HC Deb 17 December 1974 vol 883 cc1499-506

10.31 p.m.

The Financial Secretary to the Treasury (Dr. John Gilbert)

I beg to move, That further provision may be made about the making of allowances under Chapter 1 of Part III of the Finance Act 1971 in respect of expenditure incurred (whether before or after the passing of this Resolution) on fire safety. In an attempt to abbreviate the previous debate, I left unsaid a few remarks on this topic and it might be convenient to explain the matter at this stage. When I introduced the clause to provide tax relief for fire safety expenditure on 16th July, hon. Members were concerned that the provision would deny tax relief to those who had carried out fire safety work in hotels and boarding houses without a formal notice under the Fire Precautions Act 1971 being issued. It was also suggested that tying the relief to the issue of a notice might cause hoteliers to defer carrying out safety work and therefore have an unfortunate disincentive effect. I undertook to look at the point again and I am now satisfied that it is one of substance.

During the progress of this Bill in Committee I intend to introduce a new clause extending the relief provided by Section 17 of the Finance Act 1974 to include work specified in writing by a fire authority for the purpose of issuing a fire certificate under Section 5 of the Fire Precautions Act 1971. The new provision will apply to expenditure incurred on or after 1st June 1972. I also propose to extend the relief to cover fire safety work which had to be done following a court order prohibiting or restricting the use of premises made under Section 10 of the Fire Precautions Act 1971. It is to this proposal that the Ways and Means Resolution refers, and I commend it to the House.

10.33 p.m.

Mr. Robert Carr (Carshalton)

What about the fire prevention work carried out not under the Fire Precautions Act but under the Offices, Shops and Railway Premises Act, which is equally deliber- ately ordered for fire prevention purposes? People working under that Act are doing so for exactly the same purpose and should be covered in exactly the same way.

10.34 p.m.

Mr. Robert Adley (Christchurch and Lymington)

The whole House, especially those of us who have taken an interest in the subject of fire precautions, will be grateful to the Financial Secretary and to the Chief Secretary for once again taking a very small step along a very long road. It is with no disrespect to them that I say that they remind me of the words of Chairman Mao, that a journey of a thousand miles starts with a single step. There is still a long way to go before the small hotel and boarding house keepers feel that they have some protection from the burdens placed on them by the Fire Precautions Act 1971. Both Ministers have certainly shown that they are willing to listen.

As usual in debates on this subject, I declare an interest in the hotel industry, although not in any premises of a size likely to be affected by this proposal. When the Home Secretary announced yesterday the Government's intention to amend the Finance Bill, I believe that that decision was taken before the tragic fire in London in the last few days. But there is a familiar ring about the way in which there have to be tragic fires before anything effective is done. It is like trying to persuade local authorities and the Department of the Environment to allow a pedestrian crossing to be placed in a certain position. No one listens until there have been x number of deaths on that road. The long fight, which is continued with this amendment to the Finance Bill, will not be ended until the Treasury agrees to treat an hotel as an industrial building. That argument has been put by several of my colleagues and myself over a long period.

I ask the Financial Secretary and the Chief Secretary to read the recent "little Neddy" report on the hotel and catering industry. It proves what many of us have put to successive Governments, that the industry received bad tax treatment before the hotel development incentive scheme, then a massive and too-powerful shot in the arm as a result of the scheme and, when the scheme ended, it returned to the doldrums. What the industry needs is not a massive cash injection given indiscriminately once every 10 years but continuing therapy.

The Government must be aware that many small hotels and boarding houses are being forced out of business by the Fire Precautions Act. In the Daily Mail of 13th December there appears an article headed: Cash crisis forces hoteliers to quit". In the Birmingham Post of 7th December this heading appears: Hotel group's debts total more than £17 million. Large and small companies are being battered by the Fire Precautions Act, by rates increases and by inflation.

I urge the Treasury Ministers to read the "little Neddy" report, which brings out certain serious factors, one of which is that of the six countries which were studied—the other five being Denmark, Germany, France, Spain and Switzerland —only the relevant financial authority of the United Kingdom does not allow the hotel industry capital allowances on buildings. I urge the Minister to continue his sympathetic attempts to mitigate the hardships which all hon. Members who were in the House in 1971 had responsibility for causing.

I thank the Financial Secretary and the Chief Secretary for the help that they have given so far.

10.38 p.m.

Mr. A. G. F. Hall-Davis (Morecambe and Lonsdale)

I give a qualified welcome to the motion. I have an interest to declare as a director of a company owning hotels, but not one, so far as I know, financially embarrassed by implementing the regulations.

No one appreciated—certainly not those of us who were on the Government benches at the time—how onerous would be the financial burden of the 1971 Act on hotel keepers. Since the passing of the Act there have been attempts on the part of the authorities to secure its implementation and on the part of hard-pressed hotel keepers to find the finance to meet the cost. It is extremely important that both the nature of the requirements of the regulations to be enforced and the financial assistance that will ultimately be available should be finalised.

One of the reasons why the improvements have been delayed, in addition to the financial restrictions of those trying to implement them, has been the fact that the regulations and the Act have been interpreted differently in different parts of the country, and those in areas where they have felt that more stringent criteria were being applied have held back in the hope that their authorities, regional or local, would revise their attitude. I am glad to say that in certain cases that has been done, but it is important that a definitive national set of standards should now be produced.

I realise that this is a matter not for the Financial Secretary but for the Home Office, but the Home Secretary said, in making his statement on the Paddington disaster, that he would draw the attention of the Treasury to comments which had been made about the difficulty of meeting the cost of these improvements. I do not believe that this motion in any way reflects any reconsideration that may be given to the financial assistance as a result of the very high degree of risk which has been revealed by the delay in implementing the regulations.

Is there to be some further consideration of the possibility of giving either credit facilities or loans or grants as a result of the Home Secretary's remarks? Will the hon. Gentleman deal with this matter either by saying that nothing further is to be done or by coming to a conclusion quickly as to what might be done?

I believe that the financial difficulties are such that it will still be much longer than many of us would like to see before adequate safety standards are implemented, unless the Treasury further eases the financial burden, most certainly by giving a direction to the banks that lending for implementing fire safety precautions is just as deserving of priority as lending for exports, agriculture or industrial investment. It is the very least that the Treasury should do. Will it please make clear quickly whether it is going to do more or nothing?

10.43 p.m.

Mr. Ian Percival (Southport)

I, too, welcome the announcement and echo the observations of my hon. Friends the Members for Christchurch and Lymington (Mr. Adley) and Morecambe and Lonsdale (Mr. Hall-Davis). The people we are talking about play an important part in the life of a community such as Southport— indeed, also in the life of the community as a whole—by providing reasonably-priced holidays which many people who could not otherwise afford a holiday can in fact afford.

These people are mostly self-employed, independent and very hardworking. They make no calls on anyone else. They have to shoulder their own burdens, and they get little enough reward. They accept that it was right of the House to lay down minimum standards for fire precautions—all my constituents have accepted the propriety of that move—but there is no doubt that we have all discovered what a severe burden it has been to many of them.

Therefore, we shall be glad to see something done. When the Financial Secretary studies what can be done, and if it is a choice between a narrow or a generous provision, will he please err on the generous side?

I congratulate my hon. Friend the Member for Christchurch and Lymington on the way he has kept up the battle on this matter and on his success in persuading the Government that action is necessary. We welcome the announcement and look forward to seeing the details.

10.45 p.m.

Mr. John Hannam (Exeter)

I should like to add a few words to the comments made by my hon. Friends, and I begin by congratulating my hon. Friend the Member for Christchurch and Lymington (Mr. Adley) on pursuing this matter so diligently on behalf of Members on both sides of the House over a period of time.

It is important in the context of the matter to think in terms of the crisis facing the hotel industry. At a time when we need every penny that can be earned across the balance of payments, the hotel industry in the South-West is facing a severe crisis, with hundreds of hotels coming on to the market. Many are being forced into this position because of the double burden of sharply increased rates and fire precaution costs.

I declare an interest in my family business in the hotel industry. To illustrate the difficulties I cite the example of a small hotel with about 21 bedrooms which over the years has carried out a programme of improvements in fire precautions. Last July it suddenly found itself faced with a five—foolscap—page list of requirements by the chief fire officer of the area, the cost of which totalled about £8,000. This works out at about £400 per bedroom, and the money cannot be recouped by increased charges to the customer.

In those circumstances it is vitally important that every assistance is given to hotels of this size. They are found in nearly all our holiday resorts, but they fall outside the assistance that is given to 12-and 13-bedroom hotels and have to rely on tax relief and assistance through the banks.

The action taken by the Financial Secretary to allow this expenditure against taxation is welcome, and I add my plea to that made by my hon. Friend the Member for Christchurch and Lymington with regard to capital allowances for hotels. We are one of the few countries in Europe that do not allow capital expenditure in the hotel industry against taxation, and I believe that we are falling behind with the modernisation and improvement of our hotels as a result. I urge that in this continuing process towards treating this valuable and important industry as an industry the possibility of allowing expenditure against taxation should be considered by Treasury Ministers in any further deliberations.

10.48 p.m.

Dr. Gilbert

I hope that I may have the leave of the House to reply briefly to what has been said.

I am sure hon. Members have recognised that the debate has ranged fairly widely for a Ways and Means Motion, particularly some of the remarks of the hon. Members for Exeter (Mr. Hannam) and Christchurch and Lymington (Mr. Adley), but I should not say it was any the less valuable for that.

Clearly, these things fall to be looked at rather in a piecemeal way. That is the nature of government. We always do things a stage at a time, but I think we have made two advances within the last few months. I am grateful to the hon. Member for Christchurch and Lymington for acknowledging that, and it is only right that I should pay tribute, as the hon. and learned Member for Southport (Mr. Percival) did, to the hon. Gentleman for the persistence that he and others have shown in their constituents' interests in this matter.

The answer to the right hon. Member for Carshalton (Mr. Carr) is that the new clause that will be covered by this motion will not cover situations under the Offices, Shops and Railway Premises Act. It is tightly drawn to cover premises in respect of which fire safety work has been carried out under the Fire Precautions Act 1971, whether or not a formal notice has been issued, and that it is as far as it goes. If the right hon. Gentleman cares to study HANSARD, he will see that I have laid it out fairly carefully. I understand that the right hon. Gentleman has written to my right hon. Friend about this, and we shall be happy to provide any further details.

Mr. Robert Carr

I understand what the hon. Gentleman says. I apologise for throwing this subject at him, but I had not realised that this matter was coming up tonight. Perhaps he and his colleagues in government would look at this matter because it might also be important. May I add my thanks to the hon. Gentleman and his colleagues for what they have done.

Dr. Gilbert

I am grateful to the right hon. Gentleman. I did not consider that he was bowling a googly at me since it is quite proper on Ways and Means Resolutions to ask questions of that nature. I am sorry that I am unable to be more forthcoming.

The hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) asked for a quick decision. I do not know whether governments ever reach quick decisions, but there is a difficulty because, however far one would like to go, the public expenditure implications become very much more considerable when one seeks to widen the matter in the way in which the hon. Gentleman and his hon. Friends suggest.

I certainly undertake to look at the "little Neddy" report to which the hon. Member for Christchurch and Lymington referred. I cannot give any commitment to hon. Gentlemen that in the near future we shall go further than we have gone in the Ways and Means Resolution and in the new clause to be tabled in Committee. but I am grateful that what we have been able to do meets with their approval.

Mr. Hall-Davis

Will the hon. Gentleman also examine the matter of credit?

Dr. Gilbert

Yes.

Question put and agreed to.

Resolved,

That further provision may be made about the making of allowances under Chapter I of Part III of the Finance Act 1971 in respect of expenditure incurred (whether before or after the passing of this Resolution) on fire safety.

Ordered,

That it be an Instruction to the Standing Committee on the Finance Bill that they have power to make provision therein pursuant to the said Resolution.