HC Deb 16 July 1990 vol 176 cc814-7
Mr. Beith

I beg to move amendment No. 44, in page 93, line 9, leave out '50' and insert '25'.

Mr. Deputy Speaker

With this it will be convenient to consider amendment No. 45, in clause 116, page 94, line 21, leave out 'three' and insert 'nine'.

Mr. Beith

We 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.

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. Lilley

The 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. Beith


Mr. Lilley

I shall give way if the hon. Gentleman wishes to pursue this arcane distinction between the state and the Government.

Mr. Beith

It 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. Lilley

On 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. Beith

The 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.

Division No. 295] [11.09 pm
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.
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
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.
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.

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