DEFERRED LIABILITY FOR DEVELOPMENT LAND TAX (Hansard, 24 June 1976)

§ Mr. Graham Page
I beg to move Amendment No. 231, in page 44, line 15, leave out 'an approved co-operative' and insert 'a'.

§ Mr. Speaker
With this amendment it may be convenient to consider the following amendments:

§ Mr. Page
I am much obliged for your suggestion that we may take the other amendments with this one, Mr. Speaker.
We are dealing now with Clause 26 of the Bill, which gives certain exemptions to some housing associations and reliefs to others. It picks out, rather astonishingly I think, approved co-operative housing associations and self-build societies as those to receive complete exemption from the tax. We recollect from previous debates that charities are not exempt from the tax but yet we have approved co-operative housing associations and self-build societies picked out for this special benefit under the Act.
Then, in subsection (2), two similar kinds of body are not given full exemption but are merely given deferment of the tax. They are the Housing Corporation or a registered housing association which is neither an approved co-operative housing association nor a self-build 1882 society. So the ordinary common or garden association merely gets relief, whereas a co-operative housing association gets complete exemption. I do not know why there should be this distinction between the co-operative housing association and the cost-rent housing association. For that reason, these amendments would move the cost-rent association into the exempt category merely by removing the preceding words "housing association", so that exemption would refer to all housing associations. The subsection would then continue to refer to the self-build society but the amendments would add the Housing Corporation to the exempted bodies.
If an approved co-operative housing association is accepted under the Bill as being exempt from the tax, surely that should extend not only to all housing associations but also to the Housing Corporation itself. I do not believe the Housing Corporation very frequently undertakes actual building, or buying or selling. It is not essentially for that purpose. If it does so it is doing it on the same principle as the other two kinds of housing association. In these amendments, therefore, we wish to give exemption to all kinds of housing associations, to the self-build society and to the Housing Corporation.

§ Mr. Nicholas Fairbairn (Kinross and West Perthshire)
May I intervene briefly before the Minister makes his debates of his no doubt intended rejection of the amendment? As I understand the purport of his remarks, he has told us that it would not be right for recreation grounds, for example, to be exempt, because other things might not be exempt. He has said it would not be right for charities to be exempt because only some people would benefit, and it would not be right for pension funds to be exempt, because not everybody is a member of a pension fund. What of this clause, which proposes to give special treatment only to some people?

§ Mr. Denzil Davies
Perhaps I may first explain to the right hon. Member for Crosby (Mr. Page) why we have drawn this distinction, since my explanation may go some way to answering the question from the hon. and learned Gentleman. The right hon. Gentleman says quite correctly that the clause as 1883 drafted gives exemption to approved cooperative housing associations and self-build societies. That is because they are very similar to owner-occupiers. Indeed, as we understand them, self-build societies and co-operative housing associations build houses for owner-occupation for members of those bodies. They are, therefore, almost on all fours with owner-occupiers and we feel it is right to give them exemption, as owner-occupiers already get exemption on disposing of their property.
The hon. and learned Gentleman asks why these bodies should be given any exemption at all, since we are not giving exemption to recreation grounds or charities. We give exemption to owner-occupiers, and I should have thought that most people would consider it was right to exempt owner-occupiers from the provisions of the Bill. I would expect hon. Gentlemen opposite to object strongly if, under this legislation, we were to suggest taxing the owner-occupier on his one house. There have always to be exemptions, and I made last night the point that care has to be taken with exemptions to avoid being unfair.
The Housing Corporation differs from self-build societies, as I believe the right hon. Gentleman would agree. I understand that the latter build houses for letting and not for occupation by members. To that extent, therefore, they are different. I believe that in most cases they build for letting. For that reason, it was felt right to defer the charge on commencement of material development and charge them only the true DLT on the actual disposal of the property.

§ Mr. Graham Page
In many cases housing associations which let properties may, when they are fully let, eventually sell the whole construction.

§ Mr. Davies
The right hon. Gentleman goes some way to confirming what I have said, that they build for letting and then sell off. We thought it right to defer the charge at the point of commencement of material development until the charge arises on the actual sale. That is why the two are treated differently. The self-build society is more akin to owner occupation. The Housing Corporation is different, and the Bill as drawn reflects 1884 the differences between them. I ask the House not to accept the amendments.

§ Mr. Graham Page
I find that argument most unconvincing. There is no distinction in the service provided by these bodies, so that one should be exempt altogether and the other should only have the tax deferred for a certain period.
Both the Minister and I have used the phrase "exempt body" throughout this debate. I am not sure whether we are right in doing so. As I understand it, although these two bodies—the co-operative housing association and the self-build society—are exempt bodies under the clause, I am not sure whether they would have the right to make a purchase net of tax. They seem to be in another clause of the Bill. But if they are not why are they not? I ask my hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) why, for example, his Scottish Special Housing Association should be an exempt body under Clause 11 whereas the Housing Corporation and the co-operative housing associations are given a little special exemption under another clause and apparently do not then come into the category of those who can purchase net of tax. I cannot say that I am sorry about that, because I do not like the procedure of purchases net of tax. But I do not see why my hon. and learned Friend's SSHA should have that benefit when other housing associations do not.
The difficulty with this legislation is to find some logic so that it is possible to work out why the Government are allowing some not very deserving bodies off the tax and refusing to do the same for very deserving bodies such as the charities.