§ Mr. Deputy SpeakerWith this it will be convenient to consider amendment No. 45, in clause 116, page 94, line 21, leave out 'three' and insert 'nine'.
§ Mr. BeithWe come to the port levy. Somehow the Government always contrive that the port levy shall be debated at the latest possible hour of the night, preferably with as few as possible of their hon. Friends present so that they cannot be made fully aware that it is not only a levy on ports but is a privatisation tax. It is a tax designed to recoup all the proceeds from the privatisation of ports to the central Exchequer. That process will probably discourage further port privatisations more or less totally. It is accompanied by a statement made in Committee by the Chief Secretary to the effect that any port that devises alternative arrangements for privatisation and brings them in a private Bill which would direct the proceeds towards the local community so that the Government did not get their 50 per cent. levy would face retrospective legislation to ensure that a 50 per cent. levy was secured. It is the first time I can remember hearing a Minister promise to introduce retrospective legislation on a certain matter. The Government are so determined to achieve their privatisation levy on the ports.
Part of the problem is that the tax is certain to be more than 50 per cent. in many cases. There are other responsibilities such as capital gains tax to be considered and the capital gains tax market values are applied to the 50 per cent. If a port were to decide, for example, to place its shares as a private business in the hands of local authorities, local businesses or its own employees, they would change hands at less than the rate that would prevail if they were on the open market without those conditions. However, the company would still be taxed as if it had made the disposals on a full market-value basis. That will mean that a responsible port authority, seeking to safeguard the future of the port in its area, could find itself taxed at 70, 80, 100 or even 110 per cent. on the proceeds of privatisation.
815 I must ask Conservative Members what is the point of the exercise if it is not to release the trapped resources of the ports and bring into the ports the new resources from shareholdings which come about as a result of privatisation. Why does the central Exchequer have to grab all that money?
Faced with those features, I have proposed two amendments. One reduces the levy to 25 per cent. nominally and, therefore, to 50 per cent. in practice, and the other deals with the specific issue of employee share ownership plans and the Government's stringent limitations on the opportunity for ports to make shares available to employees through employee share ownership schemes. It is extraodinary that the Government have taken this step. I do not see why the central Exchequer rather than local ports and local communities should be dipping so heavily into the proceeds. Many port authorities will come to the conclusion that privatisation is not for them. I say that as someone who is not, in general, opposed to all privatisations. There are many circumstances in which it might be an appropriate step to take. However, it would be appropriate only if the port authority can ensure that it remains under local management, and that its resources will not simply be transferred to the Exchequer. Faced with the arrangements that the Government have devised, many trust ports will say that they are far better off as they are.
The Government have permitted a 3 per cent. dispersal of shares to employee share ownership plans to attract tax relief—despite the endorsement by the former Financial Secretary, now Secretary of State for Trade and Industry, of the idea that 10 per cent. might be an appropriate ESOP holding in a company. In Committee of the whole House the right hon. Gentleman said:
10 per cent. strikes the right balance, representing as it does a stake large enough to ensure the employees a degree of involvement in the company's affairs, while not being so large as to make the new relief unattractive."—[Official Report, 16 May 1990; Vol. 172, c. 960.]If 10 per cent. is good for ESOPs in general, why is it not good for ESOPs in ports? Ten per cent. was turned down in a Division in Committee, so I have put a slightly more modest proposal before the House tonight and suggest that we accept 9 per cent. Surely that would be acceptable to the Government.The Government seem determined to restrict to the absolute minimum the opportunities that they will afford for ESOPs to get some tax relief from this port levy. I wonder whether Conservative Members who are interested in and have shown strong support for ESOPs, such as the right hon. Member for Croydon, South (Sir W. Clark), are happy with this arrangement. It is profoundly unsatisfactory.
At no stage have the Government made a convincing case for the central Exchequer making such huge claims on these revenues. They sought at one stage to argue that the Government had invested in trust ports in the past, and therefore were entitled to get their money back. Any scheme that got the Government their money back would return only a tiny fraction of the amount of revenue about which the Government are talking. I, therefore, invite the Government and the House to lower the nominal rate of levy so that it is not so huge a deterrent on the placing of shares with the local community and to raise the limit under which employee share ownership schemes can gain tax relief from this huge impost.
§ Mr. LilleyThe hon. Member for Berwick-upon-Tweed (Mr. Beith) suggests that this is a privatisation tax, but he seems to forget that normally when the Government sell a company they keep 100 per cent. of the revenue. The states owns—
§ Mr. LilleyI shall give way if the hon. Gentleman wishes to pursue this arcane distinction between the state and the Government.
§ Mr. BeithIt is not an arcane distinction. It is beyond dispute that the state does not own the ports. They are trust ports. If the state owned them, they would not be the subject of private Bills, such as the Tees and Hartlepool Port Authority Bill and the Clyde Port Authority Bill, and the Minister knows that full well.
§ Mr. LilleyOn the contrary, the courts have ruled that trusts of this kind are owned by the state, as distinct from the Government. When the Government sell a company, they keep 100 per cent. of the revenue. The hon. Gentleman may argue that this is not a privatisation, but he cannot argue that there is anything abnormal about keeping the proceeds of a sale. In this case, we felt that it was right to have less than 100 per cent. of the funds going to the Government in order to give some incentive for the trusts to go private and to let them use some of the funds for the development of the port operations. Fifty per cent. seemed a good compromise, being half way between zero and 100 per cent.
Although we may be reasonably sure that this levy will not discourage future privatisations by trusts, the main reason for privatisation is that the forming of private company status will free the trusts from the inhibitions, which they previously suffered under their existing status, from developing their activities beyond those of the ports and making full use of the assets that they possess.
The companies are free to give more than 3 per cent. of shares to their employees if they wish, but only 3 per cent. will escape levy. Any higher proportion would have to come out of company funds, which is not unreasonable. There is nothing in this which is comparable with the 10 per cent. limit for ESOPs. Three per cent. would be a higher proportion going to employees than in any previous issue for which I have records—I think that the highest figure has been 2.4 per cent. So the 3 per cent. figure is not artificially low and I urge the House to reject both the amendments.
§ Mr. BeithThe Government have just demonstrated how lacking in radicalism they are. They are content with a 2.4 per cent. proportion going to ESOPs rather than opening the way to a much larger share, and yet again they have failed to make out a case for that. The pretence is being made that the Government own the ports. That is clearly not the case, as they have been invested in, supported and managed by the local communities. The fact that a court had to find some definition of their ownership other than the Government is ample demonstration that they are not in the hands of the Government. The Government have no right to lay claim to resources which ought to be left in the ports. Therefore, I ask the House to resist the Government by at least reducing the level of the tax to be imposed.
§ Question put, That the amendment be made:—
§ The House divided: Ayes 8, Noes 88.
790| Division No. 295] | [11.09 pm |
| AYES | |
| Barnes, Harry (Derbyshire NE) | Meale, Alan |
| Beith, A. J. | Michie, Mrs Ray (Arg'l & Bute) |
| Campbell, Menzies (Fife NE) | Nellist, Dave |
| Carlile, Alex (Mont'g) | Parry, Robert |
| Cryer, Bob | Pendry, Tom |
| Dunnachie, Jimmy | Primarolo, Dawn |
| Godman, Dr Norman A. | Skinner, Dennis |
| Graham, Thomas | Spearing, Nigel |
| Home Robertson, John | Steel, Rt Hon Sir David |
| Howells, Geraint | Taylor, Matthew (Truro) |
| Hughes, Simon (Southwark) | Wallace, James |
| Kennedy, Charles | |
| Kirkwood, Archy | Tellers for the Ayes: |
| Lewis, Terry | Mr. Richard Livsey and |
| Martin, Michael J. (Springburn) | Mr. Ronnie Fearn. |
| NOES | |
| Alexander, Richard | Fishburn, John Dudley |
| Alison, Rt Hon Michael | Fookes, Dame Janet |
| Amess, David | Forman, Nigel |
| Amos, Alan | Forsyth, Michael (Stirling) |
| Arnold, Jacques (Gravesham) | Forth, Eric |
| Arnold, Sir Thomas | Franks, Cecil |
| Ashby, David | Freeman, Roger |
| Baker, Nicholas (Dorset N) | French, Douglas |
| Bellingham, Henry | Garel-Jones, Tristan |
| Bennett, Nicholas (Pembroke) | Gill, Christopher |
| Benyon, W. | Goodlad, Alastair |
| Bevan, David Gilroy | Goodson-Wickes, Dr Charles |
| Blackburn, Dr John G. | Greenway, John (Ryedale) |
| Blaker, Rt Hon Sir Peter | Gregory, Conal |
| Body, Sir Richard | Griffiths, Peter (Portsmouth N) |
| Boswell, Tim | Hague, William |
| Bowis, John | Hamilton, Hon Archie (Epsom) |
| Brazier, Julian | Hamilton, Neil (Tatton) |
| Brown, Michael (Brigg & CI't's) | Hargreaves, Ken (Hyndburn) |
| Burns, Simon | Harris, David |
| Butcher, John | Hawkins, Christopher |
| Carlisle, John, (Luton N) | Hayward, Robert |
| Carlisle, Kenneth (Lincoln) | Heathcoat-Amory, David |
| Carrington, Matthew | Hind, Kenneth |
| Carttiss, Michael | Howard, Rt Hon Michael |
| Chapman, Sydney | Howarth, G. (Cannock & B'wd) |
| Chope, Christopher | Hughes, Robert G. (Harrow W) |
| Clark, Dr Michael (Rochford) | Hunter, Andrew |
| Clark, Sir W. (Croydon S) | Irvine, Michael |
| Coombs, Anthony (Wyre F'rest) | Jack, Michael |
| Coombs, Simon (Swindon) | Jackson, Robert |
| Cran, James | Janman, Tim |
| Currie, Mrs Edwina | Johnson Smith, Sir Geoffrey |
| Davies, Q. (Stamf'd & Spald'g) | Jopling, Rt Hon Michael |
| Davis, David (Boothferry) | King, Roger (B'ham N'thfield) |
| Day, Stephen | King, Rt Hon Tom (Bridgwater) |
| Devlin, Tim | Knapman, Roger |
| Douglas-Hamilton, Lord James | Knight, Greg (Derby North) |
| Dover, Den | Knight, Dame Jill (Edgbaston) |
| Dunn, Bob | Lawrence, Ivan |
| Fallen, Michael | Lennox-Boyd, Hon Mark |
| Favell, Tony | Lightbown, David |
| Fenner, Dame Peggy | Lilley, Peter |
| Lloyd, Sir Ian (Havant) | Spicer, Michael (S Worcs) |
| McLoughlin, Patrick | Squire, Robin |
| Maxwell-Hyslop, Robin | Stanbrook, Ivor |
| Miller, Sir Hal | Stern, Michael |
| Moate, Roger | Stevens, Lewis |
| Morrison, Sir Charles | Stewart, Andy (Sherwood) |
| Moss, Malcolm | Stradling Thomas, Sir John |
| Moynihan, Hon Colin | Summerson, Hugo |
| Neale, Gerrard | Taylor, Ian (Esher) |
| Neubert, Michael | Taylor, John M (Solihull) |
| Newton, Rt Hon Tony | Taylor, Teddy (S'end E) |
| Nicholls, Patrick | Thompson, Patrick (Norwich N) |
| Norris, Steve | Thurnham, Peter |
| Oppenheim, Phillip | Twinn, Dr Ian |
| Paice, James | Viggers, Peter |
| Pawsey, James | Waldegrave, Rt Hon William |
| Porter, David (Waveney) | Walden, George |
| Powell, William (Corby) | Wardle, Charles (Bexhill) |
| Raffan, Keith | Watts, John |
| Redwood, John | Wheeler, Sir John |
| Renton, Rt Hon Tim | Widdecombe, Ann |
| Roberts, Sir Wyn (Conwy) | Wilkinson, John |
| Rowe, Andrew | Winterton, Mrs Ann |
| Ryder, Richard | Winterton, Nicholas |
| Sackville, Hon Tom | Wolfson, Mark |
| Shaw, David (Dover) | Wood, Timothy |
| Shaw, Sir Michael (Scarb') | Yeo, Tim |
| Shephard, Mrs G. (Norfolk SW) | |
| Shepherd, Colin (Hereford) | Tellers for the Noes: |
| Skeet, Sir Trevor | Mr. Irvine Patnick and |
| Smith, Tim (Beaconsfield) | Mr. Tony Durant. |
| Speller, Tony |
| Division No. 296] | [1.00 am |
| AYES | |
| Beith, A. J. | Steel, Rt Hon Sir David |
| Campbell, Menzies (Fife NE) | Wallace, James |
| Kennedy, Charles | |
| Kirkwood, Archy | Tellers for the Ayes: |
| Michie, Mrs Ray (Arg'l & Bute) | Mr. Simon Hughes and |
| Skinner, Dennis | Mr. Matthew Taylor. |
| NOES | |
| Alison, Rt Hon Michael | Hind, Kenneth |
| Amess, David | Howarth, G. (Cannock & B'wd) |
| Amos, Alan | Hughes, Robert G. (Harrow W) |
| Arnold, Jacques (Gravesham) | Irvine, Michael |
| Arnold, Sir Thomas | Jack, Michael |
| Ashby, David | Janman, Tim |
| Baker, Nicholas (Dorset N) | Johnson Smith, Sir Geoffrey |
| Bennett, Nicholas (Pembroke) | King, Roger (B'ham N'thfield) |
| Blackburn, Dr John G. | Knapman, Roger |
| Blaker, Rt Hon Sir Peter | Knight, Greg (Derby North) |
| Boswell, Tim | Lennox-Boyd, Hon Mark |
| Bowis, John | Lightbown, David |
| Burns, Simon | Lilley, Peter |
| Butcher, John | Maxwell-Hyslop, Robin |
| Carlisle, Kenneth (Lincoln) | Moss, Malcolm |
| Carrington, Matthew | Neale, Gerrard |
| Chapman, Sydney | Neubert, Michael |
| Chope, Christopher | Nicholls, Patrick |
| Clark, Sir W. (Croydon S) | Norris, Steve |
| Coombs, Anthony (Wyre F'rest) | Paice, James |
| Coombs, Simon (Swindon) | Porter, David (Waveney) |
| Cran, James | Renton, Rt Hon Tim |
| Currie, Mrs Edwina | Rowe, Andrew |
| Davies, Q. (Stamf'd & Spald'g) | Ryder, Richard |
| Davis, David (Boothferry) | Shaw, David (Dover) |
| Day, Stephen | Shephard, Mrs G. (Norfolk SW) |
| Dover, Den | Shepherd, Colin (Hereford) |
| Dunn, Bob | Squire, Robin |
| Durant, Tony | Stern, Michael |
| Fallon, Michael | Stevens, Lewis |
| Favell, Tony | Summerson, Hugo |
| Fenner, Dame Peggy | Taylor, Ian (Esher) |
| Fishburn, John Dudley | Taylor, John M (Solihull) |
| Forth, Eric | Thompson, Patrick (Norwich N) |
| Freeman, Roger | Twinn, Dr Ian |
| French, Douglas | Viggers, Peter |
| Garel-Jones, Tristan | Waldegrave, Rt Hon William |
| Gill, Christopher | Wardle, Charles (Bexhill) |
| Goodlad, Alastair | Watts, John |
| Greenway, John (Ryedale) | Widdecombe, Ann |
| Hamilton, Hon Archie (Epsom) | Wood, Timothy |
| Hamilton, Neil (Tatton) | Yeo, Tim |
| Hampson, Dr Keith | |
| Harris, David | Tellers for the Noes: |
| Hayward, Robert | Mr. Irvine Patnick and |
| Heathcoat-Amory, David | Mr. Tom Sackville. |
§ Question accordingly negatived.