HC Deb 10 July 1973 vol 859 cc1335-48

Section 185 of the Taxes Act (accommodation occupied by holder of office or employment) shall not apply in relation to the occupation of Chevening House or any other premises held on the trusts of the trust instrument set out in the Schedule to the Chevening Estate Act 1959 by a person nominated in accordance with those trusts.—[Mr. Patrick Jenkin.]

Brought up, and read the First time.

Mr. Patrick Jenkin

I beg to move, That the clause be read a Second time.

The purpose of the new clause is to achieve the intention of Parliament as expressed when the Chevening Estate Act 1959 went through the House by exempting the occupation of Chevening House from income tax.

The House will have seen the Press reports of the statement made by my right hon. Friend the Chancellor of the Exchequer on Friday last, but perhaps I may very briefly rehearse the history. Before his death the late Lord Stanhope expressed the intention of giving the Chevening Estate in trust to the nation to be used by the Prime Minister or a Cabinet Minister or a descendant of King George VI as nominated by the Prime Minister. The estate is managed by a body of trustees in accordance with the terms of the trust. The maintenance of the estate and of Chevening House itself is a charge on the income of the trust. No public funds are involved.

In 1959 Parliament passed the Chevening Estate Act which gave effect to the vesting deed and trust instrument relating to the estate and also conferred an exemption from Schedule A tax for land which a person is allowed to occupy having been nominated by the Prime Minister. This exemption, which was in much the same terms as that given to Chequers by the Chequers Estate Act 1917, was passed with all-party approval. The late Mr. Hugh Gaitskell said: I have great pleasure in supporting the Bill, the character and purpose of which have been clearly explained by the Lord Privy Seal."—[OFFICIAL REPORT, 19th June 1959; Vol. 607, c. 789.] The Lord Privy Seal was my right hon. Friend Lord Butler. However, Schedule A tax was abolished in 1963 amid much rejoicing but at the same time what is now Section 185 of the Taxes Act was enacted. This charged Schedule E tax on the annual value of any premises which any one is permitted to occupy by reason of holding an office or employment. Through what we recognise was an oversight, the Finance Act 1963 did not confer the necessary exemption from this charge in respect of the occupation of Chevening.

Mr. George Cunningham

Will the right hon. Gentleman clear up one point? Is it the case that before 1963 no Schedule E tax was payable in respect of the occupation of accommodation in that category?

Mr. Jenkin

That is true, but before 1963 Schedule A tax was payable in respect of the occupation of property and when Schedule A tax was abolished it was necessary to raise a new charge under Schedule E in respect of property occupied by reason of holding an office or employment. The abolition of Schedule A tax was not intended to relieve persons occupying premises by reason of their employment.

It was Parliament's intention that the same exemption should apply to the occupant of Chevening as applies and has always applied to the occupant of Chequers. The purpose of the new clause is to ensure that the exemption should be effective. I hope that, as in 1959, this will have the support of the whole House.

I would only add that my right hon. Friend the Chancellor, who was recently nominated by the Prime Minister to be the first occupant of Chevening—the late Lord Stanhope died in August 1967—announced on Friday that he had asked the Prime Minister to withdraw the nomination because with his responsibility for the tax system my right hon. Friend did not feel it proper that he should benefit from the exemption conferred by the new clause.

Mr. Dalyell

Is the Government's view that the Chancellor of the Exchequer needs some kind of country establishment like this? Surely this should be taken into account irrespective of what might be the personal views in the Treasury. Secondly, there is a widespread rumour that the house might go to a descendent of King George VI. Is that correct?

Mr. George Cunningham

The right hon. Gentleman put the new clause forward as a rather technical matter raising no broad issues. He is doing a disservice to the subject if he restricts it so much. The whole business raises broad and, what is more important, sensitive issues. The provision of facilities having a monetary value without their being subject to tax must be sensitive when the House is considering conferring those facilities upon a Member of the House. We have to fall over backwards to ensure that we are above reproach in that respect.

I recognise that the Chancellor of the Exchequer has fallen over backwards to ensure that he personally is not, in respect of the immediate future, subject to any accusation for the enjoyment of Chevening. I think that he has probably gone too far, as my hon. Friend the Member for West Lothian (Mr. Dalyell) implied. Either it is right that a Minister should enjoy Chevening without having to pay tax on it, in which case it does not matter which Minister introduces new Clause 51 or is currently responsible for taxation policy, or it is not right, in which case no Minister should enjoy it whether he is a taxation Minister or not.

If the new clause goes through and some of the doubts I express are thought not to be of value, then the Chancellor and the Government should re-think the matter because of all people who need a nice quiet place in which to think the Chancellor of the Exchequer—I am not speaking in personal terms—probably needs it as much as anyone in his official capacity.

But I have grave doubts about providing these facilities without their being subject to the normal law of the land, and that it what is involved here. I do not think that it is a sensible use of Chevening to make it available to an individual Minister. It was a generous gift by Lord Stanhope, for which everyone, quite rightly, has expressed gratitude. But is it right that one Minister for a very restricted part of the week or the month should have the use of this vast house and vast estate? In the country's interests, if the country has the use of the place we have to ask, "Is this the use we want to make of it?"

In deciding that, one must naturally take account of what Lord Stanhope wished. He gave it to the nation for a certain purpose, but in so far as discretion is left to the Government in the use of the house I hope that full account will be taken of the fact that it may not be the best thing to do to say to one Minister, "You may for a small part of the month have the use of this enormous estate". It will continue to be made available to the public, as I understand it, but it could be available perhaps to the public more generally than would be the case if it were handed to the Chancellor or anyone else in the way that Chequers is handed to the Prime Minister.

I have a personal interest in this because in May I asked questions about the taxation of Ministers' houses generally. The Daily Express accused me of trying to do down the Chancellor of the Exchequer. That was not my intention in making comparison between taxation and Chevening, but the two things are related.

At least eight Ministers are currently enjoying an official residence—or at least a residence which they occupy by reason of their office and upon which, as far as I can make out, none of them pays tax. These include No. 10 Downing Street, No. 11 Downing Street, No. 1 Carlton Gardens—residence of the Foreign Secretary—Bute House, Edinburgh—residence of the Secretary of State for Scotland—three flats in Admiralty House, one said to be a pied-à-terre, although I am not sure how the Government Chief Whip would regard that, and a flat in the House of Lords occupied by the Lord Chancellor. Then there are Chequers, Dorneywood and Chevening, which fall into a rather different category because they are trust owned and managed.

7.15 p.m.

Then there is Mr. Speaker's residence in this building and also the residence of the Serjeant at Arms in this building. Both of them raise precisely the same taxation point. I have put down Questions about these matters and have received some information. The information concerning the enjoyment of Ministerial houses which I have mentioned is relevant background to the consideration of new Clause 51.

On 24th May, I was told by the Parliamentary Secretary to the Civil Service Department, when I asked which Ministers were currently provided with tax-free residences as part of their remuneration, that the answer was, "None ", because it was held that the occupation of these residences … is necessary for the performance of their duties and is not treated for tax purposes as an addition to salaries."—[OFFICIAL REPORT, 24th May 1973; Vol. 857, c. 134.]

That is in conflict with the presentation of these matters in our Estimates, where the provision of an official residence is noted at the side of the salary payable to a Minister. On 21st May, the Minister of State, Treasury, told me the general principle upon which tax was not payable upon these residences. He said: In general, where an employee is required for the proper performance of his duties to live in accommodation provided for him by his employer he ranks for tax purposes as the representative occupier of the accommodation"—

whatever that might mean— and is not taxable on its value. Ministers of the Crown are dealt with under the same rule."—[OFFICIAL REPORT, 21st May 1973; Vol. 857, c. 24.]

I then pursued the matter in correspondence and I am sorry to say that, although I wrote to the Minister of State, Treasury, on 25th May asking him to brief me upon the general principles of taxation policy involved here, I still await his official answer about six weeks later, when that answer is relevant to new Clause 51. It would have helped me if I could have had his reply available to me for the debate. But I have had from the Parliamentary Secretary to the Civil Service Department a longish letter some points of which are deeply disturbing. First, it is said that the so-called pied-à-terre in Admiralty House—

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

Order. I am listening carefully and I understand that the hon. Gentleman requires to make some points in order to make a background for his attack on new Clause 51, but he is not entitled to go into detail on various other residences which are not mentioned and are not concerned with the new clause. What he has done to show the background so far has been a border line case of order. If he goes any further, I shall have to stop him as going beyond the terms of the new clause.

Mr. Cunningham

I accept that, Sir Robert. I do not intend to go much further into that line. But I point out that what we are doing here is to exempt Chevening from the normal operation of Section 185 of the Income and Corporation Taxes Act 1970. In considering whether it is right that we should do so, I am suggesting that it is right that we should look at the extent to which that provision applies to other residences occupied by Ministers. I assure you that I have no intention of going into detail on the residences occupied by Ministers, except to say that two of the residences I referred to are occupied by Ministers but not in their Ministerial capacity. These are the pied-à-terre for the Government Chief Whip in Admiralty House and the flat occupied by the Lord Chancellor in the House of Lords. I wonder whether it is possible for a Minister to occupy absolutely, as a result of the occupation of an office, accommodation which he does not occupy in his Ministerial capacity.

Mr. Dalyell

Would my hon. Friend not agree that the paramount consideration in all of these discussions is that senior Ministers of the Crown of whatever party should be given the facilities to do their jobs properly?

Mr. Deputy Speaker

Order. I think that the argument which the hon. Gentleman is using now on this clause is not a fair one. He ought not to pursue that line.

Mr. Cunningham

In answer to my hon. Friend the Member for West Lothian (Mr. Dalyell) I would agree that that is a paramount consideration which I support as strongly as he does. It is also important that the taxation of Minister's residences should be on the same basis as the taxation of the residences of other citizens. We have to ensure that that is the case.

If we do not allow the director of a company or the caretaker of a block of council flats to enjoy this facility tax free, except on the basis set out in the Income and Corporation Taxes Act 1970, we must ensure that the same rule applies to Ministers. Since you do not want me to do so, Mr. Deputy Speaker, I will not go on with the other houses, other than Chevening. It is necessary for this matter to be properly gone into.

My impression, from looking into it, is that the question of taxation of Minister's houses has not been properly gone into in the past. It has been accepted too readily that these ought to be tax free. There has, for example, been a reference to the Select Committees of 1920 and 1930 which made some passing reference to the subject. On no occasion was it suggested by those Select Committees that the treatment of Ministerial houses should in any way be different from the treatment of such accommodation when occupied by other citizens. In any case, the views of a Select Committee do not constitute the law of the land.

What I am suggesting is that the treatment of Ministerial houses other than Chevening, and the treatment of Chevening if this clause is approved, is and will be different from that set out for the generality of people in the 1970 Act. The Income and Corporation Taxes Act 1970 says quite clearly that this is the general law of the land. Section 185(1) says: Where any premises in the United Kingdom are available to the occupier by reason of his wife's holding an office or employment, and—

  1. (a) he pays no rent for the premises, or
  2. (b) the rent which he pays for them is less than the annual value of the premises … the holder of the office or employment shall be treated for the purpose of tax under Schedule E as being in receipt (in addition to any other emoluments) of emoluments at an annual rate equal to the annual value of the premises …"
That is the law of the land and we are saying that it is to apply to Chevening. We are saying that at a time when it does not apply to eight or 11 Ministerially-occupied residences. At the least it is a sensitive point worth looking at.

Section 185 goes on to say something of great interest in subsection (2). It says: Where the occupier of premises holds them … by the leave of the person from whom he or his wife holds an office or employment, or any other person with whom that person is within the terms of section 533 of this Act, connected, the premises shall be conclusively presumed to be available to him by reason of his or his wife's holding the office or employment. What I am suggesting is that but for this new clause there is no doubt that Chevening would be taxable upon whoever occupied it. That has been accepted. What we are doing is to say that whoever does occupy it is different. We are saying that it is different for a Minister but we will not say that it is different for the company director or the caretaker of the council flats. We are saying that it is different for the Chancellor. At the least that is an exceedingly sensitive point to put forward and the definition of a connected person in the Act is such that I do not think it could be held that the Prime Minister and the Chancellor were disconnected for the purposes of the Act.

Mr. Dalyell

Is my hon. Friend aware that some of us think that it is a bit different for senior Ministers? Has my hon. Friend read the biography of the late Iain Macleod written by the hon. Member for Surbiton (Mr. Nigel Fisher) which gives the most appalling picture of what Mrs. Macleod had to do when entertaining many people from the colonies and Commonwealth? I suspect that a modern Chancellor has to entertain as many people as the Foreign Secretary.

Mr. Cunningham

With respect to my hon. Friend that is not the point. Ministers should be provided with the remuneration and the facilities needed to do their jobs. I agree that they are not so provided at the moment.

Mr. Deputy Speaker

Order. I do not think we ought to get involved too much in the argument about whether Ministers are given enough money to do their jobs. We could argue about that for a long time. The House will understand exactly what the hon. Member meant when he referred to the late Iain Macleod. But I do not think we can go into that now. We must try to keep strictly to the terms of the new clause.

Mr. Cunningham

I was not intending to go into it but since the House is being asked to consider this clause and since the point has been advanced in support of it, I hope that I may be allowed to say that I do not think that this is a persuasive point. Of course Ministers must have the facilities to do their job. But we must do it according to the methods which apply to the rest of the country. We cannot say that we will not pay Ministers as much as they should be paid, which might be the view of my hon. Friend, but that we will exempt them from taxation in respect of the facilities which they enjoy. That is what is involved here.

If a trust were set up to provide Lord Stokes with the enjoyment of a residence it would not be exempt from tax. He would be taxable upon it. If we want to say, in respect of the Chancellor or anyone else, that he needs extra facilities, we must meet the point by giving him extra money by which he can procure them, not by treating him differently for tax purposes from anyone else.

I hope that I have said enough to suggest that there is something here which needs to be looked at. My main objection to this clause is not so much upon the taxation point. I do not think that it is a sensible use of Chevening to give it to any Minister. I believe that the broader issues that I have attempted, not altogether successfully, to raise need to be examined. I look forward with interest and impatience to a reply on this issue and I suspect it will be discovered that the manner in which Ministerial residences have been treated for tax purposes up to now is improper and perhaps illegal. That also applies to some of the Officers of the House. At least there is a question mark that needs to be resolved. When we are proposing to provide tax-free facilities to a Minister this is as good an occasion as any on which to raise these broader issues.

7.30 p.m.

Mr. Robert Cooke (Bristol, West)

I do not want to follow the remarks of the hon. Member for Islington, South-West (Mr. George Cunningham) through all the red books from which he has sought to quote. I shall make one or two observations on what I see to be the function of Chevening and Chequers. In a sense, they are public places. Although they will be enjoyed for the time being by Ministers of the Crown they will not be enjoyed by them as a private individual might, if he chose, exclusively to enjoy a great country house in the middle of a large landed estate.

In passing, I would say that the number of people who own such places and keep them shut away from human gaze is very few. Most country houses in the middle of large estates are easily accessible to the public and at present shared by a great many people. The Chancellor, or whoever is to live at Chevening, will decide how he is to use the house. I am sure that it will be used for all manner of purposes other than simply a private residence in which the Minister of the day can shut himself away. We have only to read the newspapers to see the multifarious uses to which such places as Chequers are put, under sensible Prime Ministers. They are shared with a great number of people from this country and abroad.

The hon. Gentleman made great sport of the suggestion that Ministers may in some way be enjoying a tax-free advantage. I do not object to the situation in which we under-pay our Ministers—and we certainly do that—and they are able to do the job we ask them to do because we provide certain facilities for them. That is what some of these houses represent.

The hon. Gentleman twice returned to the subject of Officers of the House. I do not wish to stray out of order, but we must recognise that those who are entitled to a few rooms—and they are only a few rooms—in this Palace in order properly to discharge their duties can hardly be complained against. It must be realised that a vast amount of Mr. Speaker's residence is shared by hon. Members and that great chunks of it have been put to other use. Further, the Serjeant at Arms now occupies a residence that is only a third of its former size, and he shares that with a colleague. Part of this residence has also been chopped off to be used for other purposes. The hon. Gentleman is making a great deal of fuss over what are very small matters.

Mr. George Cunningham

I hoped I had made it clear that I am not remotely suggesting that these facilities should not be available to the occupant. My contention is that they should be made available to the occupants according to the law that applies to everyone else, and that may mean a shuffling of income and taxation eligibility. I am not suggesting that Mr. Speaker should live in a flat across the road—

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

Order. We must drop this point and keep to the terms of the new clause, about Chevening House, otherwise there will be no end to the discussion.

Mr. Cooke

I have no wish to prolong the argument on this matter, but it must be put into proportion. I hope that I have put into proportion a matter which Opposition members have got out of proportion.

Mr. Denis Healey (Leeds, East)

The House might feel that I was being a little presumptuous if I attempted to declare an interest in speaking in this debate, because there is no guarantee that a person who holds a responsibility in the Shadow Cabinet will continue to hold that responsibility, or any other responsibility, when the Opposition are in government.

I recall what Sir Winston Churchill said at the meeting of the Conservative Shadow Cabinet that took place in 1952 just before the General Election, which he was rightly confident of winning. He said: "Well gentlemen, this is the last time we shall all meet together—some of us."

I share the view of some of my hon. Friends that the Chancellor has, if anything, been over-scrupulous in renouncing any claim to the occupation of Chevening House—assuming that this House decides to accept the clause—but I very much respect the scruples he has shown.

The hon. Member for Islington, South-West (Mr. George Cunningham) has raised a number of issues that deserve consideration, though perhaps not in the context of the new clause. I am sure that he would be the first to recognise that Ministers are often required to live in official residences when in fact, that is the last thing they want to do. I know of several occupants of No. 11, Downing Street who would have much preferred to live in their own homes. When I had to live in Admiralty House I found that in many respects it was less agreeable than my own home.

I do not believe that Ministers who are required to live in certain places in order adequately to perform their duties—and this certainly applies to residences in Whitehall—are in a different position from hon. Members of this House are provided with offices in the House of Commons, free of rent and of all charges, on the understanding that they use the offices wholly, exclusively and necessarily in the pursuit of their occupation as Members of Parliament. In this respect, the difference in principle between the occupation of a Government residence by a Minister and the occupation of an office in this building by a member of Parliament is not essentially dissimilar.

Problems arise to the extent that a weekend residence may occasionally be used for purposes that have nothing directly to do with the Minister's departmental duties. But if a Minister were expected to recompense the Exchequer for that part of the occupation of the residence which was purely on his personal account—and my hon. Friend was generous in recognising this point—he would require additional recompense to be able to fulfil that obligation.

The Government should perhaps consider that side of the problem on another occasion, but the House would be wise to accept the new clause, because it would then be clearly acting in accordance with the wishes of the House when it passed the Act dealing with the Chevening Estate. It would make possible the occupation of Chevening in the same way as Chequers is occupied. I hope that the House will return on another occasion to the important issue raised by my hon. Friend.

Mr. Patrick Jenkin

With leave, may I say that I do not wish to follow the paths which the hon. Member for Islington, South-West (Mr. George Cunningham) trod. I seek to take issue with him on only two or three points where, frankly, he got the matter wrong. He gave me the impression that he does not understand—and I think that he admitted as much—the principle of representative occupation. I am talking not merely about Chevening or Chequers but about other matters.

A representative occupier is a person who occupies premises on behalf of his employer. He occupies them not individually or personally but as a representative of his employer. That is the case in respect of the Whitehall residences of Ministers. The law is exactly the same for Ministers as it is for everybody else. It applies to lock-keepers and park-keepers and to caretakers in council blocks. A Minister is a person who represents his employer and lives in his employer's premises for the purposes of his employment. There is no charge to tax, and exactly the same rule applies to the generality of taxpayers.

The hon. Member for Islington, South-West said that the same rules should apply to Chequers and Chevening. If they did, no Prime Minister would ever occupy Chequers again unless, as the right hon. Member for Leeds, East (Mr. Healey) said, a substantial addition were made to his salary to enable him to afford the expenses of upkeep, staffing, and so on. Therefore, the House accepted in 1917 in relation to Chequers and in 1959 in relation to Chevening that residences of this kind, whether available for Ministers or available, under the Chevening Trust, to other people who might be eligible, should be enjoyed tax free. All that we are doing in the new Clause is making the technical change necessary to achieve this under the present law.

The hon. Member for Islington, South-West suggested that the rules which applied to Ministers were "improper and illegal". I assure him that that is quite untrue and has no substance. The same rules apply to Ministers generally, apart from the Chequers and Chevening exceptions, as apply to the generality of taxpayers. The hon. Gentleman said that the situation was different for the Chancellor of the Exchequer. That must not be allowed to remain on the record uncorrected. A number of hon. Members said that my right hon. Friend was being over-scrupulous. Nothing is different for the Chancellor of the Exchequer. The hon. Gentleman was quite wrong about the point which he made.

The hon. Member for West Lothian (Mr. Dalyell) asked whether a house for the Chancellor of the Exchequer was necessary. That clearly must rest with the Prime Minister, as must his question in connection with the members of the Royal Family. Such matters are for the Prime Minister to determine under the terms of the Chevening Estate Trust.

I am grateful for what the right hon. Member for Leeds, East (Mr. Healey) said. He made a number of large assumptions, presumptive or prospective, in declaring his interest. He assumed not only his appointment but the possibility that he might even again sit on this side of the House.

Mr. Healey

Quite the reverse.

Mr. Jenkin

However, I am grateful for the right hon. Gentleman's support for the new Clause.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

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