CHARITIES: DISPOSAL OF LAND ACQUIRED AFTER 12TH SEPTEMBER 1974

HC Deb 22 June 1976 vol 913 cc1481-538

'(1) If the consideration which is received by a charity for the disposal of an interest in land which:—

1. (a) was held by the charity on 12th September 1974; or
2. (b) was held by another charity on that date and has at no time between that date and the time of the disposal been held otherwise than by a charity

is applied by the charity in acquiring a new interest in land which is to be used wholly or mainly for the purpose of the charity then the interest so acquired shall be treated for all the purposes of this Act as held by a charity on the 12th September 1974.

(2) On the disposal by a charity of an interest in land to which the preceding subsection does not apply and where

1. (a) during the whole of the period of seven years immediately preceding the date of disposal the interest has been owned by a charity (but not necessarily the same charity throughout) and
2. (b) the land (as distinct from the rents and profits thereof) has not been held otherwise than wholly or mainly for charitable purposes

than in determining the amount of any realised development value for the purposes of this Act there shall be deducted so much of the net proceeds of the disposal as is represented by the difference between:

1. (i) the relevant base value at the date of disposal of that interest and
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2. (ii) its value on that date on the assumption that planning permission would be granted for any development by virtue of which the use of the land would be made to correspond with the use which prevails in the case of contiguous or adjacent land'.—(Mr. Wakeham.)

Brought up, and read the First time.

Mr. John Wakeham (Maldon)

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

Mr. Deputy Speaker

With this it will be convenient to take New Clause 8 (Reduced rate of tax for charities).

Mr. Wakeham

I have moved this new clause because I was impressed by arguments put to me that charities had not been treated fairly under the Bill. Whatever the merits or demerits of the Bill, it seemed to me that in Standing Committee hon. Members wanted to be fair to charities, and I thought it right to give the House an opportunity to put the matter right. I do this not to score any political point, but because the new clause is moderate and limited and would attract support from all parties in the House.

Its objects are twofold. The first is to to secure roll-over relief for churches and charities for changes only in their operational land. The second is to avoid the concessions that the Government rightly gave under the Community Land Act from being eroded by the development land tax.

I make no secret of the fact that I prefer charities to be exempted from tax which, by and large, has been the case from time immemorial, although some people would say from the time of Henry VIII. I come from the constituency that produced Anne Boleyn. If it was Henry VIII who last taxed charities, I rest my case on that. Nevertheless, I have put down some amendments to Clause 25 to cover that point.

My purpose in New Clause 4 is much more limited than a general exemption. It is specific and particular. If the argument is that there is an abuse by charities of any of the provisions of the Bill, the way to deal with that is by revising the legislation dealing with charities rather than by including them in the Bill.

Subsection (1) of the new clause introduces a roll-over provision to ensure that operational land—that is, land used by the charity for its own purposes and not held for investment and income—should be treated as White Paper day land and thus developed or sold without liability to development land tax. Churches and charities need to replace their operational land for all sorts of very good reasons—changes in population, the needs of a community, compulsory purchase, road development schemes, and so on. It seems wrong that replacement land acquired after 12th September 1974 should lose the benefits of the land that has been replaced.

There was a great deal of discussion in the Standing Committee, of which I was not a member, of the treatment of charities. From the record of those proceedings it seems that too little weight was given to four points. First, although it is true that since White Paper day land may be sold at market value and the base value for DLT purposes of any land bought will be higher, which in turn means that when the replaced land comes to be sold, any DLT will be correspondingly less, the benefits of this wil wear off as sale follows sale. The number of changes that churches and charities need to make over a period of years is perhaps more than the Committee considered.

Mr. David Mitchell (Basingstoke)

On the point about the position of church or charity land that will be redeveloped and needs to be available on an on-going basis to finance the purchase of further land, one knows how important it is in the case of churches to be able to move out of dying city centres and into expanding and new towns, such as I represent. They must have finance to do so and much of it comes from the sale of older property. But does my hon. Friend not recognise that the same is true of a multitude of businesses, particularly small businesses, which have an enormous contribution to make to the economy and which will be desperately damaged by the Bill as it stands?

Mr. Wakeham

That is a valid point and I would support any proposals to assist small businesses in this way. But my argument at the moment relates to charities.

This is a case in which common sense and reason might prevail. Although there are not many Government supporters listening to my arguments, at least two Ministers are present, and I hope that my arguments will receive favourable consideration. Although my hon. Friend's comment is valuable, it widens the argument and if I adopted it I might not get the support for which I am hoping.

My second observation is that where a church or charity has to give up land which is to be developed for its charitable work, it seems wrong, just at the time when it needs all the cash available, that a substantial part of its resources should be taken away in taxation. That is analogous to my hon. Friend's point.

The third comment, touched on in Committee, is that this tax, so far as it affects charities, brings a new problem to those who administer them. For the first time they have to concern themselves with the intricacies of tax planning as well as all the other problems of running and administering their charities.

As a chartered accountant I am prepared to declare an interest in this matter, as charities will have to seek professional advice to deal with problems arising from development land tax. I do not think that this additional burden should be put on charities at the present time.

The fourth topic I want to raise, which was given too little consideration in Committee, is that the purpose of the Bill is to give benefit to the Community from the gains from land. Surely charities do just that. By leaving development gains in charities, surely we are achieving the broad objective of the Bill.

Subsection (2) of my new clause makes sure that the concessions announced on 15th July last year and in part of the Community Land Act are not eroded. These concessions mean that with land held by a charity for seven years compensation would be based on the value of that land on the assumption that planning permission would be granted and not on the current use value, which is often very low. This is particularly the case when considering the position of city churches that move out to the suburbs. As matters stand now, for land acquired after White Paper day this concession can be wiped out by development land tax.

The Government would argue that this concession does not come in to effect until the second appointed day and by that time the taxation provision may be very different. But they recognise that there may be a problem here. They would argue that they would want to deal with it then and not now.

My new clause would put the matter right now and clear up the present doubts and uncertainties. It would enable charities to plan their affairs some years ahead knowing that they will not have a concession given on the one hand and taken away on the other by development land tax.

My new clause is moderate and reasonable. It ensures that any benefits arising from the tax concessions go directly to the charities and therefore to the community. As such, it should commend itself to all parts of the House, and I hope, to the Government.

Mr. Sainsbury

I should start by declaring another interest—I am a trustee of a number of charities including one in particular which is a fairly substantial holder of interests in land, some of which, in my opinion, are becoming near to being ripe for development. This will present problems to those entrusted with the care of the charity's affairs.

I mention that particular one because it is an example of the fact that whereas obviously a very large number of charities do not have any property at all, or do not have property remotely covered by the provisions of the Bill, there are a number, including some substantial ones with a wide scale of operations, which hold a large proportion of their assets in the form of property. This is not surprising, because often the property was acquired by way of endowments, often from the founder of the charity.

That is what happened in the case of the charity I mentioned. The founder owned a farm in what is now a suburb of London. Unfortunately, the founder was not sufficiently far-sighted to ensure that his farm occupied the best pitch in the shopping centre, but he did not do badly and the charity has benefited substantially over the years. Like other charities, it received property in the form of endowments. Perhaps that is why so many charities treat property as their most important source of funds with which to carry out their activities.

9.30 p.m.

The other point to be borne in mind is that charities are perpetual bodies. The trustees for the time being of any charity must be conscious at all times of their responsibility to pass on the assets of the charity to their successors over the generations. They do not envisage that they come into being to carry out a specific function and that when that is done the charity will be wound up. That happens, but only rarely. Far more frequently the charity will expect to continue in its appointed rôle for as far forward as the mind can conceive, and the trustees will think of their assets in that context. This is an important factor to bear in mind when discussing these related matters of charities.

In the Committee the Minister went some way to recognising, if somewhat grudgingly, that the proposals in the Bill presented a problem to charities. He said: I noticed that the hon. Gentleman said 'Long-term—50, 60 years, 100 years'. He continued: It is a long-term problem … if there is one, but I do not think that in the long term there will be a problem because people in just these circumstances will have taken into account legal obligations and liabilities".—[Official Report, Standing Committee J, 29th April 1976; c. 764.] I think that the liabilities he had in mind at that point were taxation liabilities.

It seems to be generally accepted that we go back to the time of Henry VIII for tax exemption for charities. We have a long and well-established tradition of such exemptions. I do not wish to raise the argument, which has been raised occasionally in other places and also when we were discussing the Community Land Bill, as to whether all charities are as charitable and deserving as one another.

There is the problem of definition of charities. It is accepted that they do an important and worthwhile job in the community. It is at times of financial stringency when the local authorities are having to scrutinise all aspects of their expenditure on, among other things, personal social services that the charitable bodies have a particularly important rôle to play. They go some way to filling gaps in the provision of services. One of which I am particularly conscious in my constituency, where there are many elderly people, is that of sheltered accommodation. Whatever we may like to think about the way charities manage their affairs, I should have thought it would be fair to say of them, as of other bodies, that it is dangerous to introduce artificial distortions.

One of the matters which was of considerable concern to those of us who served in the Committee stage of the Bill was the extent to which the introduction of taxation of charities—for the first time since the reign of Henry VIII, or for the first time ever—would result in distortion of the way in which they manage their affairs. It is only in this one respect of the development land tax that it is proposed that charities should be subject to taxation.

The Minister, during our fairly lengthy discussion on this matter in Committee, did not suggest in any way that other forms of taxation should be levied, and I have not heard the suggestion put forward from the Government side. Suppose that we have this tax on charities. A charity which holds property may for some reason decide to sell some land. One very likely reason for this is that the local authority wishes to acquire some of its land for a road-widening scheme. The charity may therefore dispose of some of the land which it held on 12th September 1974, and which it may have held for many hundreds of years.

The nature of the charity is immaterial. Having disposed of the land, however, it is very likely, in my experience, that the trustees of that charity would wish to reinvest the proceeds in property in order to produce income for their charitable purposes. Traditionally, and for the reasons I have already referred to, charities may well wish to continue to hold a substantial proportion of their assets in the form of property.

Having acquired other property, as the Bill stands—and without the benefit of this ingenious clause—those charities will then be holding an asset on which they might become liable to tax many years ahead when development or redevelopment is appropriate for that particular asset. They will, of course, be entitled to the same exemptions as everybody else with regard to development land tax, and these will themselves have a distorting effect since they will tend to make owners of property try to avoid any form of redevelopment which would make them liable for development land tax. This will therefore tend to make people concentrate on redevelopment which is within the exemption limits, irrespective of whether that is the appropriate form of redevelopment or the best form of economic use of the particular site.

That is a distortion which charities will share with everybody else, but the grave distortion that the clause will avoid is that of having one assets of a charity subject to taxation in these circgumstances whereas all the other assets would not be liable to tax. This will be a grave distortion and a matter of difficulty to the trustees. It will be an increasing distortion. Over the years, more and more of the property of charities will be property which they did not hold on 12th September 1974.

I find particular merit in the clause, and I am convinced that unless we can adopt a formula such as this—a particularly ingenious and satisfactory one—charities will in due course be increasingly damaged by the provisions of the Bill. I hope that the Minister will accept the new clause and continue the historic, traditional and valuable exemption from taxes given to charities in response to the work which they and nobody else can do in the community.

Mr. Douglas Crawford (Perth and East Perthshire)

I support the new clause. I apologise for my absence earlier. I was in the Standing Committee considering the Finance Bill upstairs.

During proceedings on the Community Land Bill, I made a statement of interest to the effect that my father was a minister in the Church of Scotland.

The hon. Member for Hove (Mr. Sainsbury) said that Henry VIII was the first person to tax charities in England.

Mr. Sainsbury

I think it was suggested that Henry VIII was the last person to tax charities.

Mr. Crawford

I apologise to the hon. Member. I was about to point out that charities and charitable institutions had been the foundation of many great educational establishments in Scotland.

I echo the plea of the hon. Member for Hove for common sense. It is important to ensure that the operational land of churches should be free from taxation as long as it remains operational in the proper sense of the word. The church must be able to move its work for the community freely wherever the need arises.

I reiterate the plea in the letter from the Churches Main Committee which has, no doubt, been received by a number of hon. Members. It states: given the fact that there already are exemptions in the Bill, including protection for land which the Churches happen to own on 12th September 1974, we cannot believe that this further small exemption for land acquired after that date would do serious damage to the land scheme". The Minister should be aware that having to pay deferred tax at that stage will inevitably eat into reserves which churches need to restart work elsewhere. A development by a church or charity is a development for its own use. Even if it does not directly serve the operational needs of the church, the resulting capital or income is an important part of the financing of an operational development and the cost of maintaining it. A constantly recurring example quoted by the Churches Main Committee is that of the redevelopment of a church site with the church building a community centre, shops, offices and so on. The income from the latter is an essential part of the financing of the former. In no circumstances can the realised value of church land be used for anything other than charitable purposes.

My constituents, like those of most other hon. Members, are very concerned about this matter. I hope that the Minister will accept the new clause.

Mr. Stephen Ross

When I first saw the new clause on the Notice Paper, I felt that it had a great deal of merit. I apologise to the hon. Member for Maldon (Mr. Wakeham) for missing part of his speech. Unfortunately, I was occupied elsewhere in the building. I very much support the new clause because it goes to the root of the problem.

We argued the case for charities on the Community Land Bill, but we got very little for them apart from a 10-year exemption. Now, everybody is concerned about what will happen when that 10- year period is up. So far, the Government have not brought forward any proposals to meet the calamity which will affect charities at that time.

I have suggested on a number of occasions that if the Government stand absolutely firm and insist that charities must meet their obligations in the same way as others after the 10 years have expired, at least some sort of compensatory fund should be set up to enable them to be compensated in the same way as landowners and others were compensated under the Town and Country Planning Act 1947. However, that suggestion has fallen on deaf ears. Therefore, we look to a clause such as the one now before us to try to get over the problem, and I think that it overcomes it. It is ingenious and sensibly drawn. Clearly, someone has spent a great deal of time drafting it. I hope that we shall not be told that there is some illegality about the drafting. It makes sense to me, and I think that it deserves the support of all our Members.

9.45 p.m.

As I understand the clause, charities will be able to reinvest the money. That is what nearly all charities do. I have acted for quite a number of them in my time, and I draw the Minister's attention to the activities of the Haig Homes on the Isle of Wight. This charity has done a great deal of good in my area. It has been selling off land for development purposes, and the money has been reinvested to provide money for further homes for the incapacitated. It has been used to provide a lot of old folk's homes as well. When I was canvassing round them only a short while ago, I thought what a credit they were. That sort of thing will not be able to be done again if the law stays as it is.

Goodness knows what will replace the charities and the rôle they play in our society if our economic situation does not improve radically. We already have enough trouble trying to deal with social security and social service problems. We fear that cuts are coming. No doubt there will be cut-backs—indeed, there have been some already. If the charities have to cut back because they are unable to raise the necessary finance, what is to be put in their place? We are entitled to hear from the Government what they intend to do about these bodies.

The second part of the new clause seems to be fair and realistic in its approach. I hope that it means that only a restricted amount of taxation would be applied to land which a charitable body might have purchased on the open market and held on to for at least seven years. Surely that is long enough to enable anyone to accept that there was no degree of speculation.

As I read the clause, if a charity sells it is liable to taxation. I hope that I have understood correctly and that the taxation would be limited to relating the development value of the land as sold to adjacent land of a similar type—in other words, a limited liability. Nevertheless, in that event charities would be facing their responsibilities. I had hoped that we should find it possible to release them altogether, but perhaps that is just not possible. We have had many arguments about that point. The second part of the clause accepts that the charities will have to pay their taxation in the same way as the rest of us if they have bought land which has not been in charitable ownership, or has not been reinvested from land asssets which they have already sold.

I believe that the clause should be accepted by the Government. If it is not, we are entitled to know what they will do to help the many charitable bodies which play such an important rôle in our lives.

Mr. Clegg

I support what my hon. Friend the Member for Maldon (Mr. Wakeham) said in introducing the clause and what has been said by other hon. Friends. Almost from the time I first set foot in the House I have found the Labour Party's attitude to charities ambivalent.

The first new tax I heard introduced when I became a Member was selective employment tax. In the first draft of that tax to be put before the House there was no exemption for charities. It was not until there was an outcry against it that such an exemption was made. My colleagues who suffered in Committee on the Community Land Bill will know that the Government had to be forced by the outcry from the churches and other bodies to modify their original proposal. I believe that this modest clause should be accepted.

My hon. Friends and others have drawn attention to the work that is done by charities. I do not think we need stress that overmuch. Labour Members like certain charities but dislike others. I believe that behind this time limit that they have put on exemptions for charities is their dislike of educational charities.

Mr. Jasper More (Ludlow)

My hon. Friend referred to hon. Gentlemen opposite. I suppose by that he means one Minister, two rather bored looking Whips and one elderly, respected Member—the hon. and learned Member for Hackney, North and Stoke Newington (Mr. Weitzman)—who clearly has not come in to listen to the debate.

Mr. Clegg

I am grateful to my hon. Friend for his intervention. I think that most hon. Members opposite have come in because this is the coolest place in the Palace of Westminster. I am sure that they have not come in to listen to the sparkling speeches being made by Opposition Members and the deafening silence from the Government side.

During the late night watches on the Community Land Bill we found that there had been no forward thinking by the Government about charities before preparing that legislation. We had to probe and probe again to discover what their intention was. We got some very strange replies at 5 o'clock in the morning. They said that some charities would not be affected. They did not know which those charities were. They could not define them. Yet this Government pride themselves on planning.

We are talking about the long-term future of charities. The new clause will go some way towards reassuring charities by giving them a longer-term future and—what hon. Gentlemen opposite are always saying—time to plan in the long term as well as in the short term. For those and other reasons advanced by my hon. Friends I fully support the new clause.

Mr John Cope (Gloucestershire. South)

I rise to support the new clause so ably moved by my hon. Friend the Member for Maldon (Mr. Wakeham) and to congratulate him on the way in which it is drawn, which should commend it to the House and to the Government. This is not what might be called a blunderbuss paving clause. It is precisely and carefully worded so as to appeal, in the right spirit, to hon. Members on both sides of the House and to the Government in particular.

I want to refer specifically to the position of churches. My constituency includes part of two dioceses of the Church of England. The diocesan authorities in both dioceses have approached me about this tax and how it will apply to them. I have been in otuch with Treasury Ministers, and they have set out at length their opinions as to why the tax should remain as it is proposed in the Bill. I do not find the letters from either the Minister of State or his colleagues very satisfactory.

The principal argument advanced by the Minister of State in correspondence, which has been advanced in other places as well, is that to give full exemption to charities would be contrary to the principle that, as an integral part of the Government's land scheme, development land tax is to pave the way towards transactions at current use value, that develoyment land tax is therefore different in nature from other taxes, and that it does not follow that institutions at present exempt from tax should be exempt under the new arrangements.

I do not think that development land tax is different in nature from other taxes. The rules are different, but that is the position with any tax. That is true comparing income tax with corporation tax, just as it is comparing capital gains tax with development land tax.

The purpose of the Bill is simple. It is to tax gains made on the development and sale of land. In many respects it is similar to the capital gain tax, except that its rules are drawn up to apply specificaly to land. It has the full special rules that apply to development. It is not different in its nature from any other tax. On the contrary it is similar to the capital gains tax.

My hon. Friend the Member for North Fylde (Mr. Clegg) made an interesting point when he mentioned something which I had forgotten, although I remembered it when he mentioned it. The selective employment tax as originally drafted was intended to apply to charities on much the same arguments as are advanced for the development land tax. In the former case, as a result of the outcry and the fuss made by charities and Members of Parliament, the Labour Government very properly decided to continue the exemption started by King Henry VIII. In his letter the Minister of State argued that the tax was an integral part of the Government's land scheme. However, the Government changed their mind about their attitude to charities in the Community Land Act.

The development land tax is intended to pave the way towards transactions at current use value. Income tax is intended to pave the way towards income being received net of tax. That is the purpose of income tax. We may use similar arguments about any tax. This tax is intended to extract from those who would otherwise have it a proportion of a gain.

I cannot sec that there is any difference between a charity that buys and sells shares and one that buys and sells land. Later in his letter the Minister of State admitted that there might be problems of finance in the long term for churches, although he referred especially to voluntary schools. The extract reads: we do not think the legislation will harm the voluntary schools in the short or medium term. There may be problems of finance in the long term. The Government have accepted part of our case already. In Clauses 24 and 25 they accept that the position of a charity is different from that of other people. They accept that charities are in a different situation. In one sense we do not argue that charities are different from other organisations. We argue that they are wholly different, or only different in part, but we ask that when this tax is introduced, they should therefore continue the arrangement that has obtained for so long for other taxes.

I read an extract from the letter of the Minister of State, answering points in a letter addressed to me by the Bishop of Bristol. That letter was not exclusive to me. Similar letters went from the bishop to other Members of Parliament, including the Second Church Estates Commissioner. I am not sure where he is at the moment, but I am assured that he is in Committee considering the Finance Bill. The hon. Member who so informs me has come from that Committee to take part in this debate.

10.0 p.m.

Mr. Peter Morrison (City of Chester)

Does my hon. Friend agree that the Second Church Estates Commissioner should be here when we are discussing this important new clause?

Mr. Deputy Speaker

Order. We cannot produce the Second Church Estates Commissioner here.

Mr. Cope

I appreciate that you, Mr. Deputy Speaker, cannot produce him here. He is not yours to produce, any more than he is the creature of the rest of us to produce. It is entirely for him to decide whether to be here.

I tabled some Questions on this matter to the Second Church Estates Commissioner. In a Written Answer on 19th May I was told: The potential cost to the Church is thus not only a matter of money but also of loss of mobility and effectiveness in its organisation."—[Official Report, 19th May 1976: Vol. 911, c. 582.]

Mr. Crawford

It is a little unfair that the Second Church Estates Commissioner has been criticised for not being present, because I know from personal experience how difficult it is to be in two places in this building at the same time. I think that Opposition Members are being a little hard on the Second Church Estates Commissioner.

Mr. Cope

I was quoting the Second Church Estates Commissioner with approval. I entirely agree with what the hon. Gentleman said in that Answer, and I thought that the House wanted to be reminded of it.

The Bishop of Bristol also reminded me in his letter in April that it was envisaged by Parliament, when the Education Acts were enacted from 1944 onwards, that the funds required by the churches to sustain their participation in the national maintained schools system would be derived mainly from the sale of land and buildings no longer required for educational purposes. A good deal of land and a number of those buildings will have been held for a number of years, and in some instances for many generations, and will not be affected by the Bill because they will have been held already on White Paper day. It is a great restriction on their ability to manage that land if the tax is to apply as proposed in the Bill as it stands.

The bishop also said in his letter to me—and this was said in full knowledge of the Bill as it stands— The application of development land tax to the proceeds from a growing proportion of such sales will inevitably in the long term stifle and frustrate the efforts of the churches to make what they and Parliament have hitherto seen as their proper contribution to the schools system of the country. We all know that there are those in this House who do not wish the contributions of the churches to the school system to be as great as it is. There has been some controversy over this matter in the last day or two, and I shall not embarrass anybody by going into that subject, but it is surely important that the churches should make a contribution to the educational system, not least by means of the church schools.

The bishop continued at another stage in the letter to say that it appeared to him that the Bill failed to recognise that the financial resources of charities were deployed in the interests of the community at large. It raises the whole question of who best can look after the resources in the interests of the community. Are we saying that money can be looked after in the best interests of the community only when it is in the hands of a local authority or the Government?

Charities in general and churches in particular have a great part to play and a contribution to make in our national life in that respect. To introduce the tax and to apply it to charities across the board would be a backward step. But the Government have not done that. They have introduced special arrangements which, to a certain extent, recognise the special position of charities. I urge them to accept the new clause and follow through the logic of their arguments.

Mr. Michael Spicer

One must ask why the Government are unlikely to accept the new clause. As my hon. Friend the Member for Gloucestershire, South (Mr. Cope) has said, they have already gone some way. I am sure the Minister will argue that it is as far as they can go. One must therefore ask why they will not go the whole way and why they have introduced a new tax on charities. One must ask why Socialists do not like charities, because that goes to the root of the matter.

If the Minister follows the line he took in Committee, I suspect he will use arguments which are basically Socialist. One understands those arguments even if one does not agree with them. He will say that charities do not represent the entire community, whereas the Bill does. He will argue that the sum of the whole is in some way greater than its parts.

That is a Socialist view and one with which we totally disagree. We believe that the sum is equal to the parts and that if the parts are bad, the sum will be bad. Somehow, in the tradition of Rousseau, the Government's philosophy is that there is something greater than the individual parts of society. But if one does not have charities which are thriving, all the benefits that charities bring to the whole will be damaged. Socialists dispute that. That is why one of the arguments that the Minister will use is that charities, being only a single part of society, do not benefit society as much as his Bill, which will benefit everyone.

There are two reasons why Socialists do not like charities. The first is that in some way they believe that charities in many of their forms—such as charitable housing associations—are a threat to State institutions. In Committee, the only real contribution from the Government Back Benches—and there were only about three such speeches—was an intervention by the hon. Member for Woolwich, East (Mr. Cartwright) in our debate on charities. He was inflamed by a speech by my hon. Friend the Member for Hove (Mr. Sainsbury), who claimed that in his constituency certain housing trusts were beneficial. The hon. Member for Woolwich, East said that that was a reflection upon the provision of housing by local authorities. Socialists believe that many charities are a threat to publicly-provided benefits. That is a fundamental reason why I suspect the Minister will not accept the clause.

The second and perhaps related reason is that the trade union movement believes that many charities form a threat to its wage bargaining position—for example, in the work undertaken by the WRVS.

Mr. George Cunningham (Islington, South and Finsbury)

How?

Mr. Spicer

It happens where charities' benefits are provided by voluntary labour. I think of the mini-buses driven by voluntary drivers from villages to the towns, carrying pensioners to collect their pensions, as happens in my constituency and many others. That is seen as a threat by workers in the nationalised bus industry. It is of concern to the charities in question that they should not be seen overtly to threaten the trade unions involved. There are other examples that I shall be happy to give the hon. Gentleman if he wishes to pursue the matter.

For those reasons I can understand why Socialists, at the bottom of their hearts, do not like charities. They prefer to see benefits provided by the State, preferably operating from the centre. That is part of the Socialist ethic, and there is no need for Labour Members to be apologetic about it. That is what Socialism largely stands for—the provision from the centre by the State of all benefits. Charities constitute a threat to that Socialist objective.

Mr. George Cunningham

No.

Mr. Spicer

It is no historic accident that a Socialist Government for the first time have introduced a tax on charities. The Minister may well argue that he has given way here and there on specific aspects of the tax, but at the end of the day charities are to be taxed for the first time. That is the thin end of the wedge, the beginning of a new fiscal concept.

I entirely agree with my hon. Friend the Member for Gloucestershire, South that it is not a unique tax. I suspect that in the long term it will be developed, if Socialist Governments persist, and that it will be welcomed by the mass of those who believe in Socialism, because it is their objective ultimately to prohibit private initiative of that sort. That is what Socialism is all about.

So I enthusiastically welcome the new clause. I hope I have not over caricatured the arguments. I see no reason why the Minister should be afraid of those arguments. I am sure that he believes in them because they are what his party firmly believes. That is why I fear that we shall not win over the Government in this matter, for on this issue of charities there is a difference of principle between us.

10.15 p.m.

Mr. Peter Morrison

I rise to support and congratulate my hon. Friend the Member for Maldon (Mr. Wakeham) on moving New Clause 4. It was certainly interesting to listen to my hon. Friend the Member for Worcestershire, South (Mr. Spicer), who pointed out that the Socialist Party cannot abide charity. Labour Members laugh and object, but we know that at the end of the day they believe that the central Government and the State are better able to do what charities do, despite the fact that a great many people are voluntarily giving their time to charities to help others who are in real need. This is the very reason why the Government have decided to proceed with this provision on charities. They want to do what they can to undermine charities.

My hon. Friend the Member for North Fylde (Mr. Clegg) said that the Government were somewhat ambivalent towards charities. He was certainly being rather charitable towards the Socialist Party. I do not believe that the Government are remotely ambivalent, but my hon. Friend may have a point, because I recall to the House what was said by the right hon. Member for Huyton (Sir H. Wilson) when speaking at the annual general meeting of the National Council of Social Service. I quote: Voluntary organisations have the ability to provide a form of service which the State is ill-fitted to provide, however dedicated its administrators". Yet Labour Members support their right hon. Friend. If they really meant to do so, why are they not coming into the Lobby with my hon. Friends and myself tonight backing this new clause? The reason is that in their heart of hearts they do not want to back charities. They do not want to feel in their hearts, as I and my hon. Friends certainly believe, that voluntary organisations have done and are doing better than the State can do.

As regards churches, my hon. Friend the Member for Worcestershire, South developed the arguments very cogently. In my constituency there is a contracting city centre, to the extent that many people are moving from the city centre to outlying suburban areas. If DLT had been in existence over the last 100 years, the situation of the churches in my constituency, as they sell off land in the city centre to build new churches in new council or owner-occupied estates outside the city centre, would be decidedly more difficult than it is. Such places are utterly essential to the community.

I have absolutely no doubt that my hon. Friend the Member for Maldon is right in putting forward the new clause. If hon. Members opposite really believe in voluntary organisations and want charities to go on doing what they have been doing, not only over the past decade but in past centuries, the least they can do is to abstain rather than vote against my hon. Friend's new clause.

Mr. Esmond Bulmer (Kidderminster)

I support the new clause, and I wish to speak particularly for the Church of England and to explain my reasons for concern.

Any hon. Member who has had anything to do with the finances of the Church in these times of inflation will understand all too well what havoc inflation has played, especially with the upkeep of buildings and with trying to keep pace with paying proper wages and salaries. These financial pressures mean that a great deal of reorganisation will be forced upon the Church, which in turn will mean a number of buildings having to be relinquished and a great number of new buildings being erected to meet the changing needs of society.

Equally, many of our ancient churches and the buildings connected with them are a valuable part of our heritage, and the funds that the Church can still obtain from its other developments go towards their upkeep. I should like to see all the Church's funds exempted from this tax. However, at least let us have what the new clause proposes should be held.

At present we also have a substantial cut-back in public services. There is a great deal that the Church can do to provide a safety net, and in my constituency and in the constituencies of others of my hon. Friends there is a great deal that the Church is doing. It depends, however, upon voluntary subscriptions. In many ways, it is uniquely successful in drawing on voluntary funds in a way that the State has not succeeded in doing. For all these reasons, I support the position of the Church as being a privileged one.

If the Minister visited my constituency and travelled up the new ring road, he would find on his left-hand side first the parish church, then the Methodist church and then the Trades and Labour Club. If he went back into the history of the town, he would discover that the land was owned by the Church of England and that the Church had recognised the needs of the Methodist church and of the Trades and Labour Club.

I do not believe that the Government wish to put any obstacles in the way of the development or the building of the local Trades and Labour Club or in the case of my constituency, that they will do anything other than welcome the flexibility shown by the Church of England. Under the terms of the Bill, however, that flexibility could be destroyed. In the future, those concerned might have to say to people requesting the release of church land: "In the interests of the Church, we think that we may need it and, therefore, we cannot release it for your purposes."

For that reason, I echo what my hon. Friends have said, and I say finally to the Government that we have an established Church which receives no help from the State. The State might at least allow it to hold what it owns.

Mr. Patrick Cormack (Staffordshire, South-West)

The Minister of State is a Welshman. I hope that his Welsh heart has been moved by what has been said and that he will remember what his compatriots owe to the free church, especially in Wales. He must realise that for this Government to strike a blow at the very heritage which has put him on the Treasury Bench would be a sad, sorry and disgusting spectacle.

When we consider the enormous contribution to social advance which has been made by modern charities in recent years and upon which the Labour Party draws in more ways than one, it is difficult to understand why this attack has been mounted. I have in mind a body like the Child Poverty Action Group, though perhaps I should not at the moment. Let us consider instead Shelter and other similar bodies. All these are charities. They have contributed as much as any hon. Member in any part of the House and as much as any Government towards social advance and thinking. But it is at bodies like that that the Government are striking a blow if they do not accede to the Opposition's request.

I cannot think that any man of sensibility, any man with a sense of history and perspective, could possibly refuse in any churlish spirit the moving arguments made so eloquently by my hon. Friends. However, I fear that my hon. Friend the Member for Worcestershire, South (Mr. Spicer) possibly put his finger on the point—although I hope I am wrong—when he talked about Socialism and charities. There is within the Socialist Party an unfortunate tendency towards uniformity—that all social good must be engineered and bestowed by the State, that everything that is to be for the benefit of the people must be engineered by some mammoth organisation, and that that must be the State. That is the argument of the more extreme Socialists.

I cannot think that the Minister is unable to comprehend the force of our arguments. I cannot think that with his Welsh background he is unable to appreciate the strength that is in diversity. However, in justice to my hon. Friend the Member for Worcestershire, South as much as anything else, we must follow this point through.

It would seem that there are far too many in the Socialist Party today, and far too many on the Labour Benches, who feel as my hon. Friend said they feel and who regard anything which challenges State provision as being wrong. Whether it be in the provision of independent education or the provision of private medicine, the existence of charities doing very often better than what the State does causes such people to feel guilty, and therefore they oppose.

I was particularly glad to hear that ringing quotation from the right hon. Member for Huyton (Sir H. Wilson), who is at this moment, I understand, at Buckingham Palace. I trust that he is not submitting another charitable list while he is there.

Mr. Fairbairn

Considering that the right hon. Member for Huyton (Sir H. Wilson) was in America yesterday on the benefit of private funds, charitable funds subscribed to the Arts Council, it is surprising that he got back so quickly.

Mr. Cormack

The right hon. Gentleman was in America as a trustee of the D'Oyly Carte Opera Company. In what more fitting capacity could he go to America, or anywhere else?

However, let us not digress on the manifold attributes of the latter-day Pooh-Bah. Let us say that when that quotation from the right hon. Member for Huyton rang through this Chamber a few moments ago one saw true appreciation of the enormous virtues and values of charitable institutions. He saw—after all, if he saw it, it must have been fairly apparent—that charities can contribute so much more than the monolithic apparatus of the State. [Interruption.] I wish that my hon. Friend the Member for Burton (Mr. Lawrence) would switch off the alarm in his wristwatch, because there is no inhibition on the time we are taking in debating this extremely important measure.

Mr. Ivan Lawrence (Burton)

I apologise if my hon. Friend thought that I was signalling to the effect that his speech was going on for too long. I use the alarm to indicate to myself when my own speeches are going on too long. I listen with the greatest pleasure to my hon. Friend. I hope he will continue for many more hours.

Mr. Cormack

I am greatly encouraged. I merely hope that that signal has not aborted my hon. Friend's speech, because if that has signalled the end of the speech that he was due to make we shall all be very sorry.

Mr. George Cunningham

Get on with it.

Mr. Cormack

I am most grateful to my hon. Friend—and, indeed, to the hon. Member for Islington, South and Finsbury (Mr. Cunningham), who has displayed considerable perspicacity since his entry into Parliament. He knows in his heart the tremendous contribution that charities must have made towards the welfare of his constituents. He must have constituents who have benefited from such magnificent organisations as the Spastics Society, the Save the Children Fund, Help the Aged, and Age Concern. Knowing him, as I do, for a charitable man, I am sure that he has himself subscribed to their efforts and endeavours on more than one occasion. He may even hold office in one of those organisations. If he does, knowing him as I do for his independence of spirit and mind, and even for his voting power on occasion, I cannot imagine that he will support an attack on charities.

10.30 p.m.

That is what we are talking about tonight. We are talking about an attack upon those who give of their time, talents and money to ensure that a little extra degree of individual concern is expressed to those who need that concern, and to ensure that there is proper care within our society. There cannot be true caring where there is total impersonality. There must be a degree of individual involvement, and it is in our charities that we see this.

I was glad that my hon. Friend the Member for Kidderminster (Mr. Bulmer) referred to the Church, because what we are witnessing today—I choose my words with extreme caution and absolute care—is an attack on charities such as has not been witnessed in this country since the dissolution of the monastries. I cannot really imagine that the Chancellor of the Exchequer wishes to pose as the poor man's Henry VIII.

Mr. Jasper More

I hate to interrupt my hon. Friend but I do so purely on a point of accuracy. There was an attack on charities in 1863 by none other than Mr. Gladstone, who decided that all charities must pay income tax. That almost created a revolution in the country. I am glad to see the hon. Member for the Isle of Wight (Mr. Ross) enter the Chamber. Mr. Gladstone eventually saw the light on the road to Damascus and recanted of his sins and laid down as a precept that never again must charities be subject to any form of taxation. That is what makes it so disgraceful that the present Government should have brought in legislation of this kind. I hope that my hon. Friend has not lost the thread of his admirable speech.

Mr. Cormack

How could I with such a splendid, stimulating and entirely pertinent intervention? Indeed, to remind us of Mr. Gladstone in the presence of one of his intellectual successors is a great service to the House.

I merely hope that the Chancellor of the Exchequer, when he is advised of my hon. Friend's intervention, will seek not to emulate Mr. Gladstone but will go one better and expunge from the Bill the vindictive clause which will bring in very little to the national coffers but which means so much to those who, from Bury St. Edmunds to South Worcestershire and Burton-on-Trent, and from Land's End to John O'Groats and London, work day in and day out to serve their fellow men.

I think of the women in the WRVS. I think of those who slave to operate our lifeboats. It is not only the churches, although they are a cause dear and close to my own heart. Throughout the length and breadth of the country there are charities too innumerable to mention.

I am glad to see the hon. Member for Edmonton (Mr. Graham) present when I am talking about charities. The hon. Gentleman, who is a dear friend of mine, will surely know that tomorrow the National Art-Collections Fund has its annual general meeting. That is a cause which is particularly dear to his heart. It is a charity which has perhaps done as much as any other to serve the national heritage. Why should bodies like that, which have operated with great sensitivity and total objectivity, and which up to now have been singled out by this Government for favourbale tax treatment, be attacked by this particular measure?

Mr. David Weitzman (Hackney, North and Stoke Newington)

Will the hon. Gentleman please be charitable to all of us and stop his silly meanderings?

Mr. Cormack

I do not think, Mr. Deputy Speaker, that I need seek your protection from interventions of that kind. I can see from the eager faces around me that my hon. Friends are entirely with me and welcome a dissertation on the value of charities. If the hon. and learned Member for Hackney, North and Stoke Newington (Mr. Weitzman) has not the charity to listen, let him have the charity to go outside and buy a friend a drink.

Mr. George Cunningham

I am sorry to introduce a serious note into this vaudeville act, but the hon. Member knows, as do most hon. Members who have spoken in the last 20 minutes while I have been listening, that in private conversation none of them would make the kind of exaggerated charges that they are making in their speeches. The hon. Member himself would not in private conversation make the kind of charges that he is now making.

Since he is one of the hon. Members, in any part of the House, who cares about the House and the respect in which it is held outside, I suggest to the hon. Member that by exaggerating the case and suggesting that all the virtue is on one side and all the villainy on the other he does no good to the House of Commons, to the case he is making or to charities. Therefore, can we get to the real merits of the marginal case for the proposition, which is a real one, which can be made, and to the marginal case against it, and stop this vaudeville act?

Mr. Cormack

rose—

Mr. Fairbairn

On a point of order, Mr. Deputy Speaker.

Mr. George Cunningham

Talk about vaudeville!

Mr. Fairbairn

Is it proper for an hon. Member to impugn the motives not only of those who have spoken but of those who have yet to speak?

Mr. Deputy Speaker (Mr. Oscar Murton)

The latter part of that point of order is purely hypothetical. On the former part, I do not think that the hon. Member's motives were impugned. The exchange was part of the cut and thrust of debate.

Mr. Cunningham

If this place is ever abolished, this is why it will happen.

Mr. Cormack

If anyone is guilty of exaggeration at the moment, it is the hon. Member for Islington, South and Finsbury in the violent nature of his interjections. At no stage in my membership of this House, and certainly not this evening, have I suggested that a monopoly of wisdom and virtue lies on one side. Indeed, in my opening remarks I referred to the invaluable contribution of certain charities which are particularly close to the hearts of Labour Members. I have never suggested, and will never suggest, that the monopoly of virtue lies on one side. Indeed, I was appealing to the good sense, sensitivity and sense of history of Labour Members when I talked about the contributions to social advance and reform which have been made by charitable individuals who would never in the course of history have allied themselves with my party.

Of course, this is not a one-sided argument. That is why I hope that the Minister will do what he has done before tonight and say that he accepts the argument and that the Government will think again about this process. Whether the wording of the new clause is entirely apposite I do not know. The Government have the resources and the facilities to tell us that.

What the Government can and should accept, and what in charity and good sense they must accept, is the force of the argument of those throughout the country, many of them not members of the Conservative Party—the bishops have been quoted: the Bench of Bishops at the moment is not particularly blue in its complexion—who are concerned to moderate the terrible effects of this measure upon the things they hold dear.

My hon. Friend quoted from a letter from the Bishop of Bristol, who talked in moving terms about the contribution made to our educational system by the voluntary schools. In effect, he asked why all these resources should be given to the State or to local authorities as if they, and only they, knew best how to regulate the education of our children. The voluntary schools contribute enormously to the diversity of the education system and give it depth and wealth. These are not private or independent schools patronised only by the affluent and giving education only to the wealthy. They are ordinary schools which add an extra ingredient to our education.

When the bishop says that the future of those schools will be in total jeopardy if this measure is passed, he is not speaking in a partisan way as a politician of either the Left or the Right. He speaks as a man who knows and who cares deeply. If this House cannot listen to his argument, it is all the poorer.

Although, of course, in the cut and thrust of debate it is perfectly permissable for me or the Minister to exaggerate and score party points, at the end of the day this argument is far more important than any party or any individual. These institutions which contribute more than any others to the wealth and diversity of our society are being attacked. It is for the Minister to answer that attack. If he can convince us—which I doubt—we will listen.

Mr. Michael Spicer

Would my hon. Friend agree that, contrary to what the hon. Member for Islington, South and Finsbury (Mr. Cunningham) implied, we were saying that it is the ethics and value estimates honourably held by Labour Members which have led them to believe that we should work towards a situation where all benefits are State-controlled and State-operated?

Mr. Cormack

Indeed, that is the point which my hon. Friend made and which I took up earlier. In developing the point I said—and I believe it—that most hon. Gentlemen opposite do not fall into the extreme category of those who truly believe that the State can, shall and must provide. I know from personal knowledge that many of them support charities. Many of them, like the right hon. Member for Huyton, believe that charities have a continuing and valuable—indeed invaluable—rôle in our social structure.

Tonight the Minister is mounting an attack on individuality and voluntary effort, which are among the things that have made our society one of the richest in the world. If we believe in this country, in its value judgment and in the development it has made to social progress throughout the globe, we should say with one voice that we will not allow this measure to pass.

Mr. John Stokes (Halesowen and Stourbridge)

I rise to support all my colleagues tonight who have appealed to the Government to give some respite to churches and charities from the rigours of this disagreeable and anti-social Bill. One of the glories of England has been its voluntary spirit, which I hope it supported on all sides of the House. The Bill intends to kill that spirit, and in time everyone and everything in this ancient country will have to be beholden to the State.

If the new clause is not passed, we shall be, in effect, passing judgment on our ancestors and all those who lived and died before us and whose tombs we see in the glorious parish churches of our countryside. We must be able to hand on something infinitely precious to our heirs and successors. [Interruption.] I am interested that Labour Members laugh at our parish churches and their great memorials. That surely is to their everlasting shame.

We see in the opposition to the clause—I address my comment particularly to the Minister, who is a clever young man from Wales—the spite and envy which characterises part of the Labour Party. That part of it hates anything and everything which is not State-supported or State-dominated. The fact that only four Labour Back Benchers are present indicates the interest of the Labour Party in this matter. To kill the clause will be another death blow to freedom. It will be a denial and a betrayal of the great past of this country.

10.45 p.m.

Mr. Lawrence

I canont match the oratory of the two previous speakers and I am, therefore, tempted to take my text from I Corinthians XII, which reads Charity is to be preferred before all other gifts. If there is one matter to which the Government should address themselves tonight, it is not purely the matter of charities, but the question of actually being charitable towards the institutions of which my hon. Friends have spoken. Charity is to be preferred also before all gifts from the Welfare State. The text goes on to say "Charity never falleth away", but what the Government intend to do by the Bill is to make sure that charities fall away. Then, the only institution which could come to the assistance of the religious organisations or the needy in our society would be the Welfare State, to which we as taxpayers are finding it increasingly difficult to contribute more of our money.

The clause seeks to prevent harm being done to charities under the Bill. The Government have made some concessions to charities, but it seems to be almost an element of spite to deny charities the full benefits of exemption. I do not understand the Government's attitude. After all, the scope of the Welfare State is obviously limited, and never more so than at this time when the Government are having to borrow £12,000 million to make up the difference between what is raised in taxation and what the Welfare State demands.

We cannot go on spending and spending. The Government will never be in a position to make up for the work which the charities do and which they may not be able to do if the Bill is enacted without the sort of change we now envisage. The charities want only to be left alone to look after themselves. They do not want the State to help or hinder them. After all, what the charities do is for the good of all of us in helping the weak in our society.

Some of the effects of the Bill may well be disastrous to the charities and more generally harmful. Let me give an example. They will not want to give up land which they owned on 12th September 1974 because the Bill favours those which had land before that date and charges for DLT those which have land after that date. Will that be good for the land market?

What we need to do least at the present time, in view of the housing shortage and the land starvation which there must be under this régime, is to dry up the sources of our land. Or is the land to be taken away from the churches or from the charitable institutions in due course, perhaps in 10 years' time when the effects of the Community Land Act come to be implemented?

How can the charitable organisations adapt themselves to the new needs of a changing society if they are discouraged from selling their land? Suppose that they wish to sell land in an area where people are moving out and want to acquire land in an area where the population is growing, so that money can be gained from the ownership of land in, say, busy shopping centres to be put to good charitable uses. Under the Bill, they will have to pay development land tax and they will thus be deterred from undertaking that purchase and sale of land.

In these times, the rate of inflation is almost unbearable to all sections of society, and it reflects itself in the costs and expenses of charities. In this time of all times, it is important that the charities should be able to protect their income where large proportions of it are available from the purchase and the sale of land which is less susceptible to inflationary pressures than other commodities are.

I should like to give a second example of the effect that the Bill will have. Suppose that land which is purchased after 12th September 1974 becomes unsuitable in some way to the charity which bought it because it is no longer large enough for the purpose for which it was intended, or that has in some shape or form a defect which no longer makes it acceptable to the charity. Is that land to be sold subject to tax liability while any new land that the charity has to buy is to be acquired at market value, at inflated rates? Is this the sort of effect that the Government seriously mean to have upon charities at the present time?

I have only to quote one sentence from the Churches Main Committee on this point: The result over the long term must therefore tend to ossify the work of the Churches and charities and make them less responsible to new needs. I accept that Labour Members—many of whom subscribe to and many of whom, when they are away from this place, work for charities—appreciate more than many other people the need for the charities to remain financially viable. If that is the sort of observation which can legitimately be made by the Churches Main Committee, surely it must cause the Government to think again about this part of their legislation.

Land ownership and the freedom to buy and sell land for a profit are the only protection that the churches and other charities have against inflation. When the charities have gone—because they can no longer afford to maintain the services which they have provided over the years, since they will no longer have any resources and can no longer sell their land in order to bring in money—will the Government then be able to look after the interests of the religious denominations, the sick, the old and the needy in our society who do not at present depend to any substantial degree upon the Welfare State? Will the Government be able to increase their borrowing requirement to subsidise the charities and to take them under State control? Will the present or any Government ever be able to make up for the work done by so many of these wonderful organisations?

Why does the Labour Party allow itself so repeatedly to be seen as the enemy of the churches and to be the organisation which undermines that part of the fabric of our society? I know that there are sincere and deep supporters of religions on the Labour side of the House. Why do they allow the Government to be seen to be the organisation of the attack on the traditions of the churches and their work? Why do the Government, who as Labour Party representatives have always boasted of their concern for the old, the needy and the sick, allow themselves to be put in a position where we can say that they are being, in effect, the enemy of all the good work that these organisations do?

Why does the Labour Party allow itself to be put in the position of being the enemy of all private enterprise even when it is devoted to social ideals? Why does it allow itself to be put in a position where we can say that it behaves as if it hated the sight of charities and other organisations set up only for social welfare? Why? What is to be gained? Is this the attitude which the trade unions want? Are they asking Labour Members to undermine the financial viability of charities, churches and other social organisations? I doubt it. Are Labour Party candidate selection committees asking them to do this? I doubt it. Is it thought that people in the country who put the Labour Party in power want them to undermine all these institutions in this way? For goodness sake, I ask Labour Members to think again.

If money is no longer available for charities from taxation, it has to come, if need be, from the sale of some of their land assets. I remind the Government and their supporters, because it seems to be slipping from the recollection, that individuals can no longer afford to give as high a proportion of their income to charity as they used to do.

If one looks down the list of countries which trade with us—Belgium, Denmark, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Sweden, the United States, Canada and Japan—one finds that in only one other country do people start paying income tax at a lower threshold than we do, and that is Sweden. If one looks down the list of those countries and asks at what rate income tax is first paid, one finds that no other country starts paying at 35 per cent and that Sweden starts paying at 7 per cent. If one looks down the list to see the maximum rate of income tax, one finds that no other country has a maximum rate at anything like the 83 per cent. which we pay.

When one bears these factors in mind—and if they have frequently to be rammed down the throats of Labour Members, we must do that—it must be obvious to the Government that charities will no longer be able to receive the sort of income from working people that they have had in the past. Therefore, when we have had a brilliantly devised new clause like this one, reasonable in all its requirements and, as far as I can see, excellently drafted, I hope that hon Members will look at their attitude afresh.

I started by referring to Corinthians and I return to it. And now there remain faith, hope and charity, these three: but the greatest of these is charity. I am afraid that the Government have given me little reason for faith in any of the policies they have introduced. I live in hope that perhaps they may change some where they impinge on the needy and weak of whom they so frequently claim to be the champions. Charity, however, is something that the Government could easily give by accepting the new clause. In the name of charity and charities, I beseech them to accept the clause.

11 p.m.

Mr. John Page (Harrow, West)

Under your dignified and benign chairmanship, Mr. Deputy Speaker, it has become the fashion tonight that a text should be given before one starts one's speech.

I wish to take as my text a quotation from the Official Report: I do not regard it as my responsibility, nor do I want to undertake the task, to judge between the relative social merits of any of these charities. Therefore, it is a case of all in or all out, as far as I can see, with all the implications that flow from that"—[Official Report, 25th May 1966; Vol. 729, c. 655.] That was part of a speech made by the present Prime Minister when he was Chancellor of the Exchequer, shortly before his translation to Home Secretary. He had been making the important point that all charities should be treated in the same way for tax purposes.

I wish to draw attention to the position of voluntary and charitable housing associations, whose business includes the buying and selling of land and the building and converting of houses and flats. All my hon. Friends who have taken part in the debate have spoken with the authority of a deep knowledge of the subject. I speak in an inquiring manner to attempt to clarify the position of housing associations in relation to the new clause.

For the past 25 years, I have been on the committee of a housing association in the East End of London which provides homes of a quality which is both necessary and demanded by those who live in the properties. We shall be making decisions on the purchase of plots of land in the East End which could be used for development.

I understand that property held by that organisation, which is registered as a charity, could be sold without liability to the new tax if the land was held before 12th September 1974. But what about land purchased by charitable housing associations after that date?

Suppose that we had bought an old vicarage or a parish hall in Bethnal Green after that date with the intention of building flatlets on part of it and selling the rest at a profit for shops or a garage in order to pay for the development. That is almost a specific example. To my knowledge it has happened on at least three occasions to a smallish London voluntary housing association during the past 10 years. It will obviously happen in future.

In the larger cities especially, where new developments need to be undertaken by voluntary organisations because they cannot possibly be effective from the point of view of a profit-making company, is it the fact that the associations will be charged the new tax on any land that is sold, whereas a trade union might buy a Reynolds or a Picasso, sell it a few years later and not have to pay capital gains tax on the £100,000 or so that it might make out of the sale? If the Minister tells me that I am wrong in the analogy I have given about the Picasso, I hope he will excuse me and not let that spoil the rest of my argument, which is especially serious.

That leads me back to the quotation from the present Prime Minister in 1966 that a charity is a charity is a charity. I suggest that, merely because by its very nature, a charity does not have to deal in land, it should not be treated differently and less advantageously than a charity that can dabble in land or any other investment that it wishes to make. On that basis, I hope that charity, mercy and equity will be considered by the Minister and that he will accept the new clause, which is marginal in its effect on Government policy but of major importance to a small but valuable group of organisations in our community.

Mr. Russell Fairgrieve (Aberdeenshire, West)

I add my voice to those who are asking for the acceptance of the clause, and particulary to those who reside in Scotland, where for many years and many generations we have had a succession of charities doing great work. Some of them have been mentioned already, but I shall refer to some again.

The Society for the Prevention of Cruelty to Children and the Society for the Prevention of Cruelty to Animals have done wonderful work in Scotland throughout the years. We have the women's rural institutes and the charitable work for the lifeboats, especially on our Scottish coasts, where there are possibly more calls upon that valuable and charitable service than in other parts of the United Kingdom. We have the work for the crippled and the aged and the work of Shelter, one of our housing associations. We have meals on wheels and, notwithstanding the churches, we have the special Scottish housing associations.

In the Bill all charities are being attacked. Throughout the year, and particularly at certain times of the year, we get more and more moving appeals from the charities explaining the severe difficulties they are up against because of falling income. When we read these letters—hon. Members on both sides of the Chamber receive them—and when we give to charities, we are giving out of taxed income. That is not always taken into account. Why do Members, on both sides of the House do this? It is because of a continual distrust of the State. They feel that they wish to take an individual interest in something because the State might not be so concerned because of its monolithic outlook.

What happens? If people show enterprise, it is frowned upon. If they show initiative in choosing one charity and not another, that is against the precept of a Socialist State.

Mr. George Cunningham

Rubbish.

Mr. Fairgrieve

Choice must be taken away. The men in Whitehall, the Government, know best. We are killing the interest that individuals take in charities by being prepared to join charitable boards and to give of their time and money. Again, we are seeing the usual thing that we see continually from this Government—Socialism in action: distrust of the people and the wish to bring some monolithic answer to all our problems.

Mr. George Cunningham

Am I right in recalling that until quite recently the Conservative Party in the House of Commons relied exclusively upon the voluntary financial contributions made by people to provide for research and that kind of thing, but that it has now decided that it is prepared to accept £150,000 of public money out of the taxpayers' pockets for doing the job that had previously been done by voluntary contributions? If I am right in recalling that, does it not show that the Conservative Party also sees the need for State intervention for useful purposes alongside the operation of voluntary contributions?

Mr. Fairgrieve

I do not see the relevance of that intervention. But as the hon. Gentleman has made interventions in each of my last three speeches in the House, I assume that he must have some interest in them.

However, that brings out something we know—that is, that while Labour Members continue to concern themselves only with the distribution of wealth, not being in the least bit interested in its creation, they will run into the type of problems into which the Bill is running. Regrettably, this is again further evidence of Socialism in action. We are seeing here the hard, cruel bureaucratic face of Socialism.

Mr. George Cunningham

£150,000.

Mr. Eldon Griffiths (Bury St. Edmunds)

Unlike some of my hon. Friends, I do not believe that the Labour Party wants to grind the faces of the charities any more than it wanted to bring about a vast increase in unemployment or the cutting back by local authorities all over the country of help for spastic children or for the elderly. I do not for one moment believe that hon. Gentlemen opposite wanted to produce those results. Their difficulty is that their Government, their philosophy and their logic push them into this kind of trap and they do not know how to get out of it.

The new clause gives many Labour Members an opportunity, without putting their Government at risk, of putting their consciences first and of doing something that they know to be right. Indeed, I suspect that one reason why the Government Benches are so empty is that many hon. Gentlemen know full well that what they will be voting for tonight is indefensible. Nevertheless, they will do it because they have got hooked by their Government and they do not know how to get off the hook.

The tragedy of Socialism is that so often it starts with the best of intentions and the highest of ideals, but when it comes to practise what it preaches it gets caught up in political theories and legalistic structures. Week after week hon. Gentlemen opposite find themselves plodding through the Division Lobby supporting policies with which, as human beings, they fundamentally do not agree. Tonight they have an opportunity to show themselves to be men.

11.15 p.m.

I make this plea at the beginning because when I first came to the House, perhaps before I had grown disillusioned. I listened to a debate on the distribution to the Jewish victims of the concentration camps of money provided by the Government of the Federal Republic of Germany. My right hon. Friend who is now Lord Home, the man whom I most admire. had the unenviable task of asking his party to do what many of its members believed to be wrong. I had been here for so short a time in the early 1960s that I voted the way that I believed. The following morning I was invited to see the then Government Chief Whip. I was advised that that was not the way in which new by-election victors were supposed to operate in the House of Commons. But as a consequence of the fact that I, the most junior Member of Parliament at that time, and a number of my hon. Friends—some of whom are now on the Front Bench—voted in accordance with our consciences, the Government changed their mind. They altered the clause. We achieved what we knew to be right.

Members of the Labour Party—I wish that there were more of them present—know that they would stop the Minister cold on this clause. They know that just a handful of them need only say to their Chief Whip that the Parliamentary Labour Party—the friends of the poor and the homeless—will not accept this attack on charities. The Government Chief Whip would have no alternative but to explain to the Treasury Bench that it would be wise for the Minister of State, when he replies, to make the usual noises that Governments make about sticking to a principle but then to concede the point. Hon. Gentlemen opposite know that if they wished they could tonight preserve those charities which most of them, I suspect, in their constituencies and local newspapers maintain that they support. If they do not do so they will lack courage, they will be total humbugs.

Mr. George Cunningham

The hon. Gentleman says that if Labour Members did not take a certain line they would be humbugs or would lack courage. There is a third possibility—namely, that we disagree with the arguments advanced by the Opposition. The hon. Gentleman well knows that there have been occasions when Labour Members have rebelled and forced their Front Bench to do this nr that. Therefore, will the hon. Gentleman refrain from exaggerating his case?

Mr. Griffiths

Perhaps the hon. Gentleman had not observed that I had not come to my case. I was dealing with the tactical position in which hon. Gentlemen find themselves. However, at the invitation of the hon. Gentleman I come to my case.

The Government's objections to the new clause arise from a point of philosophy. They stem from the view of Ministers, if not of the whole of the Labour Party, that in matters of charity, as indeed in everything else, it is the State that should be mainly responsible. The Opposition take the view that the State unquestionably has a rôle to play in aiding the poor and homeless but that many activities are better undertaken by individuals—and even better by voluntary bodies. That is the essential difference in our philosophy.

Mr. George Cunningham

In that case, why did the Conservative Party take £150,000 of taxpayers' money? Why did they do that if they believe that these matters are better covered by voluntary contributions?

Mr. Griffiths

One could almost say that it was stuffed down our throats by the Labour Party, but that would not be correct. If the hon. Gentleman wishes to make a contribution to the debate, why does he not have the guts to stand up and be called by the Chair?

Mr. George Cunningham

It does not need any guts.

Mr. Griffiths

The Minister might be interested in this context to hear about an occasion of which I can speak from my own experience. When the Conservative Government were in power, we had the difficult task of accepting into this country a large number of Ugandan Asians. That was one of the most difficult decisions for any Government to have to take. At that time it fell to me, among others, to organise a large number of reception camps throughout the country for 25,000 Ugandan Asians who arrived here in a most desperate plight. It fell to the Government to make the main arrangements and to the local authorities to undertake much of the work. I want the Minister to accept that although the Government took he lead, it was the voluntary bodies that carried out much of the job.

In camp after camp that I visited, I found that it was the Churches, the women of the WRVS, the Red Cross, the women's institutes, Age Concern, the YMCA and others who did the job and who counted. Although the State and the local authorities provided the backing, it was the voluntary people of our country who rallied round and undertook the job in the hour of need.

Those are the very people who will be struck at by this mean and nasty Bill. They are the people who would be helped by the new clause. The willingness of our people to serve voluntarily is one of our greatest national assets. If the day should come—and it may be upon us soon—when those who serve become disillusioned and feel that the State system is stacked against them and that the State will do it all, our nation will be very much the poorer. The Minister should think long and hard before he destroys the ability and the willingness of that group of people, of all parties and of all religious persuasions, to respond to need in a charitable way.

There is also the other side of the coin. It is not only people who work for the charities, the salt of our population, those who are assisted by the charities, whom the Bill will damage. I am thinking, for example, of the people who are helped by the Salvation Army. These unfortunates are very often the ones we do not like to think about—the incontinent wayfarers and the impoverished tramps who are to be found in hostels in various parts of London. Then there are also the spastics, who above all people deserve our help, and the mentally and physically handicapped. The sort of help that no State can give is something called kindness, those little unremembered acts of kindness and love performed by individuals. The hon. Member for Manchester, Wythenshawe (Mr. Morris), who is the Under-Secretary of State for Health and Social Security with responsibility for the disabled and who is now in the Chamber, will be the first to agree because he has done much for the handicapped.

I underline my argument with an illustration. I have occasionally gone round wiht the meals-on-wheels organisation, which is sometimes is said to have a "Mum's Army" imagine. But as one travels round with the women taking meals to the elderly, the incontinent, the housebound and the handicapped, one cannot but be touched by what they do. I remember an elderly woman in her eighties, who was twisted, poor and nearly blind. She told me what a difference there was between the days when the council delivered her meals and those when they were brought to her by the women who had got together on a voluntary basis. I make no attack on the council. But those who work for councils generally regard their work as a job. They get round the houses as quickly as they can. By contrast, the volunteer provides the personal touch, the piece of fish that has been cooked a little longer, the individual contact which can and does come from the volunteer, but only rarely from employees.

The Minister should be careful that, in addition to damaging the spirit of those who serve and work for our charities, he does not take away from the people who receive benefit from charity those little touches of kindness that only the volunteer can give.

I turn now to other areas that are to be damaged. I used to have some responsibility for sport. Again and again I found that public funds for swimming pools or a stadium or any of the many other needs of healthy and active youth could not be made available even though the Government, in which I had the responsibility in real terms, provided perhaps eight times that which is being provided now. But since local Government and the State could not encompass the sporting needs of our youngsters we encouraged, as a matter of policy, the voluntary, private, charitable bodies to come to the aid of sport.

An illustration is the Sobell Sports Centre in Islington, set up by a man who grew up as a poor boy in the East End of London, did well and made his millions. He wanted to put back into the pot more than he had taken out, and the sports centre is the result. It is a charity arising from the action of a man who might well have invested in land. Across the whole range of sport and recreation, the voluntary bodies and charities provide that for which the State does not have the resources.

Mr. George Cunningham

I am sorry to intervene again, but it is necessary to say that the future of that institution has had to be the subject of intervention by the local council because the other sources of funds were not sufficient to keep it going. That is not, therefore, a good illustration of the argument by the hon. Member for Bury St. Edmunds (Mr. Griffiths).

11.30 p.m.

Mr. Griffiths

I am sorry that the hon. Member for Islington, South and Finsbury (Mr. Cunningham) does not appreciate the inflation which his Government have set loose. The £1 million originally provided in the trust of the Sobell Sports Centre came from a charity. Much of that money may well have been invested in land. If the Bill goes through without the new clause, the hon. Member can say goodbye to any more bequests of that kind.

Charities and voluntary bodies have also made a massive contribution to the environment. I remember presenting, on behalf of the United Kingdom, at the United Nations Conference on the Environment in Stockholm a book which displayed the English countryside as an example not of State planning but of that combination of public and private activity that has made our landscape one of the treasures of the world.

A great deal of our cultural landscape arises from the charitable foundations that have ornamented our history. I think of some of the parks and houses, and above all of many of our parish churches, which are among England's glories. The ability of church after church to maintain its tower and gardens and its beauty could be severely damaged by this nasty Bill.

I turn to a point raised by my hon. Friend the Member for Worcestershire, South (Mr. Spicer) in his admirable speech. He asked the basic question whether charity was incompatible with Socialism. I said at the beginning of my speech that I did not believe that Labour Members personally wanted to put through this squalid Bill. My hon. Friend put his finger on the point. The problem for Socialists about charity is its diversity. Charity is something that proceeds not from one place but from many. It is the activity of tens of thousands of diverse organisations and individuals, all helping different people and taking different attitudes. The philosophy behind the Bill is not diversity but monopoly. That is a fundamental reason why my hon. Friend the Member for City of Chester (Mr. Morrison) is right in discovering an incompatibility between the Socialist Party and charity.

Charity also means independence, the independence of people from total reliance upon the State. That, too, is incompatible with a fundamental tenet of Socialism. Charity also means self-help, which the Labour Party also finds deeply offensive.

Our new clause would give Labour Members the opportunity to stop the Government in their tracks without bringing them down. They owe their consciences and their constituents the courage to do so. If the clause is accepted it will not save all the charities in Britain, because they are already the victims of inflation, but it will enable the survival of the spirit of charity, the willingness of hundreds of thousands of our fellow citizens to work for others for nothing but the joy. The clause would also help the environment and sport, but above all it would help the weakest and poorest members of our community, those for whom the Labour Party maintains that it has the deepest compassion.

I commend this well-drafted clause. If the Minister accepts it he will not put the Government at risk. He will be accepting what a majority of hon. Members on both sides of the House believe, deep down, that the Bill is wrong on this point. If he has the courage to recognise that, he will not damage his career. He will demonstrate that he is a man of sensitivity and compassion, and he will do something right for his country.

Mr. Fairbairn

Following upon that lucid and impassioned speech, I hope that I shall not offend against the principle which the hon. Member for Islington, South and Finsbury (Mr. Cunningham), a Scotsman sitting for a very English seat—

Mr. Cormack

A very Irish seat.

Mr. Fairbairn

—has so freqeuntly passed upon us that we should not exaggerate our case. For a Scotsman who sits for an English seat, he shows all the meanness that a Scotsman out of his own country can show.

However, it is important to realise that what we are debating is two clauses—and a relief of them—which merely have the effect that they will suddenly cut off from charities a source of their income. That is what has to be realised. Suddenly there is to be a change.

I should have thought that the proper definition of a charity was essentially an organisation which merely raises its funds and spends them on the purposes for which it exists, without profit. It does it for the very quintessence of its own intentions, be it the Salvation Army, the local church or anything else. It is interested in fulfilling its obligations. It is not interested in the terrible thing of profits—which Labour Members find so offensive, but so necessary, and which they spend so constantly.

Mr. Cormack

They spend other people's profits.

Mr. Fairbairn

It matters not whose profits they spend. The never make them. They lose them. However, I should have thought that it could be generally agreed among us that a charity, whatever it is, is an organisation which raises funds and spends them on a purpose which all of us would agree is good, whether it be the prevention of cruelty to animals or to children, the salvation of refugees, for spastics or for whatever reason, or for the worship of whatever deity one person or another holds to be worshipful.

Accepting that the purpose of Clauses 24 and 25—without amendment effected—is to deny to those organisations a major source and a major derivation not only of the income they will have in the future but which they had planned in the past, it means simply that if a church is to move, as churches frequently will have to move, from the centre of a town to the periphery, that will be all right provided it is church for church. However, if the church says "We are a congregation that can no longer afford to keep a church or to have a church in such and such a suburb", and if it therefore says "We happen to own the corner of Oxford Street or the corner of Langham Place"—where there is a church—" and we shall erect on that something that will give us the income which will enable us to preach in the parish of Islington" that will be forbidden.

That is the scandal of this legislation. We are forbidding to the charities the right to use their best way to get the largest income in order to do the work we all believe they should be doing. That has never before been the law of this country. I do not believe that it is the Labour Party's intention that it should be the law.

As the Minister will know—and there is no more compassionate man—I do not believe that he is in sympathy with that concept. This is a had Bill which has been drafted by innumerable different Departments. I do not believe that the people who are advising the Minister understand what the separate clauses mean. I believe that logic—that terrible thing of blocking up loopholes; logic, the art of going wrong with confidence, which has constantly been the guiding light of this Government and their Ministers—compels them to ensure that nobody will get out of the filthy trap they have laid for us all. Therefore, it would be evil if the charities were to be exempt.

It would be offensive, would it not, if the Church of England, the RSPCA or the Salvation Army were to let part of their premises to a shop or for development in order to fulfil their financial commitments to the people in whose service they were in operation? That would be offensive, and the Government would have to take away from those wretched organisations the power to serve those in whose interests they were in being.

The Minister told us of his views, and they were very touching. But they were totally irrelevant. He told us during Committee that the Government were not discriminating against charities in this legislation. He added: I do not think I need to say more. We have dealt fairly with charities. I cannot accept this extension because it would create a two-tier market. Therefore, it would be horrid if those naughty charities were to be treated differently from the industries which are partly exempted and commerce which is not. That is a two-tier market, but it does not matter there.

The Minister added in Committee: Charities would be free to invest in land at no taxation liability".—[Official Report, Standing Committee J, 12th May 1976; c. 1139.] Would it not be awful if those who are doing their best to serve their community out of their resources, and making no profit for its own sake, were actually to be exempted from the beloved concept of tax? That is what this is all about.

The Government need not enter into the concept that unless everyone is taxed there is unfairness. These are organisations which provide, at one-hundredth the cost, the same services as the Gov- ernment could provide. If the Government seriously believe that their proposals will do good either to the Inland Revenue or to the community, they are mistaken. They are embarking again on a bad road, for a bad reason, and I regret to say that, even worse, those hon. Members who support them, who pretend sympathy for those who are weak, poor and feeble, will vote with the Government in order to keep their own beastly consciences.

Mr. Graham Page

These two new clauses deal with charities which need land, and rely on the value of that land, for carrying out their charitable services. That perhaps does not cover all charities, but it is extraordinary how many it covers. Ordinary charities, such as the Salvation Army or the YMCA, not only the churches and the colleges but many of the far more modest charities, rely on the ownership of property and the enhancement of the value of that property in order to carry out their charitable work.

That is recognised in the Bill. It is recognised by giving to charities certain relief, a narrow relief, in respect of land held by charities on White Paper day, 12th September 1974. The relief would be on land which charities hold and wish to develop for their own purposes. They would not then be charged on the deemed disposal. In a very narrow way, therefore, the Government have recognised that there should be some small relief for charities.

11.45 p.m.

The new clause would provide charities with relief from the tax on a roll-over basis. It would not give them complete relief but it would give them some reasonable relief for using the charitable money on which they depend to carry out their services, to roll it over into new enterprises or the improvement of their assets, so that they can perform their functions the better.

My hon. Friends have perhaps not noticed that we are discussing at the same time New Clause 8, which would simply provide that DLT in this respect should be 10 per cent. and not 80 per cent. I freely admit that this was a device to get another debate on charities on Report after we had had a full debate on them in Committee. I should have preferred a simple clause to say that charities should not pay the tax at all.

How on earth did the Government get the idea of charging charities with this tax? It is a miserable tax anyway, but what will be gained by charging charities? All that will be achieved is a break with the tradition which Parliament has observed for centuries of recognising that charities do a great service and of not taxing them.

The whole basis of the tax is that the money should be taken from those who make a profit out of land and given back to those who provide a service for the community. Are not the Churches and colleges and other charities at least as important in the service they render to the community as the Highlands and Islands Development Board, the Letchworth Garden City Development Corporation and the Scottish Special Housing Association? Do they not deserve the complete relief which is given to those bodies among others?

Although I support the roll-over clause completely, I should prefer charities to be completely free of the tax. This is the first time that such a tax has been imposed on charities. They have been free of development gains tax and capital gains tax. They have never been viewed as a source of income for the Exchequer. How did the Government identify the need to tax charities by this means?

I think the Government will find that their supporters are utterly ashamed of the fact that they ever brought in this tax against charities. I hope that even at this late moment the Government will see sense and not only accept New Clause 4 but also say that, on second thoughts. they will relieve charities altogether of development land tax.

Mr. Denzil Davies

It would be trite to say that we have had a far-reaching debate. Opposition Members, with characteristic understatement, have deployed their case subtly, giving large numbers of cases in which charities will be affected, from meals on wheels to the Child Poverty Action Group. They have claimed that charities which make a profit out of land development will be destroyed completely by the legislation. That is the general tenor of the speeches we have heard tonight. Perhaps I can bring the debate down to its lower level by saying that the Opposition have spoiled their case by overstating it and exaggerating it. The hon. Member for Staffordshire, South-West (Mr. Cormack) was a prime example of this.

Mr. Cormack

Will not the Minister admit that in the future it is perfectly possible that people who are charitably disposed might give land to charities? Does he not realise that this is one way in which a person who wishes to leave a bequest to a charity can do so?

Mr. Davies

If a gift of land is made to a charity, it is not affected by this legislation.

There are a minority of charities—the churches and perhaps one or two others—which own land with development value. But they are a minority—an important minority, but nevertheless a minority. Most charities, including the ones which have been mentioned tonight, such as meals on wheels, the Child Poverty Action Group, the Save the Children Fund and Oxfam, are not so fortunate as to own prime sites in the middle of cities which they want to sell and make a development profit.

We are concerned mainly with churches which want to move their operations and activities from the inner city into the suburbs. To meet that particular problem we introduced various deferments and exemptions to the legislation. The first such exemption is on land owned by a charity on 12th September 1974. That is completely exempt from the effects of the legislation. This covers 98 per cent. of land owned by charities.

If a church, for example, in an inner city area disposes of land which it acquired before 12th September 1974 in order to follow the population into the suburbs because of decay in the inner city, and if it makes a development profit, which is reinvested in new land in the suburbs to build a new church, that case is completely exempt. There is no tax in respect of that land. I concede entirely that if. in 10, 15, or 20 years' time, when the suburbs have decayed, or have themselves become inner cities, the church wants to move again and once more it makes a development profit, that particular sale will be taxed.

As the Bishop of Bristol said, however, this is a long-term problem. All the representations we have had from the churches have recognised that fact.

Mr. Fairbairn

I think that the Minister is overlooking the fact that, just as trade unions and other organisations have done, charities may have invested in land in order to obtain an income and capital improvement. It has nothing to do with the fact that a church or cathedral happens to have to move. This is a matter of investment. If the ministers move their investment, how are they to keep their land?

Mr. Davies

If the land was owned by the charity before 12th September 1974, there is no problem. If it was acquired after that date, a betterment profit would be taxed. I would not have thought that that was entirely a bad thing.

Mr. Stephen Ross

The Minister is saying that if the land is owned by the charity before the relevant date it will not be taxed. Under the Community Land Act, charities have about 10 years' exemption. After that, they are liable to have their land acquired by the local authority. That means that the asset will not remain with them after 10 years.

Mr. Davies

The tax is transitional in the sense that once the appointed day has been set under the Community Land Act we enter a different regime. Under these provisions, however, and in the short and medium term, I submit to the House that there is no problem. In the long term there might be a problem, although charities would take into account the change in legislation to conform with the present arrangements.

The other point that has been made concerned the village church or school. Where a charity develops land for its own use to rebuild the school or church—and "own use" is narrowly defined in the legislation, so that we are concerned with operational land and not land for investment—there is no question of any tax being imposed. Hon. Members have exaggerated when they have tried to suggest that village schools or churches will be destroyed under the Bill. That is complete and utter nonsense.

Finally, we must come to the main point. The hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) said that when a charity makes a profit it has done something good but that we are proposing to tax it. We are concerned with a betterment profit in the sense that it arises because of the granting of planning permission. It is not a profit which arises as a result of a prudent investment. It arises as a result perhaps of a lucky investment in the sense that the body concerned happens to own land which falls on one side of a line and that enables it to receive planning permission. This is not a matter of the charity working hard to make a profit. The profit is purely fortuitous and arises through the action of the local authority, not through the prudence of the charity.

Mr. Fairbairn

I was careful to say that the definition of a charity was that it did not make a profit. If it makes an investment with the intention of increasing its funds, it is not making a profit but is merely enlarging its capacity to do its duty.

Mr. Davies

That is another definition of profit. I would not have thought it was worth getting involved in semantic arguments of that kind. If a charity buys land for £5,000 and by some act of a local authority that land becomes worth £100,000, the £95,000 gain looks to me very much like some kind of profit. My point is that it is not wrong for the charity to make that profit but that it is not the result of prudent investment. It is the result of community action and local government action and has nothing to do with the charity at all.

12 midnight.

Mr. Ridley

When a charity has a premium bond win or organises a church raffle which brings in some money—both of which gains are fortuitous and not the result of hard work—are the Government proposing to tax those?

Mr. Davies

Hon. Gentlemen should not argue from the particular to the general in every case. I was not saying that because a gain was fortuitous it would necessarily be taxed. The point is that we are not depriving a charity of its hard-won profit or gain. We are merely saying that here is a gain arising largely as a result of community action and that most of that gain should be returned to the community, not to the State, through the local authority.

Mr. Kenneth Lewis (Rutland and Stamford)

The Chancellor of the Exchequer, under capital transfer tax, has allowed charities to receive gifts from people of up to £50,000 so that charities may continue to exist. In some cases land may be donated to a charity. Is not the Minister contradicting what his own Chancellor of the Exchequer is doing by taking away, with this development land tax, what the Chancellor of the Exchequer is trying to concede?

Mr. Davies

No. It shows again that we are very sympathetic to the needs of charities and that we recognise that people make gifts of land to charities. My right hon. Friend has recognised it in the Resolution giving the appropriate exemption. The gift will not be subject to development land tax. We are concerned only with a situation where a gain or profit is made by the charity as a result of the granting by a local authority of planning permission.

Mr. Nicholas Winterton (Macclesfield)

Where will the money go if it does not go back to the community? Will not money which goes back to the community through a charity be much more effective in every possible way than money which goes through the Government and costs so much to administer?

Mr. Davies

We are talking about elected local authorities, many of them controlled by the Conservative Party, with worthy councillors. Sometimes the money will be used more effectively and sometimes not. I accept that entirely. I am sorry that hon. Gentlemen have so little sympathy and regard for local authorities and would not wish to see these gains returned to the community.

I do not want to pursue the argument. There is a great gulf between this side of the House and Opposition Members. Hon. Gentlemen have spoilt their case by exaggerating it. They have done their case great injustice. I have accepted that in the length term there may well be a problem. I accepted that in Committee. No doubt these matters will be looked at again, but at the moment there is no problem.

Charities are fully protected. We have given them a substantial concession, and in most cases the legislation will not affect charities at all. We are concerned with an important minority of charities which will not be affected in the immediate future, and we believe that at the end of the day the right way to deal with the problem is as we propose and that the right people to have the betterment profit are the community.

Question put, That the clause be read a Second time:—

The House divided: Ayes, 271; Noes, 276.

Division No. 191.]	AYES	[12.5 a.m
Adley, Robert	Bulmer, Esmond	Dunlop, John
Aitken, Jonathan	Burden, F. A.	Durant, Tony
Alison, Michael	Butler, Adam (Bosworth)	Dykes, Hugh
Arnold, Tom	Carlisle, Mark	Edwards, Nicholas (Pembroke)
Atkins, Rt Hon H. (Spelthorne)	Carson, John	Elliott, Sir William
Baker, Kenneth	Chalker, Mrs Lynda	Emery, Peter
Banks, Robert	Channon, Paul	Ewing, Mrs Winifred (Moray)
Bell, Ronald	Churchill, W. S.	Eyre, Reginald
Bennett, Dr Reginald (Fareham)	Clark, Alan (Plymouth, Sutton)	Fairbairn, Nicholas
Benyon, W.	Clark, William (Croydon S)	Fairgrieve, Russell
Berry, Hon Anthony	Clarke, Kenneth (Rushcliffe)	Farr, John
Biffen, John	Clegg, Walter	Fell, Anthony
Biggs-Davison, John	Cockcroft, John	Fisher, Sir Nigel
Blaker, Peter	Cooke, Robert (Bristol W)	Fletcher, Alex (Edinburgh N)
Body, Richard	Cope, John	Fletcher-Cooke, Charles
Boscawen, Hon Robert	Cordle, John H.	Fookes, Miss Janet
Bottomley, Peter	Cormack, Patrick	Forman, Nigel
Bowden, A. (Brighton, Kemptown)	Corrie, John	Fox, Marcus
Boyson, Dr Rhodes (Brent)	Crawford, Douglas	Fraser, Rt Hon H. (Stafford & St)
Bradford, Rev Robert	Critchley, Julian	Fry, Peter
Braine, Sir Bernard	Crouch, David	Galbraith, Hon. T. G. D.
Brittan, Leon	Crowder, F. P.	Gardiner, George (Reigate)
Brocklebank-Fowler, C.	Davies, Rt Hon J. (Knutsford)	Gardner, Edward (S Fylde)
Brotherton, Michael	Dean, Paul (N Somerset)	Gilmour, Rt Hon Ian (Chesham)
Bryan, Sir Paul	Dodsworth, Geoffrey	Gilmour, Sir John (East Fife)
Buchanan-Smith, Alick	Douglas-Hamilton, Lord James	Glyn, Dr Alan
Buck, Antony	Drayson, Burnaby	Godber, Rt Hon Joseph
Budgen, Nick	du Cann, Rt Hon Edward	Goodhart, Philip
Goodhew, Victor	Macmillan, Rt Hon M. (Farnham)	Rossi, Hugh (Hornsey)
Goodlad, Alastair	McNair-Wilson, M. (Newbury)	Rost, Peter (SE Derbyshire)
Gow, Ian (Eastbourne)	McNair-Wilson, P. (New Forest)	Royle, Sir Anthony
Gower, Sir Raymond (Barry)	Madel, David	Sainsbury, Tim
Grant, Anthony (Harrow C)	Marshall, Michael (Arundel)	St. John-Stevas, Norman
Gray, Hamish	Marten, Neil	Scott, Nicholas
Griffiths, Eldon	Mates, Michael	Scott-Hopkins, James
Grist, Ian	Mather, Carol	Shaw, Giles (Pudsey)
Grylls, Michael	Mawby, Ray	Shelton, William (Streatham)
Hall, Sir John	Maxwell-Hyslop, Robin	Shepherd, Colin
Hall-Davis, A. G. F.	Mayhew, Patrick	Shersby, Michael
Hamilton, Michael (Salisbury)	Meyer, Sir Anthony	Silvester, Fred
Hampson, Dr Keith	Miller, Hal (Bromsgrove)	Sims, Roger
Hannam, John	Mills, Peter	Sinclair, Sir George
Harvie Anderson, Rt Hon Miss	Miscampbell, Norman	Skeet, T. H. H.
Hastings, Stephen	Mitchell, David (Basingstoke)	Smith, Cyril (Rochdale)
Havers, Sir Michael	Moate, Roger	Smith, Dudley (Warwick)
Hawkins, Paul	Molyneaux, James	Speed, Keith
Hayhoe, Barney	Monro, Hector	Spence, John
Heseltine, Michael	Montgomery, Fergus	Spicer, Jim (W Dorset)
Hicks, Robert	Moore, John (Croydon C)	Spicer, Michael (S Worcester)
Higgins, Terence L.	More, Jasper (Ludlow)	Sproat, Iain
Holland, Philip	Morgan, Geraint	Stainton, Keith
Hooson, Emlyn	Morgan-Giles, Rear-Admiral	Stanbrook, Ivor
Hordern, Peter	Morris, Michael (Northampton S)	Stanley, John
Howe, Rt Hon Sir Geoffrey	Morrison, Hon Peter (Chester)	Steen, Anthony (Waver tree)
Howell, David (Guildford)	Mudd, David	Stewart, Donald (Western Isles)
Howell, Ralph (North Norfolk)	Neave, Airey	Stewart, Ian (Hitchin)
Hunt, David (Wirral)	Nelson, Anthony	Stokes, John
Hunt, John	Neubert, Michael	Stradling Thomas, J.
Hutchison, Michael Clark	Newton, Tony	Tapsell, Peter
Irving, Charles (Cheltenham)	Normanton, Tom	Taylor, R. (Croydon NW)
James, David	Nott, John	Taylor, Teddy (Cathcart)
Jenkin, Rt Hon P. (Wanst'd & W'df'd)	Onslow, Cranley	Tebbit, Norman
Jessel, Toby	Oppenheim, Mrs Sally	Temple-Morris, Peter
Johnson Smith, G. (E Grinstead)	Page, John (Harrow West)	Thomas, Rt Hon P. (Hendon S)
Jones, Arthur (Daventry)	Page, Rt Hon R. Graham (Crosby)	Thompson, George
Jopling, Michael	Parkinson, Cecil	Townsend, Cyril D.
Joseph, Rt Hon Sir Keith	Pattie, Geoffrey	Trotter, Neville
Kaberry, Sir Donald	Penhaligon, David	Tugendhat, Christopher
Kershaw, Anthony	Percival, Ian	van Straubenzee, W. R.
Kimball, Marcus	Peyton, Rt Hon John	Vaughan, Dr Gerard
King, Evelyn (South Dorset)	Pink, R. Bonner	Viggers, Peter
King, Tom (Bridgwater)	Powell, Rt Hon J. Enoch	Wakeham, John
Kitson, Sir Timothy	Price, David (Eastleigh)	Walder, David (Clitheroe)
Knight, Mrs Jill	Prior, Rt Hon James	Walker, Rt Hon P. (Worcester)
Knox, David	Pym, Rt Hon Francis	Wall, Patrick
Lamont, Norman	Raison, Timothy	Walters, Dennis
Lane, David	Rathbone, Tim	Warren, Kenneth
Langford-Holt, Sir John	Rawlinson, Rt Hon Sir Peter	Weatherill, Bernard
Latham, Michael (Melton)	Rees, Peter (Dover & Deal)	Wells, John
Lawrence, Ivan	Rees-Davies, W. R.	Welsh, Andrew
Lawson, Nigel	Reid, George	Whitelaw, Rt Hon William
Lester, Jim (Beeston)	Renton Rt Hon Sir D. (Hunts)	Wiggin, Jerry
Lewis, Kenneth (Rutland)	Renton Tim (Mid-Sussex)	Wilson, Gordon (Dundee E)
Lloyd, Ian	Rhys Williams Sir Brandon	Winterton, Nicholas
Loveridge, John	Ridley, Hon Nicholas	Wood, Rt Hon Richard
Luce, Richard	Ridsdale, Julian	Young, Sir G. (Ealing, Acton)
McAdden, Sir Stephen	Rifkind, Malcolm	Younger, Hon George
MacCormick, Iain	Rippon, Rt. Hon Geoffrey
McCrindle, Robert	Roberts, Wyn (Conway)	TELLERS FOR THE AYES:
McCusker, H.	Rodgers, Sir John (Sevenoaks)	Mr. Spencer Le Marchant and
Macfarlane, Neil	Ross, Stephen (Isle of Wight)	Mr. Michael Roberts.
MacGregor, John	Ross, William (Londonderry)
NOES
Abse, Leo	Blenkinsop, Arthur	Carmichael, Neil
Allaun, Frank	Boardman, H.	Carter, Ray
Anderson, Donald	Booth, Rt Hon Albert	Carter-Jones, Lewis
Archer, Peter	Boothroyd, Miss Betty	Cartwright, John
Armstrong, Ernest	Bottomley, Rt Hon Arthur	Castle, Rt Hon Barbara
Ashley, Jack	Boyden, James (Bish Auck)	Clemitson, Ivor
Ashton, Joe	Bradley, Tom	Cocks, Michael (Bristol S)
Atkins, Ronald (Preston N)	Bray, Dr Jeremy	Cohen, Stanley
Atkinson, Norman	Brown, Hugh D. (Provan)	Coleman, Donald
Bagier, Gordon A. T.	Brown, Robert C. (Newcastle W)	Colquhoun, Ms Maureen
Barnett, Guy (Greenwich)	Brown, Ronald (Hackney S)	Concannon, J. D.
Barnett, Rt Hon Joel (Heywood)	Buchan, Norman	Cook, Robin F. (Edin C)
Bates, Alf	Buchanan, Richard	Corbett, Robin
Bean, R. E.	Butler, Mrs Joyce (Wood Green)	Cox, Thomas (Tooting)
Benn, Rt Hon Anthony Wedgwood	Callaghan, Jim (Middleton & P)	Craigen, J. M. (Maryhill)
Bennett, Andrew (Stockport N)	Campbell, Ian	Cryer, Bob
Bidwell, Sydney	Canavan, Dennis	Cunningham, G. (Islington S)
Bishop, E. S.	Cant, R. B.	Cunningham, Dr J. (Whiteh)
Dalyell, Tam	Kaufman, Gerald	Rees, Rt Hon Merlyn (Leeds S)
Davidson, Arthur	Kelley, Richard	Richardson, Miss Jo
Davies, Bryan (Enfield N)	Kerr, Russell	Robert, Albert (Normanton)
Davies, Denzil (Llanelli)	Kilroy-Silk, Robert	Roberts, Gwilym (Cannock)
Davies, Ifor (Gower)	Kinnock, Neil	Robertson, John (Paisley)
Davis, Clinton (Hackney C)	Lambie, David	Robinson, Geoffrey
Deakins, Eric	Lamborn, Harry	Roderick, Caerwyn
Dean, Joseph (Leeds West)	Lamond, James	Rodgers, George (Chorley)
de Freitas, Rt Hon Sir Geoffrey	Latham, Arthur (Paddington)	Rodgers, William (Stockton)
Dell, Rt Hon Edmund	Leadbitter, Ted	Rooker, J. W.
Dempsey, James	Lee, John	Ross, Rt. Hon W. (Kilmarnock)
Dormand, J. D.	Lestor, Miss Joan (Eton & Slough)	Rowlands, Ted
Douglas-Mann, Bruce	Lever, Rt Hon Harold	Sandelson, Neville
Duffy, A. E. P.	Lewis, Arthur (Newham N)	Sedgemore, Brian
Dunn, James A.	Lewis, Ron (Carlisle)	Selby, Harry
Dunnett, Jack	Lipton, Marcus	Shaw, Arnold (Ilford South)
Dunwoody, Mrs Gwyneth	Litterick, Tom	Sheldon, Robert (Ashton-u-Lyne)
Eadie, Alex	Lomas, Kenneth	Shore, Rt Hon Peter
Edge, Geoff	Loyden, Eddie	Short, Rt Hon E. (Newcastle C)
Edwards, Robert (Wolv SE)	Luard, Evan	Short, Mrs Renée (Wolv NE)
Ellis, John (Brigg & Scun)	Lyons, Edward (Bradford W)	Silkin, Rt Hon John (Deptford)
Ellis, Tom (Wrexham)	Mabon, Dr J. Dickson	Silkin, Rt Hon S. C. (Dulwich)
English, Michael	McCartney, Hugh	Sillars, James
Ennals, David	McElhone, Frank	Silverman, Julius
Evans, Ioan (Aberdare)	MacFarquhar, Roderick	Skinner, Dennis
Ewing, Harry (Stirling)	McGuire, Michael (Ince)	Small, William
Faulds, Andrew	Mackenzie, Gregor	Smith, John (N Lanarkshire)
Fernyhough, Rt Hon E.	Mackintosh, John P.	Snape, Peter
Fitt, Gerard (Belfast W)	Maclennan, Robert	Spearing, Nigel
Flannery, Martin	McMillan, Tom (Glasgow C)	Stewart, Rt Hon M. (Fulham)
Fletcher, Raymond (Ilkeston)	McNamara, Kevin	Stoddart, David
Fletcher, Ted (Darlington)	Madden, Max	Strang, Gavin
Ford, Ben	Magee, Bryan	Strauss, Rt Hon G. R.
Forrester, John	Mahon, Simon	Summerskill, Hon Dr Shirley
Fowler, Gerald (The Wrekin)	Marks, Kenneth	Swain, Thomas
Freeson, Reginald	Marquand, David	Thomas, Jeffrey (Abertillery)
Garrett, John (Norwich S)	Marshall, Dr Edmund (Goole)	Thomas, Mike (Newcastle E)
Garrett, W. E. (Wallsend)	Marshall, Jim (Leicester S)	Thomas, Ron (Bristol NW)
George, Bruce	Mason, Rt Hon Roy	Thorne, Stan (Preston South)
Gilbert, Dr John	Maynard, Miss Joan	Tierney, Sydney
Ginsburg, David	Meacher, Michael	Tinn, James
Golding, John	Mellish, Rt Hon Robert	Tomlinson, John
Gould, Bryan	Mendelson, John	Tomney, Frank
Gourlay, Harry	Mikardo, Ian	Torney, Tom
Graham, Ted	Millan, Bruce	Tuck, Raphael
Grant, George (Morpeth)	Miller, Mrs Millie (Ilford N)	Urwin, T. W.
Grant, John (Islington C)	Mitchell, R. C. (Soton, lichen)	Varley, Rt Hon Eric G.
Grocott, Bruce	Moonman, Eric	Wainwright, Edwin (Dearne V)
Hardy, Peter	Morris, Alfred (Wythenshawe)	Walker, Harold (Doncaster)
Harrison, Walter (Wakefield)	Morris, Charles R. (Openshaw)	Walker, Terry (Kingswood)
Hart, Rt Hon Judith	Morris, Rt Hon J.(Aberavon)	Ward, Michael
Hattersley, Rt Hon Roy	Moyle, Roland	Watkins, David
Hatton, Frank	Mulley, Rt Hon Frederick	Watkinson, John
Hayman, Mrs Helene	Murray, Rt Hon Ronald King	Weetch, Ken
Heffer, Eric S.	Murry, Rt Hon Ronald King	Weitzman, David
Hooley, Frank	Newens, Stanley	Wellbeloved, James
Howell, Rt Hon Denis	Noble, Mike	White, James (Pollok)
Hoyle, Doug (Nelson)	Oakes, Gordon	Whitehead, Phillip
Huckfield, Les	Ogden, Eric	Whitlock, William
Hughes, Mark (Durham)	O'Halloran, Michael	Willey, Rt Hon Frederick
Hughes, Robert (Aberdeen N)	Orbach, Maurice	Williams, Alan (Swansea W)
Hughes, Roy (Newport)	Orme, Rt Hon Stanley	Williams, Alan Lee (Hornch'ch)
Hunter, Adam	Ovenden, John	Willams, Rt Hon Shirley (Hertford)
Irvine, Rt Hon Sir A. (Edge Hill)	Owen, Dr David	Williams, Sir Thomas
Irving, Rt Hon S. (Dartford)	Padley, Walter	Wilson, Alexander (Hamilton)
Jackson, Colin (Brighouse)	Palmer, Arthur	Wilson, William (Coventry SE)
Jackson, Miss Margaret (Lincoln)	Park, George	Wise, Mrs Audrey
Janner, Greville	Parry, Robert	Woodall, Alec
Jay, Rt Hon Douglas	Pavitt, Laurie	Woof, Robert
Jeger, Mrs Lena	Peart, Rt Hon Fred	Wrigglesworth, Ian
Jenkins, Hugh (Putney)	Pendry, Tom	Young, David (Bolton E)
John, Brynmor	Phipps, Dr Colin
Johnson, James (Hull West)	Prentice, Rt Hon Reg	TELLERS FOR THE NOES:
Johnson, Walter (Derby S)	Price, C. (Lewisham W)	Mr. Joseph Harper and
Jones, Dan (Burnley)	Price, William (Rugby)	Mr. James Hamiluon.
Judd, Frank	Radice, Giles

Question accordingly negatived.