§ Where a loss is incurred on the showing of a house or garden or arboretum to the public relief shall be allowed under section 168 of the Taxes Act 1970 whether or not profits arising would have been assessable under Case I or Case VI, Schedule D.—[Mr. Robert Cooke.)
§ Brought up, and read the First time.
§ 6.30 p.m.
§ Mr. Speaker
With this new Clause the House can also discuss new Clause 39–(Suspension of estate duty on houses of national, scientific, historic or artistic interest and on funds in trust for their upkeep).
§ Mr. Cooke
In discussing these new Clauses I should like to begin by putting the problem into perspective. All over 1181 Britain, on this sunny afternoon, thousands of people, many of them visitors from abroad, have been enjoying historic houses and gardens, privately owned—the principal attraction—and those owned by the National Trust, the Department for the Environment, and others, and these houses and gardens have been seen at their very best on this day.
Few people give a thought to how these places survive for their enjoyment, and perhaps even the Government have not realised the difficulties that are involved or, if they have, they have not yet gone far enough to make it possible for these places to survive. I do not believe that I have to justify their survival. They are, after all, the principal tourist attraction, and tourism is a most valuable source of income to this country.
It is historic Britain that people come from abroad to see, in greater and greater numbers, and even those at home are becoming more appreciative of our historic past and want to see these buildings, gardens and parks survive into the future. In a more crowded island, the need for places where the public can enjoyed are no longer there for them to and more important.
The sad situation with regard to the buildings is that not even the cost of keeping out the winter damp is allowable for tax purposes in all too many cases. Buildings which the parents of those who this afternoon have been disporting themselves in the sunshine enjoyed are no longer there for them to see.
In my view, there will be further losses despite the fine work done through the Historic Buildings Council for England, Scotland and Wales and, indeed, the assistance given by expert advisers from what used to be the Ministry of Public Building and Works. It should be said in passing that although the grant from the Council has generously been increased to £1 million, in effect all that is being done is to return to the owners of these houses some of the money that has already been taken away in taxes.
I believe that I can speak with some experience about this matter, although I suppose that I ought to declare an interest. It is a lifelong interest in our 1182 architectural heritage, and in particular in our historic houses, and more especially those which are still lived-in homes. I am, myself, the owner of one of the nation's finest fifteenth-century houses.
It came to me in my father's lifetime, because he had to make a cruel choice between handing it over to me and cutting himself off from it completely, or seeing the whole of his work of restoration and improvement taken away by estate duty. The provision under which the transfer was made has since been abolished by the previous Socialist Government, but there capital gains tax pursues the gift, so far ineffectively, though their agents are waiting their chance to pounce on me later. That may sound rather lurid, but in this case it is the fact.
The first of my two new Clauses is designed to help to preserve historic houses in private ownership by making it easier to finance their opening to an increasing number of appreciative visitors. I hope that here I may have the close attention of the Treasury Minister who is to reply—I know that I have had his attention so far—because there is a particular point which I should like him to note.
We are not seeking to create a special class of taxpayers. That has been the stock Treasury reply in recent years. Indeed, the hon. and learned Member for Lincoln (Mr. Taverne) gave that reply to a deputation from the British Tourist Authority Historic Houses' Committee. That is not the case. The buildings are already specially singled out and protected by innumerable laws, and fresh Acts are passed almost every year to protect the buildings. These Acts protect the buildings and houses, but sometimes positively prevent the owners from effectively showing them to the public. In many cases they make it more difficult to increase public access, which is necessary to try to produce anything like a reasonable income.
The preservation moves that have been made to date are, on the whole, of a negative nature. They say to the owner, "Thou shalt not do this or that". They do not say, "Thou shalt make every effort to restore the building and make it available to the public". There is a disincentive here, and some local authorities pursue the implementation of Acts of Parliament in a most unhelpful way. I 1183 had better not digress on that one, but it is a fact.
The Clause provides something positive. It is designed to enable owners to allow the loss of public opening to be set against other resources, if one is lucky enough to have them, and I should make it clear that if this provision were to be enacted it would not help me personally, though it would have helped in the past. Had it been possible to get Case I treatment for all the years that my father worked on the building, a substantial amount of his income from other sources as a surgeon would have gone into the protection and improvement of this historic building, and that would have been no bad thing for the nation.
The plea that we are making is reinforced by what has been said by the Historic Buildings Council for England in its recent report for 1969–70. In a sense it has made the need for some action by the Government most urgent because, whereas before it was possible for an owner to argue with the tax inspector that he should get Case I treatment which would enable him to set the loss of public opening against his other income, and of course charge against the business of running the house—establishing it as a business, the expense of opening it, and so on—it is now extraordinarily difficult so to argue because the tax inspector can wave the report by this august body at the owner and say, "Here is the Council saying that in most cases it is impossible to run the affair with a view to making a profit, and therefore, you should not get your Case I treatment".
I hope that the Treasury has a copy of the report. If not, I can make one available. It was the action of the Council in drawing attention to the inability of the vast majority to make any-think like a going business, with a view to making a profit, and that is the necessary qualification, which made it so difficult to get Case I treatment. Indeed, the Council believes that only a few cases can get it. That makes the case. The ground has been shot from under the taxpayers' feet by the Historic Buildings Council.
If one cannot get Case I, there is always Case VI, under which one can carry forward the losses to future years in which 1184 a profit is made. But a profit is most unlikely and in some cases is impossible. True, it can be set against other Case VI income, but I am advised that, whereas Case VI income used to include sporting rents, which in some cases provided a good income, they have now gone into another case and there is nothing that most owners can set Case VI losses against.
It might be supposed that, if one had struggled on for a lifetime to keep one of these historic buildings alive, one would be thanked for it by the nation or at any rate not attacked for so doing, but the present state of the law means that estate duty can very easily wipe out the work of a lifetime.
New Clause 39 safeguards money not just for the upkeep of a historic building—if one is lucky enough to have any—but also for the protection of the lands and gardens and park and whatever other revenue-producing lands that the Exchequer chooses to allow. There is a wide discretion here. It tries to protect the resources supporting a historic building from the effects of estate duty, although there is a safeguard for the taxpayers at large, which is that, if the historic building, the asset, is sold or realised, the full rigours of taxation fall upon it.
It is designed to put the House, garden and other lands in a similar position to certain very choice objects of scientific, historic or artistic interest which can be now so exempted in this way. It is ridiculous that, after all the work done by a private owner to keep a historic building alive to be enjoyed by many hundreds of thousands of people visiting this country and our own people, on his death, either all the contents are sold or the whole place is alolwed to fall into gradual decay.
There are some owners who, rather than give up their heritage, will let it gradually run down. For work of the Historic Buildings Council for England, this vast sum of £1 million has had to be provided by the taxpayers, because, in the past, the taxation has crippled the resources of people trying to keep these houses in reasonable repair.
If the Government want the country to continue to enjoy this part of our heritage, they must face the facts. I know that there are political obstacles, because there are people of extreme views—perhaps on the other side of the House, but 1185 certainly in the Socialist Party—who feel that these places should be institutionalised, that the State should take them over and that the private owner has no place. But the private owner provides those buildings with the greatest attraction for our own people and for overseas visitors. Statistics published by the British Tourist Authority amply prove this.
These places should be allowed to live on, and they can be preserved if the owners are given just this bit of encouragement. The Government must face up to it. I would not expect them to go all the way today. All that I am asking them to do is recognise the problem and say that they will sympathetically consider our proposal and give us some hope for the future.
This Clause is not designed to help the idle rich to continue to enjoy a life of luxury. Those people left our shores long ago and for all I know will never return. This new Clause is designed to enable people who are prepared to do so to stay here and battle it out with the elements of decay in the interests of the country at large.
§ 6.45 p.m.
§ Sir D. Renton
I support the plea of my hon. Friend the Member for Bristol, West (Mr. Robert Cooke). I do so as one who has so often, like many members of the public, enjoyed visiting those historic buildings which are homes. I remember when Sir Stafford Cripps set up the Gowers Committee. He said that it was best that historic homes should continue to be lived in if they were to be fully appreciated by the public who visited them.
The Gowers Committee made a great many recommendations, in addition to the establishment of the Historic Buildings Council—from which grants are not always to be obtained—and they have not all been implemented. This new Clause is an attempt by my hon. Friend to pick out two modest but helpful provisions which would make it possible for some houses to remain open which would otherwise have to close down, as many others have done in recent years because inflation and high taxation have put it beyond the means of the owners to support these houses.
I happen to live in a small old house dating from about 1550. The cost of 1186 ordinary repairs and maintenance is enormous in relation to its size, and if a larger house which the public want to visit is to be kept in proper condition, the owners must be able to find the money. If we put it beyond the means of the owners to keep these houses going, not only will they be driven out of homes which they may have occupied for many generations, but the public will also be driven out.
That is, unless the National Trust can be persuaded to keep them on, but that means providing the necessary funds for the National Trust to do so, and those funds are not always available—or it may be that those historic homes can be turned into schools or museums or other public buildings. But that latter alternative involves the most enormous public expense in purchasing the buildings, adapting them, having them restored and so on. There have been several examples in my constituency of famous old houses which have been adapted in this way, but the expense has been colossal.
These two Clauses do not go far enough, but they would help. Whether or not they are acceptable to the Government, I hope that the Chief Secretary will agree that the time has come to examine the whole matter again in the light of the 20 years' experience since a start was made on implementing the proposals of the Gowers Committee. Certainly, unless something is done, and pretty soon, we shall lose a further large portion of what is perhaps one of the most treasured parts of our national heritage.
§ Mr. Nott
I support what has been said on this subject, and particularly about new Clause 38. I am sure that my hon. Friends would be satisfied if the Chief Secretary would say that the Government were seriously considering this whole problem.
This proposal would in many cases be more desirable to, though it would complement, the historic buildings grant where a private owner wishes to open his house to the public and where the public are interested in its historical associations and architecture. A person who chooses to spend other income to improve that type of property and so preserve it for posterity should be able to offset those costs against his other income. 1187 This would be a less expensive way of preserving our scheduled buildings than the constant increase in the historic buildings grant, of which I am greatly in favour and I am delighted of the recent increase which the Government have given. What we are suggesting is nothing more than an offset arrangement under personal taxation. It would be far less expensive to the Treasury than the principle which has already been accepted, namely, the Government grant. I am, therefore, highly sympathetic to new Clause 38, and I hope that the Chief Secretary will give an indication that the Government are continuing to look at this problem.
Although, as I say, the increase in the historic buildings grant is greatly welcomed, it is often applied only to the problem of ancient and historic buildings after they have fallen into decay. In other words, the grant is normally available only when the roof has collapsed or death watch beetle is in evidence. Our proposal would enable owners to keep their buildings in good repair for posterity.
§ Mr. Edward du Cann (Taunton)
I wholeheartedly associate myself with the pleas that have been made in this context. The Chief Secretary will be aware of the anxiety that exists in informed circles over this whole subject, and I wish particularly to support the point made by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) that it is time for the Government to take a new look at the whole matter. My right hon. and learned Friend made an appropriate and timely suggestion.
I do not know whether the Chief Secretary will be able to agree to the new Clause. If not, I trust that he will be able to undertake to adopt the principle of it in due course. I hope that either tonight or in the measurable future a considered statement of Government policy will be made over this whole area. Such a statement is overdue.
§ The Chief Secretary to the Treasury (Mr. Maurice Macmillan)
Nobody will quarrel with my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) that there is great attraction, from the tourist and general preservation 1188 point of view, in seeing that historic houses remain family homes lived in by people in private ownership. Indeed, this principle was accepted by Sir Stafford Cripps.
Nor will anybody quarrel with my hon. Friend the Member for St. Ives (Mr. Nott) that in many cases it is cheaper to pay the owners to go on living in historic houses than to maintain those houses in the form of public institutions. That is clearly accepted by the Government, as evidenced by the increased rate of grant, which is now running at about £1 million a year.
I would go so far as to agree with my hon. Friend the Member for Bristol, West (Mr. Robert Cooke) that there are cases where the duty of preserving and upkeeping such a house could be onerous on the owner and even militate against the likely success of the owner's efforts to conduct a commercial operation by showing the house. However, there is considerable difficult in trying to meet these problems by means of the two new Clauses under discussion.
My hon. Friends will agree that it is a difficult task to draft a provision which will distinguish between measures that are designed to preserve a house in private ownership and measures designed to preserve a house in current ownership, and this is a problem with which neither new Clause gets to grips.
One difficulty about which my hon. Friend the Member for Bristol, West was obviously thinking in connection with the income tax provisions was that of a house which it was unlikely that enough people would ever want to visit in a given year for it to be able to produce a regular enough income which would give it Class I status and therefore an income from trading. On the other hand, if any form of income were allowable for tax purposes as money spent on such a house, it would be extremely difficult under this proposal to stop those who wish to show a small portion of the house or who show the house infreqently from receiving, in effect, a subsidy by relief on the upkeep of the whole of the property. One comes across this sort of case from time to time.
It would be very hard indeed to do more under Schedule D than to continue the present arrangements of Class VI, 1189 which is the carry forward provision. However, this is something we shall continue to look at in our review of taxation, which my hon. Friends are no doubt aware is by no means complete. I hope I have said enough to show that I am aware of the problem that has been raised.
New Clause 39 is designed to ensure that historic houses and trust funds for their upkeep are considered in the same way as pictures, prints, books, manuscripts, works of art and so on under Section 40 of the Finance Act, 1930, the details of which I need not weary the House by describing.
The implication here is that the house and its immediate surroundings, and any trust fund set up for it, should be similarly exempt from the capital gains tax provisions that go with the exemption from death duty.
The new Clause also provides that such a trust fund would be able to switch investments without the switch being regarded as a sale, which would attract estate duty, and presumably from capital gains tax, so long as the proceeds were reinvested or retained within the fund or applied to the upkeep of the house. Considerable difficulties would arise here, despite the arguments of the Gowers Committee.
There is a case for saying that this would not be more expensive than the Government grant which is available to designated houses, although, as has been mentioned, the grant is usually available to avert disaster. The problem is that with estate duty exemption, and particularly with the exemption of funds, there is very little guarantee as to the extent to which that exemption will be confined to the purposes for which it was allowed, that is to say, the upkeep of the property; and particularly so because by reducing the amount of dutiable estate it clearly also benefits the owner indirectly to a further extent.
One of the problems raised by both new Clauses is that in some cases one is undoubtedly dealing with people who have made considerable personal sacrifices to live in a certain property because of love or interest or historic association; people who could live a great deal more comfortably somewhere else but who have 1190 chosen, for reasons which are by no means dishonourable, to spend more on maintenance of the property and less on themselves than they would if they lived somewhere else. But I must say that these Clauses as drafted would enable people to get very considerable help in the upkeep of properties in which they were living quite happily, and which they were well able to maintain without assistance. It is the wide divergence of the problem, the difficulty of confining taxpayers' help to the taxpayers' purpose of preserving property and preserving historic houses which makes it difficult to accept the Clauses as they stand.
There is one major difference in regard to goods and chattels in respect of the provision of Section 40 of the Finance Act, 1930. Goods and chattels are removable and, above all, exportable, and the concession is designed to be much more clearly defined as maintaining the objects concerned intact and in this country. The problem with historic houses is not quite the same, because even if such a house is sold to another owner there is no reason why that owner should not show it just as much as the original owner did.
My right hon. and hon. Friends made their point in regard to a problem which is by no means new. It was identified some ten years ago, and was the subject of the Gowers Report. In the course of the general review of our tax system which is to take place during the coming year, we will bear in mind what has been said in this debate.
§ Mr. Robert Cooke
I am grateful to my hon. Friend for his reply, but all of us who have tabled or supported the new Clauses agree that a good deal more work needs to be done on the Treasury. Reference to the Gowers Report brought my hon. Friend's speech to its conclusion, but perhaps we might begin by getting that report back into print, and that is the Treasury's responsibility. Perhaps the document referred to from the Treasury Bench will be available to the House; perhaps we could have a few more copies of it. My hon. Friend will find that the Stationery Office have no more, and would like mine back.
The Gowers Report specifically said that a particular house and related land should be exempted from estate duty for 1191 so long as they were not sold, and also property assigned to trustees to manage the house. I presume that one might form some private trust for the property, in which case one would enjoy the same privileges as the National Trust. I see signs of dissent from the Treasury Bench, but that is not the answer I have had before, so perhaps we are worse off than we thought we were.
My hon. Friend referred to further Government help—the £1 million to be used by the Historic Buildings Council—but let us be quite clear that that money is for capital repairs; making good the ravages of time and meeting the inability of owners to do the necessary work because they have had their resources reduced by taxation. It has nothing to do with the running costs of the building, which comprises much of what we propose to do.
My hon. Friend said that the results of the new Clauses might make it just that much easier for people to go on living in houses where they are at present living quite comfortably. No doubt some of them are living quite comfortably at the present time. No doubt the Onslow family—your predecessors, Mr. Speaker—would still be living at Clandon Park in some degree of comfort if they had hung on to it, but do not let us imagine for a moment that the £200,000 which has been spent by the National Trust, and the various amounts of help from the Government, and indeed the other £100,000 which should be spent on the property, would have been spent by any family living comfortably in the family home which they had for hundreds of years. Instead they have been attacked by every form of taxation, beginning with the Lloyd George Budget, and even before that. Let us therefore not kid ourselves that this provision would enable people to go on living in comfort.
In any case, that could be looked after, because the schedule of repairs and improvements could well be managed by the Historic Buildings Council and its architects. One could be told that if one did not spend, say, £10,000, one would not get tax relief. If there is any looseness in the new Clauses, I am sure that it is not beyond the ability of the Treasury, if it had the will, to tighten them up. I appreciate my hon. Friend's 1192 position, because a Minister always gets a brief when dealing with a new Clause, advising him, first, to pull it to pieces because of its drafting, or because it goes too far, or does not go far enough, or does not do that which the hon. Member tabling it said it would do. We expected that sort of approach, but our concern has been the spirit of the matter.
My hon. Friend referred to Case 1. The trouble now is that one can keep one's house open, work very hard on it and collect quite a lot of money, only to find that all that income is merely added to-one's other incomes and consequently to one's tax burden. If one opens a house regularly, reasonable public access is required. That means that the house must be open on about one hundred days a year or to so many thousand visitors. That is perfectly well looked after under the existing Statute. A few people have tried to break the spirit of the agreement they had with the chairman of the Historic Buildings Council, but they are in a very small minority, and in any case they have been taken care of. Reasonable public access means reasonable access at reasonable times to all reasonable people.
I believe that the Case 1 element would do away with the position where one can work very hard and perhaps after four or five years may have taken a total of £20,000 only to find that all the takings are liable to the full burden of taxation, resulting either in the owners being ruined or the best of the contents of the house being sold to satisfy tax demands. Even then the contents might well attract capital gains tax. It becomes a rolling stone picking up tax wherever it goes.
I will not pursue the matter further, but I must point out that my right hon. and hon. Friends and myself, and other hon. Members who are not now present, could have mounted a massive operation this afternoon. We could have got a great many more hon. Members to come and carry on the debate. There is undoubtedly enormous interest in the subject outside the House. However, there are a great many more important matters for the House to discuss. I only say that if we allow these things to be destroyed we shall be the poorer, so will all our friends from overseas and those who come after us here.
Perhaps having said so much in using my right to reply to the debate I may 1193 end in the hope that we shall do better next time and beg leave to withdraw the Clause.
§ Motion and Clause, by leave, withdrawn.