more, because, as companies, they would pay 42½ per cent. The solution to that problem is easy—just repay individuals and not companies. His argument based on the problems of cases of over £1,500 was completely and devastatingly dealt with by my hon. and learned Friend the Member for Northwich (Sir J. Foster), who supplied an easy formula to deal with those cases.

So the Minister continues, as he has done month after month, to insist on taking no action for those who have suffered from this legislation. He is a sort of Robin Hood in reverse—or a "Robinson Hood" might be a more appropriate title. The main theme is to rob the poor in order to swell the coffers of the Land Commission. Having robbed the poor, and having admitted that it is wrong to do so, the right hon. Gentleman does nothing to repay the poor whom he has robbed in that period.

We have all quoted the letter written by Sir Henry Wells on the subject of the administration of the Land Commission. Sir Henry makes it clear in that letter that there is no great problem. The Minister kept talking about an insuperable problem, but Sir Henry was not of the same opinion. What Sir Henry—quite rightly, perhaps, in his position—has never pronounced on is whether or not he would like to repay this money. If I were chairman of the Land Commission, bearing in mind all the bad morale that must exist there and the thoroughly bad name the Commission has—not due to the actions of its officers, I am the first to concede that its officers have not been guilty, but due to this bad legislation—nothing could please me more than to be able to repay this money and remove the hostility to the Land Commission.

The Minister had better face up to another problem. He sometimes complains that we have already had seven or eight debates on this topic, but all those people who have sold land prior to 5th April have yet to be assessed for levy. They will have to pay the levy, although their transactions involve less than £1,500. In June or July, in September or November—or, perhaps, next year—they will start receiving their assessments for betterment levy. I hope that every such case is brought to the House and debated, and that hon. Members on both sides will continue to hound the Government until they repay the people whom they have robbed.

Division No. 214.] AYES [7.44 p.m.
Allason, James (Hemel Hempstead) Gower, Raymond Nicholls, Sir Harmar
Astor, John Grant, Anthony Noble, Rt. Hn. Michael
Atkins, Humphrey (M't'n & M'd'n) Grant-Ferris, R. Nott, John
Awdry, Daniel Hall, John (Wycombe) Osborn, John (Hallam)
Baker, Kenneth (Aston) Hall-Davis, A. G. F. Osborne, Sir Cyril (Louth)
Baker, W. H. K. (Banff) Hamilton, Michael (Salisbury) Page, Graham (Crosby)
Balniel, Lord Harris, Frederic (Croydon, N. W.) Page, John (Harrow, W.)
Barber, Rt. Hn. Anthony Harrison, Brian (Maldon) Percival, Ian
Batsford, Brian Harrison, Col. Sir Harwood (Eye) Pike, Miss Mervyn
Bell, Ronald Harvey, Sir Arthur Vere Pink, R. Bonner
Bennett, Sir Frederic (Torquay) Hastings, Stephen Pounder, Rafton
Bennett, Dr. Reginald (Gos. & Fhm) Hawkins, Paul Powell, Rt. Hn. J. Enoch
Berry, Hn. Anthony Heald, Rt. Hn. Sir Lionel Prior, J. M. L.
Quennell, Miss J. M.
Bessell, Peter Heseltine, Michael Ramsden, Rt. Hn. James
Biffen, John Higgins, Terence L. Rees-Davies, W. R.
Black, Sir Cyril Hiley, Joseph Renton, Rt. Hn. Sir David
Blaker, Peter Hill, J. E. B. Rhys Williams, Sir Brandon
Boardman, Tom (Leicester, S. W.) Hirst, Geoffrey Ridley, Hn Nicholas
Body, Richard Holland, Philip Ridsdale, Julian
Boyd-Carpenter, Rt. Hn. John Hordern, Peter Rossi, Hugh (Hornsey)
Boyle, Rt. Hn. Sir Edward Hornby, Richard Scott-Hopkins, James
Brinton, Sir Tafton Hutchison, Michael Clark Shaw, Michael (Sc'b'gh & Whitby)
Bromley-Davenport, Lt.-Col. Sir Walter Iremonger, T. L. Silvester, Frederick
Buchanan-Smith, Alick (Angus, N & M) Jenkin, Patrick (Woodford) Sinclair, Sir George
Buck, Antony (Colchester) Kershaw, Anthony Smith, Dudley (W'wick & L'mington)
Bullus, Sir Eric Kimball, Marcus Speed, Keith
Campbell, B. (Oldham, W.) King, Evelyn (Dorset, S.) Stainton, Keith
Chichester-Clark, R. Kitson, Timothy Steel, David (Roxburgh)
Clegg, Walter Knight, Mrs. Jill Stodart, Anthony
Corfield, F. V. Lane, David Taylor, Edward M. (G'gow, Cathcart)
Costain, A. P. Legge-Bourke, Sir Harry Taylor, Frank (Moss Side)
Craddock, Sir Beresford (Spelthorne) Lewis, Kenneth (Rutland) Temple, John M.
Currie, G. B. H. Lubbock, Eric Thatcher, Mrs. Margaret
Dalkeith, Earl of Mackenzie, Alasdair (Ross & Crom'ty) Tilney, John
Dance, James Maclean, Sir Fitzroy Vaughan-Morgan, Rt. Hn. Sir John
Davidson, James (Aberdeenshire, W.) Macleod, Rt. Hn. Iain Waddington, David
d'Avigdor-Goldsmid, Sir Henry McMaster, Stanley Wainwright, Richard (Colne Valley)
Dean, Paul McNair-Wilson, Michael (W'stow, E.) Walker, Peter (Worcester)
Deedes, Rt. Hn. W. F. (Ashford) Maddan, Martin Walker-Smith, Rt. Hn. Sir Derek
Doughty, Charles Maginnis, John E. Walters, Dennis
Elliott, R. W. (N'c'tle-upon-Tyne, N.) Marples, Rt. Hn. Ernest Weatherill, Bernard
Emery, Peter Marten, Neil Wells, John (Maidstone)
Errington, Sir Eric Maudling, Rt. Hn. Reginald Whitelaw Rt. Hn. William
Eyre, Reginald Mawby, Ray Wiggin, A. W.
Farr, John Maxwell-Hyslop, R. J. Wilson, Geoffrey (Truro)
Fortescue, Tim Maydon, Lt.-Cmdr. S. L. C. Winstanley, Dr. M. P.
Foster, Sir John Mills, Peter (Torrington) Wood, Rt. Hn. Richard
Gilmour, Ian (Norfolk, C.) Mills, Stratton (Belfast, N.) Wright, Esmond
Gilmour, Sir John (Fife, E.) More, Jasper Wylie, N. R.
Glover, Sir Douglas Morgan, Geraint (Denbigh)
Godber, Rt. Hn. J. B. Morrison, Charles (Devizes) TELLERS FOR THE AYES:
Goodhart, Philip Mott-Radclyffe, Sir Charles Mr. Anthony Royle and
Goodhew, Victor Murton, Oscar Mr. Hector Monro.

It is because of the Government's miserable failure to act properly over a minute sum of £1½ million, and because of their insistence over cases of hardship involving 5,000 families who have sold little plots of land, that I hope that not only my hon. Friends but those hon. and right hon. Gentlemen opposite who have spoken so strongly against the levy, will vote for the Amendment and thus show that the Committee still has some standards of decency.

Question put, That the Amendment be made:—

The Committee divided: Ayes 156, Noes 204.

Allaun, Frank (Salford, E.) Griffiths, David (Rother Valley) Morris, Alfred (Wythenshawe)
Anderson, Donald Griffiths, Eddie (Brightside) Morris, John (Aberavon)
Archer, Peter Griffiths, Rt. Hn. James (Llanelly) Moyle, Roland
Ashley, Jack Griffiths, Will (Exchange) Neal, Harold
Ashton, Joe (Bassetlaw) Gunter, Rt. Hn. R. J. Newens, Stan
Atkins, Ronald (Preston, N.) Hamilton, William (Fife, W.) Noel-Baker, Rt. Hn. Philip
Atkinson, Norman (Tottenham) Hamling, William Oakes, Gordon
Bacon, Rt. Hn. Alice Hannan, William Oram, Albert E.
Bagier, Gordon A. T. Harrison, Walter (Wakefield) Orme, Stanley
Barnett, Joel Hart, Rt. Hn. Judith Oswald, Thomas
Baxter, William Hattersley, Roy Owen, Dr. David (Plymouth, S'tn)
Beaney, Alan Hazell, Bert Padley, Walter
Bence, Cyril Heffer, Eric S. Page, Derek (King's Lynn)
Bidwell, Sydney Henig, Stanley Paget, R. T.
Binns, John Herbison, Rt. Hn. Margaret Palmer, Arthur
Bishop, E. S. Hilton, W. S. Pannell, Rt. Hn. Charles
Blackburn, F. Hooley, Frank Park, Trevor
Boardman, H. (Leigh) Horner, John Parker, John (Dagenham)
Booth, Albert Hoy, James Parkyn, Brian (Bedford)
Brooks, Edwin Hughes, Rt. Hn. Cledwyn (Anglesey) Pavitt, Laurence
Brown, Hugh D. (G'gow, Provan) Hughes, Hector (Aberdeen, N.) Pearson, Arthur (Pontypridd)
Brown, Bob (N'c'tle-upon-Tyne, W.) Hughes, Roy (Newport) Perry Ernest G. (Battersea, S.)
Buchan, Norman Hunter, Adam Perry, George H. (Nottingham, S.)
Buchanan, Richard (G'gow, Sp'burn) Hynd, John Prentice, Rt. Hn. R. E.
Butler, Herbert (Hackney, C.) Irvine, Sir Arthur (Edge Hill) Price, William (Rugby)
Carmichael, Neil Jenkins, Hugh (Putney) Rankin, John
Carter-Jones, Lewis Jenkins, Rt. Hn. Roy (Stechford) Roberts, Rt. Hn. Goronwy
Castle, Rt. Hn. Barbara Johnson, Carol (Lewisham, S.) Roberts, Gwilym (Bedfordshire, S.)
Conlan, Bernard Jones, Dan (Burnley) Robinon, Rt. Hn. Kenneth (St. P'c'as)
Corbet, Mrs. Freda Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) Rodgers, William (Stockton)
Craddock, George (Bradford, S.) Jones, T. Alec (Rhondda, West) Roebuck, Roy
Crosland, Rt. Hn. Anthony Judd, Frank Rogers, George (Kensington, N.)
Crossman, Rt. Hn. Richard Kelley, Richard Ryan, John
Darling, Rt. Hn. George Kenyon, Clifford Sheldon, Robert
Davies, Ednyfed Hudson (Conway) Kerr, Mrs. Anne (R'ter & Chatham) Shore, Rt. Hn. Peter (Stepney)
Davies, G. Elfed (Rhondda, E.) Kerr, Dr. David (W'worth, Central) Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Davies, Dr. Ernest (Stretford) Kerr, Russell (Feltham) Silverman, Julius
Davies, Rt. Hn. Harold (Leek) Lawson, George Slater, Joseph
Davies, Ifor (Gower) Leadbitter, Ted Small, William
Delargy, Hugh Lee, Rt. Hn. Jennie (Cannock) Spriggs, Leslie
Dell, Edmund Lewis, Arthur (W. Ham, N.) Strauss, Rt. Hn. G. R.
Dempsey, James Lewis, Ron (Carlisle) Taverne, Dick
Diamond, Rt. Hn. John Loughlin, Charles Thornton, Ernest
Dickens, James Luard, Evan Tinn, James
Driberg, Tom McBride, Neil Tuck, Raphael
Dunnett, Jack Mccann, John Urwin, T. W.
Dunwoody, Mrs. Gwyneth (Exeter) MacColl, James Varley, Eric G.
Dunwoody, Dr. John (F'th & C'b'e) MacDermot, Niall Wainwright, Edwin (Dearne Valley)
Eadie, Alex Macdonald, A. H. Walden, Brian (All Saints)
Edwards, William (Merioneth) McGuire, Michael Walker, Harold (Doncaster)
Wallace, George
Ellis, John McKay, Mrs. Margaret Watkins, David (Consett)
English, Michael Mackenzie, Cregor (Rutherglen) Watkins, Tudor (Brecon & Radnor)
Ensor, David Mackie, John Weitzman, David
Evans, Fred (Caerphilly) Mackintosh, John P. Wellbeloved, James
Evans, Ioan L. (Birm'h'm, Yardley) McMillan, Tom (Glasgow, C.) Wells, William (Walsall, N.)
Fernyhough, E. McNamara, J. Kevin White, Mrs. Eirene
Fletcher, Rt. Hn. Sir Eric (Islington, E.) MacPherson, Malcolm Whitlock, William
Fletcher, Raymond (Ilkeston) Mahon, Peter (Preston, S.) Wilkins, W. A.
Fletcher, Ted (Darlington) Mahon, Simon (Bootle) Williams, Alan (Swansea, W.)
Ford, Ben Mallalieu, E. L. (Brigg) Williams, Clifford (Abertillery)
Forrester, John Mallalieu, J. P. W. (Huddersfield, E.) Williams, W. T. (Warrington)
Fowler, Gerry Mapp, Charles Willis, Rt. Hn. George
Fraser, John (Norwood) Marquand, David Wilson, Rt. Hn. Harold (Huyton)
Freeson, Reginald Mason, Rt. Hn. Roy Woodburn, Rt. Hn. A.
Gardner, Tony Mellish, Rt. Hn. Robert Woof, Robert
Ginsburg, David Mikardo, Ian
Gray, Dr. Hugh (Yarmouth) Millan, Bruce TELLERS FOR THE NOES:
Gregory, Arnold Mitchell, R. C. (S'th'pton, Test) Mr. Joseph Harper and
Grey, Charles (Durham) Morgan, Elystan (Cardiganshire) Mr. Charles R Morris.
Mr. Hugh Rossi (Hornsey)

I beg to move Amendment No. 9, in page 50, line 12, leave out '£1,500' and insert '£5,000'.

The Deputy Chairman (Mr. Harry Gourlay)

With this Amendment it may be for the convenience of the Committee if we discuss Amendment No. 10, in page 50, line 12, after '£1,500' insert: 'or such larger amount as the Minister of Housing and Local Government may by order determine'. Amendment No. 11, in line 13, leave out from beginning to end of line 18 on page 51, and insert: (b) the parties to the act or event certify that such act or event does not form part of an act or event or a series of acts or events of which the top value or the total of the top values exceeds £5,000. Amendment No. 12, in line 34, leave out '£1,500' and insert '£5,000'.

Amendment No. 14, in page 51, line 31, after 'that' insert 'any certificate or'.

Mr. Rossi

I am obliged, Mr. Gourlay. Amendments Nos. 12 and 14 would be consequential on Amendment No. 9, whereas Amendment No. 11 would make a substantial variation in the Bill. I assume that Amendment No. 10 will be moved by the hon. Member for Orpington (Mr. Lubbock).

The Deputy Chairman

The other Amendments are not being moved, but can be spoken to.

Mr. Rossi

I am obliged.

The Amendment is closely in keeping with a new Clause moved by my hon. Friend the Member for North Fylde (Mr. Clegg) in Standing Committee on the Land Commission Bill. That Clause sought to exclude from levy all cases where the price or value of land did not exceed £5,000. In his admirable speech in support of the Clause my hon. Friend said that there was a tradition of exemption of small transactions. in fiscal measures. He made particular reference to exemption from stamp duty and estate duty. Any sale of land to the value of £5,500 or less is exempt from the incidence of stamp duty.

Under the Bill, estate duty is no longer to be charged on estates of £10,000 or less. The Chancellor of the Exchequer, in his Budget speech, when referring to the new provision, said that he wished this exemption to operate particularly in those cases where the principal asset of the estate was the house in which the deceased's family resided; in these days of inflation the value of that house composed the greater part of that estate, and he thought it to be rather hard and unconscionable that estate duty should be charged in those circumstances. That was the Chancellor's justification for raising the estate duty exemption level to £10,000. Similar thinking could well have applied to the betterment levy, but apparently it does not.

My hon. Friend the Member for North Fylde said on 9th August, 1966, that the argument in favour of his Clause was an effort to reduce the volume of work which will flow to the Land Commission … We also heard something today of the avalanche of forms which are to descend on to the Land Commission. The Commission will have many problems to deal with, and we believe that one of the great advantages of granting this exemption would be to speed the flow of business within the Land Commission and also to make small transactions outside the Land Commission work much more smoothly."—[OFFICIAL REPORT, Standing Committee E; 9th August, 1966, c. 988–9.] It is not without interest to note that the White Paper, introducing the present modifications in the levy, tells us that the exemptions proposed by the Bill, namely, where the sale price does not exceed £1,500, will account for half of all cases at present giving rise to liability under the Act, and which account for only about one-tenth of total levy. Therefore, if regard is paid to what is said in the White Paper, it will be seen immediately that hon. Members on this side have been proved right once again, as they have been time and time again in all our discussions on the Land Commission.

The argument presented in the White Paper in favour of the exemption of land of value of less than £1,500 is one purely of administrative convenience. It is to get rid of the paperwork which is cluttering up the Commission. It will get rid of half the total number of cases with which the Commission has to deal and which produce a very small return for all that labour. There is not one word in the White Paper about hardship. There is not one word of regret for the misery that has been caused to all the people who have suffered from the legislation. That is the test of the matter. The Government are merely seeking administrative convenience. They are exempting cases involving £1,500 or under to save the Commission a great deal of paper work that we warned it would have in any case.

8.0 p.m.

But we on this side are not concerned purely with matters of administrative convenience. We are concerned to see that the legislation does not cause hardship to ordinary men and women. The £1,500 limit that we are being asked to give will be of no assistance to the couple in Buckinghamshire, of whose case the Minister is well aware. An old gentleman of 76 and his wife had a small cottage in respect of which the local authority served an order requiring them to bring it up to certain standards.

Apart from their pension, they had no money. They certainly did not have the capital to spend upwards of £1,000 on their property, and so they decided to sell a piece of the cottage garden. That produced about £1,800, resulting in a large levy. The Minister knows the details of the case and the hardship caused to that couple. Yet that is the kind of case which will be in no way helped by the exemption, quite apart from the consideration of retrospection which we discussed earlier.

I read with surprise in the White Paper that the £1,500 limit would account for about half the present cases giving rise to liability under the Act, having in mind that case of the small garden in Buckinghamshire. I invite the Minister to give the House more information about such cases. In our earlier debate he was asked to give his analysis of them and produce evidence in support of what the White Paper states. I again invite him to do that. It would be of great interest to hon. Members to have such a document placed in the Library, where it would be readily available to us all. When the analysis is published I believe that the proposed concession in the Bill will be seen to offer little if any benefit for substantial areas, particularly in the South-East of England.

It is for that reason that in the Amendment we propose a far more realistic figure. Local authorities in the London area are having to pay between £4,500 and £5,500 for terrace houses which they intend to demolish in connection with clearance schemes. If that is the level of price having to be paid for slum clearance properties in London, what plots of land are available at £1,500 in the South East? I think that it was my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) who spoke in our earlier debate about chicken hutches, which were about all that could be bought for that figure in some parts of England.

I also remind the Minister that when the Government opposed the new Clause to which I have already referred in Committee on the Land Commission Bill there was a tacit acceptance of the sum of £5,000, because not a word was said about that figure being inaccurate or excessive. The right hon. Gentleman will see in the OFFICIAL REPORT of the Committee proceedings that the then Minister of Land and Natural Resources objected to our Amendment for three reasons. First, he said that it was difficult to draw a line such as was proposed in the new Clause without leaving a sense of unfairness. In other words, he said that everything had to go into the bag or a feeling of injustice would be created.

If that argument is good for £5,000 it is good for £1,500. It is merely a question where one draws the line. It is arbitrary at any level. If that was a valid argument by the Minister of Land and Natural Resources on 9th August, 1966 it is valid today in respect of not only £5,000, but £1,500.

The second argument was that if the new Clause was accepted it might be unfair to some vendors and developers, because they would lose the advantage of being able to claim, under Schedule 5 of the Act, base value on a previous transaction. If that argument was valid for £5,000 in 1966 it is valid for £1,500 today.

The right hon. Gentleman's third argument was on the possibility of evasion. He said: A housing estate would not be a housing estate; it would be a number of separate individual projects, each of them less than £5,000. In that way we should be wide open to evasion."—[OFFICIAL REPORT, Standing Committee E, 9th August, 1966; c. 991.] If that argument was valid in 1966 for £5,000 it is valid today for £1,500. The argument then was that the owner of a large estate could split it up into a number of small plots, each of £5,000, sell them off individually and thereby try to avoid the levy. In exactly the same way he could break them up into smaller plots of £1,500.

None of the arguments against our new Clause in 1966 is apparently relied on by the Government today, because they are proposing their own arbitrary figure. The difference between us—the difference between £1,500 and £5,000—is one on which we must ask the Minister to give his explanation. The real difference between us is that he is concerned purely with administrative convenience, while we are concerned with hardship to people. If he would soften his heart just a little and see the effect that the levy is having on ordinary men and women who are trying to sell their houses and pieces of their garden, if he were concerned with the problems that arose from those circumstances, he would be with us all the way.

But the right hon. Gentleman is not concerned with that. He is concerned with cutting out such paper work as does not give a sufficiently remunerative return for the Land Commission. On that, we go no way with him at all. Those are the main considerations we wish to put forward on Amendment No. 9 and the Amendments consequential upon it.

We propose Amendment No. 11 as a tidying-up Amendment to replace all the verbiage from line 13 on page 50 to line 18 on page 51. The purpose of all those words is to meet the possibility of evasion, to meet the case of an estate owner who breaks up his property into a number of separate plots each of £1,500 or less in value, thereby escaping the levy on the totality of his estate. With respect, we regard that as a clumsy way of doing it, and we propose our Amendment No. 11 in substitution therefor.

That Amendment follows closely the certificate for value which is to be found for stamp duty purposes on every conveyance or transfer of land, in which the parties to the document have to declare that the event there recorded is not one of a series of transactions in respect of which the total consideration exceeds the figure at which stamp duty begins to be payable. It is a familiar formula, a formula easily understood by professional advisers who have to help people to understand this legislation, and it is hallowed by long use.

I do not much like the use of the term "top value". It reminds one of the term "O.K. user" which one may find in a town planning Bill in the future. However, we have taken "top value" from the Bill as it stands, so we do not have to apologise for it.

Those are the considerations which we put to the Committee. Above all else, we seek to put the Minister firmly to proof of his £1,500 limit. We ask him to show that he really wants to do something to help, not merely for the purpose of administrative convenience. Yea or nay, is he concerned with hardship? If he is, he must accept our Amendment and agree to the raising of the limit to £5,000.

Mr. Lubbock

The hon. Member for Hornsey (Mr. Rossi) made a good case so far as it goes, but the difficulty in his argument—I think that he accept it himself—is that whatever figure one chooses is bound to be arbitrary and sooner or later it will be overtaken by the rises in land and property prices which have been a common experience in the past few years. It would, therefore, be better if we gave the Minister some flexibility, allowing him to take account of changes in the value of land which will inevitably come in the next few years.

Mr. Rossi

I am sorry to interrupt so soon, but, having heard all that has been said today, could the hon. Gentleman really trust the Minister to act fairly and with justice in this matter? Ought we not to impose a figure upon him?

8.15 p.m.

Mr. Lubbock

At least, we should always have opportunity to press this Minister or whoever succeeded him to make an Order as the values of land change in course of time. We could constantly apply that lever in seeking to have the exemption limit raised. If, on the other hand, we lay down a hard and fast figure in the Bill, whether £1,500 or £5,000, we shall need an amending Measure to raise it to a more realistic level. Having in mind what has happened to house and land prices over the past few years, I could not regard that as satisfactory. In my own constituency, house prices have rocketed in recent years far beyond the level which most ordinary young couples can afford, and I have no doubt that the hon. Gentleman and many other hon. Members can parallel that experience.

Land and property values can change rapidly. Whatever legislation the House chooses to pass, we must allow an element of flexibility. The present Minister might not see fit to exercise the power which I propose to confer on him, but he will not be there for ever. There will come a time, one hopes, when more realistic counsels prevail in the Ministry of Housing and Local Government. I only wish that we could have had such an exemption limit written into the Land Commission Bill from the start. We might not have had this argument now. But that is all water under the bridge. None the less, I am sure that we should make a mistake if we put in a figure of £1,500 or £5,000 into this Bill in the expectation that it could remain realistic for all time.

I put another point to the Minister in connection with the arbitrary nature of any figure, and I hope that he will deal specifically with it. He told us several times that half the transactions will be taken out of levy by the £1,500 limit and that this will mean a loss of revenue to the Land Commission of ony 10 per cent. It would be of great assistance, particularly in the present context, to have a histogram showing the number of transactions—I am sure that the right hon. Gentleman understands what I mean—

Mr. Clegg

I am afraid I do not.

Mr. Lubbock

Perhaps, if I continue the sentence, the hon. Gentleman will understand—a histogram showing the number of transactions with top values of £1,500, £2,000 and so on in steps of £500 up to £5,000, and showing the loss of revenue to the Land Commission if the limit were fixed anywhere between those two end figures. Does the hon. Gentleman follow me?

Mr. Clegg

Yes, I do now.

Mr. Lubbock

We could then see the amount of revenue which the right hon. Gentleman was aiming to secure from the Land Commission under the £1,500 limit, and so on up to the £5,000 suggested in the Conservative Amendment. I have no doubt that the losing of only a small proportion of revenue is the uppermost consideration in the right hon. Gentleman's mind.

With those figures, we should be on much stronger ground in arguing with the right hon. Gentleman on his own terms. Without them, however, it is rather difficult for hon. Members—bearing in mind that we represent taxpayers and we do not want to damage the revenue which is coming to the Government by means of this levy—to decide that we want the figure to be pitched at a particular level. That is why I have chosen not to stick my neck out by putting a figure in my Amendment. If the right hon. Gentleman could produce those figures before the Bill came back to the House on Report, we should be in a much better position to judge.

Intuitively, I guess that, if one has to have a fixed limit written into the Bill, I would sooner see £5,000, for the simple reason that if it is to be a fixed limit it will be there for a long time, and I should not imagine that it will take very long for a piece of land or property at present worth £1,500 to increase to the figure mentioned in the Conservative Amendment. I should also like the Minister to give me the equivalent information for the reduction in the number of assessments that have to be made. The cost of collecting the levy is frighteningly high, or has been so far, in relation to the benefits secured. I know that the right hon. Gentleman will tell me that it was always anticipated that it would take four or five years for the levy to build up to the anticipated figure of £80 million. I just do not believe that it will ever reach £80 million.

In the meanwhile, if we look at the report of the Comptroller and Auditor-General on the Land Commission's activities for its first financial year, we can see what an extremely poor bargain this has been for the taxpayer. Levy collected amounted to something like £1 million, but the Land Commission had to spend £2,384,000 to collect it. The revenue was therefore negatived. I am trying to help the right hon. Gentleman by suggesting that if we did agree on a higher limit we could, as he has said, cut down on the paper work. We could dismiss or transfer to more useful employment some of the many people employed in the Land Commission.

I should have thought that this would be an argument which would appeal to the Government when we are facing this appalling trade deficit and financial and economic difficulties unparalleled in our history. To have these people sitting in the Land Commission pushing pieces of paper around for the sake of 2s. 6d. is economic madness. The sooner these people get out into productive industry, into the motor car industry, the mines, into the aluminium foundries and so on, the sooner this country will recover her financial position.

I hope that the right hon. Gentleman can also give us this vital piece of information about how many assessments would be eliminated by increasing the limit. Then we would be in a better position to judge the matter. I hope that I am not asking the right hon. Gentleman too much, but so frequently we have to make decisions on the basis of totally inadquate facts and figures from the Government. The next piece of information for which I am asking is absolutely essential. I should like to know how much he estimates would be raised by way of capital gains tax, again in these steps of £500, between a limit of £1,500 and £5,000. We will not lose the whole of our revenue, whatever the actual sum it. Some of it will come back to the Treasury and the right hon. Gentleman ought to tell us roughly how much.

I will not hold him to the last £1,000 and rebuke him if, in the end, it turns out that his figures are not completely accurate, but we are entitled to this information when dealing with fairly large sums of money and considering what is best for his own Department's finance and for the taxpayer.

I agree with the hon. Member for Crosby (Mr. Graham Page) who spoke about hardship. Undeniably there have been serious cases of hardship. Whatever the financial arguments that may be put forward, this is a matter to which hon. Members ought to pay primary attention. We can discuss the details of taxation, where the level should be pitched, and all these complicated economic questions, but in the last resort we have to listen to our constituents and what they are telling us about the burden of these payments as seen through their eyes. I know that hardship is a relative term. I have already mentioned the case of a constituent of mine who has had to pay the levy, and who was in receipt of no other income apart from supplementary benefit and a pension.

Such a person looks at hardship in a very different light from a person who may have retired with an occupational pension, who has a very small house, and is disposing of it for a sum greater than £1,500. Hardship is relative, and it may seem that the £500 figure is a fairly relative one. With the general rising standards of prosperity, which come about, not through the political efforts of any Government but as the result of a general rise in Western standards, I would have thought that we should have a slightly better idea about what constitutes hardship. To speak about people disposing of a house for £5,000 as being in the upper income bracket is absolutely ridiculous.

If the right hon. Gentleman does not see fit to accept my Amendment, which gives him an improved flexibility to vary these limits as and when economic circumstances permit, as and when the factors I have outlined enable him to do so, I hope that he will accept the Conservative Amendment, and put it at £5,000, even if it must remain there for some time.

Mr. Ridsdale

I am glad to support the Amendment moved by my hon. Friend the Member for Hornsey (Mr. Rossi). When the Minister was dealing with the case against retrospective legislation he said that the £1,500 benefit was very generous. I ask him to think again about this. My hon. Friend has cited a case, and I have sent the Minister another. How the right hon. Gentleman can say that he thinks that this is a generous benefit after these cases I cannot imagine. He is being hard-hearted and ignoring the grave hardship which is being caused.

Unless he alters this provision, and raises the limit to £5,000, now that he has given certain benefits, a lot more people—retired pensioners living on small fixed incomes—may want to sell their land but will have to pay very high rates of tax. I want to cite the case of a retired pensioner who sold a piece of land for £2,200. The betterment levy was £724. I have sent details of the case to the Minister. The pensioner in question wrote to me and said: As a family we are broke. As a pensioner I cannot find work. My wife and three sons are ill clad and their diet is below substandard. Most of our furniture has been sold to survive. We have been without fuel during this very cold weather. The Government then add insult to our woe by taking £724 …. These are the hard, cruel facts, and the Minister dares to state that he is sorry. It is no wonder that the Minister nods his head and says that £1,500 is a generous benefit. I do not believe that it is generous. I ask the right hon. Gentleman to think again, because I am convinced that unless he raises the limit to £5,000, further hardship cases will come forward.

It is all very well for the Minister to go to the Dispatch Box, quote figures of hardship and say that there are 500 cases and only 250 will be above the £1,500 limit, or whatever the figure is. It is bad legislation that creates this kind of hardship. If there was only one case such as I have quoted, it would be the duty of the Government to see that the legislation was altered. They purport to be the friend of the pensioner and of people on small fixed incomes.

At this time, when the cost of living is rising and it is more and more difficult for people to pay the rising prices, I hope that the Minister will think again and not only be generous, but save the Government a great deal of embarrassment. I am sure that it would not cost a great deal of money to accept the Amendment and raise the limit to £5,000. For these reasons, I support the Amendment which my hon. Friend the Member for Hornsey so ably put forward.

[Mr. SYDNEY IRVING in the Chair]

8.30 p.m.

Mr. Clegg

The case for the Amendments has been properly and ably put by my hon. Friend the Member for Hornsey (Mr. Rossi) and well illustrated by my hon. Friend the Member for Harwich (Mr. Ridsdale). They have made a formidable case. I was also interested to hear the contribution of the hon. Member for Orpington (Mr. Lubbock), whose speech was both interesting and, for my part, educative, because I am much wiser now than before I heard it. Possibly, the best solution to the arguments put forward by the hon. Member would be to write £5,000 into the Bill and then add the words of his Amendment, which would give us the best of all possible worlds.

I regret that I may bore the Committee by looking at some of the technical aspects of the Clause and of Amendment No. 11, which would leave out from the beginning of line 13, page 50, to the end of line 18, page 51, thereby cutting out a great deal of verbiage.

We have heard in the debate of people suffering hardship because solicitors, in particular, did not advise them of the consequences of their actions. Hon. Members are fairly well aware that I am a solicitor, and so I have an interest in the argument. I took a very poor view of the argument put forward by the Minister. He used it in the previous debate and he repeated it today, when it was picked up by his hon. and learned Friend the Member for Derby, North (Mr. MacDermot).

I take a very dim view of this, because throughout the debates on the Land Commission Bill the Government were told time and time again that it was difficult to understand and practically incomprehensible and would throw a tremendous burden on the profession. They were warned that this would happen. In the other place, their most distinguished lawyer said that he did not understand it. Is it any wonder, therefore, that from time to time their advice may not have been all that it should have been? The Government went ahead, however, in spite of all we told them would happen.

Amendment No. 11 seeks to take out some of the verbiage and introduce a far more simple concept. This is the sort of verbiage which it is designed to take out; it illustrates some of the complexity which makes advising on the Bill an absolute nightmare. For example, subsection (5) says: If, apart from the provisions of this section, levy in Case C in respect of the same chargeable act or event is chargeable on different persons as having, or contracting to acquire, different assessable interests, the chargeable act or event shall be treated for the purposes of this Section as different chargeable acts or events related to those different assessable interests. That is the sort of verbiage we are trying to cut out, because it is a cat's cradle of words and expressions. Later, there is legal shorthand which it is hard even for those with legal training to follow. To understand subsection (8) it is necessary to take into account six other subsections or Clauses. The Amendment would have the great virtue of making the Bill much simpler to understand.

But it has other virtues. The argument in the White Paper and that advanced by my hon. Friend and myself in Standing Committee was that there would be considerable administrative saving, but as the Clause stands I am by no means convinced that there would be. If I understand it, and I have some difficulty about that, the provision means that the person who is to claim exemption will have to make an application, which means that every claim for exemption will have to be examined in depth.

Mr. K. Robinson

I may be able to help the hon. Gentleman. One of the administrative conveniences of exempting all sales or transactions to a maximum of £1,500 will be that they may be disregarded by the Commission as soon as they are reported. They will automatically be reported as transactions, but then disregarded if the consideration is £1,500 or less.

Mr. Clegg

Will district valuers check on the values if an exemption is claimed?

Mr. Robinson

In the great majority of cases the district valuer will not come into it, because they will be sales of land at the figure of at or below £1,500.

Mr. Clegg

I am obliged to the right hon. Gentleman. To some extent he has relieved my worries, but the wording speaks of applications.

We want this provision to work well and I still think that it would be better to relate it to stamp duty, because there would be no need for an investigation once a declaration had gone into a conveyance, and that would mean that there was no strain on the administration. That would work because, although solicitors have been attacked, no solicitor would allow a client to swear or sign a declaration which was false.

However, although there will be some administrative savings from this provision, they would be even greater if the Amendment to increase the limit to £5,000 were accepted. I admit that in Committee we were almost picking the figure of £5,000 out of the air as a figure which we thought reasonable.

I take up the point made by the hon. Member for Orpington about a histogram. In debates like this in Committee, when we are studying detail and it is by chance that this subject arises on the Floor of the House and not in Standing Committee, and we are dealing with Amendments of this kind, it would be advisable if we could have the sort of information which the hon. Member for Orpington has suggested. Our judgment would thereby be the sounder. It would mean much extra work, but it would mean that the Committe would be better informed and thus better able to reach a correct conclusion.

I now come to what I presume will be the Minister's reaction to these Amendments. I believe that he will reject the Amendment providing for a figure of £5,000, as he rejected the last Amendment which we put forward. I find the Minister's attitude hard to understand. He came to his job as Minister for Planning and Land with a reputation of being competent and compassionate. But when people take that office they seem to suffer a sea change. Ex-Ministers constantly rise like Banquo from the benches opposite to look over a Minister's shoulder during a debate. Sometimes they rattle their chains at him, sometimes they give him support.

Something seems to happen to Ministers for Land. I do not know whether it is because of the influence of the Treasury. From being reasonable men for whom the House of Commons has some affection, they become almost adamantine monsters; they remain impervious to reason. We put forward argument after argument, which later they accept, as to a limited extent they have accepted the arguments which we are putting forward on this Amendment.

I cannot understand why they have decided to keep the limit down to £1,500. We have heard about cases of hardship above the figure of £1,500, and I have no doubt that hardship will occur in future, especially with rising inflation.

The Minister, like ourselves, has plucked a figure from the air.

Mr. K. Robinson

indicated dissent.

Mr. Clegg

The Minister indicates dissent. I presume, therefore, that the figure was based largely on the number of transactions involved, or perhaps on the amount of revenue which would be lost. But at the end of the day it is a matter of judgment as to how much is to be the level of exemption.

The Land Commission has sought to use its powers in the Act in a humane way. We have no quarrel with the people in the Land Commission. But it is clear from the Minister's earlier remarks that the decision which we are now asked to approve is political. If that be so, let us be clear that the decision to hold down the exemption to £1,500 is a political decision taken by Labour politicians in a Labour Government. The onus will rest upon them and upon nobody else.

I feel that in their heart of hearts many hon. Members opposite would like to support this Amendment. I ask the Committee to support these Amendments which would bring justice to many people, which is the job of Parliament.

Mr. Evelyn King (Dorset, South)

Having listened to this debate and preceeding debates on this subject, it is difficult not to feel sympathy for the Minister. He is in the situation, in which Ministers often find themselves, of trying to defend a Bill which he did not design and which, I suspect, he would not have designed. Yet when he seeks to amend it he is clobbered by the Treasury. I sympathise with him.

Having listened to many debates on various subjects over the years I can hardly recall one in which there was such universal opposition to what was being proposed as we have had in this debate today. Ministers might consider the reason since it is directly germane to this Amendment.

From letters which I have received from the Minister I gathered that he appears to feel that this is an argument between the two sides about the theory of land values. If that were so, there would be a direct conflict between the two sides. But that is not the situation. The reason opposition to what is proposed is almost unanimous is that in every case it is the poor man who is victimised.

8.45 p.m.

I have here one file of my own and two others in my office containing some 40 cases of complaint. I went through those files before the debate. With the exception of one case, the other 39 were from wage earners. This is the point of the Amendment and I hope that the Minister will listen with a degree of sympathy to what is said.

When the Bill was first mooted and debated, the argument was that fortunes were being made in Piccadilly Circus and elsewhere in the development of town centres. This was the argument upon which the Bill was based, whether or not one read the small print.

The Government have taken a gun to shoot an elephant, but they have missed the elephant and shot a sparrow. This is a fault which it is not unreasonable to recognise. The Government continue to show a lack of imagination for the feelings and aspirations of ordinary working people.

I should like to mention the case of Howell and Arnold, which I referred to the Minister, as an illustration. I am not now concerned with the details of that case, but with the Minister's approach. It concerns a young man engaged to be married who with his fiancée and the help of his future father-in-law spent summer evenings digging the foundations for a house. This is a human situation. For months they worked and laid their own bricks. I will not weary the Committee with the details of the case, but I submitted it to the Minister. He wrote to explain that this was a tax placed upon the "additional value created by the community". That phrase did more to annoy that couple than the tax. Ask a man to show his blistered hands and tell him that the community did it, and it will be realised that a good deal of rubbish is being talked. The right hon. Gentleman's phrase about values created by the community may apply in a city situation, but it does not apply in all situations or in that young man's situation. In fact it hardly applies in any one of the 39 cases I have mentioned. They are rural cases.

I now come to the second phrase which was almost as irritating. I have said that this was a couple engaged to be married building their own home. The Minister's opening phrase is "when they began their venture". When a young couple start to get their home together buying furniture and so on—it is not a venture. It is a natural operation common to the birds of the air. They are nesting. It is not a venture; it is a normal thing which should be rewarded, not penalised.

It is in the small cases that the trouble comes. Once the limit is raised to the point at which the penalties or the tax falls on the development companies, the argument is different. It would not be of this nature. The kind of muddle—I can use no other word—that goes on between the Land Commission and the Ministry is indescribable.

I should now like to refer to the Lamberts' case which I referred to the Minister. The Lamberts, again, are working people of modest means. They wrote and complained to me. I wrote to the Minister, and on 23rd April he wrote: Mr. and Mrs. Lambert, however, are not exempt. I had to write and tell them that this was so. It caused them grief. On 8th May I had another letter from the Minister in which he states: I announced that the proposal to give relief from levy to a person who was given a piece of land to enable him to build a house for his own occupation would be applied retrospectively. This will include the Lamberts. On that very day they received a letter from the Land Commission saying that if the money was not paid within seven days they would be sued. That is an example of the muddle that one finds. Within 12 days there were two letters from the Minister, one saying one thing and the other another and a letter from the Land Commission seemingly ignorant of both, saying that if the amount due was not paid they would be prosecuted.

If we can get the strain off the small people and get it on to those cases above £5,000—I do not insist on that figure—or at any rate on to the true developers instead of the humble people we shall return to a measure of justice and we can return to the plain argument about whether land benefits ought to be taxed instead of tonight's argument to which there is only one answer. Young couples about to be married ought not to be punished.

Dame Irene Ward (Tynemouth)

I support these Amendments, and I propose to quote one case of hardship which, having listened to many of my hon. Friends, I regard as a new line.

In my constituency there was a sea-going engineer. When he married, he bought a house which was then—and this is some considerable time ago—valued at £900. His wife had twins, and when the twins were six his wife left him. He divorced her and asked his married sister whether, while he was at sea—in my part of the world we have many sea-going people, and very proud of them we are—she would look after the twins. She agreed, the twins went to live with their aunt, and he let his house.

When the twins reached the age of 15 their father died, and the twins were therefore deprived of both their mother and father. Their father left a legal will in favour of his twin children, a boy and a girl, and they continued to live with their aunt.

Quite recently the twins reached the age of 21, and they thought that now they were adult they would like to set up home together, and off they went to their own home. Having arrived there, along came the capital gains tax, or Land Commision, or whoever it is, and said that the value of the house had risen by between £2,000 and £3,000, and, therefore, these children would have to pay up.

I wrote and said that I did not understand the situation because I thought that everybody was allowed to have one home of his own and that therefore this house would be exempt from the tax. I said that I could not understand how this charge could be placed on these two kids who were just entering on life together. But not at all. I received a letter from the Minister saying that this house could not be regarded as the kids' home because they had not lived in it. I find this absolutely frightful, because these poor kids, having been deprived of their mother and father, and having decided to go back to their own home, are faced with this charge.

Would the Minister have said, when the twins were six years old—nobody at that time knew, because the Conservatives were in power, about this tax which was going to be imposed when the Socialists got in—that these twins ought to have lived by themselves? Would he have suggested, when they were 15 and their father died, that they should then have left their aunt's home where they were properly and well cared for and gone back to their own home? Does the Minister suggest that because, at the age of 21, when it seems reasonable for them to do so, these kids are getting excited about having the first home of their own, on the basis that everybody thought they were entitled to one home of their own, they should have to pay this tax because the value of their house has risen while they have been away from it?

I could not believe it. I know all the arguments about how stony-hearted Ministers can become. I have many views about the Treasury, but I could not believe that any Minister could deprive youngsters of that kind of the one thing to which all people have a right—a home of their own—simply because they were too young and had lost both their father and mother and could not be regarded as having had a home because they were not living in it. I did not see how they could be asked to pay.

I wrote again to the Treasury and I received an answer saying that the case was being reconsidered. Will the Minister tell us that the case of these kids will be reconsidered, and will he let it be known that it is the right of people to have one home of their own? What would be the view of a sea-going engineer if he was going to sea—working for his country, and his own livelihood and family, with all the sadness that had come his way—if somebody said to him, "You can go to sea but your children will not be protected"?

This is a disgraceful example, and I am looking forward to hearing the Minister say that the right of every person to have one home of his own will be upheld. Can it be that the Government are going to squeeze everything they can out of these kids, who have lost all they had and are now in an appalling situation?

If the Minister accepted one of our Amendments the position of these children would be saved, and that would be a good thing. I am therefore looking forward to hearing the Minister say, here and now, and without any fussing, that everybody has a right to own one home of his own, and the fact that the parents were not living in the home in this case does not remove the application of this principle and this provision that has been made to protect the rights of the people. I have much pleasure in supporting the Amendment, and I hope that the Government and the Minister will be thoroughly trounced in the Division Lobby.

Mr. K. Robinson

I find it difficult to carry in my mind the details of all the personal cases with which I am involved, and I did not recognise from the details she gave me the case which the hon. Lady has been describing. However, I did become extremely disturbed when I was personally accused of depriving two orphans of their home.

I have made a few inquiries, and I find that the case is nothing to do with betterment levy or with the Land Commission.

Dame Irene Ward

The capital gains tax.

Mr. Robinson

Yes, the capital gains tax, and I understand that the hon. Lady is in communication with my hon. Friend the Financial Secretary on the matter. Contrary to the hon. Lady's aspirations, the Amendments will not help her constituents one iota.

Dame Irene Ward

If the value of the house rises—

The Chairman

Order. I am sorry to have to interrupt the hon. Lady. I allowed her considerable latitude and she went rather outside the terms of the Amendment. I hope that she will not proceed further.

Dame Irene Ward

I am glad about that, Mr. Irving. It was very nice of you. It shows what a strong case I was making. I am delighted that you gave me that latitude. It gives me a little more faith in the House of Commons. I hope that the Minister will follow the lead that you have given.

9.0 p.m.

Mr. K. Robinson

Before coming to the Amendments, and staying within the rules of order, I hope that I can say something about the vexed question of hardship, which, understandably, keeps cropping up.

The hon. Member for Dorset, South (Mr. Evelyn King) took great exception to a phrase which I included in a letter about the value created by the community. I do not think that he misunderstood me. Value created by the community has nothing to do with the value created by a couple who, by their own hands and their own efforts to build a house, are creating something quite different from development value.

That was what I was seeking to define, and that is the value created by the community in giving planning permission for development. They are two separate things, as I think the hon. Gentleman understands, and I hope that he conveyed this to his outraged constituent.

I do not want to enter into the aspect of hardship in the case mentioned by the hon. Member for Harwich (Mr. Ridsdale), which obviously devolves on a number of personal circumstances, some of which he outlined. He talked about a betterment levy of about £700 on a sale. It is important to get this into perspective. If the levy were £700, more than £1,000 uncovenanted profit, as a result of the community's actions, was retained by the levy payer, over and above the current use value of the land he sold.

I am not saying that there could be no hardship. He could have spent it without realising that levy was payable, in which case there might be real hardship, but the essence of the matter is that, if the levy were £700, the levy payer retained over £1,000, plus the current use value of the land—

Mr. Ridsdalerose

Mr. Robinson

I will look again at the case, because the hon. Gentleman has raised it in reasonable terms, and refresh my mind.

I listened with great interest to the hon. Member for Hornsey (Mr. Rossi) who could hardly have heard his hon. Friend the Member for Worcester (Mr. Peter Walker) on the previous Amendment. His hon. Friend said that I had claimed that the sole purpose of the de minimis provision was to deal with hardship, and I hoped that I had persuaded him that the intention was a good deal wider, although I accept that it would include certain cases of hardship. But the hon. Member accuses me of doing it solely for administrative convenience, with no thought of hardship. That is as far from the truth as was his hon. Friend, at the other extreme.

The Amendments would exempt from levy all chargeable acts and events where the top value is £5,000 or less, instead of £1,500. The exemption limit of £1,500 was chosen with care. That is the answer to the hon. Member for North Fylde (Mr. Clegg as he will see. I repeat that, in the Government's view, this figure is generous. It exempts well over half the total number of cases at present liable. Anyone who has land worth more than £1,500 to sell and who, at the same time, is realising development value, is in a not unfortunate position. He is profiting from the actions of the community, which have increased the value of his land, and there is no good reason for exempting him from levy.

In many parts of the country, a plot for a single house will sell for £1,500 or possibly substantially less, so this limit will help many people who sell off part of their garden as a building plot. Most of the cases in which hardship is alleged which come within this category have been in rural areas, where single-house plots will generally fetch a good deal less than £1,500.

Transactions at the level of £5,000 cannot be reasonably described as small transactions. A sale of land at this figure is usually substantial, especially in a rural area, and exempting transactions on that scale from levy would run counter to the whole scheme of the levy. This is no doubt what the Opposition intend. I fully understand that—

Mr. Rossi

Would the right hon. Gentleman not agree, then, from the remarks which he has made, that there is a case for regional variation in this figure?

Mr. Robinson

I accept that the prices of land vary in different parts of the country, but I am giving the reasons why the Government decided that £1,500 was the right figure.

The Opposition do not believe that social justice demands that a proportion of the development value created by the community should return to the community—

Mr. Reginald Eyre (Birmingham, Hall Green)rose

Mr. Robinson

I should get on. The hon. Gentleman has not been a very assiduous attender of the debate today.

The Opposition would like to wreck the whole of this scheme of levy. The Government, on the contrary, have reaffirmed in the White Paper the principle of the levy, and the exemption of £1,500 is designed to give as much relief as can reasonably be given without prejudicing the basic principle. In moving this Amendment, the Opposition may have overlooked the fact that, as things stand, in many transactions there is no question of levy. They may have had in mind, in suggesting £5,000, that sales of small houses should be exempt, but the sale of a house, on which little or no development value is realised, is, of course, already exempt. One of the White Paper's other proposals will increase the number if cases in which there is freedom from levy for owner-occupiers.

From the point of view of administration also, £1,500, we consider, is the right figure. Cases in which the market value was £1,500 or less have accounted for over half the assessments made in the first two years of the levy's operation. I think that the figure is nearer 55 per cent. Those cases have accounted for less than one-tenth of the total amount of levy assessed during the period. An exemption limit of £5,000 would have exempted not 50 or 55 per cent., but 80 per cent.—[HON. MEMEBERS: "Hear, hear."] I thought that that was what they wanted. That would have reduced the amount of levy assessed by about 25 per cent.

I cannot provide the hon. Member for Orpington (Mr. Lubbock) with his histogram, but I can tell him that, if he will start from these two figures as a base, on £3,000 the number of cases exempted would have been about 72 per cent. and the amount of levy nearly 18 per cent. If the hon. Gentleman requires further figures, I hope that he will table a Question to me, when I will do my best to help him. As he spoke about members of the Land Commission staff being engaged in unprofitable occupations, I trust that he will not wish to burden them unduly and will, therefore, limit his demands.

The hon. Gentleman also asked about the capital gains set-up. The figures which I quoted when we were debating the previous Amendment showed that the fraction of one-third is the capital gains tax element. On a rough and ready basis, the hon. Gentleman can take that figure as being the one applying all the way through.

Another reason for setting the figure at £1,500 is the need to ensure that the exemption does not provide loopholes leading to avoidance. It may be argued that this difficulty will be overcome by the fact that transactions exempted from levy will be subject to capital gains, but this is not a complete answer. Some transactions which are subject to levy would be exempt from capital gains, and in the case of a project for development—that is what is known as a Case C under the Land Commission Act—there would be no immediate liability to capital gains tax.

A limit of significantly more than £1,500 would also encourage avoidance of levy by means of fragmentation, a point to which the hon. Member for North Fylde referred. The anti-avoidance provisions should be sufficient—I appreciate that the Opposition would like to make these provisions weaker—to prevent this exemption from being exploited for the purpose of levy avoidance. If the limit were set as high as £5,000 there would be a much stronger incentive to find ways of using it to avoid levy. I do not believe that hon. Gentlemen opposite can be so naive as to think that one could ignore the possibility of avoidance.

This brings me to the Amendments dealing with anti-avoidance, but it might be helpful if, first, I comment on the Liberal Amendment, which seeks to give the Minister of Housing and Local Government power, by order, to increase the amount of top value below which there is to be exemption from levy. The Liberal Amendment is technically defective, but I do not rest my argument on that.

The exemption of £1,500 should, in our view, remain appropriate for a time long enough to rule out the need for a further change to be made quickly. However, and more important, the change introduced by the Clause is a general change affecting the structure of the levy. It is not a technical correction nor an exemption of a small limited class where, perhaps, the granting of exemption by order might be appropriate. As such, it is right that this change should be made by legislation and it is also right that, if there should be a case for changing the figure in future—say, if big changes in land values were to take place—any de minimis change should also be made by legislation.

This is not different from most tax propositions. In income tax, changes of the application of the tax can be made only by legislation. The provisions applying to single person's, married women's allowances, children's relief and so on are also dealt with in this way and there is no provision for them to be varied by order. The same considerations apply to this general change in betterment levy.

It was for this reason, and because of the complications of the changes which are necessary in capital gains tax, that it was not possible to make satisfactory changes to the levy simply by using exemption orders under Section 63. Nor do I think that it would be appropriate for the Minister of Housing and Local Government to make orders, which have consequential effects in capital gains tax. It is for these reasons that I am unable to advise the Committee to accept the Amendment.

The other Amendments are concerned with the anti-avoidance provisions which, we said in the White Paper, would be incorporated in the Finance Bill in due course; and they are now contained in subsections (2) to (5) of the new provision, which is to be inserted in the Land Commission Act.

As the hon. Member for Hornsey admitted, the Conservative Amendment owes a great deal to the certificate given in conveyances and transfers of land for stamp duty purposes. I have no doubt that that procedure is eminently suited for that purpose, but, in our view, it is not suited to the requirements of betterment levy. The certificate procedure for stamp duty purposes is intended to deal with the splitting up of single transactions between two parties into a series of transactions below the exemption limit, thus avoiding liability to duty.

We are concerned, in respect of the levy, to prevent fragmentation by the seller alone. For example, instead of selling his land to a builder for development, a landowner might sell it in plots to prospective house purchasers at under £1,500 a time, or whatever the figure of limit might be, and thereby pay no levy.

Moreover, while such a certificate procedure is effective for a rate of tax of 1 per cent., which is the stamp duty rate, it could not be effective for levy at a rate of 40 per cent. We therefore do not regard this proposal as an effective method of countering the dangers of avoidance. Further, the Amendment appears to overlook—or, at any rate, to disregard—the fact that it is not only transactions between parties which the new provision seeks to aggregate. Any leviable event—that is, an event which would have given rise to levy, apart from these provisions—is aggregated, and this includes development under what is called a Case C rent, an aspect for which the Amendment makes no provision.

In two ways the Amendment is more restrictive than are the Government's proposals, but it would be so very ineffective against avoidance that I almost hesitate to mention them. First of all, the Amendment does not restrict aggregation to the same financial year. That would mean that transactions falling in different financial years could be aggregated, and exemption lost in consequence, if that transaction were part of a series of transactions.

Secondly, it does not restrict aggregation of transactions to those which, apart from the new exemption, would have produced a liability to levy. Let me give an example. A person who sold four houses without development value and one plot of land for £1,500 with development value to the one purchaser would, under the Amendment, find his transactions aggregated. This would not be the case under the Government's proposals: he would get the full benefit of the exemption on the sale of a plot of land.

But the main reason for rejecting the Amendment is that it would leave the levy open to very easy and wide-scale avoidance. I hope that that was not the intention of those who tabled it, but in the light of some of the extravagant phrases and threats that have been used by hon. Members opposite in regard to the Land Commission and the betterment levy, it is not easy for me altogether to put aside such suspicion.

9.15 p.m.

Mr. Graham Page

When the Minister finishes a speech in that manner he cannot expect a very polite reply. In this sort of situation we are bound to choose an arbitrary figure, and we are now completely satisfied that we were correct in seeking to increase the limit from £1,500 to £5,000. The Minister has given us the justification for it.

The right hon. Gentleman said that if we had a figure of £5,000 we would relieve the Land Commission of 80 per cent. of the cases and 25 per cent. of the value. When one takes the two together, that is a complete condemnation of the whole system. We have a system which is collecting 25 per cent. of the value out of 80 per cent. of the cases, and if we can remove that 80 per cent. of cases we shall remove not only the hardships but the administrative inconvenience.

My hon. Friend the Member for Hornsey (Mr. Rossi) asked the Minister to give his reasons for the choice of £1,500. The right hon. Gentleman replied that the figure was chosen with care; that it was a generous figure; that it exempted over half the number of cases. But I still do not understand whether that care was directed to asking the Commission what would be the figure which would remove 50 per cent. of the cases from the Commission; that is to say, whether the figure was chosen for administrative convenience or as being the right value for a plot of land for a reasonably sized house.

The argument that has been put forward by the Minister today and previously is that £1,500 is reasonable for a plot for a reasonable house, but he said only that it was reasonable in many parts of the country. As my hon. Friend the Member for Hornsey pointed out, one will not get a plot for £1,500 for a normal family house anywhere in the South-East or in a good many other places. We therefore have this strange mixture of an exemption which will exempt a plot for, say, a medium-size house in the Midlands, or a cottage or a small house in the North. That is the sort of exemption we are asked to approve. It is certainly less than the plot value for a reasonable house in many areas.

I am rather surprised that this was not put forward more on a reasonable basis. A more reasonable figure could have been found if it had been varied throughout the country. It is quite

Division No. 215.] AYES [9.20 p.m.
Allason, James (Hemel Hempstead) Blaker, Peter Costain, A. P.
Astor, John Boardman, Tom (Leicester, S. W.) Craddock, Sir Beresford (Spelthorne)
Atkins, Humphrey (M't'n & M'd'n) Boyle, Rt. Hn. Sir Edward Currie, G. B. H.
Awdry, Daniel Brewis, John Dalkeith, Earl of
Baker, Kenneth (Acton) Brinton, Sir Tatton Dance, James
Baker, W. H. K. (Banff) Bromley-Davenport, Lt.-Col. Sir Walter Davidson, James (Aberdeenshire, W.)
Balniel, Lord Buchanan-Smith, Alick (Angus, N & M) d'Avigdor-Goldsmid, Sir Henry
Barber, Rt. Hn. Anthony Buck, Antony (Colchester) Dean, Paul
Batsford, Brian Bullus, Sir Eric Deedes, Rt. Hn. W. F. (Ashford)
Bell, Ronald Campbell, B. (Oldham, W.) Doughty, Charles
Bennett, Sir Frederic (Torquay) Chichester-Clark, R. Drayson, G. B.
Bennett, Dr. Reginald (Gos. & Fhm) Clark, Henry Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Berry, Hn. Anthony Clegg, Walter Emery, Peter
Biffen, John Cooke, Robert Errington, Sir Eric
Black, Sir Cyril Corfield, F. V. Eyre, Reginald

certain that £1,500 is not the correct limit for hardship in these small cases.

This issue should not be decided entirely on administrative convenience, but at least one of the advantages of exemption should be a saving in administration. If I correctly understood the Minister's reply to my hon. Friend the Member for North Fylde (Mr. Clegg), the Minister said that there would not be anything like applications for the exemption, that the Commission would merely look at the transaction and say, "It is a transaction for £1,500. We need not look at it any more".

If that is so, the whole of the Minister's argument about evasion and loopholes falls, because if the Commission is to take a document on its face value of £1,500 the Minister might just as well adopt our simple and well known form of the certificate for value used for stamp duty. This is a tried system, backed by the deterrent of a penalty. It would provide the Commission with sufficient information which it could trust, as one trusts the certificate for value for Stamp Duty, and cut out an enormous amount of administration.

The Minister is pigheaded over not facing the facts. It is stupid not to face the facts as we have seen them in all the cases of hardship which have arisen. The figure of exemption now proposed by the Government has come forward with a lot of ballyhoo. It is so little and so late that it will not cope either with the cases of hardship or with the administrative burden. I hope that my right hon. and hon. Friends will take this into the Lobby.

Question put, That the Amendment be made:—

The Committee divided: Ayes 161, Noes 209.

Farr, John Legge-Bourke, Sir Harry Renton, Rt. Hn. Sir David
Fortescue, Tim Lewis, Kenneth (Rutland) Rhys Williams, Sir Brandon
Foster, Sir John Longden, Gilbert Ridsdale, Julian
Gilmour, Ian (Norfolk, C.) Lubbock, Eric Rossi, Hugh (Hornsey)
Gilmour, Sir John (Fife, E.) Mackenzie, Alasdair (Ross & Crom'ty) Royle, Anthony
Glover, Sir Douglas Macleod, Rt. Hn. Iain Scott-Hopkins, James
Godber, Rt. Hn. J. B. McMaster, Stanley Shaw, Michael (Sc'b'gh & Whitby)
Goodhart, Philip McNair-Wilson, Michael Silvester, Frederick
Goodhew, Victor McNair-Wilson Patrick (New Forest) Sinclair, Sir George
Gower, Raymond Maddan, Martin Smith, Dudley (W'wick & L'mington)
Grant-Ferris, R. Maginnis, John E. Speed, Keith
Hall, John (Wycombe) Marten, Neil Stainton, Keith
Hall-Davis, A. G. F. Maudling, Rt. Hn. Reginald Steel, David (Roxburgh)
Hamilton, Michael (Salisbury) Mawby, Ray Stodart, Anthony
Harris, Reader (Heston) Maxwell-Hyslop, R. J. Stoddart-Scott, Col. Sir M.
Harrison, Brian (Maldon) Maydon, Lt.-Cmdr. S. L. C. Taylor, Edward M. (G'gow, Cathcart)
Harrison, Col, Sir Harwood (Eye) Mills, Peter (Torrington) Taylor, Frank (Moss Side)
Harvey, Sir Arthur Vere Mills, Stratton (Belfast, N.) Temple, John M.
Hastings, Stephen Monro, Hector Thatcher, Mrs. Margaret
Hawkins, Paul Morgan, Geraint (Denbigh) Tilney, John
Hay, John Morrison, Charles (Devizes) Vaughan-Morgan, Rt. Hn. Sir John
Heald, Rt. Hn. Sir Lionel Munro-Lucas-Tooth, Sir Hugh Waddington, David
Heseltine, Michael Murton, Oscar Wainwright, Richard (Colne Valley)
Higgins, Terence L. Nicholls, Sir Harmar Walker, Peter (Worcester)
Hiley, Joseph Noble, Rt. Hn. Michael Walker-Smith, Rt. Hn. Sir Derek
Hill, J. E. B. Nott, John Walters, Dennis
Hirst, Geoffrey Osborn, John (Hallam) Ward, Dame Irene
Holland, Philip Osborne, Sir Cyril (Louth) Weatherill, Bernard
Hooson, Emlyn Page, Graham (Crosby) Wells, John (Maidstone)
Hordern, Peter Page, John (Harrow, W.) Whitelaw, Rt. Hn. William
Hornby, Richard Percival, Ian Wiggin, A. W.
Hutchison, Michael Clark Pike, Miss Mervyn Wilson, Geoffrey (Truro)
Iremonger, T. L. Pink, R. Bonner Winstanley, Dr. M. P.
Jenkin, Patrick (Woodford) Pounder, Rafton Wood, Rt. Hn. Richard
Kershaw, Anthony Powell, Rt. Hn. J. Enoch Wright, Esmond
Kimball, Marcus Prior, J. M. L. Wylie, N. R.
King, Evelyn (Dorset, S.) Pym, Francis
Kitson, Timothy Quennell, Miss J. M. TELLERS FOR THE AYES:
Knight, Mrs. Jill Ramsden, Rt. Hn. James Mr. Jasper More and
Lane, David Rees-Davies, W. R. Mr. Anthony Grant.
Allaun, Frank (Salford, E.) Dell, Edmund Henig, Stanley
Anderson, Donald Dempsey, James Herbison, Rt. Hn. Margaret
Archer, Peter Diamond, Rt. Hn. John Hilton, W. S.
Ashley, Jack Dickens, James Hooley, Frank
Ashton, Joe (Bassetlaw) Driberg, Tom Horner, John
Atkins, Ronald (Preston, N.) Dunnett, Jack Houghton, Rt. Hn. Douglas
Atkinson, Norman (Tottenham) Dunwoody, Mrs. Gwyneth (Exeter) Hoy, James
Bacon, Rt. Hn. Alice Dunwoody, Dr. John (F'th & C'b'e) Huckfield, Leslie
Bagier, Gordon A. T. Eadie, Alex Hughes, Rt. Hn. Cledwyn Anglesey)
Barnett, Joel Edwards, William (Merioneth) Hughes, Hector (Aberdeen, N.)
Baxter, William Ellis, John Hughes, Roy (Newport)
Beaney, Alan English, Michael Hunter, Adam
Bence, Cyril Ensor, David Hynd, John
Bidwell, Sydney Evans, Fred (Caerphilly) Irvine, Sir Arthur (Edge Hill)
Binns, John Evans, Ioan L. (Birm'h'm, Yardley) Jenkins, Hugh (Putney)
Blackburn, F. Fernyhough, E. Jenkins, Rt. Hn. Roy (Stechford)
Boardman, H. (Leigh) Fletcher, Rt. Hn. Sir Eric (Islington, E.) Johnson, Carol (Lewisham, S.)
Booth, Albert Fletcher, Raymond (Ilkeston) Jones, Dan (Burnley)
Boston, Terence Fletcher, Ted (Darlington) Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Brooks, Edwin Ford, Ben Jones, T. Alec (Rhondda, West)
Brown, Hugh D. (G'gow, Provan) Forrester, John Judd, Frank
Brown, Bob (N'c'tle-upon-Tyne, W.) Fowler, Gerry Kelley, Richard
Buchan, Norman Fraser, John (Norwood) Kenyon, Clifford
Buchanan, Richard (G'gow, Sp'burn) Freeson, Reginald Kerr, Mrs. Anne (R'ter & Chatham)
Butler, Herbert (Hackney, C.) Gardner, Tony Kerr, Dr. David (W'worth, Central)
Callaghan, Rt. Hn. James Ginsburg, David Kerr, Russell (Feltham)
Carmichael, Neil Gray, Dr. Hugh (Yarmouth) Lawson, George
Carter-Jones, Lewis Gregory, Arnold Leadbitter, Ted
Castle, Rt. Hn. Barbara Grey, Charles (Durham) Lee, John (Reading)
Conlan, Bernard Griffiths, David (Rother Valley) Lewis, Arthur (W. Ham, N.)
Corbet, Mrs. Freda Griffiths, Eddie (Brightside) Lewis, Ron (Carlisle)
Craddock, George (Bradford, S.) Griffiths, Will (Exchange) Loughlin, Charles
Crosland, Rt. Hn. Anthony Gunter, Rt. Hn. R. J. Luard, Evan
Crossman, Rt. Hn. Richard Hamilton, William (Fife, W.) Lyons, Edward (Bradford, E.)
Darling, Rt. Hn. George Hamling, William McBride, Neil
Davies, Ednyfed Hudson (Conway) Hannan, William MacColl, James
Davies, G. Elfed (Rhondda, E.) Harrison, Walter (Wakefield) MacDermot, Niall
Davies, Dr. Ernest (Stretford) Hart, Rt. Hn. Judith McGuire, Michael
Davies, Rt. Hn. Harold (Leek) Hattersley, Roy McKay, Mrs. Margaret
Davies, Ifor (Gower) Hazell, Bert Mackenzie, Gregor (Rutherglen)
Delargy, Hugh Heffer, Eric S. Mackie, John
Mackintosh, John P. Owen, Dr. David (Plymouth, S'tn) Spriggs, Leslie
McMillan, Tom (Glasgow, C.) Padley, Walter Taverne, Dick
McNamara, J. Kevin Page, Derek (King's Lynn) Thomson, Rt. Hn. George
MacPherson, Malcolm Paget, R. T. Thorton, Ernest
Mahon, Peter (Preston, S.) Palmer, Arthur Tinn, James
Mahon, Simon (Bootle) Pannell, Rt. Hn. Charles Tuck, Raphaell
Mallalieu, E. L. (Brigg) Park, Trevor Urwin, T. W.
Malilalieu, J. P. W. (Huddersfield, E.) Parker, John (Dagenham) Varley, Eric G.
Mapp, Charles Parkyn, Brian (Bedford) Wainwright, Edwin (Dearne Valley)
Marquand, David Pavitt, Laurence Walden, Brian (All Saints)
Marsh, Rt. Hn. Richard Pearson, Arthur (Pontypridd) Walker, Harold (Doncaster)
Mason, Rt. Hn. Roy Perry, George H. (Nottingham, S.) Wallace, George
Mellish, Rt. Hn. Robert Prentice, Rt. Hn. R. E. Watkins, David (Consett)
Mendelson, John Price, William (Rugby) Watkins, Tudor (Brecon & Radnor)
Mikardo, Ian Rankin, John Weitzman, David
Millan, Bruce Roberts, Albert (Normanton) Wellbeloved, James
Mitchell, R. C. (S'th'pton, Test) Roberts, Rt. Hn. Goronwy Wells, William (Walsall, N.)
Morgan, Elystan (Cardiganshire) Roberts, Gwilym (Bedfordshire, S.) White, Mrs. Eirene
Morris, Alfred (Wythenshawe) Robertson, John (Paisley) Whitlock, William
Morris, Charles R. (Openshaw) Robinson, Rt. Hn. Kenneth (St. P'c'as) Wilkins, W. A.
Morris, John (Aberavon) Rodgers, William (Stockton) Williams, Alan (Swansea, W.)
Moyle, Roland Roebuck, Roy Williams, Clifford (Abertillery)
Newens, Stan Rogers, George (Kensington, N.) Williams, W. T. (Warrington)
Noel-Baker, Rt. Hn. Philip Sheldon, Robert Willis, Rt. Hn. George
Ogden, Eric Shore, Rt. Hn. Peter (Stepney) Woodburn, Rt. Hn. A.
Oram, Albert E. Short, Rt. Hn. Edward (N'c'tle-u-Tyne) Woof, Robert
Orbach, Maurice Silverman, Julius
Orme, Stanley Skeffington, Arthur TELLERS FOR THE NOES:
Oswald, Thomas Slater, Joseph Mr. Ernest G. Perry and
Small, William Mr. Joseph Harper.
Mr. K. Robinson

I beg to move Amendment No. 57, in page 50, line 26, leave out from 'or' to 'is' in line 27 and insert: 'his or her wife or husband'.

The Chairman

We may discuss at the same time Amendment No. 15, in page 52, line 1, leave out subsection (9).

Mr. Robinson

I have already explained the reasons why it is necessary to have anti-avoidance provisions in this legislation. I hope that I have convinced the Opposition that one cannot introduce exemptions without trying to ensure that they are not misused to enable people who should pay levy to avoid paying it. There is, however, one point at which, on consideration, I think that we have made the anti-avoidance provisions rather too restrictive.

In dealing with the aggregation of separate chargeable acts or events within a financial year, we have covered not only transactions carried out by the applicant for relief but also those carried out by a person connected with the applicant. That is subsection (2). In subsection (9), we define the word "connected" by reference to Schedule 13 of the Land Commission Act. But that definition goes very wide, covering not only mothers and fathers, grandmothers and grandfathers, but brothers, sisters, sons, daughters and so forth, so that in a normal family there might easily be as many as 20 or 30 connected persons.

It is not our purpose to try to aggregate for the purposes of exemption transactions carried out by any one of that wide range of persons. Moreover, there would be considerable administrative difficulties. On further consideration, it seemed to me that the objective could be achieved by simply providing that husbands and wives are connected persons, while keeping the provision already in the subsection as drafted, that a person cannot avoid levy by getting someone else to act on his behalf in a transaction which ought to come within the aggregation provisions.

The Amendment achieves this very simply by substituting for the reference to a person connected with the applicant a reference to the applicant's wife or husband. This removes the need for subsection (9) and we have the slightly odd situation when the Chancellor's name appears at the top of the list of names of the Amendment in the name of the right hon. Member for Enfield, West (Mr. Iain Macleod), which we are very glad to adopt. In proposing this change, I have made it clear that it is the Government's intention not to be unduly restrictive but merely to incorporate the minimum anti-avoidance provisions.

When the original Land Commission Bill was going through, my predecessors took the view that it would be impossible to have a de minimis provision without opening the door to wide-scale avoidance. The proposals we are now putting forward get round this difficulty, but I must emphasise that the Government are prepared to see this provision written into the scheme only if they are satisfied that it is not being exploited as a means of avoiding the levy in cases where it is rightly due. If it turns out that we have not been strict enough and the provisions are being avoided, we shall not hesitate to bring forward further provisions to check avoidance.

Mr. Clegg

The Committee will be delighted to hear that husbands and wives are connected persons, and we are further delighted to hear that the Minister has accepted the deletion of subsection (9), as proposed by this side of the Committee. In so far as this eases things, we welcome it. I would just add that to link husbands' and wives' land transactions in this way is not right in principle. Wives should be able to hold land in their own right and be treated as separate persons.

Amendment agreed to.

Mr. K. Robinson

I beg to move Amendment No. 58, in clause 36, page 51, line 14, leave out from 'on' to 'different' in line 15 and insert 'two or more'.

This Amendment puts right a small defect in subsection (5) of the proposed new Section 59A. The arguments for it are somewhat complicated and the hour is late. I hope that if I give the assurance to hon. Gentlemen opposite that the effect of this provision is in favour of the subject, they will accept this at face value.

Amendment agreed to.

Further Amendments made: No. 59, in page 51, line 44, after '1967', insert: 'or the Case F General (Scotland) Regulations 1967'.

No. 15, in page 52, line 1, leave out subsection (9).—[Mr. K. Robinson.]

Question proposed, That the Clause, as amended, stand part of the Bill.

Mr. John Farr (Harborough)

I am sorry to have to make some remarks at this stage, but I was detained in Committee upstairs when one or two points arose relating to some Amendments tabled by my hon. Friends and myself. Although this Committee has reached a decision on these Amendments, relating to the value of £1,500, instead of our Amendment of £5,000, and to the date, there are one or two points I want to raise which, even at this late stage might persuade the Minister to think again and decide that this Clause should not stand part of the Bill.

The Chairman

Order. I hope that the hon. Gentleman is not seeking to discuss again decisions which the Committee have already taken. It will be out of order if he is seeking to reverse those decisions.

Mr. Farr

I understand that, Mr. Irving. I am merely seeking to speak to the Question, That the Clause, as amended, stand part of the Bill. I am suggesting that if I have the opportunity of putting forward some new reasons why this Clause should not stand part of the Bill, I might possibly be within the realms of order.

The points which I wished to raise earlier on the Clause are not matters which I have learnt in Committee or in debate in the House. They are experiences which I have met in my constituency. I would not like the Clause to pass without the Minister becoming aware of some of the cases of human tragedy and hardship which will occur should the Clause reach the Statute Book in its present form.

I know from some of the remarks I heard towards the end of the debate on the date on which the Clause becomes effective—5th April, 1969—that many of my hon. Friends put cogent reasons to the Minister, which he appeared to appreciate although he declined to withdraw his support of the Clause. One or two of the points which might yet be relevant and might persuade the Minister to have second thoughts on this damaging Clause concern the date of its application.

The Bill contains a proposal that the change which the Government intend to make should take effect from 5th April, 1969. Reasons have been given why the date should be earlier. I hope to be able to put one or two human cases of which I am aware of real tragedy of constituents of mine who are in a desperate situation because they do not know where to find the money to pay the levy which has been assessed upon them. They need not find themselves in that position if only the Minister had accepted our Amendment to alter the date to 1967 or, alternatively, decided that the Clause should not stand part of the Bill.

A typical example which, I hope, will persuade the Minister to change his mind concerns an old-age pensioner couple in my constituency. They own a vegetable plot, which they bought some years ago with some savings for a very modest figure. The purpose of buying the plot was that if they had their capital tied up in it, after a number of years they would have a chance to sell the plot and give themselves enough capital to put down the deposit to buy the rented house in which they were living.

They bought the plot of land for £258 and sold it in 1968 for £520. Straight away, they put that down as an initial deposit for their lifelong ambition—to buy the, not modern, but comfortable semi-detached house in which they were living. You can imagine their concern, Mr. Irving—it has prompted me almost to demand that I be heard tonight—when, after they had paid the deposit, the Land Commission assessed them for levy of £122. As far as I am aware these people are not in receipt of any social security pension other than the old-age pension. They do not have £122. Can the right hon. Gentleman suggest a solution which would overcome the difficulties and help to meet this case?

There is another cogent reason why the Clause should not stand part of the Bill. There is another couple in my constituency who are old-age pensioners of very modest means. The wife is in very ill health and needs a certain amount of extras and little luxuries in life, perhaps a little extra food, which they can ill-afford on their pension but which the husband would like to be able to provide for the wife. They had a garden to their house which they sold fairly recently at £1 per square yard, the garden being 948 square yards. They have been assessed for a levy of £335 4s. on this transaction.

The man is in a quandary. He wants to pay the levy if he is able to do so, but he put aside the proceedings of the sale of the land to provide his wife with a holiday and certain extras in an endeavour to put her on her feet and make her healthy once more. Is that the sort of couple the Act was designed to attack? Are they the sort of people who ought to pay the penalties?

9.45 p.m.

I happen to have had the misfortune to serve on both Standing Committees which considered the Land Commission Act. I was on the abortive Bill which began in 1964 and on the second which we saw through to a conclusion in 1966. Many of my colleagues in that Committee, many of whom are present tonight, warned the Government time and again that these were the sort of people who would be hit, but the Government rejected our Amendments which were designed to protect those who were weak and unable to protect themselves. The Goveriment rejected those Amendments out of hand, said that we were simply flying a kite, and that our Amendments were fictions of our imagination. But as we have seen, and as hon. Members opposite, too, have probably seen, there was much truth in what we said.

I have many other examples which I may bring to the Minister's attention in the hope of persuading him to change his mind. My constituency is one of the biggest in the country and the population is continually on the move. It is virtually to the south of the City of Leicester, a suburban dormitory area with tremendous development continually on the go. The population has increased by about 3,000 adults a year over the last 10 years and this has given rise to great problems in connection with the Land Commission and its impact on my constituency.

Another example concerns a young working couple who decided that, instead of trying to save up to buy a house, they would build for themselves. The couple were married recently and the man's father-in-law gave them a plot of land on which to build a house. Instead of sitting back and renting a house, or spending evenings watching television, the couple put their savings into bricks and mortar and the young man got down to building a house himself. He is the sort of person the country needs. By dint of his own endeavours and a considerable amount of work, he has something to show for his spare-time occupation, namely, a new house.

Is that the sort of person whom the Government desire to penalise? They are only a working couple, yet the first letter they received when they moved into their new house was an assessment from the Land Commission for £450 as a backhanded reward from the Government for their efforts.

I do not suppose that there is a hope that the Minister will change his mind. Nevertheless, I should not like to see the Clause accepted without the Minister being aware of the details of the three cases which I have outlined. I should not like to see grave injustice being done to ordinary people by the Minister's inaction.

Mr. Peter Walker

We have listened to my hon. Friend the Member for Harborough (Mr. Farr) with great interest. His points would have been met had our Amendments been accepted. I can understand his regret that he was not present during the debate which took place on this matter.

I shall ask my hon. Friends not to vote against this Clause. It would have been a better Clause had our Amendments been accepted, but we feel that a vote against it would mean that the same situation would obtain in future as has obtained in the past, and would run counter to the interests of those who wish to remove some of the dangers of the effects of Land Commission operations.

Although I sympathise with my hon. Friend, I must ask my hon. Friends to support the Clause.

Question put and agreed to.

Clause, as amended, ordered to stand part of the Bill.

Forward to