§ 4.18 p.m.
§ LORD SANDFORD
My Lords, with permission, I should like to intervene now to repeat a Statement which is being made in another place by my right honourable friend the Minister of Housing. It is about the Land Commission.
"As announced in the Queen's Speech, a Bill will be introduced during the present Session to abolish the Land Commission. The Bill will provide for the abolition of the betterment levy. Provision will be made, either in the same Bill or in later legislation this Session, for development value realised from future land transactions to be dealt with through the normal system of taxation of profits and capital gains.
"Betterment levy will not be payable in respect of chargeable acts or events taking place after to-day. This means, for example, that a sale of land which is completed to-morrow, or a development project which is started to-morrow, will be free of levy. Where completion follows a contract which was made to-day or earlier, provision will be made to ensure that the full amount of the gain is charged to tax.
"These proposals do not disturb the existing exemption of owner-occupiers of houses from capital gains tax.
"The present law about betterment levy will continue to apply to chargeable acts or events that have already taken place. Levy will still be payable on assessments already made and to be made under the existing law.
"The Commission's programme of land acquisition has been brought to a halt. Proposals for land acquisition which have not yet reached an advanced stage are being withdrawn; and the Land Commission are already informing the people concerned. Proposals which have reached an advanced stage are being reviewed as a matter of urgency, and decisions will be made known to those concerned as soon as possible. Arrangements are being made for the orderly disposal of the land in the Commission's possession. Provision will be made in the legislation for the transfer to an appropriate public 1004 body of the assets and liabilities remaining on the dissolution of the Commission.
"The Commission's staff of about 1,000 will be dispersed progressively over the coming months. The arrangements will be fully discussed with the national and departmental staff sides.
"The availability of land for development is essential to the stability of land prices and to the revival of the housebuilding programme. The Land Commission have failed either to stabilise land prices or to make a worthwhile contribution to the release of land in the areas of acute land shortage. I am discussing with local authorities how they can best help with these problems through the release of more land and in other ways. I am confident that the measures we are taking will result in an increase in the volume of land coming forward for development and will be of real benefit to the housing programme."
§ 4.22 p.m.
§ LORD KENNET
My Lords, we on this side of the House are grateful to the noble Lord for repeating the Statement made in another place. I have one or two questions I should like to ask. There are some passages which do not seem entirely clear, and perhaps the noble Lord can help the House. He said that when the levy is wound up arrangements will be made to tax the gain in land values arising from planning permissions in the normal way, through profits and capital gains tax. He also said that the full amount of the gain is to be charged to tax. That could be read as meaning that the new rate of tax on land value gains was to be 100 per cent. I am sure that that is not so but I should like to ask the noble Lord what the rate will be. Will it be 40 per cent., as the land levy was? Will it be the going rate of capital gains tax; or what will it be?
Again, on the question of the disposal of the land at present in the Commission's possession, will this be on the open market? Will it be disposed of to anybody who seeks to tender for it? I for one was puzzled by the reference to assets and liabilities remaining when the Commission are dissolved, and how they are to be 1005 passed to a public body. What sort of assets is it envisaged will remain on the dissolution of the Commission, and to what public body will they be passed?
I do not want to step outside the customary interrogative form of words when quizzing a Minister on a Statement, but I am sure that noble Lords on this side of the House will watch with the keenest attention what in fact happens to land values, and to the rate at which land comes forward for development, especi-lly in the South-East. I would say that with the best will in the world we wish the Government success in the consultations they are to have with the local authorities, especially in the South-East and the West Midlands, about getting land for housing. We got nowhere with them; but now, of course, it will be "deep calleth unto deep."
§ LORD SANDFORD
My Lords, if the noble Lord, Lord Wade, will forgive me, I think that this is a problem with a number of different sides and we might get on better if I deal with one question after another. The noble Lord, Lord Kennet, asked me what exactly was meant by the full rate of tax on the whole gain. He is right when he surmises that what will take the place of betterment levy will be either capital gains tax, which is running at the rate of 30 per cent., or corporation tax at the rate of 45 per cent., although of course it will be applied to a different base.
The noble Lord asked me what exactly was meant by the orderly disposal of land. The position is that in many cases it will not be practicable, particularly where the Commission have acquired parcels of land for assembling into a larger site for comprehensive development, for the land to be disposed of to those to whom it belonged originally. Where land can be disposed of in the plots in which it was bought, former owners will be given the opportunity to bid for their original holdings.
What is meant by the transfer to a public body on the dissolution of the Land Commission is this. First of all, it has not yet been decided, and I have nothing further to say about which public body it will be. But it is conceived that there will arrive a moment when it is no longer necessary to keep the Land 1006 Commission as such in being, but there will be land which has not been disposed of in the way described. Perhaps I may add that I am confident that we shall be able to do as well as, if not better than, the previous Government in the releasing of land in the South-East and the West Midlands, though I realise that this problem is the nub of the matter.
§ LORD WADE
My Lords, I should like to join the noble Lord, Lord Kennet, in thanking the noble Lord, Lord Sandford, for repeating this Statement. I raise no objection to the abolition of the Land Commission, but I think that some tribute should be paid to Sir Henry Wells. He has had a difficult task, and I am sure that he has done his best; and it is not his fault if the Land Commission have achieved little. As to the levy, my colleagues and I have always stood firm on the principle that the community should recoup land values created by the community. We have never thought that the levy was the best way of achieving this.
May I ask one specific question, which is not quite the same as that raised by the noble Lord, Lord Kennet? In the Statement, the noble Lord, Lord Sandford, said:Provision will be made…for development value realised from future land transactions to be dealt with through the normal system of taxation of profits and capital gains.Does that mean that all—and I emphasise "all"—chargeable acts or events which created liability to levy will in future be covered by the taxation of profits and capital gains? If so, will that not involve some changes in the law with regard to taxing profits and capital gains? I hope that at the end of the day the law will not be made even more complicated than it is already.
§ LORD SANDFORD
My Lords, I am grateful to the noble Lord, Lord Wade, for his reception of this Statement, and I would hasten to join with him in the tribute not only to Sir Henry Wells, the first Chairman of the Land Commission, but also to those other members of the Commission who, I am glad to say, have all agreed to continue to serve while the Commission are being wound up. The noble Lord asked whether all the events and chargeable acts that are at the 1007 present moment subject to betterment levy will be caught by capital gains. The position is that capital gains applies to any increase in the value of the land asset that is sold, but it is measured from a different time and it does not arise until the gain has been secured, whereas, as the noble Lord will know, there are six separate cases which draw betterment levy, and the conditions have to fulfil one of those before the levy can be assessed. There will, of course, be need for legislation, as I explained in the Statement. Whether this will be embodied in one piece of legislation or in two remains to be seen.
§ LORD SILKIN
My Lords, the noble Lord made a statement, which I thought was rather gratuitous, that the Land Commission had failed. I would deny that they failed in any sense at all. After all, they have been in existence for only a very short time, and they had to get going from the start. To say that in so short a time it is possible to judge that the Commission have failed is really a piece of political prejudice. After all, noble Lords opposite were against the Land Commission, right from the beginning. Speaking for myself, and I hope for my friends, we shall vigorously oppose any legislation that is introduced. Furthermore, is it not a fact that if the levy is going to be transferred to capital gains, it will mean a smaller income to the Exchequer than if the levy had remained? Is there any justification for that? Why should not the person who makes a gain out of profit in land pay a reasonable sum? Nobody has challenged the 40 per cent. so far, but in fact this transfer will be a reduction.
Finally, may I ask about land acquisition? It is true that up till now the Land Commission have acquired a relatively small amount of land, but all these matters take time, and it will take any other organisation time to acquire land. However, the value of the Land Commission was that they could acquire land in different areas within the control of different local authorities, and a local authority normally can acquire land only within its own area. Much of the land they had was spread over a number of local authority areas; and were not the Land Commission valuable from that point of view? Was it not a fact that 1008 their plans were to acquire considerably more land in the next two or three years?
§ LORD SANDFORD
My Lords, I am grateful to the noble Lord, but we have to face the fact that when it comes to judging the merits and the demerits of the Land Commission and the betterment levy, there is an irreconcilable division of opinion between the Government and the Opposition. The fact is that we made it an item of our Election Manifesto that we should abolish both the Commission and the betterment levy. We undertook to do that, and we should be failing in our duty if we did not bring forward the necessary measures at the first convenient opportunity. The noble Lord asked me a question about the loss of revenue. Some of the revenue that has hitherto been collected under betterment levy will be collected now, as I explained, by the normal taxation system, but the ultimate loss will be of the order of£25 million a year. We believe that in all the circumstances that is acceptable. What the noble Lord said about land, and the ability of the Land Commission to acquire land in the areas of more than one local authority, is undoubtedly true; but the fact remains that even after all this time the Land Commission held only 1,900 acres, having bought 2,200 and sold 300.
§ LORD SHACKLETON
My Lords, I am astonished at the tone of the noble Lord's Statement. He, rather as an afterthought, paid a tribute to Sir Henry Wells and his fellow Commissioners, but uttered not a word of sympathy for the staff. Have there been consultations with the staff side? I take it that they were informed, at any rate, about the time the Statement was due to be made. What are their prospects for re-absorption? There are presumably quite a number of temporary staff working who will presumably lose their jobs entirely. I strongly echo the views of my noble friend Lord Silkin who saw his 1947 Act destroyed, with all the consequent increase in land values. Now we shall see the same thing happen again. The charm of noble Lords opposite is such that we are apt to forget that the Tories still have the same spots.
§ LORD SANDFORD
My Lords, I am grateful to the noble Lord for his supplementary question about staff because, although my Statement did cover the 1009 matter, it certainly did not cover it very fully. However, it did say—and I confirm this—that the arrangements will be fully discussed with the national and departmental staff sides concerned. Of course that implies, and it is perfectly true, that there have already been considerable consultations. The posting of some of the more senior staff will present certain difficulties, but it is likely that most of the staff will be able to be absorbed in other departments. That is certainly true of the more junior members of the staff concerned. It has to be remembered that the full volume of levy work will continue to flow for some considerable time, and it is this that occupies probably two-thirds of the total staff involved. The staff who were previously engaged on the lands work are now being used to help speed the levy work, and as soon as other vacancies are identified it will be possible to release quite a large number of the Commission staff, perhaps about one-fifth of the total.
§ LORD SHINWELL
My Lords, may I ask the noble Lord whether the announcement just made about the abolition of the Land Commission is to set the pattern of Government policy in the future, to destroy everything they can lay their hands on? Before making a Statement of the character that the noble Lord has made, is it not essential to be able to portray the future with rather less ambiguity? Are we not entitled to rather more information on a Statement of the kind just made?
§ LORD SANDFORD
My Lords, as I say, we have to face the fact that in this matter of the Land Commission and the betterment levy there are irreconcilable differences of opinion between the two Parties. As to whether that indicates any particular pattern of policy, I may say that the pattern of our policy was set out in our Election Manifesto. These are two particular aspects of it which we are pledged to bring into force, and we are now doing it.
§ LORD BESWICK
My Lords, is the noble Lord saying that whatever was in the Election Manifesto is to be carried out, even if the Government find that the facts in the Departments are different from those they put in the Manifesto?
§ LORD SANDFORD
Certainly, my Lords—and many times in the past two weeks—we have said to noble Lords who have been pressing us on other matters of policy that these are subjects which need to be reviewed before new policies are introduced. In this particular matter the review has satisfied us that this policy is ripe for introduction now.
§ VISCOUNT MASSEREENE AND FERRARD
My Lords, as to this loss of£25 million revenue, may I ask my noble friend whether he has taken into consideration the saving in the expenses of the Land Commission and the thousand staff employed? That may work out to be of some benefit, from the point of view of the Inland Revenue. I understand that when my noble friend gave the figure for the loss of revenue he did not take into account, on the other hand, the actual saving in Government expenditure through running down the Land Commission.
§ LORD SANDFORD
My Lords, I am grateful to the noble Viscount. I was dealing only with the question which the noble Lord, Lord Silkin, raised, of what was the scale of the loss of revenue involved. As to the saving owing to reduction of staff, as I have just explained, the position is that there is every hope and expectation that the ending of the betterment levy and the halting of land acquisition by the Commission will result not in an overall and immediate reduction of staff but in enabling the people released to fill vacancies which would otherwise have to be filled by recruitment.
§ LORD SHACKLETON
My Lords, obviously we must not go on continuing this debate, but the total cost of the Land Commission's staff is about£2.500,000. That is my calculation, if the noble Lord does not know it. I thought the Government were going to reduce the size of the Civil Service generally, but now we are told that these people are going to be absorbed. I am delighted to hear it, but there is no doubt that we shall have to probe this matter further in the future.
§ LORD AIREDALE
My Lords, we have been told about the irreconcilable differences between the two Parties, but may I remind the Minister that the third Party is behind the Government in this matter?
§ LORD ST. HELENS
My Lords, my noble friend may have detected a whiff of criticism coming from the other side of the House. Because we have remained quiet, I should not like him to think that he will not have anything but the overwhelming support of all of his noble friends who sit beside him on this side of the House.