SPECIAL ADDITION TO BASE A (Hansard, 24 June 1976)

§ Mr. Graham Page (Crosby)
I beg to move Amendment No. 20, in page 7, line 13, at end insert: 'or the value of his reacquisition in the case of a deemed disposal'.

§ Mr. Deputy Speaker (Mr. Oscar Murton)
With this we may take Amendment No. 23, in page 7, line 29, leave out subsections (4) to (8).

§ Mr. Page
The amendments relate to the special addition to base A. That sounds technical jargon, but it is well understood by those of us who struggled through the Committee stage of the Bill for many hours. The special addition to the base from which one starts to calculate the realised development value is in some cases 15 per cent. and in others 10 per cent. Where there has been a deemed disposal—not an actual disposal—and reacquisition at the commencement of the material development, certain rather complicated calculations apply. In many cases a special addition to the base figure will not be made when there has been a deemed disposal and deemed reacquisition.
The amendment is intended to simplify the calculations and to provide merely that if there is a deemed disposal and a deemed acquisition, there will be deemed figures for each—a deemed amount for which it is disposed and a deemed amount for which it is reacquired. Why not take those figures simply as base A and make the special addition to them instead of going through the long procedure set out in subsections (4) to (8), which includes a formula which looks more like an advertisement for Double Diamond than anything else?

§ Mr. Russell Kerr (Feltham and Heston)
We are only here for the beer.

§ Mr. Page
I know that the hon. Gentleman is only here for the beer. The Bill will provide us with a complicated formula which is BD—PD/BV. The amendments are an attempt to simplify the Bill and to save everyone a lot of trouble. They seek to make a special addition when there is a deemed disposal.

§ The Minister of State, Treasury (Mr. Denzil Davies)
In his engaging way, the right hon. Member for Crosby (Mr. Page) suggested that the amendments would simplify the Bill. They might do that, but they would do a great deal more as well. We are all in favour of simplifying the Bill, but experience in Committee has shown us that that is not always very easy.
His point of substance was that the special addition should continue to run even after the deemed disposal and reacquisition that take place on the commencement of material development. We debated this matter at length in Committee and the Opposition suggested that the special addition should not stop at that point because that was merely a deemed disposal.
The special addition is a very important and generous relief from taxation which is provided to take into account partly the very high cost of buying land in 1972 and 1973 and partly the high interest cost which made it expensive to finance purchases. The special addition was thought to be the right way of assisting purchasers who bought at a high cost. We believe that the Government have been extremely generous in these provisions. Everything I read in professional magazines and all the commentators' views agree that that is the case. The Opposition want to us to go further and that is their prerogative. Wherever a relief is given, there is always a request to extend it.
I cannot accept the Opposition's case, for the reasons I gave in Committee. Certainly I could not at this moment find some philosophical and metaphysical reason why the special addition stops at a deemed disposal. Once there is a deemed disposal and an acquisition, there is a high base value.

§ Mr. Michael Spicer (Worcestershire, South)
The Minister seems to be basing his case upon the fact that particularly 1853 high values were attached to properties during a particular period. He says that high costs were incurred. He says that the reason for not allowing a special addition to run beyond the specified time is that the costs by then had come down to a more reasonable level. If that is a sound argument, surely it can apply to the whole Bill, and surely in that case the whole premise of the Bill is negated.

§ Mr. Davies
The hon. Member has misinterpreted and misunderstood what I said. I said that in 1972–73 the costs of buying land were very high. Expansion of the money supply and various actions of the previous Government created inflated prices for land and high costs for the financing of purchases. We therefore introduced the special addition. We think that we have provided sufficient relief and that we should go no further. That is why I ask the House to reject the amendment.

§ Mr. Graham Page
I am sorry that the Minister cannot put forward an argument of principle for the difference between the special addition before and after deemed disposal. As far as I can see, there is no difference. I look on this as being a recompense for the money being kept idle and locked up in the property until it is developed. Even when the development starts, there is still no return from that money.
This amendment gave the Minister an opportunity to accept an increase in the special addition. I am sorry that he did not take advantage of it.