§ 'Any agreement between an owner of land or the owner of a relevant interest in land and the Treasury which involves the waiving of liability for capital transfer tax in return for limitations on development of, or access to, land in an area of national scenic heritage shall be the subject of consultation between the Treasury and the local authority or local authorities in whose area the relevant land lies before any such agreement is concluded.'.—[Mr. Dewar.]
§ Brought up, and read the First time.
§ Mr. Dewar
I beg to move, That the clause be read a Second time.
The clause deals with consultation between local authorities and the Treasury and other parties who might be involved in the matter of capital transfer tax exemptions for land in areas of outstanding scenic importance. This is an unlikely topic to be tackled in the Bill. Capital transfer tax is for me a mysterious and erudite business, and I do not pretend to be an expert in it. It is worth giving it an airing at this stage, however, and the clause raises matters of genuine importance that the Minister might be glad of an opportunity to comment upon, given some of the public anxieties that on occasions have surfaced in the matter.
We are dealing here with an arrangement by which land is given an exemption from CTT in return for certain guarantees by the owners about its future management. I do not object to that aim. We are all in favour of proper management of areas of outstanding scenic interest, and if that can be achieved by taxation arrangements such a policy is not per se wrong. It would be difficult for me to say that it were. The Minister would no doubt point out that similar arrangements operated under Labour Governments. One of the more noticeable examples which has had great publicity was contained in the Treasury memorandum of October 1977 when Labour Ministers would have taken the decision.
It is self-evident from the drafting of the clause that I am not seeking to abolish the arrangement. If I were to seek to do that, I think that the Finance Bill would be a much more appropriate vehicle. I might have encountered considerable difficulties over the long title and various other matters if I had tried to do it in this Bill. What I am seeking to do, and am entitled to do, is to suggest that when such arrangements are considered there should be a specific statutory duty to consult the local authority within whose area lies the land that is the subject of the agreement. We are also entitled, when attempting to decide whether such a provision is wise or necessary, to consider how the arrangement has been working in practice and whether, to the best of our knowledge—the Minister may shed new light on the matter—these 1008 arrangements constitute a sound bargain for the public purse. These are legitimate questions to ask when we are considering whether some formal consultation machinery involving the local authority, as suggested in the clause, is needed.
I am no expert in this matter—I am making a virtue of necessity—and therefore I shall give a simple description of the arrangement. In return for exemption the owners of land of particular scenic importance give certain undertakings about preservation and public access. I wish to confine myself to the situation where a conditional exemption is granted and where a charge or potential charge to CTT has arisen. Those who are about to bear the burden express a willingness to do a deal on access, preservation and management in return for that conditional CTT exemption. The exemption is granted on the condition that if at some future point the land is sold in an arm's length transaction not only will there be a liability to capital gains tax, but the capital transfer tax which was not levied when the arrangement was made will fall due.
There might be other possibilities. There is the strange arrangement by which land can be sold to one of the public bodies listed in schedule 6, paragraph 12, of the Finance Act 1965. In those circumstances, only part of the CTT due is the subject of exemption. This arrangement is covered by a strange fiscal term. One is allowed to keep a douceur or a proportion of the tax that otherwise would have been due. That is not so much a bribe as a tip for good behaviour. This is a mysterious twilight world in which one can pass the land on to another member of the family or to someone who will maintain the original terms of the agreement. The CTT liability remains in limbo and does not fall upon the owner at that point.
That is as adequate a description as I need to give. This is a mysterious and, perhaps inevitably since it involves private finance, a hidden matter. A deal is made. I do not use that word in a pejorative sense. It is not often exposed to the public eye. However, it surfaces occasionally and when it does it creates a considerable amount of emotion and debate. The outstanding example, which is on everyone's mind, and which crops up occasionally is of the Vestey family and their Assynt estates in Sutherland.
On 19 October 1980 the matter was raised in an article in the The Sunday Times which stated that the Vestey family had made an arrangement to deal with an estate which it put at 100,000 acres where it got an exemption on the condition that it must not develop the property without consulting conservation bodies and must allow the public to have reasonable access to the land.
It is alleged—I say "alleged" because I am in no position to confirm or deny the figures—that the exemption was worth some £540,000. To complete the picture I should recall that there was a hearing a week ago on Wednesday of the Public Accounts Committee at which the matter was raised. Sir Lawrence Airey of the Inland Revenue was giving evidence, and he said that to talk of sums in excess of £500,000 was "grossly wrong". He did not go further—perhaps for reasons we can understand—to put the record straight in any positive sense, but he entered a protest against what he thought were inflated figures.
I do not know the truth. I have no reason to question—I would not wish to do so for a moment—the evidence of the Inland Revenue. However, we can for our purposes 1009 assume that the exemption was of substance, and the consideration, from the point of view of the revenue forgone by the public purse, must have been substantial.
According to press reports, in return there is a promise that there will be no development without consultation and that there will be public access. That is a good example, in the sense that one is entitled to know the worth of what is being given in return. do not know that part of the world as well as other hon. Members, especially Members who represent it, such as the hon. Member for Caithness and Sutherland (Mr. Maclennan), although I have been there on a number of occasions. I did not gain the impression that there was great difficulty about access. It is a large wilderness area and I am not clear what access promises were made that were of substantial value to members of the public.
I hope that I shall not be thought rude. but I have never gained the impression—although others could give better evidence—that with that group of proprietors there was not a great rush to develop anyway. The promise to consult conservation bodies before developing seems to be an empty gesture, but one which may have brought—I stress the word "may"—a substantial return.
We are entitled to ask whether, in these circumstances, there is a strong case, as the amendment suggests, for saying that before the bargain is struck the local authority concerned should be brought into the dialogue to pass judgment on whether what is being offered is of realistic and genuine value to the public, and whether anything else is reasonably required in terms of management of the estates in return for the exemption. If what was asked for was unreasonable and was a bargain, there would have to be consenting parties, but there should at least be the opportunity for that to be considered.
At present the Countryside Commission for Scotland is consulted. I do not complain about that. It is important that it should be consulted about the preservation of areas of outstanding scenic worth. But it also has a statutory duty to consider an area from its point of view. A local authority, elected by the people of the area, surely has a much broader view of the proper considerations in weighing up whether a bargain is in the interests of the public. It is dangerous to exclude the local authority, and it would be positively useful if it were to have a part in the arrangements.
In October 1980, a new memorandum was produced which recently came into effect. That presumably will govern all future matters in this area. I am unhappy about what I have discovered in the memorandum. It is written in such vague and general terms that it is almost impossible to discover what criteria will govern the bargaining process under one of these arrangements. Paragraph 5.3 reads:To satisfy the conditions of exemption an undertaking has to be given by the appropriate person, usually the new owner, broadly to the effect that reasonable steps will be taken to preserve the property and to secure reasonable public access.I confess that the loosely drafted phrasebroadly to the effect that reasonable steps will be takenis not exactly fighting talk. If substantial sums of potential public revenue are to be forgone in capital transfer tax exemption, at least it would be a reasonable safeguard to involve local authorities in such negotiations, to ensure that that rather timid, hedged-about and qualified series of words were given teeth to get a reasonably "good buy" for the taxpayer and the public purse.
1010 There is undoubtedly a feeling that in the case I have mentioned the people involved—we do not know the figures—gained much and, in practical terms, gave little. It is a matter of "blessed are they that have for to them shall be given" by successively naive Governments. That may be grossly unfair, but it is a genuine feeling. Putting it no higher, it would be a safeguard against misunderstanding, and the anger that such deals can generate, if the local authority were on the inside as a party and contributing positively to the discussions.
I do not want to labour the point, but we know that anger can be real and understandable. There were widespread reports of a debate in the Highlands regional council—reports appeared in The Scotsman on 20 November 1980 and on the same day they appeared in The Press and Journal where they were a front page story—in which a number of councillors, perhaps in the heat of debate, made sweeping criticisms. The nature of the criticisms shows how understandably strongly they feel about the lack of information that surrounds such deals. A number of comparisons were, made with Nazi Germany, but I shall not bother the House with that matter. However, that shows the background.
The Scotsman reported that the vice-chairman of the local planning committee, Mr. Francis Keith, when talking about the Lochinver area, complained:There was no land for a cemetery—the nearest was ten miles away, he said. No houses could be built without loss of crofting land, and despite a queue of potential developers, there was considerable difficulty in getting, sites for industry".These are some of the restrictions. As to the benefits, I don't know. The people of Lochinver are very much afraid of expressing opinions because the estate has an iron hand clamped on the village".I am not endorsing those views because it would be presumptuous of me to do so, but they are genuinely held. Conversations that I have had recently have suggested that they are still strongly held.
I suggest to the Minister that to take on board this comparatively modest amendment will not wreck the scheme or rule it out of court but will involve the people who, above all, should be involved—the elected representatives in the area where the land is situated. To involve them is common sense and is not the stuff of red revolution or ideologically unacceptable to the hon. Member for South Angus (Mr. Fraser), the promoter of the Bill, or to the Minister.
There are genuine advantages in consultation in the memorandum which governs these agreements, paragraph 5.4 reads:Once the property has been designated for conditional exemption, it and the undertakings given will be kept under review, to ensure both that ownership continues on the basis et the approved exemption and that the undertakings … are being honoured.What does that monitoring consist of? Are there possibilities for further conversations to tighten up the arrangements? Could not local authorities be involved in that part of the process as well as before the bargain has been struck?
I have said enough to outline my feelings and the case. I recognise that there are not many of these arrangements—at least to my knowledge. I am grateful that the Countryside Commission for Scotland has conveniently published its thirtieth Report. That says that the commission has been involved in only three such cases in 1980. In two of them, to be fair, it came to the conclusion, no doubt for good reasons, that the land was 1011 not of sufficient scenic importance to justify a capital transfer tax exemption. The commission made one slightly barbed reference. It said that it welcomed the arrangements, notwithstanding some ill-founded criticism and comments regarding one case.
I hope that no one will resent my bringing up the matter on this occasion. I am not trying to make pejorative or prejudiced judgments. I am merely reflecting an anxiety and suggesting a sensible way of overcoming the difficulties. The Countryside Commission for Scotland is fighting already, but let us have a second point of view—a second adviser to the Treasury. Let us choose one which is solidly based in local democracy and which knows what the local view should be.
It is important that we should have the refreshing realism of local authority directly elected opinion. Some aspects of the document which governs these arrangements are thoroughly unsatisfactory. The commission fairly says that it welcomes the arrangements that have been made for maintenance funds for heritage property. That is where there are special tax concessions on money earmarked in trust to manage and maintain an area which has been granted an exemption.
That is fair in its way, but paragraph 10.2 of the Government's memorandum states:The principle behind these specially favourable arrangements is that it is generally desirable for outstanding land and buildings to remain in private ownership rather than to be taken over by the State.I do not want to debate nationalisation and public ownership. Ownership is not as important as use. The sentence in the memorandum assumes that arrangements ensure that private ownership continues. It is open to question. It gives colour to the alarm about whether a fair bargain is struck when exemptions are given. That alarm could be defused if the local authority were involved.
In some areas of the Highlands there is a strong suspicion that people do not come first. Land is held sterilised and undeveloped when use could be made of it. The sentence gives credence to the theory that there might be a tacit conspiracy by, or lethargy on the part of the Government. If the local authorities were allowed to advise the Treasury—but not to dictate what should happen—that would reassure the authorities and public opinion.
I hope that the Minister and the Bill's promoter will be sympathetic to the new clause. If it is not properly drafted, I hope that a similar provision can be made in the House of Lords.
§ Mr. Robert Maclennan (Caithness and Sutherland)
The hon. Member for Glasgow, Garscadden (Mr. Dewar) said, correctly, that it was not possible under the Bill to consider the appropriateness or otherwise of the capital transfer tax exemptions with which the clause deals. I recognise the debate's limitations. However, I feel less constrained than the hon. Gentleman in relation to the events which gave rise to the new clause. Because of my constituency knowledge, I am able to be more outspoken about the effect of the arrangement in relation to Glencanisp, near Lochinver.
There is legitimate and growing concern throughout the Highlands and islands of Scotland that the interests of the 1012 environmental lobby are being given undue weight in relation to appropriate land use, the need for local development, and the creation of employment locally. The areas are in danger of becoming mere wildernesses, devoid of people even to provide the basic services which visitors expect. I was ignorant of the existence of the Treasury memorandum of 1977 until The Sunday Times performed a useful service in bringing it to light. It is one of a number of measures which reinforce that trend.
The National Trust for Scotland has the power to enter into conservation agreements with proprietors and to interpose its view about whether a development is acceptable. Throughout the Highlands and islands, particularly in coastal areas which are most likely to provide development opportunities, the National Trust for Scotland is making agreements on a wide scale. The effect of the agreements has not been tested in the courts. They constitute yet another obstacle in the way of development. In my constituency, for example, the National Trust for Scotland sought to obstruct the desirable development of a caravan site and restaurant in the alleged interests of leaving a strip of coast line untouched.
The role of the Nature Conservancy Council is also causing controversy. Through the designation of sites of special scientific importance, it is intervening to stop, for instance, the sale of land for forestry without reference to local planning authorities and without considering whether the proposed use of land will create employment. It seems to view proposals in isolation. The memorandum, replaced in 1980, takes us further away from the democratic control of planning authorities.
What public benefit is derived from the exemption from capital transfer tax of proprietors who are fortunate enough to own land of national scenic importance? In every respect they gain what they wish at the public expense. The hon. Member for Garscadden referred to the Vestey family. For many years that family deliberately sought to inhibit development. In the old days before the Labour Government amended the law on the imposition of feudal conditions enabling them to be challenged in the lands tribunals, the Vestey family was notorious for attaching feudal conditions to limit the use of land. The hon. Member for Fife, Central (Mr. Hamilton) saw evidence of that when he visited my constituency a few years ago.
That limitation was symptomatic of the approach of too many absentee proprietors. Such proprietors gain from the exemption from capital transfer tax in return for limitations on the development of land. There is no evidence that the Vestey family is in the least interested in the development of land. It never acquired the land to develop it. It acquired 100,000 acres for the sole purpose of surrounding itself with large areas of emptiness to besport itself and its friends privately for two or three weeks in the year chasing stags over the crags. Sometimes one wishes that the Vesteys had followed the stags over the crags and that the land could return to public ownership and public use.
There is no doubt that the acquisition of those estates was not contemplated with development in mind. There is equally no doubt that the proprietors of those estates will lose no opportunity to obstruct development. The remarks of the councillor for Durness, Mr. Francis Keith, were not far wide of the mark. It is true that over the years local authorities have had great difficulty in acquiring land for development and house building, and the land that has been made available by the Vesteys in the past has been highly unsuitable for house building. At present, there is 1013 a question about whether land at Lochinver should be made available for extending the fishing port there. Although I understand that the land in question is not part of the Glencanisp estate that is covered by the agreement with the Treasury, the negotiations with the estate illustrate the difficulties that proprietors can put in the way of development.
Under the terms of the Treasury memorandum 1980, the body which is primarily consulted in determining whether it is appropriate for the Treasury to grant the remission of capital transfer tax is the Countryside Commission for Scotland. It must be said that the remit of that commission is exceedingly limited. it is not concerned with the wider issues of the public weal, but with one narrow range of questions which relate to the preservation of the countryside and the public's access to the countryside.
Although it may be appropriate to consult the Countryside Commission on such matters, many people, certainly in my constituency, regard that commission as parti pris in these matters. Its chairman, Dr. Jean Balfour, is the proprietor of an estate which is adjacent to the very estate that has given rise to this debate. She herself is not regarded in Sutherland as an ideal landowner. She has allowed a farm on her estate to go out of productive use because she believes that there is an obscure tree on the farm that is of special scientific importance. It may be thought that her interests in the matter are heavily weighted in favour of maintaining the wilderness over which she appears to have such influence with the present Government. She once described her own estate as nothing but rock and water, despite the fact that it had an extremely good working farm which she has allowed to go out of use. Despite her prejudiced attitude, she and her commission are to be regarded as the arbiters of the fate of large tracts of the Highlands which are regarded as of scenic importance.
This is not an abstract question. It involves the livelihood of the dwindling population of many parts of the Highlands. The estate of Glencanisp is not alone in the Highland and Islands in being scenically attractive. There are thousands of square miles of similar land. In Sutherland alone, the population has dwindled to below 13,000. If priority is to be given to the creation or perpetuation of wilderness, I predict that no one will be left, even to act as supervisors of the wilderness for the benefit of the few people who can afford the petrol to drive around the single track roads which are an obstacle to the growth of tourism.
The Treasury memorandum of 1980 is a wholly unacceptable way to ensure public interest in the preservation of land and access to it. It is unacceptable that private agreements should be entered into between the Treasury and the proprietor of the land. It is a matter of public interest. It is not a private matter between the Treasury and the individual proprietor. There is no doubt that the Treasury memorandum is contrary to the public interest. I regret that the hon. Member for Garscadden did not call for the abandonment of the memorandum, though I realise that this Bill is not the proper place for that to be done. A Finance Bill would be the right instrument to bring about a change of that nature in the law.
The amelioration proposed by the hon. Member for Garscadden, though it goes some way to pulling the sting out of the problem, does not go far enough. If the Government agree that local authorities should be 1014 consulted when the Treasury and an individual enter into discussions about a piece of land, I do not doubt that the local authority will make its views known with pungency and force.
The blanket nature of the agreements that have been entered into, apparently, in respect of Glencanisp give rise to possible concern about how that can be done. Let not the Minister say that agreements entered into between the Treasury and the individual, being matters of taxation, are matters between the Revenue and the individual alone. They are matters of public consequence. These measures are denying the public substantial amounts of money, although the Public Accounts Committee was unable to discover how much. Not only are the public being deprived of the revenue, they are being deprived of the possibility of development. Thus, the estate gains at both ends by these one-sided agreements.
I do not expect the Minister to look with sympathy on any extension of local authority influence in matters of planning. At Question Time earlier this week I raised the general issue with the Secretary of State. He said that he thought it right that the arrangements entered into by the Government—they are now enacted—whereby areas of outstanding scenic importance must be subjected to the further intervention of the Countryside Commission, should stand, even in the Highlands and Islands, although there has been wholehearted opposition to them from the Highlands regional council, the Western Isles councils, the Crofters Commission, the Highlands and Islands Development Board, and all the district councils in the area. The only body that appears to be in favour of the Government's attitude is the highly suspect Countryside Commission itself, which has such narrow tunnel vision about the development of the Highlands that it has forfeited all respect throughout the area as a body capable of giving objective advice in the public interest.
If the Government continue to be so insensitive to the needs of the area, there is no doubt that they will lose what little support they at present enjoy in the north of Scotland. The very least that the Government can do is to show their awareness that the sterilisation of large tracts of land cannot and should not be undertaken without consulting the elected local planning authorities, as the new clause provides. The new clause, although it does not go nearly far enough, should be accepted with alacrity.
§ Mr. William Hamilton (Fife, Central)
I shall not detain the House for more than a few minutes. I am grateful to my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) and to the hon. Member for Caithness and Sutherland (Mr. Maclennan) for putting the case in such forthright and reasonable terms.
The hon. Member for Caithness and Sutherland speaks with great authority and justified indignation about what has happened and is happening in the Highlands of Scotland. He was kind enough to refer to my visits to his constituency. I took great delight in having working holidays with him in his area, and I am sorry that his departure from my party prevents me from doing so on the basis of political friendship. However, on the basis of personal friendship, I shall be delighted to go there again.
There is no doubt that there is an extremely radical political element in the Scottish Highlands that has been tapped by the hon. Gentleman with great success over the past few years. It originates from the Highlands 1015 clearances, and everything related to them. The Vesteys are a vestige of the feeling of persecution and exploitation of the natives in the area.
It is right to say that the environmental lobby is strong and developing. I have no great antipathy to it, because I think that it does a valuable job. However, its interests must be balanced against the wider interests on the natives who live and work in the area. The hon. Member for Caithness and Sutherland referred to the National Trust, the Nature Conservancy Council and the Countryside Commission for Scotland, of which Dr. Jean Balfour is the chairman. Dr. Balfour is well known in Fife as a real reactionary, diehard Tory landowner. There is no doubt that she seeks to preserve the interests of feudal landlords, including herself, and to hell with everyone else. I am afraid that that attitude still prevails in large measure among the landowners in the Highlands.
The specific case to which reference has been made is that of the extremely wealthy Vestey family. The Labour Government, who produced the 1977 agreement, have a great deal to answer for. The Minister would be right to make great political capital out of the fact that these arrangements were entered into by the Labour Government. The arrangements are very simple, very stark and extremely unjust. The Vesteys come to an arrangement with the tax authorities by which they take over an enormous tract of wild land in Scotland and in return for a promise not to develop, which they would not have done in any case, they receive substantial tax concessions which they do not need.
All that benefits solely, wholly and exclusively the Vestey family and their hunting and fishing friends, for whom that estate is used. That, on the face of it, is indefensible from every point of view. From the point of view of the environment, the public, the local authority and the Inland Revenue, there is no case whatever for arrangements of that kind.
The hon. Member for Caithness and Sutherland was modest enough not to mention that this matter was brought before the Public Accounts Committee, of which both he and I are members, on his initiative. He saw the report in The Sunday Times and it was on his initiative that we got the Comptroller and Auditor General to take up the matter. That was how the Public Accounts Committee had before it a week or so ago the head of the Inland Revenue to discuss these matters with us. We took evidence which will be duly reported to the House and, I hope, eventually debated in the House. I hope that the hon. Member for Caithness and Sutherland will watch for that debate to come up because we shall then be able to go into these matters in very much greater depth and detail than we have been able to do so far.
Although the Minister will not accept the new clause, I hope that he and the Scottish Office will take up these matters with the Treasury, the Inland Revenue and local authorities to try to find some machinery that will adequately protect the interests of those who live there and not the financial feudal interests of others.
§ Mr. Rifkind
I have listened with great interest to the various contributions. The hon. Member for Glasgow, Garscadden (Mr. Dewar) was right to begin his remarks by saying that most of his comments, and, indeed, those of his hon. Friends, would deal with questions of tax 1016 exemption and capital transfer tax. Those issues are not primarily concerned with a Bill that deals purely with the enhancement and the amenity of the countryside. They would be more properly directed to another Bill now passing through the House.
I wish to comment on the rather abrasive remarks of the hon. Member for Caithness and Sutherland (Mr. Maclennan), and on what most objective people would consider to be his unfair comments both on the Countryside Commission for Scotland as a whole and on its distinguished chairman, Dr. Jean Balfour. His remarks were slightly odd and difficult to understand. He will recollect not only that the commission does a first-class job, but that it was brought into existence by the Labour Government—which, presumably, he supported. I presume that he did not vote against the creation of the commission.
The hon. Gentleman attacked Dr. Jean Balfour in a most unscrupulous manner. She was appointed in 1972 by the Conservative Government. Her service to the commission obviously was sufficiently excellent and meritorious to justify her reappointment by the Labour Government and the former Secretary of State for Scotland, Lord Ross of Marnock. The hon. Member for Fife, Central (Mr. Hamilton) described Dr. Balfour as a reactionary Tory landlord. Did he express that opinion when the Labour Government reappointed Dr. Balfour? Did the hon. Member for Caithness and Sutherland, who was a member of that Government, express his displeasure publicly at that time and in a way that made his views quite clear?
§ Mr. Maclennan
I wholly rebut the Minister's suggestion that my remarks were unscrupulous. I have made them before. The chairman of the Countryside Commission for Scotland is fully aware of my views about her and also about the inappropriateness of such a landlord—who presides over a devastated estate—acting in such a public role. She knows my views, and the people of Scotland know them. The former Secretary of State for Scotland knows my views. However, both he and the Minister know the rules about collective ministerial responsibility. The Minister made a highly improper suggestion by saying that I should have stepped out of line and publicly criticised a Minister in a Government to which I belonged.
§ Mr. Rifkind
The hon. Gentleman made his views known and it seems clear that the then Secretary of State for Scotland, who is now Lord Ross of Marnock, had little time for them. If the hon. Gentleman made his views known, it is clear that they were rejected by the Government of whom he was a member. If the then Secretary of State for Scotland saw fit to reject his opinions about Dr. Balfour, there is no reason why the House should now come to any different conclusion.
The Countryside Commission for Scotland was brought into existence by a Labour Government. Its chairman was reappointed by a Labour Government. The tax exemptions introduced in the Finance Act 1976 were introduced by the Labour Government. That Act was implemented by a Labour Government, and the details of the exemptions were issued by the Treasury during that Government's administration. Wherever criticism of these matters might appropriately come from, it cannot come from Labour 1017 Members. That must be so whether or not they were Members of this place during the period to which I have referred.
I turn to the basic provisions that are set out in the new clause. I shall not address myself to the technicalities of financial and tax matters; it is not for the House to consider those issues now. We are concerned with the amenity of the countryside. The basis on which the 1976 Act operates is that for areas of land of outstanding scenic value the owner may claim exemption from capital transfer tax as provided by the Labour Government in 1976.
The question posed by the Finance Act is whether land should or should not come within that category. The decision is taken not by the commission, not by the individual landowner, but by the Treasury. As the hon. Member for Garscadden said, the Treasury, in coining to a view, seeks the advice of the organisations to which I have referred—those that are thought to be expert on matters such as scenic value. That is the basis on which an exemption is granted. Exemptions are granted not on the basis of economic development but on whether the land in question is of such outstanding scenic value to justify the exemption.
The Treasury normally consults the Nature Conservancy Council, the commission, the Forestry Commission and other organisations of that sort. It can also consult the local authority. Labour Members have made considerable reference to the Vestey case. I understand that the local authority concerned was consulted on access and other issues relating to the decision to grant the estate capital transfer tax exemption.
There are only relatively small parts of the United Kingdom that would justify an exemption. Not all landowners with such land would seek the exemption. Would the new clause make any significant difference to the Bill's legitimate objectives? I accept that the new clause may have been intended primarily as a hook on which to hang a general debate. However, I am obliged to address myself to the new clause itself. The clause contains the strict requirement that the local authority should be statutorily consulted when any decision is to be taken on whether a particular piece of land should justify exemption from capital transfer tax. It seeks to involve the local authority in the management agreement that flows from such a decision.
Local authorities already have powers in clause 10 to initiate a management agreement whenever that may be desirable. There is no basic reason why a local authority should be the one body that has the statutory right to be consulted on tax exemption. Whether the land in question is of sufficient scenic value to justify exemption is a matter for those who are expert in scenic evaluation and for the Treasury with its responsibility for public finance. Those are the only aspects that require consideration automatically.
The hon. Member for Caithness and Sutherland and many others in the Highlands are rightly concerned about the possible sterilisation of land.
§ Mr. Rifkind
It is "possible" in some areas and perhaps "actual" in others. I am not aware of the examples that the hon. Gentleman has mentioned.
No one has ever suggested or has wished to suggest, and I am sure that when the Labour Government 1018 introduced the provisions they did not wish to suggest, that they should be used or could be used to sterilise land. As for certain landowners in the Highlands or elsewhere acting irresponsibly, that is a much wider issue that has nothing to do with the Bill or with capital transfer tax. Our consideration is limited to whether the provisions set out in the clause are likely to help development if they are changed in the way that is suggested in the new clause.
At present the designation of an area of land as eligible for exemption from CTT does not automatically sterilise that land for all development. Small development may take place within the designation. If major economic projects are thought to be essential in the national interest or for other reasons of that sort, it is for either the local authority or a Government Department to seek compulsory purchase or other means to introduce the form of economic development that is considered essential in the national interest or for other reasons. The mere fact that a piece of land is designated as justifying exemption from CTT does not in itself make the slightest difference to whether that land is or is not to be used for economic development. A number of other considerations arise, none of which is affected to its benefit or detriment by CTT exemption.
On that basis, the new clause does not hold water. I am well aware that the hon. Member for Caithness and Sutherland is concerned about the categorisation of national scenic areas. He will appreciate that new clause 3 is directed to that very issue. Therefore, it would be more appropriate if I were to make my comments on the hon. Gentleman's remarks when we consider new clause 3.
As for the new clause now before us, the issue of tax exemption is obviously more appropriately a matter for consideration within the Finance Bill. It would be more appropriate for an approach to be made to the Treasury. As for the scenic value of the countryside, Labour Governments have acknowledged by their actions as well as by their words that they recognise the valuable and important work that is done by the commission. The result has been the enhancement of various provisions in the Finance Acts and the provisions set out in the Bill. Valuable and important work is performed not only by the chairman of the commission but by its entire staff thoughout Scotland in a most excellent fashion.
§ Mr. Peter Fraser
As the Bill's sponsor, I shall outline my views on the new clause. The Bill stemmed from a working party that was set up in Scotland covering landowning interests, amenity groups and local authorities. With one or two minor exceptions, the provisions that have been put in the Bill have received almost universal support in Scotland, including the support of the Highlands region, save for one small matter that may be covered by a later amendment. All those concerned have given their welcome to what is contained in the Bill.
As my hon. Friend the under-Secretary of State has said, this is essentially a matter of taxation. It would surely be inappropriate to attempt to include such matters in the Bill. Taxation impinges directly on a totally different area from the one with which we are dealing in the Bill. I regret that the hon. Member for Caithness and Sutherland (Mr. Maclennan) has used the Bill as a vehicle to obtain for himself some cheap local publicity.
§ Mr. Dewar
I am totally unrepentant about tabling the new clause. It is in order. If it were not, we would not be 1019 debating it. I do not dispute that the Highland region welcomed what is in the Bill, with the exception of clause 10. However, it has a strong wish to see other provisions in the Bill that at present do not appear. I have spoken to a number of people in the Highland region in the past two or three days and there is no doubt that they would like the new clause to be incorporated in the Bill. It is right that it should be publicly ventilated and debated.
I did not make any remarks about competence or acts of individuals. I do not intend to depart from that now. However, I shall deal with a couple of the points raised by the Minister, because I am not entirely satisfied with his arguments.
It is appropriate that we deal with the matter here. The Bill deals with the countryside in Scotland and the statutory powers which affect it. The arrangements and management agreements with which we have been dealing, particularly the exemption arrangements made by to Treasury centrally, involve the management of important areas of scenic interest. They also involve the Countryside Commission for Scotland.
Clause 11 deals with grants, Treasury approval and so on. There is nothing untoward about that clause. It does not stick out like a sore thumb. The point of the exemption is not only that it gives relief from taxation to people who may or may not deserve it—that is a matter for subjective judgment—but it is supposed to be an open bargain from which both sides benefit and from which both sides receive a fair return.
We have a duty to probe whether that system is working properly, irrespective of who introduced it, and whether the public is getting a fair return for, presumably, the substantial sums which are potentially involved in those remissions.
We have talked about the Vestey example. I am sorry that we have discussed only that example. It has surfaced publicly from what is normally a private and mysterious series of transactions. No one has been able to say—and my understanding of the Public Accounts Committee's public session is that the Inland Revenue could not say—what were the substantial advantages which were given to the public which would not have been available to the public if that money had not been given to the Vesteys. The Under-Secretary has not told me that as a result of the exemption and of the Treasury forgoing revenue which we could have used, given the Government's present financial difficulties, the people of Sutherland have the important rights which otherwise they would not have received. That is what I would have wanted to convince me.
We are entitled to ask what is in it for us. We, the taxpayers, are giving the money and we have the right to see what we are receiving. No one has produced one iota of evidence or one suggestion about what the benefit was from that arrangement to the public who are paying.
The Under-Secretary says that there is no reason why the local authority should be the one body with a statutory right to be consulted. One good reason is that the people in the local authority are elected by those who live in that area. It is extremely important that they are consulted. I do not want to exclude the Countryside Commission for Scotland. It has a particular interest which should be fed into the process. I do not in any way make disrespectful remarks about its expertise or the value of what it might 1020 contribute to that process, but it should not be alone. The elected representatives should also be involved. This is the one interesting thing which the Under-Secretary said. If the local authority was consulted in the Vestey transaction, that comes as a great surprise to me because there has been no hint of it up to now. If that is so, it is a double-edged argument. If the Under-Secretary is saying that one should not worry because the local authority was consulted, let us ensure that it is always consulted, for the reasons which I have given.
§ Mr. Rifkind
I made it clear that on that occasion the local authority was consulted as to details of the access arrangements which were to be part of a management agreement. I am not aware of any example anywhere in our tax law or statutes which gives a local authority a statutory right to be consulted on the question whether or not an individual should or should not receive a tax exemption from the Treasury.
§ Mr. Dewar
Let us not be afraid of innovating occasionally. Even Conservative Governments should occasionally screw up their courage in small matters and innovate. A local authority should have a statutory right to be consulted about whether the concessions which are being offered by the landowner are of substantial advantage to the people it represents. After that opinion has been received, it is up to the Treasury to follow or not follow that advice or to try to improve the terms on the basis of that advice. I am not suggesting a right of veto, but advice on a matter on which the local authority is pre-eminently suited to advise. That matter is whether there could be a substantial advantage which could not be gained in another way.
It is bordering on sophistry to point to the powers in clause 10 and to management agreements, because those agreements are totally separate and matters into which the landowner may or may not enter. They follow after the bargain on exemption has been struck. Therefore, the matter has been decided and it is too late to make a substantial contribution to the argument or the negotiations. It is a basic matter of democracy. There is a pre-eminent argument for involving those who were elected by the people who live in the area in which the land lies.
I am unconvinced that we are getting a good deal out of the agreements. The stunning silence about the worth of the concessions given reinforces my scepticism. I am more convinced that it is proper to involve the democratically-elected councillors of the area. I hope that a simple and modest amendment, which is an attempt to help by building confidence into an area where confidence is lacking and crumbling, as represented by the strong remarks of the hon. Member for Caithness and Sutherland will be considered more sympathetically than the Minister has shown himself willing to do.
§ Question put and negatived.