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Commons Chamber

Volume 884: debated on Wednesday 22 January 1975

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House Of Commons

Wednesday 22nd January 1975

The House met at half-past Two o'clock


[Mr. SPEAKER in the Chair]

Oral Answers To Questions


North Sea Oil (Aberdeenshire)


asked the Secretary of State for Scotland if he will take steps to ensure that ratepayers in Aberdeenshire do not have to meet the extra finance that will be required to produce the necessary infrastructure for the new oil and oil-related industries moving into the area.

We have already done so, as is explained in paragraph 27 of the report—published on 20th January—on the Rate Support Grant (Scotland) Order 1975.

I thank the Minister for that reply. When does he think the first payments for this purpose will be made? When they are made will he take into account the moneys already spent and being spent by this local authority for these purposes?

The payments will start in 1975–76 and will, like the rate support grant generally, be paid throughout the year. It is not possible to take account of expenditure before 1975–76, except to the extent that any continuing commitments taken on will affect expenditure in that year. A good deal of it is capital expenditure, with continuing revenue commitments which, from 1975–76 onwards, will come in for the help that will be given.

I agree that the Government have done something in this regard but does the Minister agree that a great deal more needs to be done? Will he represent to the Chancellor and others that if the Government have large sums of money for investment in connection with oil they would do better to address at least a large proportion of it to infrastructure rather than to the highly specialist oil business, and get their money from the oil business by taxation?

That is a rather different and wider point. The right hon. Gentleman knows that oil-related infrastructure developments already receive preference in Government allocation of public expenditure. The Question is directed to seeing that this additional expenditure does not impose undue burdens on the ratepayers. We have taken care of that.

The hon. Gentleman said on Monday, and repeated again today, that this expenditure related mainly to loan charging. Has he any idea of the total amount of capital expenditure which this rate support grant will generate in this area?

I cannot give precise totals until we see all the returns and analyse what is eligible for help. The sum of £2½ million is provided for in the order concerned. The level of grant on the expenditure which we consider eligible for this additional help will be a high percentage, as I hope will be clear when I am able to make a final announcement shortly.

I agree with the Minister and his right hon. Friend over their decision about oil-related developments in Argyll, but is the hon. Gentleman aware that I would welcome their assurance that equal attention will be paid to the question of infrastructure in Argyll as compared with the North-East of the country?

I can give that assurance. As the hon. Gentleman knows, we are already in touch with the county council about the particular matters affecting his constituency. We are anxious to see that infrastructure developments go hand in hand with industrial developments in his and other areas.

Will the Minister say whether, under this measure, it will be possible to offset in whole or in part the cost of the desperately-needed lorry park for oil-related traffic in Aberdeen?

I am not sure whether the local authority concerned included that in its return. If it did, it will receive consideration. I cannot commit myself at the moment.



asked the Secretary of State for Scotland what action he proposes to take following the report by the committee investigating truancy in Scottish schools; and if he will make a statement.

The Pack Committee of Inquiry into Truancy and Indiscipline was set up in the late summer of last year and has not yet reported.

Will my hon. Friend bear in mind that this problem has been a serious one for the past few years? Does he agree that it is due, among other things, to the shortage of teachers, the lack of an attractive curriculum for these young people aged from 15 to 16, and the slum school accommodation which they are expected to occupy? Would it not ease the problem immediately if the Secretary of State allowed such children to leave school on the day they turn 16? Would this not also help them to take up employment which they are frequently offered but lose because they have to wait until the official school-leaving date?

As my hon. Friend has recognised, the problems of truancy and indiscipline have many origins. As for the point that he makes about the leaving date, he will know that my right hon. Friend told my hon. Friend the Member for Dunfermline (Mr. Hunter) on 14th January that a review of school leaving dates is at present being undertaken.

Has the Minister seen the report in today's Press about a large number of children—a number running into many hundreds—who have been taken up by the police in the borough of Lambeth while playing truant? Does he think that it would be a good thing to have a similar swoop in some Scottish cities?

I have seen the report. I would need to consider the matter before drawing any conclusions.



asked the Secretary of State for Scotland if he has any proposals to curb vandalism.

Such measures as the strengthening of the police force, crime prevention campaigns and the provision of better recreational facilities are valuable and important, but the greatest contribution to reducing this mischief would be a stronger sense of community responsibility, and this it is my object to encourage.

Is not talk of community responsibility altogether too vague? Is not something much more positive wanted from the Government to deal with this great social evil? Why cannot the Minister consider the suggestion made by his hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey)—a suggestion which I have made in the House—that these guilty people should be made to help put right what they have disfigured? Will the hon. Gentleman consider that positive move towards overcoming this grave social evil?

The Government are fully aware of the problems caused by vandalism and have been vigilant in introducing new and helpful measures to deal with the problem, but in our view the hon. Gentleman's suggestion would not be helpful.

With respect to the hon. Gentleman, is he not being rather complacent? Surely he should treat more seriously a suggestion made by both the Opposition and his hon. Friend. Is he aware that the Criminal Justice Act, which allows reparation by the offender, has been tried out in some areas of England and Wales with considerable success? Will he not do something about this, instead of sitting back and doing nothing?

There is certainly no complacency on my part, or on the part of the Government. We are very concerned about vandalism. Of that there can be no doubt. The figures of committals from the children's panels in Scotland are up by a substantial percentage, and most of those committals were as a result of vandalism. It does not become the hon. Gentleman to say that no measures are being taken. The Government are very much aware of the problem of vandalism, and they are doing and will continue to do everything in their power to resolve it.

Irvine New Town


asked the Secretary of State for Scotland if he will pay an official visit to Irvine New Town.

I have no immediate plans to do so, but look forward to the possibility at a convenient future date.

When my right hon. Friend decides to visit Irvine New Town, will he remember that his Minister of State and the Under-Secretary of State for Energy got lost several times when they last visited North Ayrshire, and that on the next day, again because of the bad roads in North Ayrshire, 14 Labour Members of Parliament took an hour and 40 minutes to go from Cambuslang to Largs, and missed an important appointment? When will the Secretary of State start the motorway link, from North Ayrshire to the M74 and the M8 to serve Hunterston and Irvine New Town, which was promised by both Conservative and Labour Governments? It is especially important now that oil-related developments are going to the area.

If and when I visit the new town officially, my hon. Friend may take it that I shall not get lost. He probably knows my familiarity with the area. For my hon. Friend's information, I shall be there unofficially in a fortnight's time. Not everyone in Ayrshire is entirely agreed on the line which the motorway should take.

My hon. Friend has been in communication with my noble Friend the Minister of State on this subject, and he will be aware that we require much more hard information about the generation of traffic—it will not all be going from Irvine to Cambuslang—before we can embark on a massive project of this nature.

Is the right hon. Gentleman aware of the tremendous damage caused by heavy wagons which have to use the old coastal road on their journey to Hunterston, and of the danger caused by the excessive speed of lorries going through West Kilbride? Will the right hon. Gentleman look into that?

I am aware of the difficulties. There are always difficulties when a major project causes roads to be used for purposes for which they were never designed. This matter must be considered in future.

After the Secretary of State has visited Irvine New Town I shall be delighted if he will visit Cumbernauld New Town. I should like to discuss with him the question of employment for our young people—

Order. The hon. Lady may make statements to the Secretary of State on that occasion. Today she must ask a question.

Is the Secretary of State aware that in Cumbernauld young people have great difficulty in securing employment? There is only one job for every 40 girls leaving school, and one job for every 16 boys leaving school. The development corporation, the town council and I would welcome the opportunity to discuss this matter with him.

I should be glad if the hon. Lady would put down a Question on that subject, but she had better be careful. She asked me to visit Cumbernauld after I had visited Irvine. I make no commitment, but I might visit Cumbernauld before visiting Irvine.

Sports Council


asked the Secretary of State for Scotland what is the amount of grant that will be available to the Scottish Sports Council for 1975–76; and what increase this is on 1974–75.

My right hon. Friend is still considering the matter and will announce a decision as soon as possible.

That is disappointing news. By this time last year the sports council had been awarded a substantial grant by the Conservative Government. When does the chairman of the sports council hope to announce his decision on the inquiry into Hampden Park? Will the Government commit themselves to giving official assistance towards the rebuilding of that important national stadium?

I understand that the report on the future of Hampden Park is expected in the spring. The committee is aware of the urgency and importance of the problems concerned. The Government will have to see what the report says and consider the financial implications before committing themselves to any specific grant.

If there is any spare money going, would it not be better to put it into the grant-aided schools?

Economic Affairs


asked the Secretary of State for Scotland if he will publish a White Paper outlining his plans for the Scottish economy in 1975.

I have nothing to add to my reply to my hon. Friend the Member for South Ayrshire (Mr. Sillars) on 6th November.—[Vo1 880, c. 107.]

Is the Secretary of State aware that there is concern and alarm in Scotland about the almost daily reports of factory closures and extended short-time working? Has he the agreement of the Cabinet to an emergency package of measures if unemployment reaches an unacceptable level in Scotland?

The answer to the first part of the supplementary question is "Yes, I am aware". To the second part of the supplementary question, the answer is "No". The hon. Gentleman will be aware of the plans that we have put forward about the Scottish Development Agency, the legislation for which we hope to get through the House in the present Session of Parliament if certain hon. Members do not obstruct the Government's legislative programme.

Does my right hon. Friend agree that one of the problems facing the Scottish economy is the lack of public accountability of private industrialists who are not slow to take advantage of public funds, such as Government grants and the regional employment premium and advance factories? Is he aware that in my constituency in the past few months four advance factories have been closed, throwing more than 400 people out of work? What steps does the Secretary of State intend to take to make private industry more accountable to the Scottish work force?

Accountability is one matter which we shall be discussing and hope to cover in the proposed Industry Bill.

Is the Secretary of State aware of the vitally important part that a large number of small businesses play in Scotland's economy and the catastrophic effect on these businesses of the current proposals in the Finance Bill? Will the right hon. Gentleman summon a special meeting of the Scottish Economic Council, of which he is chairman, to discuss this before it is too late and small businesses have all gone under?

On the matter of summoning a special meeting of the Scottish Economic Council, I do not know what the council is because, if the hon. Gentleman remembers rightly, the Conservative Government let it lapse. Things were going so well that the Tories obviously forgot about its existence.

On the point which was raised about small businesses, I appreciate the important part they play in the development of the Scottish economy and I have made it my task to ensure that these firms take the initiative, in terms of expansion. This is one of the tasks which the SDA will be able to perform. We shall have for that purpose an instrument which we have not had hitherto in Scotland. I do not accept all the implications of the hon. Gentleman's remarks about the Finance Bill.

Is my right hon. Friend aware that the announcement of new oil platform construction sites is maintaining the pace of oil-related developments in Scotland? Will he see that it is given greater depth when the Prime Minister visits Scotland next month, so that momentum is imparted to the steel and heavy engineering industries?

There is no doubt that industry in Scotland, small and large, is playing a greater part in the opportunities afforded by oil developments. This is one of the most heartening features of the Scottish economy at present. I have seen figures showing that, directly and indirectly, the number of jobs created in this respect is approaching 28,000.

Does the Secretary of State agree that one of the best ways of curing industrial problems today is to support the call made by the SNP for an easing of restrictions which the Bank of England has imposed on Scottish clearing banks, thus preventing those banks from making available as much resources as they would like to afford to Scottish industry, or is he content to see Scottish industry suffer from credit restrictions and from an economic medicine being administered for an economic illness which does not exist in Scotland?

It is a pity that the hon. Gentleman, in his prepared supplementary question, did not take account of the fact that the Scottish banks have disowned the attitude of the SNP.

List D Schools (Tayside)


asked the Secretary of State for Scotland what percentage of pupils in List D (approved) schools in the Tayside Region comes from other regions.

I thank my hon. Friend for that reply, although it is substantially different from the information which I was given in my region. Does he not agree that the transfer of large numbers of pupils away from the regions in which these schools are situated must cause considerable extra expense? Has he looked into the effects of a policy which has resulted in drawing away pupils from other areas, and does he think that the extra expense is justified?

It is the responsibility of the children's panels to decide where pupils in need of care and attention should go. My hon. Friend may be referring to the fact that expense is incurred by social workers going from one area to another to visit children within their responsibility. At present there are no reciprocal arrangements covering such activities. I shall consider putting these matters to the directors of social work departments to see whether unnecessary expense—and perhaps, more important, loss of valuable man hours—can be reduced.

Does the hon. Gentleman agree that the basic problem lies in the List D places? Will he say when he will be in a position to offer a sufficient number of places because, unless action is taken the Social Work (Scotland) Act cannot be properly implemented?

It is true that there is a shortage of places, but the waiting list has been reduced a little. I have not the precise figures, and I do not disguise the fact that there is a shortage of List D places, but, as I have emphasised time and again, List D places are not the only answer when children are in difficulty. All kinds of avenues should be explored, and local authorities are already doing so. They are examining other schemes, such as intermediate treatment schemes. There will be more List D school places, but I repeat that that is not the only way to tackle these problems.



asked the Secretary of State for Scotland what official representations he has had from the Scottish teachers since the rising of Parliament before the Christmas Recess; and whether he will make a statement on the present state of education in Scottish schools.

The answer to the first part of the Question is "None, Sir".

So far as the second part is concerned, hon. Members will be aware that an agreement was reached in the Scottish Teachers Salaries Committee on 30th December on a revision of salaries for school teachers within the total cost recommended by the Houghton Committee. The teachers' side agreed to recommend to its constituent organisations that industrial action in support of pay increases should cease.

Work to rule unrelated to pay continues in some schools, and I intend shortly to discuss this with employing authorities and teachers' representatives.

Is the right hon. Gentleman aware that owing to a dramatic doubling of fees for those who send children to grant-aided schools in Edinburgh and elsewhere in Scotland, there may be a mass exodus from those schools? Is he also aware that many parents are extremely concerned and have reason to fear that if they have to send their children elsewhere, the other schools in Edinburgh will not be able to accommodate their children? Will he take into consideration the interests of the thousands of children involved and seriously consider making an immediate increase in the grants to grant-aided schools?

The hon. Gentleman's supplementary question is unrelated to the Question on the Order Paper. [Interruption.] He will be aware that there is another Question on the Order Paper that deals with this subject.

Will the Secretary of State stop trying to hide behind the wording of a Question later on the Order Paper—a Question he knows will probably not be reached? Does he not agree that the policy on grant-aided schools is not a policy at all, but a mean and spiteful vendetta that could cause chaos throughout the whole of Scotland and is causing damage to children's education? Will he not abandon this mean and spiteful policy and adopt, in its place, a sensible policy? There may well have to be a change in future, but the right hon. Gentleman's present policy will create chaos in Edinburgh and will cause enormous hardship, for no good educational reason.

I can well understand why the hon. Gentleman does not wish to face the Question which relates to official representations I have had

"from the Scottish teachers since the rising of Parliament before the Christmas Recess; and whether he will make a statement on the present state of education in Scottish schools"
not grant-aided schools. Having fallen flat on his face over his attitude to the troubles before Christmas, he is now proceeding to fall flat on his face over grant-aided schools.

Does my right hon. Friend agree that the inordinate number of fee-paying places, whether independent or grant-aided, has bedevilled education in Edinburgh for everybody for too long? It has been harmful to pupils in schools in the State sector, and it is time that it was diminished. Will he say whether any professional educationist or teaching body has made a protest about the proposals on grant-aided schools?

What my hon. Friend says may be true, but it is not related particularly to this Question.

In view of the totally unsatisfactory nature of the Minister's answer, I beg to give notice that I shall ask leave to raise the matter on the Adjournment at the earliest possible moment.

Rents And Incomes


asked the Secretary of State for Scotland what was the ratio of the average local authority house rent to the average household income in Scotland for the year 1973.

Will the Minister say whether those figures include rents rebated? Does he recognise that if rebated rents are taken into account this may be an extremely low figure? Does it not justify the provisions of the Housing Finance Act? Would it not be more realistic to stand by those provisions and to use the resources thus saved for the building of badly-needed houses?

One thing we are not convinced about is that the 1972 Act, whatever other virtues it may have, produced more housing for the Scottish people. On the specific point raised by the right hon. Lady, the figures are taken from the family expenditure survey of 1973 and relate to rebated rents. The ratio between rents and income has been increasing. The figures require a lot more study before we can justify any excessive increases in local authority rents.

Is my hon. Friend aware that Scottish tenants were very grateful for the rents freeze implemented by the Labour Government? Will he, in turn, congratulate Scottish Labour local authorities which, over the years, have managed to keep rents of council houses at a reasonable level? Will he tell my constituent the right hon. Member for Renfrewshire East) Miss Harvie Anderson), that it ill behoves those who live in large country mansions to criticise the rent levels of council tenants who are obliged to live in much humbler circumstances?

There has been a unanimous welcome by local authorities for our decision to give back to them freedom to determine their own rent levels. Most constituents—unfortunately, not all of them—voted for us at the last election. Most council tenants, not because they are council tenants, certainly appreciated the freeze on rents which was introduced as part of the counter-inflation measures.

Does the Minister agree that the average income of private tenants living in private rented accommodation is less than the average income of those living in council houses? In those circumstances, why are the Labour Party and he himself, as Minister in charge of the recent Bill, still supporting an unjust system, under which those who are poorer support those who are richer?

I challenge some of the assumptions behind that question. Many people in the private sector pay rents which are far too high for the type of slum accommodation in which they live. I would rather approach the matter on the basis of being fair, As a general rule, it is not wise to hand out public money unless there is a proven need for it. There are other sections of the community in which no income tests are applied—including owner-occupiers—so it is very difficult to generalise and apply a policy in an attempt to be fair to all sections. I am convinced that we have the right housing policies for the people of Scotland.

Kidney Transplants


asked the Secretary of State for Scotland what easily available figures he has to indicate the number of people in Scotland on kidney machines, and the number of those who have had a successful kidney transplant; and if he will make an estimate of approximately how many would opt for a kidney transplant if matching tissue were obtainable.

At 31st December 1974, 171 people were on kidney machines in hospital units or at home. A total of 241 kidney transplant operations, including 15 relating to second kidney transplants, have been carried out in Scotland since 1960. Of the 226 patients who received kidneys, 134 are still alive. As regards the last part of the Question it is not possible to make an estimate, but 38 patients resident in Scotland have been notified to the national organ matching and distribution service at Bristol as potential recipients.

Do such figures persuade the Government to support a contracting-out scheme?

I am afraid that that matter will have to await discussion on the Second Reading of my hon. Friend's Private Member's Bill.

Tied Cottages


asked the Secretary of State for Scotland what representations he has received concerning legislation on tied cottages.

I have received direct representations from the National Farmers' Union of Scotland, the Scottish Landowners' Federation and the Aberdeen and District Milk Marketing Board. They all expressed concern about the possible adverse effect on Scottish agriculture of the proposal to abolish the tied cottage system.

What consultations has my hon. Friend had with the Department of the Environment about any proposed legislation? Will this apply to all tied housing, or only to the 10 per cent. in agriculture? Does he also agree that the problem of tied housing in agriculture is largely a reflection of the shortage of housing in rural areas generally? If legislation is not brought in this Session, will he consult local authorities about measures to alleviate this shortage?

Yes, I can certainly give my hon. Friend that assurance. There have been discussions with all interested parties in Scotland and in the United Kingdom as a whole, but the House should be reminded that there are sometimes different circumstances in Scotland, so the effects of our policy will require careful consideration. However, the Government are convinced that the existence of tied cottages is detrimental to social justice, and causes hardship in many cases. We therefore intend to ensure that these injustices are removed. But this is a complex matter and I want it to be seen in the context of tied houses generally.

Does the Minister realise the cruelty which can be inflicted on cattle if stockmen do not actually live on the farms where they work?

This point is put to me regularly. I remind farmers that when my daughter was born, the midwife did not sleep with me—and I reckon that my wife is more valuable than any cow that the hon. Member has.

I certainly have no intention of venturing on to that ground. May I bring my hon. Friend back to his original answer? Was I right in understanding that he has not received representations or views from individual farm workers, who are the people most affected by the agricultural tied cottage system? Will he consider advertising in the farming industry's own Press to invite independent points of view from ordinary farm workers on a confidential basis? He will understand, I am sure, that there is a difficulty in organising these people.

I am always willing to meet people, but I am a little reluctant to give that specific commitment. It could, perhaps, be arranged privately. If my hon. Friend has any ideas on the subject, perhaps he will discuss them with me. There are unions involved in this, so I can take account of the official representations made at both Scottish and United Kingdom level. I emphasise that we recognise that there is a difference in the Scottish scene. Bearing in mind that new district authorities are coming into being in May, I would not see it as a top housing priority in Scotland at the moment. However, we have given a commitment in our manifesto, and it will certainly be honoured.

Does the Minister appreciate that in the west of Scotland, where farms are scattered, the real problem is providing housing for farm workers once they have left their tied cottages on retirement, and that the provision of such housing would solve the whole problem?

Yes, I agree, but it is not as simple as that. The hon. Member must make up his mind whether he is on the side of the local authorities, the farm workers or the farmers. This is a com plex problem. I want to discuss these matters with local authorities in the context of the provision of housing for general needs as well as those which might arise from the abolition of tied cottages.

Does the Minister accept that the House appreciates his reasonable approach at this stage to this complex problem? Does he not also accept that the key issue is the new district authorities? Will he put on them all the pressure he can, with support from all parts of the House, to provide a stock of housing to which people retiring from farm work, or the police or local authority service, will be able to move? This is the crux of the matter, not the individual industries.

My dilemma is a personal one. I have two hats, one representing agriculture and the other housing. With my agricultural hat on, I would say that it has been the backwardness of local authorities which have been Tory-dominated in the past which has failed to face up to this problem—

Dumfries County Council is probably one. But with my housing hat on, as I have said, I want to approach this matter with some urgency, bearing in mind the other demands made on housing resources.

Energy Conservation


asked the Secretary of State for Scotland what energy conservation measures he has introduced in Government Departments and other offices under his control.

My Departments are co-operating with the Property Services Agency in implementing the measures applying to Government offices announced by my right hon. Friend the Secretary of State for Energy on 9th December. There are also detailed standing instructions to my staff on economies in the use of fuel for all purposes.

Does the right hon. Gentleman realise that he should be setting the pace in energy conservation in Scotland and not following meekly in the timid steps of the Secretary of State for Energy? Is he aware that Edinburgh Chamber of Commerce is leading a local campaign to save energy? Will he take its advice on how to introduce an effective conservation programme?

The hon. Gentleman had better be careful when he tells me to set the pace. One of the things that we are trying to do is get people to slow down, so as to save energy. He will appreciate that the actual buildings are the responsibility not of the Secretary of State for Scotland but of the Department of the Environment.

The people are. I assure the hon. Gentleman that the advice which was given by the Government of whom he was a supporter over the last winter has been retained, and we have carried it on and strengthened it as far as we could all this time. We are not letting up. If anyone else has anything to offer us in the way of advice and suggestions we shall gladly consider it.

Forth And Tay Road Bridges


asked the Secretary of State for Scotland what estimate he has made of the number of years which will elapse before the total debt on the Forth and Tay road bridges will be repaid by the tolls levied; and if he will make a statement.

In present circumstances any forecasts must be speculative, but the most recent reviews suggest that with the present level of tolls the repayment periods for the Forth and Tay bridges would be about 20 and 40 years from today's date, respectively.

Does not the Minister of State agree that it would be a good plan, if he cannot implement the bad things in his own party's programme, to implement the Conservative Party's programme to abolish the tolls on both these bridges?

It had escaped me that that was in the programme. It had certainly escaped me up to February 1974.

Does my hon. Friend recognise that, in principle, I have always been against tolls on these bridges? Now that we have some very late conversions to this principle, will he look at the matter again? It is quite clear that the imposition of tolls is unnecessary and inconvenient, and that it will never pay for the cost of the bridge, and should not be expected to do so.

As I think my original answer made clear, the debt will be re, paid in the period I have mentioned. I know that there are strong feelings about tolls. I am sorry to tell my hon. Friend that I see no prospect of having these tolls removed.

As the toll booths are never all in operation at once, will the Minister explain why it has been necessary to spend £300,000 to erect eight more, which are not yet open? If his figure of 20 years is correct, does he appreciate that I, for one, will be a major contributor in paying off the debt?

That is one of the cheerful aspects of the situation. I shall look into the question of the extra toll booths. I think that they were started by the Conservative Secretary of State.

Is my hon. Friend aware that Fife County Council is mounting a campaign to get these tolls abolished on both road bridges? What can we expect when those representations are made?

Is my hon. Friend also aware—this answers the hon. Member for Fife, East (Sir J. Gilmour)—that a deputation of Members of Parliament from Fife, Edinburgh and other areas went to see the hon. Member for Ayr (Mr. Younger) a few years ago, and he turned us down flat?

I am aware of that. I note that a campaign is being mounted. I think that there has been a permanent campaign. I am sorry to make these discouraging noises, but I honestly do not see that these tolls can be abolished in present circumstances. I may as welt state that absolutely frankly.

Empty Houses


asked the Secretary of State for Scotland what is the number of houses built for the corporation of Glasgow since 1945 which are now unoccupied and unlet; how many have been unoccupied and unlet for periods of four, eight, 12 and over 12 weeks, respectively, at the latest convenient date; how much revenue in rent and rates has been lost to the city of Glasgow in the most recent 12 months; how much is the current monthly loss; and whether Her Majesty's Government are still paying subsidies on these empty houses.

I do not have the information readily available in the form requested. However, at the end of November 1974 Glasgow Corporation had 263 houses available for letting but unlet for more than eight weeks. I shall write to my hon. Friend giving what further information can be provided. Government subsidies are not affected by temporary vacancies in houses available for letting.

Is my hon. Friend aware that I, too, was unable to obtain the relevant statistics? Is he aware also that in my constituency and in his constituency, on any criteria, the number of empty council houses, ignoring those vacant because they require modernisation, must run to about 1,000? This is quite unacceptable in a city like Glasgow, which is terribly short of housing accommodation. Will he set up an inquiry into all aspects of housing, including demolition, construction, modernisation, repair and letting in the city of Glasgow?

My hon. Friend is quite right. He does not need to remind me that I have some of this problem in my constituency. However, in fairness to and in appreciation of the efforts Glasgow has made, it should be said that the number of unlet houses has been reduced from 900 to below 500 in the last few months, so there has been a considerable improvement.

As for any longer-term assistance that we can give to Glasgow to help it to cope with its housing problem, together with my noble Friend I have had two meetings with the Glasgow authority to see in what way we can assist it to overcome some of its problems.

Does the figure of 263 for Glasgow, to which the Under-Secretary referred as houses which were available for letting, cover houses which are not available for letting but which are empty and awaiting maintenance workers to put right the results of vandalism or disrepair? The hon. Gentleman and I both represent large housing estates. Is he aware that there appears to be a major problem of houses lying empty for a long time and damaging the amenities of the area, simply because there is some delay in maintenance? Will he, with his officers, look into the question of maintenance procedures in Glasgow?

As the hon. Gentleman knows, the proportion is about half and half. Half of the number of houses due at any one time are empty because they are ready for letting but are not taken up. The other half are empty because they are being repaired or undergoing modernisation or some other treatment. There have been considerable improvements in this regard and I hope that the efforts that Glasgow has made in the last two months will continue.

Licensing Laws


asked the Secretary of State for Scotland what plans he has for implementing the recommendations of the Clayson Report on the reform of the Scottish licensing laws.

My right hon. Friend is considering the various recommendations but is not yet in a position to make a statement.

My right hon. Friend must be very late developer, if that is the case.

Is there any prospect of getting legislation next Session? Quite clearly there is no prospect for this Session. If there is no prospect for next Session, will my hon. Friend give an undertaking that drafting assistance will be given to a private Member to introduce a Bill and that representations will be made by the Scottish Office to the Leader of the House that time should be provided to enable this very important report to be implemented?

My hon. Friend hits the nail on the head in saying that this is a very important report. It is also a very complex report. Therefore, the Government require time to consider its implications. I cannot give the assurances that my hon. Friend seeks.

I appreciate the problem of the pressure on time in the House. Will the hon. Gentleman consider publishing the representations which have been made to him, so that at least the House may have some idea of the Scottish people's attitude to the report? Will he make representations to the Leader of the House that the report would be a very suitable matter for a debate? There is great concern about it and interest in it in Scotland.

The report was published in 1973 and was sent by the hon. Gentleman's own Government to a wide variety of organisations and bodies. The previous Conservative administration did not state their views on the Clayson Report before the February election. However, I shall consider what the hon. Gentleman has suggested.

Government Departments And Public Authorities


asked the Secretary of State for Scotland how many Government Departments, or public authorities, with United Kingdom responsibilities have established their headquarters in Scotland over the last five years.

A headquarters unit of the National Savings Bank has been established in Glasgow and the headquarters of the Offshore Supplies Office of the Department of Energy has been transferred there. The Forestry Commission headquarters will move to Edinburgh in the course of this year, and we have announced that the British National Oil Corporation will be set up in Scotland.

I am sure that the whole House will welcome these very real and meaningful forms of devolution in terms of employment and decision making.

Will the Secretary of State confirm the report in today's Glasgow Herald that the Government have decided to set up the Scottish assembly at the former Royal High School in Edinburgh? If that is the case, will he inform the House whether the Government will provide meaningful facilities to Edinburgh Cor poration to ensure a new home for Edinburgh Art Gallery?

I have seen those reports. It is true that we are looking closely at the whole question of the siting of the assembly, but no decision about any particular building has been taken, provisionally or otherwise.

Is any planning going on for the necessary changes in staffing and accommodation generally, apart from houses which will be necessary when the assembly is set up in Scotland?

The right hon. Gentleman can take it that all the practical aspects and implications of this matter are being given consideration.

With regard to the devolution of jobs, will the Secretary of State say whether he dissociates himself from the published views of William Kendall, the General Secretary of the Civil and Public Services Association, that devolution to a Scottish assembly will reduce the effectiveness of the British Civil Service?

I am sure that we do not want to introduce anything which would reduce the effectiveness of the British Civil Service—

—the Civil Service, shall we call it? Its effectivenes is related to all those ways in which an assembly or Parliament is able adequately to utilise its services in the policies which are pursued.

Criminal Offences (Non-Prosecution)


asked the Lord Advocate under what circumstances his office instructs procurators fiscal not to proceed with a prosecution for a criminal offence; and why his office instructed the procurator fiscal at Glasgow not to proceed in the case of vandals concerned in the fatal accident which caused the death of engine driver Joseph Conroy.

There are various reasons for instructions by Crown counsel not to proceed with a prosecution. For example, the facts disclosed may not constitute a crime. Alternatively, the evidence may not be sufficient to warrant a conviction. In the case to which my hon. Friend refers, the evidence available to the Crown was considered to be insufficient to warrant a conviction.

I have great sympathy for my right hon. and learned Friend in the making of such decisions, but does he realise that his decision here will cause considerable anger among railway men, and, among the police, frustration and discouragement in their constant battle against vandals? Having been caught, arrested and charged, the miscreants were set free without trial. Will my right hon. and learned Friend look into the procedures in his Department?

I appreciate the feelings of frustration which must have been generated in the quarters to which my hon. Friend refers, but one has to look at this matter in a wider setting. In this case it was felt that if a decision against taking proceedings had not been made before the fatal accident inquiry, the boys, on being advised that they need not answer any questions tending to incriminate them, would have said nothing. Equally, had a prosecution been taken, on the view that there might have been enough evidence, the chances are that the boys would have said nothing, or would have given evidence very different from what they said at the fatal accident inquiry.

Matters of this kind are always difficult, as I am sure my hon. Friend appreciates, but, to my mind, in this case the overriding public interest was to determine the true facts, which, as my hon. Friend implies, were shocking. I think that it was right to have the facts fully exposed so that the public could be alerted to the fatal dangers involved in mindless vandalism, the best safeguard against which is a vigilant public.

Departmental Responsibilities


asked the Lord Advocate what is the division of responsibilities between himself and the Solicitor-General for Scotland.

There is no formal division of responsibilities between myself and the Solicitor-General for Scotland. The Solicitor-General assists me generally in the discharge of my functions. In particular, since my parliamentary and ministerial duties require me to spend a substantial proportion of my time in London, the Solicitor-General, in practice, plays a large and valuable part in carrying on the work of the Crown Office in Edinburgh.

Does the Lord Advocate appreciate that there is a strong feeling that the undoubted talents of successive Solicitors-General for Scotland, including the present incumbent, have not been fully used, simply because, in the normal course of events, they have not had a place in the House of Commons? Will the right hon. and learned Gentleman do his best to prevent this situation continuing by seeking to ensure that, when the new assembly is set up, although he himself may remain a Member of the House of Commons and be a responsible Minister of the British Government, the Solicitor-General will be, at least ex officio, if in no other way, a member of the Scottish assembly?

I have no doubt that what the hon. Gentleman says will have been noted. I agree that it is desirable, where possible, that both the Law Officers should be Members of the elected House of Parliament. I note what the hon. Gentleman says with regard to the future Scottish assembly. Plainly, that assembly will require legal advice, and the way in which this can best be done is under active consideration.

I hope that the Lord Advocate will not give any support to the highly undemocratic suggestion just made by the hon. Member for Edinburgh, Pentlands (Mr. Rifkind), that a member of the proposed democratic assembly for Scotland should be non-elected. Will he reject that out of hand?

If my hon. Friend had attended closely to the wording of my reply he would have noted that I referred to elected assemblies. I certainly intended the implication to be that it is highly desirable that the Law Officers of the Crown should be elected members, not ex officio.



That is sad news. I thought that the right hon. and learned Gentleman might have undertaken a hang-gliding course when he got there. But, seriously, will he publish a document setting out our precise legal rights around Rockall in relation to fishing and oil exploration? It would seem that friction is building up, possibly with Denmark, and it might be far better to clarify the position at the earliest opportunity.

I note what the hon. Gentleman says, but I can give no undertaking, for my part, to publish any such document. The general law relating to fishing, as the hon. Gentleman is aware, is governed by the present international law, and our own limits are set out in the Fishery Limits Act 1964. Rockall generates its own fishing limits, like any other part of United Kingdom territory.

As regards exploitation of the Continental Shelf, as the hon. Gentleman will again be aware, this matter was canvassed, albeit inconclusively, at the Law of the Sea Conference at Caracas, and that conference has only been adjourned. Nevertheless, under the present international law, in the Government's view, the island of Rockall generates its own Continental Shelf, and we are content to rely on that basis for the exploitation of oil and other purposes.

Will the Lord Advocate reconsider his decision not to visit Rockall? It would be very advantageous if he were to do so and take the opportunity, on going there and coming back, to count the number of foreign boats which are fishing in those waters and taking away all the herring which should be going to our own fishermen.

Perhaps I gave an unnecessarily categorical assurance that I had no intention to visit Rockall. It may well be that as a comissioner of the Northern Lighthouses Board, which I am, I shall have a chance to be in the near vicinity of Rockall. If I am in that situation, I shall certainly undertake the exercise which the hon. Gentleman invites me to undertake.

European Economic Community


asked the Lord Advocate how often he has visited the EEC; and what plans he has to visit the EEC in the future.

Since taking office, I have visited the EEC on one occasion, when I was a member of the United Kingdom delegation to the meeting of the Council and Conference of EEC Ministers of Justice held in Brussels on 26th November 1974. So far as the future is concerned, I am in fact leaving this afternoon for a visit to the Court of Justice of the European Communities in Luxembourg, and I propose to go from there to Brussels, where I hope to meet members of the legal service of the Commission of the European Communities.

As the Lord Advocate is the defender of the constitutional Scottish legal system, will he ensure that whenever fundamental matters touching the jurisdiction of Scots law are to be dealt with in the institutions of the EEC his pleasant and informed voice will be there, through his attendance in person? Second, will he say a word about his Department's scrutiny of EEC secondary legislation?

I cannot guarantee that I shall be present on all occasions when questions of Scottish jurisdiction arise, but this is a matter on which I am most anxious to ensure that the separate nature of Scots law and the Scottish legal system is fully understood in all parts of the Community, including the organs at Luxembourg and Strasbourg, and, above all, in Brussels. As regards scrutiny, I assure the hon. Lady that my Department plays the fullest part, and will continue to play the fullest part, in ensuring that the special doctrines of Scots law are fully taken into account and that the special requirements of Scotland are allowed for.

Before going to Brussels, will my right hon. and learned Friend give us an assurance that, unlike the hon. Member for Moray and Nairn (Mrs. Ewing), he will not be carried away by the heady wine of Commission flattery and hospitality, but will be able to resist all the blandishments of the bureaucrats in Brussels, so that he will come back the good anti-Marketeer that he is, unlike the hon. Lady?

I hasten to say that no blandishments or excesses will make any difference whatever to my judgment. I should stress, however, that the visit I am making today is in no way connected with our continued membership or otherwise of the European Communities.

Will the right hon. and learned Gentleman take it that we all hope that when he comes back from Brussels he will have a better reception from his own party than the hon. Lady had from hers?

Offshore Oil (Dumping Of Debris)


asked the Lord Advocate how many prosecutions have been initiated against oil developers for illegal dumping of debris in the sea to the most recent convenient date for which figures are available.

Is the Lord Advocate aware that his reply will cause astonishment and anger among the fishing community in Scotland? Is he further aware that the Secretary of State for Scotland regularly receives representations from the fishery officer in Peterhead giving instances and details of cases where fishing gear is being lost through the activities of oil developers? I am sending him yet another representation which I received from Peterhead, in respect of a fisherman who lost £1,275 worth of gear, in a case in which there was grave danger to the safety of the vessel and its crew.

I see that the hon. Member has put down a Question to my right hon. Friend the Secretary of State dealing with this matter. In so far as his Question was addressed to me, I must confine my attention to prosecutions and complaints which might give rise to prosecutions. I assure the hon. Member that no complaints which might give rise to prosecutions have come to my notice or that of my Department.

I emphasise that the scope for prosecutions is limited under existing legislation. The discharge of oil, for example, is covered by the legislation, as is the dumping of debris if that debris is waste. However, I think that many of the things to which the hon. Member objects do not legally come within the category of waste and therefore are not touched upon by the Dumping at Sea Act 1974.

Will the Lord Advocate pass on my sincere thanks to the Secretary of State for his part in helping to set up a compensation fund, and, in particular—and perhaps more important—to the oil industry for agreeing to this? However, appreciative though the industry is about the fund, the prime problem remains of getting it to stop flinging debris overboard before any prosecutions can begin. The fishing industry still has the growing problem of drifting oil buoys and suspended wellheads.

Bills Presented


Mrs. Secretary Williams, supported by Mr. Secretary Foot, Mrs. Secretary Castle, Mr. Secretary Ross, Mr. Secretary John Morris, Mr. Secretary Rees, Mr. Fred Peart, Mr. Edmund Dell, Mr. Robert Sheldon, and Mr. Robert Maclennan, presented a Bill to amend sections 1, 2 and 9(4) of the Prices Act 1974 and to make consequential amendments in the Schedule to that Act: and the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 63].

Social Security (Status Of Members Of Parliament)

Mr. Eldon Griffiths, supported by Mr. Paul Hawkins, Mr. John Gorst, Mr. Ralph Howell, and Mrs. Elaine Kellett-Bowman, presented a Bill to provide that Members of Parliament shall be treated as self-employed earners for the purpose of calculating their contributions under Part I of the Social Security Act 1973: and the same was read the First time; and ordered to be read a Second time upon Friday next and to be printed [Bill 65].

Statutory Instruments


That the draft Ships and Mobile Offshore Installations Construction Credits (Increase of Limit) Order 1975 be referred to a Standing Committee on Statutory Instruments.—[Mr. Edward Short.]

Questions To Ministers

On a point of order, Mr. Speaker. Will you tell the House whether it is your intention to allow a Private Notice Question from myself about Cyprus, or whether you intend to allow a Minister from the Foreign Office to answer Question No. 35 which stands in my name on the Order Paper? I ask this mainly because of the situation which has developed in Cyprus and the responsibility of the British Government as cosignatory guarantors under the treaty. Would you not think it appropriate for some statement to be made on the situation there?

I have received no such application concerning the Question on the Order Paper. I suggest that the hon. Member should pursue the matter with the Leader of the House during business questions tomorrow.

Further to the point of order, Mr. Speaker. Surely it is for you to exert your own authority in granting a Private Notice Question. As I understand it, it is not within the province of the Leader of the House to grant permission for me to ask a Private Notice Question; it is for you to make such a decision.

Indeed it is, and whether or not I allow a Private Notice Question is a matter which is never discussed on the Floor of the House. If the hon. Member will have a word with me privately I shall talk to him about it.

Members Of The House Of Commons (Remuneration And Conditions Of Service)

3.35 p.m.

I beg to move,

That leave be given to bring in a Bill to provide for the setting up of a new permanent review body to examine and make recommendations to Parliament from time to time upon the emoluments, expenses and conditions of service of Members of the House of Commons.
It is inevitable under the procedure of this House that one must give notice of a Bill of this kind, and I gave that notice many months ago. I could not at that time have foreseen that on 19th December the Lord President would make a statement on the matter. My first thought when he had done so was that I had better withdraw what I proposed to do. On reflection, however, and on rereading what the right hon. Gentleman said and noticing that he had invited hon. Members on all sides of the House to make their views known and, indeed, anticipated some of the things I intended to say, I considered that since Lord Boyle might read what is said it would be as well if I proceeded.

First, I have two points to make. I am not concerned with, nor do I intend to mention, the level of salary which any Member of Parliament should be paid. That is a matter for the Government of the day and is not a subject on which in this context I have any views. I am concerned with the machinery by which that figure is arrived at, and that is the major point of the Bill. Second, I would suggest that if the Bill becomes effective it should become effective only from the first day on which the next Parliament meets. I object to a Parliament changing salaries during its life.

I now proceed to the principle upon which the Bill is based. It is wrong for any person or any body of persons to fix their own salary. Perhaps it is particularly wrong in the case of Members of Parliament, because of the influence they have. I appreciate the difficulties and I shall seek to meet them. There are admirable precedents in other matters for Parliament putting certain things at a distance from itself, whether it be the nationalised industries or the BBC. There are certain things which, whilst we remain ultimately responsible for them, are hived off by Parliament, and I suggest that that is acceptable here. The problem is whether we can devise sensible machinery which will have that effect. I believe that we can.

First, one may reasonably say "Haven't we got Lord Boyle?" I pay tribute to what Lord Boyle has done and the skill with which he has done it, but there are still faults in the system. First, he is asked to prescribe all too frequently. Secondly, there is room for pressure within the House and elsewhere to bring his machinery into operation. Thirdly, he can, without any impropriety, be prodded into action by the Lord President or any one of us. I should like to see machinery which is so remote that that cannot happen. I want to find machinery which will have that effect. I went to find machinery which will provide that that matter is discussed once and will not be discussed again. I also want to devise machinery which is seen to be fair.

Clearly, in the discussions of this kind of thing one is always open to amendments. However, my suggestion is that a High Court judge—and if I were asked to name one I would suggest the Vice-Chancellor of the Chancery Division of the High Court, because I am advised that he has arithmetical expertise—should on or before 1st December each year, by whatever means seem to him appropriate, take evidence and obtain three figures. The first would be the average weekly earnings in this country. The second would be the salary level of an assistant secretary in the Civil Service, and the third would be the salary level of a circuit judge.

I have selected these three after careful thought. The first I select because it links us to some extent with the prosperity or lack of it, of the people we represent. I select the second because I do not think it should lie in us to have any better opinion of ourselves than is necessary. I do not think anyone could say we were guilty of that fault if we linked ourselves to that status. I suggest the third, the circuit judge, because I am advised that he is, if I may put it without offence, the lowest form of judge and has recesses similar to ours. His salary is a little high, the average weekly wage is a little low, and the assistant secretary comes appropriately in the middle.

It should be that judge's function, a fairly simple function, to strike an average of those three salaries. I shall not state the figure, but the Bill should say that the salary of a Member of Parliament shall for ever after be X per cent. of that average. It is for the Government to fix the X.

I hope it does not seem complicated. I do not think it is. The purpose of it all is that we shall not again be put in the position, which I believe to be deeply embarrassing, of trying ourselves to say what we should be paid. I well remember that after an election some years ago a political opponent offered me mild congratulations, and then said "I suppose the first thing you will do will be to raise your own salaries." That was an offensive observation, but I felt in no position to resent it because it turned out to be absolutely true. If we have regard to the repute of the House in which we serve, we should so arrange matters that that sort of remark cannot justly be made again.

I entered the House 30 years ago. I have never known a period exceeding three or four years in which we have not had to revert to this argument. I want to get rid of it for ever.

Perhaps I may say with humility that I am an appropriate person to raise the matter, because I shall have little interest in it. I near the end of my career, and anything I may say can affect only those who come after.

I hope that Lord Boyle, who may decide the matter, is listening with his customary patience and tolerance. I also hope that a Bill of the kind I propose will appeal to hon. Members throughout the House as the final decision on the question, subject to any revision of detail that seems appropriate to be taken by the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. Evelyn King, Mr. Peter Doig and Mr. Alan Beith.

Members Of The House Of Commons (Remuneration And Conditions Of Service)

Mr. Evelyn King accordingly presented a Bill to provide for the setting up of a new permanent review body to examine and make recommendations to Parliament from time to time upon the emoluments, expenses, pensions and conditions of service of Members of the House of Commons: and the same was read the First time; and ordered to be read a Second time upon Friday 9th May and to be printed. [Bill 64.]

Orders Of The Day

Finance Bill

(Clauses 5, 14, 16, 17, 33 and 49)

Considered in Committee [ Progress, 21st January].

[Mr. GEORGE THOMAS in the Chair]

Clause 17

Capital Transfer Tax

Question again proposed, That the clause stand part of the Bill.

3.43 p.m.

Before I call an hon. Member to speak, I wish to make an appeal to the Committee. In addition to the major business we are about to discuss, there are several other major issues to which the Committee will have to give its attention in the course of the evening and the night. I hope, therefore, that, although a considerable number of hon. Members left the Chamber last night with a heavy burden of an undelivered speech, they will try, in the interests of the Committee and our business, to make their contributions as brief as possible.

I am grateful for the opportunity to re-open the debate, for although I am not sure that the capital transfer tax is the most important tax measure since the war—to use the Chancellor's terms—it is certainly likely to have a greater long-term impact upon society and the shape of industry and the countryside than any financial measure that I can remember since I joined the House in 1966.

Although the Opposition's contribution to the debate last night was admirably opened by my right hon. Friend the Member for Finchley (Mrs. Thatcher), I thought that by the end of the evening we had been somewhat diverted from the main point at issue, as was particularly evident in the Chancellor of the Exchequer's winding-up speech. It is, of course, necessary to re-examine the effect of the proposed tax on forests, charities and historic homes. But what is at stake in the debate and vote on the clause is what I think the Chancellor himself described, in the final remarks of his opening speech, as the social and economic structure of the nation—indeed its very future.

If the right hon. Gentleman meant what he said, and if, with respect to him, he is his own man rather than the mere creature of one of the militant factions who sit behind him, I think he will ponder further on his statement yesterday that he does not seek to destroy the essential base of saving, investment and employment upon which this country is founded. It is so much easier to destroy that continuity which is England than to preserve it, and England is nothing—

I can include Scotland, Ireland, Wales and Cornwall. I represent the Celtic fringe myself.

England is nothing without its traditions and history and its family firms and farms. The Tory Party used to represent what the small family firm and the small farm are all about. I hope that we still do. If we do not, I see it as my main task in politics to ensure that we do so once again. There may be Whigs in both parties who feel that they can represent all interests but, in fact, never succeed in representing any of them. But I believe that the Tory Party exists as much as anything to represent the continuity of family life and the family business and family farm.

It was a gross over-simplification for the Chancellor to state yesterday that more than 95 per cent. of the population, or whatever proportion he took, are below the threshold of the tax. That is beside the point, because the truth is that well over half the working people of this country, almost the whole of our countryside, a major proportion of our exports and all our investment are directly affected by the proposed tax—in my view, adversely.

It is too much that this short debate should hang under the threat of a closure at any time, when informed opinion in the Committee and outside is only just beginning to grasp the massive implications of what we are about. That goes for both sides of the Chamber. I know that very well from what several Labour hon. Members have told me.

My time is limited. I shall comment first on the structure and rate of the tax. In doing so, I ask the Committee to believe me when I say that I am not against the taxation of capital or inherited wealth, or against stopping up the loopholes in what is now the estate duty. Indeed, when my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) and I were in the Treasury together we genuinely wanted to make a start on the reform of capital taxation. If we had done so we would have taken into full account that we already have the most extensive taxes on capital in the world. Any measure that we would have considered would have embraced the reform of estate duty, the reform of capital gains tax—I believe probably its abolition—and perhaps the replacement of those measures with an overall tax upon wealth. However, it would not have been a tax of the kind that is increasingly being forced upon us—namely, taxes upon the creation of wealth. That is the distinction that we must make. The capital transfer tax, alas, misses that distinction altogether.

I now turn to the structure of the capital transfer tax. I believe that it is unacceptable to any reasonably minded man. With the respect that I have for the Inland Revenue and its top people, I do not understand how it could ever have produced such figures or how Ministers could ever have accepted them. The result of the grossing-up effects of this tax and the interaction of capital gains tax is that rates well in excess of 100 per cent. can be levied on even a modest family business. That is the position without the effect of the wealth tax. I am meant to be sitting shortly on the Select Committee on the wealth tax.

Time permits me to give only one example—namely, a 300-acre farm worth £500 an acre. My example could equally well be the small engineering business in the Midlands employing 50 men and worth about £150,000. We can assume that for the 300-acre farm capital gains tax since 1965 would amount to £22,500. Capital transfer tax at 20 times the annual rent of £15 an acre—I am talking about the relevant rate, which is 45 per cent. CTT—would mean a CCT liability of £48,333. The total tax payable by the donor—that is, the capital gains tax and the proposed CTT rate—would be £70,833 or half the market value of the farm. That is against a present tax liability under estate duty with the 45 per cent. rebate of £36,987.

That is the result of capital transfer tax on a relatively modest family business which would not produce for its owner any great income. The tax liability will be approximately double the present liability. If rents move up in agriculture—I believe that they must do so—and the market value is to be taken into account rather than the annual rent, total taxes on the 300-acre farm would be over 100 per cent. Therefore, the whole of the value of the farm would go in tax and more besides.

Mr. John Chown, the taxation correspondent of the Financial Times, gave a more extreme example in another vein. He made a number of assumptions, but none of them was absurd. He took the example of a parent with a handicapped child who not unreasonably wanted to provide £2,000 a year in real terms for the child for 60 years. The child would need under the new proposals £828,000. The cost to the donor of leaving that amount, after capital transfer tax, rises to £2.4 million. I do not understand how the Government could have come forward with even draft legislation of that sort.

The legislation that has been presented to the House will, of course, go through Committee. But it should never have been presented in its present form. It seemed that the Chancellor yesterday evening showed a glimmer of understanding of the enormity of what he had in draft terms. I should like to feel that in winding up today he will indicate that he has grasped what he is doing.

I may be a minority of one on the Conservative benches when I say that I believe the Chancellor's macro-economic policies are broadly right. I just happen to agree with his broad macro-economic policies. However, the right hon. Gentleman has been too busy with the general economy and with gallivanting around on international jamborees to follow what his Department has been doing with the tax system in his absence. It is no use getting us through the next two years without a bloody revolution—after all, that is the Chancellor's task—if, in doing so, there are tax measures passing through the House which will undermine the basic long-term structure of our society.

I shall now quote Lady Burton of Coventry, who is, I believe, a Socialist in another place. In a letter to The Times last week she said:
"I am writing"—
she was on the theme of the middle classes—
"not because of the anger of the middle class but because of the despair and fear, of those people in all classes of modest means and now retired, who have no hope to sustain them in their remaining years. … I am speaking not of the rich but of the millions of decent, hard-working people who saved a modest amount of money over their working years, and who put this into a building society or bought life assurance for their old age."
That letter was written by a Socialist in another place. She was referring to the efforts last week of the Treasury Bench on investment income. The Government's measures in that clause are just a mean little act resulting from foolish commitments made whilst in opposition. Clause 17 is far more far-reaching. We are dealing with the destruction of the family business, much of our landscape and the basis on which the private sector of the economy is now founded.

I am in a critical mood and I fear that I am not critical only of the Government. It was my party—I was a member of the previous Conservative Government and I take full responsibility—which for all sorts of well-meaning reasons agreed that dividends should rise under the prices and incomes policy at only 5 per cent. a year. That started the undermining of the savings principle. It was a foolish act for a Tory Government to take. It was my party—this was much more suspect, and the motives were not so good as they were based on electoral expediency—which failed to vote against the Second Reading of the Rent Act 1974.

I quote those two examples in suggesting that the traditional concept of property—I refer to property in the widest sense of the word and in the sense in which it has always been referred to in British history—has been diminished, if not forgotten. Property in the widest sense means life assurance, family businesses, savings and building society deposits. Property in that sense cannot be distinguished from the continuity of family life. That is why I feel so strongly about capital transfer tax, which goes to the very heart of the issue.

I do not like the term "the middle classes". I think it is a silly term. Perhaps it is that sector of society that can be referred to a the bourgeoisie. When we use the term "the middle classes" I think we mean the saving classes rather than the spending classes. The real income of that class has been falling very fast. The demoralisation of the bourgeoisie is no minor matter. It is the single most important factor, in my view, in present politics.

Does the hon. Gentleman acknowledge that much the greatest part of savings in this country is made in pension contributions by working people?

Yes, but who owns the pension entitlements? They are owned by the very people to whom I am referring, those who subscribe to pension schemes and who as a result of the premiums that they pay are entitled to their share of the assets of the fund. That goes to the heart of the matter.

We all know that power now resides outside the House of Commons. In my view, our institutions no longer reflect the broad base of interests in the country. Whitehall, Westminster and private industry merely react to the pressures of organised labour.

Every tax depends ultimately, the The Times said this morning—God forbid, I never thought that I would find myself in agreement with a leading article in The Times but I did this morning—the whole basis of the tax structure depends upon consent, upon the consent of the governed and the taxed. The Government, in this and other tax measures, are engaged in pulling down almost the last edifice which supports the remaining powers of government in this country—that is, respect for the tax system.

4.0 p.m.

We hear a great deal about the powers of the miners and of the electricity workers. But a power resides in the hands of the taxpayer which far exceeds the power which lies in the hands of the miner. Once this basis of consent is undermined—the Inland Revenue knows this only too well—and once people start withholding their taxes because they have become penal and objectionable, the whole structure of government in this country will collapse. That could happen very easily indeed.

I conclude with only one positive suggestion, which I hope the Chancellor will take in the spirit in which it is intended. We have had Green Paper discussions and Select Committees on many taxes in the past few years. I do not need to list those that we have had. We now have a Select Committee on the Wealth Tax. But that Committee is proceeding in parallel with Lord Diamond's committee—the Royal Commission on the Distribution of Income and Wealth. Frankly, we are both considering, in parts of our work, very similar things. Yet the Select Committee is not privy to Lord Diamond's figures, so both of us are working side by side on essentially the same problem.

In the capital transfer tax we have a tax which, quite clearly, interacts with the wealth tax and the work of Lord Diamond's committee. How is the House of Commons to perform its functions seriously if we isolate the wealth tax from the capital transfer tax? They should not be isolated. They are all now part of the same overall problem.

Therefore, if this is the most important tax since the war, I suggest to the Chancellor that it deserves some rather more lengthy, non-partisan consideration which embraces the whole concept of the wealth tax and taxes on capital, and a limit on the overall amount of tax. It should embrace all these things. I ask for consideration—not today but over the next week or two—of whether we might not take this matter out of the Bill for now and refer it to the Select Committee on the Wealth Tax, broadening the base of that Committee's working to include capital transfer tax. I am not the chairman of the Select Committee, so I must defer to him, but I am sure that we could finish our considerations by the summer and take account of these matters which, with great respect to the Treasury Bench, Treasury Ministers must know by now that they have not considered properly at all.

I want to talk about the position of Northern Ireland in relation to the new tax. First, I want to speak about the forestry industry in Northern Ireland.

Northern Ireland's forestry is principally coniferous and planted by the public. This position has been built up over many years. The reason why public planting has consisted primarily of softwoods is simply that the land on which trees have been planted, by public money, is not suitable for the growing of hardwoods. Therefore, practically all hardwood planting is carried out by private land owners. In Northern Ireland that means that hardwoods are planted on very small patches of land which are unsuitable for agriculture—because the land slopes steeply, because perhaps a corner is cut off or the land is too wet, or because there is something else wrong with it from an agricultural point of view. Some of these trees are planted as shelter belts for stock and, therefore, come under the heading of being ancillary to agriculture. But some are planted with a view to investing for the future in timber.

All Governments recognise that we have need of trees. Northern Ireland is one of the most tree-less landscapes in Europe. We have encouraged planting, but if we are to have continued planting there must be a profit which must be of benefit to the land owners. This profit can be realised only when the trees are cut down. If trees have to be cut down to pay taxes, they will not necessarily be cut down at maturity. They will be felled whenever the tax money is needed. The effect of the tax will simply be that as people exhaust their cash in the bank to pay the tax when it falls due, the trees will be cut down regardless of their state of growth. They will be turned into cash, and the land will not be replanted. This will lead to a complete destruction of the few private pieces of forestry that we have, and to more and more land becoming derelict in Northern Ireland.

I have no doubt that the Committee will be interested to learn that Northern Ireland has at present almost half a million acres of land which is unsuitable for agriculture and is not used in any way. On this land we should encourage the planting of trees. This can be done only by the private sector because in general the land exists in parcels which are much too small individually to be taken over and planted by public authorities.

I come now to the farm structure in Northern Ireland. This is totally different from that pertaining on this side of the Irish Sea. Practically all the land there is owner-occupied and farmed by the owners. The holdings are much smaller, on average, than they are in Britain, but they have been growing in size due to the economic factors operating in farming over the past 30 years or so. Size and viability have much in common. Size means the number of acres, or the size of the business actually carried on on small acreages.

When one considers the cost of increasing one's acreage of land in Northern Ireland, one has to take into account some social factors, one of which is the competition for the land available on the market, and the position of the land that is being sold. The price paid for that land when it is sold in the open market does not necessarily reflect the economic value of the land which is bought to increase the size of the holding. This brings into question the whole capability of the farming community in Northern Ireland to raise the money out of the income from the land to pay the tax on that land.

This is because the return on agricultural land, taking the market value as the base, is very much lower than that in most other industries. Family farmers do not buy land as a hedge against tax. They buy land in the way a labourer would buy a spade. It is a tool with which to earn a living—neither more nor less. It is a necessity for their way of life. A farmer without enough land cannot grow food and he cannot fulfil his object in life.

The Chancellor has implied that the loss of outside money would bring about a drop in land prices. However, that is not necessarily so. Even if it diminishes the value of the land, what happens to the farmer? What will he use as security whenever he goes to the bank for money? Farmers use the value of their land in order to get liquid capital with which to invest. At a time of inflation, when prices are rising so rapidly, it is vitally necessary that farmers have the ability to invest in the plant and machinery they need to carry on.

The Bill will lower the farmer's purchasing power, right across the farming industry. When one considers the amount of farm machinery that is sold and the effect that such a loss of purchasing power will have on the economy of this country, one appreciates that this is a matter which the Chancellor would be well advised to look at again very carefully.

The Chancellor has also said that forests have been raised in price by the tax relief under estate duty. But it is not the sale value of the forest that counts. It is the value of the spendable income from the land on which the forest grows over the life of the forest. If the profit to the land owner from a forest is less than that which he can get from grazing sheep on the land, he will stop growing trees and will graze sheep. The spendable income from the forest must be taken as an annual income over the entire life of the forest. Looked at in this light, the spendable income per annum from a forest after paying tax will be so low that it is simply not worth planting the trees.

In Northern Ireland, and I think throughout Britain, the family business is a powerful force in society. Despite what some hon. Members opposite may think, people do not work for the tax man. They work for themselves and for their children. People work for their children so that their children may have a better standard of living and a better life than that which they themselves enjoyed. Therefore, they want to give their children a better start in life.

When the Chancellor of the Exchequer says that one person in 10,000 will pay more tax he misses the point. The point is that all businesses of over £15,000 in value will eventually be caught. Not in one year but in a generation every land owner and business owner will be caught by the tax and the result will be the destruction of society as we know it.

One serious result of that in farming will be a reduction in production. Family farms depend upon the families who farm them. Father and son, wife and daughter do the work. Anyone who denies that has never lived on a family farm. If a farmer or business man believes that there is no future for his children in the farm or business he will put them into a profession or trade and, therefore, the farms and businesses will eventually collapse. They will grow into large corporate units or fragment. Either result will be disastrous to our way of life.

When people find that they have to pay not only the capital transfer tax but capital gains tax the spirits of even the stoutest will quail. The Chancellor of the Exchequer spoke of a lifetime accumulation of £15,000. That has been treated as a vast sum by hon. Members opposite. The present cost of building a very moderate council house in Northern Ireland is at least £10·50 per square foot, or over £11,000 per house. There is hardly a person in a reasonable job, even among the poorest workers, who does not wish to own his house and who is not prepared to make sacrifices for it. But when those sacrifices are taxed people simply will not make the effort. Why should they?

The Chancellor of the Exchequer spoke about 1,000 acres of land or a quarter of a million pounds. I draw attention to the amendment in the name of the hon. Member for Caernarvon (Mr. Wigley), which attempts to get round the problem in a rather subtle way by referring to the quality of land. Other methods could be used in farming. There is a system known as man days to prove the viability or otherwise of a farming business. One could consider the income from the farm over a period of years. But possibly the simplest way of dealing with the matter is to take the market value. If one does that, why worry about the size of the farm?

We are told that one of the aims of the Bill is to make the tax compulsory and not voluntary. Any tax depends upon the willingness of the governed to pay it. In my experience, people will pay bills, whether they be tax bills or any others, as long as they think that they are reasonable, just and justified. But when people as a group or as a national body are convinced that the tax is not reasonable they will make every effort to avoid paying it. That leads swiftly and inevitably to crookedness and corruption in the nation's life.

4.15 p.m.

I draw attention to the statement of the Chancellor of the Exchequer about relief for the Army and the police. I am unable to understand what he meant. My reading of Schedule 7 indicates that the relief is to be extended to members of the armed forces up to at least 1984. On 9th December I asked the following Question of the right hon. Gentleman's Department:
"… whether, when members of the UDR, the RUC and the RUCR are killed, as a result of terrorist activity in Northern Ireland, their estates are free from estate duty in the same way as the estates of members of the armed forces".—[Official Report, 9th December 1974; Vol. 883, c. 43.]
The reply was "Yes".

How does that fit in with what the Chancellor of the Exchequer said last night when he denied that the relief was extended to members of a police force? I realise that it is not in the present legislation, but I think that it should be incorporated in the legislation. If we ask men and women to defend this country either against terrorism within its borders or against armed attack from without, it is only reasonable that the nation should protect the defenders of the nation. It is atrocious to deny this relief to people who defend our way of life and our soil.

I have been trying to discover the position regarding civilians who die as a result of terrorist activity. I find they are excluded from relief. But they were not excluded in the 1939–45 war. I asked the Library about this matter, and a few days ago it supplied the answer. It said that total exemption from death duties was granted in respect of the first £5,000 worth of property passing to the widow, widower or any other relation or to the brothers and sisters and their descendants of any person who died as a result of enemy action.

Is there any good reason why that should not be incorporated in the Bill and the relief extended to civilians and their dependants who die as a result of enemy action within or without our borders? Furthermore, today £26,329 would be needed to give the same level of relief as £5,000 in 1941. In these circumstances, there is an excellent case for increasing the base starting point for the tax to almost double the £15,000 proposed.

The Chancellor said that he would be prepared to listen to reasonable arguments. I think that the points that I have made are more than reasonable. Therefore, I trust that the right hon. Gentleman will accept them and act upon them at once.

I should like to say how much I agreed with the speech of the hon. Member for Londonderry (Mr. Ross). I wish I could say the same about the speech of the Chancellor of the Exchequer last night. However, it would be ungracious not to say that we were grateful to the right hon. Gentleman for saying that he would consider some of the points made in the debate. I should like to take up one or two matters with him. It is difficult to know where to begin, although the best course is always to begin at the beginning. However, this is not a question of historical reminiscences or of airing my knowledge.

The Chancellor said that estate duty was introduced before the twentieth century began, to prevent vast aggregations of inherited wealth being passed on from generation to generation. If the Chancellor will read his history he will find out that the tax was introduced because the Liberal Government of the day were short of money and had to build many warships. Estate duty was introduced as a money-raising Bill, in which the existing probate duties and death duties were scrapped, with an estate duty brought in at a slightly higher rate in spite of the opposition of the then Prime Minister and Liberal leader, Mr. Gladstone.

In 1910 the concept, which the Chancellor of the Exchequer attributed to the nineteenth century, began to take shape in the famous Budget of Mr. Lloyd George. He introduced much higher rates of tax, partly with a view to financing the great social services then being launched and partly having in mind the present Chancellor's ideas about inherited wealth. At the same time he introduced Section 61(5) of the Finance Act. It was an amendment. It was introduced by Mr. Lloyd George expressly to exempt forestry from the effect of estate duty at the greatly increased rates imposed in 1910. The amendment was proposed not by any Tory land owner but by the Chancellor of the Exchequer, and it has remained on the statute book for the past 65 years.

The relevance of this is that it was done on commonsense principles. It was not desired to apply this penal form of taxation to a totally unsuitable industry such as forestry.

Speaking about forestry, the Chancellor of the Exchequer said that in recent years half the planting had been done by the Government, and that, of the other half, four-fifths had been done by investment companies as a hedge against inflation. Later he mentioned investment trusts.

The Committee should have a picture of what has been happening in forestry, which is now divided into three sections. Half of the planting is done by the Forestry Commission, and the other half, which is carried out neither by investment trusts nor investment companies, is carried out by private owners—half of them doing it on their own. Here I must declare an interest, as I am involved, together with my agents and employees. The rest of the planting is done by forestry companies, which are working companies responsible for management and planting and are owned by woodland owners, the employees and the timber industries. However they neither own nor deal in land. They provide jobs in rural areas and implement Government policy as directed by the Forestry Commission. There is no secret about their names. There are four principal companies. They are responsible for managing about half the private sector. Their incomes derive from the services which they provide. The land they manage is dedicated not by the forestry company but by the owner concerned.

I believe that the provisions—or nonprovisions—concerning forestry in the Bill have been actuated by suspicions of forestry being used as a method of tax avoidance. I should like to impress on the Chancellor that it not possible to avoid tax by planting trees. But it is possible to avoid tax to some extent by buying forestry land and selling it at the right time. The forestry companies follow a consistent policy of discouraging that sort of thing, which is of no help to them, although some short-term operators have tried, by means of advertisements, to interest people in these schemes. On a number of occasions the forestry companies have suggested to the Inland Revenue a simple means by which legislation could be brought in to prevent that type of tax evasion without damaging the industry in the way that now seems inevitable.

To sum up, forestry in the private sector receives aid from the taxpayer partly in the form of the income tax code introduced by the Attlee Government in 1947 and partly in the estate duty concession introduced in 1910, while in contrast the whole of the burden of the Forestry Commission planting is borne by the taxpayer.

I do not know whether it is worth while to refer to the point which seemed to weigh so heavily with the Chancellor of the Exchequer last night when he seemed to imply that there was something guilty or immoral about the fact that the planting done by "investment trusts" was done overwhelmingly in softwoods, alleging that the planting of hardwoods was done overwhelmingly by the Forestry Commission.

These are the facts of life about forestry. For defence and economic reasons, it is essential that the bulk of our forestry planting should be in softwoods, which is what we shall need if we experience a siege economy. We need softwoods to help our balance of trade. On two aspects of forestry policy—namely, rural employment and what is called amenity—we need hardwoods, which to a minor extent are also valuable in the economic and defence spheres.

The argument is hardly worth pursuing. I am not surprised that nobody wished to argue it with the Chancellor, because it is irrelevant to our discussion on the Bill.

I declare my belief that the need in this country is for a continually expanding forestry industry both in the public and the private sectors. I very much regretted the decision taken in 1958 by the Conservative Government to scale down Forestry Commission plantings. I should like the Government to register the fact that this deficiency has been to a large extent made up by the useful activities of the forestry companies I have described.

Having declared my interest as a private forester, I wish to speak briefly about ordinary private forestry. Those engaged in it plant a greater proportion of hardwoods than either the Forestry Commission or the forestry companies. We are very much concerned with small woodlands. It is difficult to see who else could be properly concerned with them.

An important aspect is terminology. We have to invent suitable names for small woods. I started that process when I was a keen and promising Member of Parliament, and I resorted to the use of the names of Leaders of the Conservative Party. There is a Macmillan Wood on our property and the Home Covert. We are now focusing on an area called the Heath Plantation. We have only one thatched cottage on the estate, and, unfortunately, the wood next door already has a name. If the necessity arises, I am not sure whether we shall be able to call it Thatcher Wood.

This is an important aspect of private forestry, which contributes to the beauty of the countryside we want to preserve and to rural employment.

It would be an ironical result of this Bill if those who like myself during a lifetime have obtained no benefit from planting, which is all a matter of spending money, were to be penalised in times of posterity by a Bill allowing nothing to be inherited by anybody.

Referring to what my hon. Friend the Member for Ludlow (Mr. More) said about the naming of woods, the only place where the Chancellor of the Exchequer would find refuge on my hon. Friend's estate would be in the Dog Kennel Plantation.

I have listened to the many speeches made in this debate but I have not heard one speech in favour of the tax. Even the hon. Member for South Ayrshire (Mr. Sillars) could find nothing very much in favour of it. Even he had to ask the right hon. Gentleman for some concessions in so far as the tax affects charities. Only the Labour Party could produce a tax which operates so unfairly on families. If a man has one child he can give it one gift of £15,000 and £1,000 a year. But anyone with four children finds that each of them can have only a quarter of that and an annual gift of £250.

4.30 p.m.

Much of last night's debate missed the Press, but no one can say that the first leader in The Times today on taxation and consent, which has been referred to already by my hon. Friend the Member for St. Ives (Mr. Nott), was written as a result of the debate in the early hours of this morning. That leading article emphasised first the punitive rates of the tax, and it went on to widen the argument to include the effect of the capital transfer tax on discretionary trusts and on family settlements.

Trusts as a whole have a long and respectable history of protecting wealth. They protect it from the profligate spender who may for a short time be the beneficiary of the wealth. But far worse damage will be done by this Government, who will just dissipate the wealth through this tax. We shall not solve inflation by taking away people's savings and using them up in current Government expenditure.

Throughout our debates on this Bill, the Chancellor of the Exchequer has shown a growing awareness of the full implications of what he is proposing. He made some comforting noises to the foresters. He made some sympathetic comments about charities and about small farmers. When he intervenes again today, I hope he will show that at least he is prepared to give further consideration to the effect of the capital transfer tax on money put into trusts and on money paid out by trusts and to the iniquitous harm which will be done by the 10-year levy on the undistributed assets of discretionary trusts.

I hope, too, that the right hon. Gentleman will make favourable noises about the retrospective element in this legislation. We have a classic example on the statute book already of a Government changing their mind about retrospective legislation and its effect on the old death duties. When foreign real property was brought into the net of the old death duties by a Conservative Government, the point about retrospection was accepted. Where someone received foreign real property thinking it free of death duties and had resettled it, it was accepted as not being liable to death duty. The same applies to settlements and discretionary trusts, and I hope that the right hon. Gentleman will look favourably at the retrospective element of what he proposes, especially where existing trusts were made in good faith by a settlor domiciled abroad who then returns to this country and is caught by the capital transfer tax when the trust is held by non-resident trustees. This is the worst kind of retrospective legislation.

We had a little bit of sanctimonious unction from the right hon. Gentleman when he tried to disguise his real intent. We heard a great deal about small farmers and owner-occupier farmers. Does the right hon. Gentleman accept that 46 per cent. of all the land farmed in this country is farmed on a landlordand-tenant relationship? He tried to get a few cheap cheers from his supporters by talking about the increase in the value of land brought about by the present death duty repayment of 45 per cent. However, I do not accept that. I believe that the landlord-and-tenant system has brought two kinds of capital into British agriculture—the working capital of the tenants and the capital of the landlords. It is capital which is badly needed by the industry.

Has the right hon. Gentleman worked out what will be the effect on food production in 10 years of no maintenance and no modernisation on half our farming land? That will be the effect of the capital transfer tax.

I expect that the right hon. Gentleman will say that he did not realise the effect of the tax. Probably he will say that he did not realise the effect of interest not being allowed to be charged against income tax and surtax where owners of land make use of the eight-year provision for paying their death duties. Here, the right hon. Gentleman is frustrating a concession which has been used by people for many years by the way in which he is treating the interest. If that is deliberate, it is fair enough and we understand. If it is another of the right hon. Gentleman's mistakes because he does not really understand what he is doing, I hope he will look again at the provision.

The tax which the right hon. Gentleman proposes is a prevention-of-gifts tax. It will ensure that one third of all businesses—agricultural and other small businesses—will be owned by senile people. No one will transfer businesses or wealth. What is worse, at some stage one third of the people of this country may end up being employed by senile female ownership under the provisions of this Bill.

I agree with my hon. Friend. It is a geriatrics' charter.

For the first time since becoming a Member of this House, this weekend I received a joint deputation in Lincolnshire from the chamber of trade, the chamber of commerce, the CLA and the NFU. It is the first time that I have known all these groups feel so strongly about any one issue.

I want finally to say a few words about forestry. The skyline of North Lincolnshire is dominated by Pelham's Pillar. It was erected by the Pelham family to commemorate the planting of their one-millionth tree. More than 3,500 acres of private woodland are owned by one family in my constituency. They employ 22 men and produce 50 tons of sawable and marketable timber each week. This enterprise is threatened by the right hon. Gentleman's provisions.

My right hon. Friend the Member for Finchley (Mrs. Thatcher) spoke about the one-generation society which this tax will bring about. Even if we repeal this tax at some time in the near future, the next generation which inherits will have to pay some duty on the assets which they receive and hold for their lifetime. But, with any luck, they will hold those assets long enough to build them up and repair the damage which any form of inheritance tax may inflict. I dare say that some form of tax of this kind can be fairly devised. The trouble about the present proposal is that the damage that it is likely to do will be irreparable.

I begin by declaring my own interest as a member of a family company. I understand only too well that the Government's proposal means the death of successful family companies in the second generation.

The creation of many enterprises cannot be properly measured in the term of one human life, whether they be family businesses, woodlands or certain forms of agriculture. Such activities have to be built up over generations. If it is to be impossible to do this for reasons of tax convenience, the country stands to lose a great deal. That is the implication of this tax, and it demands a longer debate. I do not believe that it is right that in a few hours the work of families over many generations should be set at naught.

Before any debate takes place on whether the family company is an advantage to our community, I urge the owners of such businesses to invite Government supporters to look round their factories and businesses and to say to them "We have been here for generations. We have provided employment. We have provided what our customers want. We have been sensitive to the needs of the neighbourhood. You are putting us in a position where we have to slow down investment or sell up in order to pay this tax. Are we to sell to the Arabs, to the Germans or to the Americans? If we do that, will they be sensitive to our neighbourhood? Will they support the repair or the rebuilding of the cathedral? Will they support the local football team? Will they support the local college of further education? Will they become part of our society? You are passing ownership to an alien group." That deserves serious attention by Government supporters.

The Chancellor of the Exchequer should recognise that fundamentally we are a trading nation. In origin, our great exporting companies are either family businesses or amalgamations of them. Distillers, Beechams, Unilever and ICI are all amalgamations of family businesses, and their component parts could not have emerged if they had faced the battery of taxes which the present Government are developing against them.

Other companies like Guinness, Cadbury and Marks and Spencer have been able to carry on through the generations only because of discretionary trusts. Would it have been in the national interest if they had been broken up? Would it not have been the case that, if death duties were not to some extent voluntary, they would have been broken up? Is it conceivable that, if they had been broken up, the penal levels now ruling would still continue? Would there not have been an outcry against the unemployment which would have developed and about the degree to which our assets had passed into foreign hands? I believe there would.

All of us in business are worried about the extent to which this sort of legislation is drafted by people who have never created wealth of any sort and who have no understanding of the needs of the consumer and of how difficult it is to meet those needs. Of new products that are started perhaps one in 10 is still going after 10 years. For new companies the figures are about the same order. It is extraordinarily difficult to create a successful enterprise. It is only too easy to destroy it.

I ask the Chancellor to look at our overseas competitors. Are those who are successful the ones who penalise initiative? Do we find in Germany or the United States that capital taxes are higher than they are here, that income tax is higher than it is here? Of course not. These countries recognise that starting a family business involves great sacrifice, often great risk, and that the families concerned are prepared to put present advantage behind the realisation that they are creating something that is of worth and will be of benefit to their families and, hopefully, to the community.

We understand that these proposals are put forward in some measure as part of the social contract and that equality of sacrifice is demanded. Some people would have difficulty in finding equality of sacrifice when contrasting a 30 per cent. wage increase with the destruction of the work of a family over generations. Nor do I see in this the basis on which an appeal can be made for unity. Nor do I believe that it really serves the interests of those who are party to the social contract.

Does not the standard of living of us all depend upon investment, and does not this measure threaten investment at its very core? I do not think that the Chancellor should underestimate the psychological impact of his measure. When we consider a rate of inflation of 20 per cent. and we ask what return is necessary on an investment to produce any increase in real net worth to a company we find that the answer is in the region of 40 per cent. Where can we find any activity today giving that sort of return? Because of inflation, most companies are cutting back. This move can only reduce their confidence further.

The Chancellor would appear to be offering the entrepreneur three temptations. The first is to go abroad. Is that what the regeneration of British industry is about? The second is to spend, spend, spend on imports and foreign travel. Does that help the balance of payments? The third is to run down the assets of a business to keep them in the family. Think what that means. Factories and farms are run down and woodlands are ravaged. Many people will not yield to these temptations. They will say to the Chancellor "Get you behind me, Satan." They will to some extent be encouraged by the vision of the "Blessed Margaret", pledged to restore hope to the enterprising and reward to the thrifty and to light up the dark motives of the Left.

Let us not mistake the strategy of the Left. It is to provoke owners to act irresponsibly and thereby to justify expropriation. What is happening to family businesses today is following on the Chilean model, if not yet the Chilean scale. If owners are forced to sell, I hope that they will talk to those who are members of their companies and will say that they are being put into a position when they cannot carry on because of the Government's measures and inflation. I hope they will say that it is in the interests of their shareholders that they should sell to the highest bidder. Who is the highest bidder? Naturally it is the company with which the synergy is highest. In that case obviously, because the price is high, there will be far more unemployment than would otherwise be the case.

Is this what the trade unions want? Of course not. We must recognise that to a large extent the shareholders of the companies which deserve to have the highest price are the pension funds of the trade unions. They must see where their real interests lie. If, as could be the case, such action leads to sit-ins, ultimately the Government should remember that the rest of the world cannot be compelled to buy what we produce. The Chancellor may compel nationalised industries to buy from co-operatives or from companies that are non-viable for a period. Finally, however, our success as a nation depends upon successful companies. They are always family companies in their origin.

I appeal to the social democrats in the Labour Party to do their homework and to discuss with management and trade unions in companies in their constituencies whether they really believe that the family company has been found wanting in providing employment, fostering innovation, providing an environment where people can talk to each other and see where each fits into the pattern as a whole or in being sensitive to local needs and resisting monopoly. Every inquiry which has been undertaken suggests that the great majority of people would rather work in small companies than in large ones, in the private sector rather than in the nationalised industries. At the end of the day we all like the management of our companies to have a human face. I urge the Chancellor to accept the sensible suggestion of my hon. Friend the Member for St. Ives (Mr. Nott) and defer this proposal.

4.45 p.m.

Last night the Chancellor sat and listened to speech after speech in which he was castigated for the consequences of this clause. Not a friendly voice did he hear, with the possible exception of his hon. Friend the Member for South Ayrshire (Mr. Sillars), and the right hon. Gentleman did not look particularly grateful for that. The Chancellor professed to be surprised, even shocked, by the consequences that were pointed out to him and the vehemence of protests made from the Conservative benches and from his own about the consequences of this clause. He said he would see whether anything could be done about it.

I do not believe that the Chancellor had failed to perceive what would be the consequences of this clause to forestry, farming, small businesses and charities. To no one with the intellect or the access to advice enjoyed by the Chancellor could these consequences possibly have come as a surprise. Just in case they did I want to do my best to encourage the Chancellor to take a harder look at what he is proposing.

For that purpose I want to tell him about 100 acres of woodland at Horsmonden in the Weald of Kent. Until not very many years ago those 100 acres supported only useless scrub. They did not look anything, and in productive terms they were quite valueless. But a man improved that land, and spent money draining it and planting it. He is a constituent of mine. He does not look for an immediate return, or even a medium-term return, from his investment. He is looking to the long term. Little of his planting will mature before the end of the century and, because some of his planting is oak—which does better in the Weald of Kent than anywhere else—another 100 years or so will have to pass before maturity. But, with the provisions of the clause, it is probable that none of it will mature, for the owner cannot afford to let that happen. It would add to the burden of taxation on his back which the low yield from his farming activities would not allow him to carry. His is not one of those broad backs to which the Chancellor, in his serialised Budget Statements and speeches this year, has so often and with such relish referred.

I hope that the Chancellor will give his mind to the threads that go to make up the story and look at what this land owner has done. He has taken something which was at the outset useless. To that he has applied capital and enterprise. He has, by the application of capital and enterprise, transformed this originally useless land to something which is now a burgeoning asset. It is an asset not just to him but to the countryside and the country as a whole, because he is growing something which is in short supply, for which the world demand, with an increasing population, is growing, and which is something which we already have to import in large quantities.

To do that he has devoted his money not to consumption, not to short-term expenditure, but to investment on the longest term. That is an example which the Government, on reflection, might perhaps wish to encourage. If it were followed throughout the private sector of industry many of our economic problems would be at an end.

What must the Government do to encourage the example of my constituent? It is pathetically simple. They have to do no more than allow him to pass the land on to his son, not without any tax, but upon fair and reasonable tax terms, so that his investment may mature in the hands of a member of his family. Is that wrong, selfish, acquisitive or unreasonable?

Why do not the Government do that? The ostensible reason is to be found in one of the earliest sentences of the Chancellor's first intervention last night, when he said that this tax was needed to ensure the equality of sacrifice without which we cannot meet the problems that confront us.

I wish to express my fervent agreement with what was said by my hon. Friend the Member for Kidderminster (Mr. Bulmer) about the inequality of sacrifice that the clause will impose. I ask the Chancellor what section of the community is being asked to make a sacrifice of anything in equal proportion to that which is being imposed upon land owners by the clause. But if there is to be no equality of sacrifice among producers, there is certainly to be equality of sacrifice among those who are recipients of gifts, or who are beneficiaries under trusts.

For example, a disabled person or a mongol child, fortunate among that unfortunate class in having been able to live at home because his parents have been able through their lifetime to support him, need not look for relief from the Government for a trust, or for a gift of capital, to enable him to continue to live at home and to be looked after, for there is no such relief to be found from this Government, the Government of such vaunted compassion.

I trust that the Chancellor, if he was taken by surprise at the vehemence of the protests uttered last night against this monstrous clause, will go away and think about it again.

The provisions of the clause remind me of a piece of indiscriminate bombing. Somehow, some time, somewhere, no doubt one of the bombs will hit the target intended. In the meantime a great deal of unnecessary and undesirable damage will have been done.

With the target which the Chancellor laid down last night I entirely agree. For greater accuracy I will quote from The Times report as the Official Report is not yet available. The Chancellor is reported as saying that:
"the first and overriding purpose of the tax was to make estate duty an effective tax.
No MP could object to making effective a tax which was universally agreed to be fair, which had been in existence for 80 years, but which had been avoided on a colossal and increasing scale."
The Chancellor had a defined target. What the legislation needed was discrimination in the way that that target was aimed at, and the bomb aimer should have been more accurate.

I do not agree with hon. Members who suggest that it is a good thing for the country that estate duty was a voluntary tax. How can that be justified? Because many of the people who should have paid the tax have not done so the rate of the tax has had to be higher. The tax threshold has been lower because many people who should have paid the tax dodged it, and those who dodged it were generally the wealthiest people who should, of all concerned, have paid.

For many years Government of all complexions have accepted that estate duty was a fair and just tax. Had it been levied properly we should not be in this situation now.

The hon. and learned Gentleman, drawing on his great legal experience, will, I am sure, concede that estate duty was not conceived as a gifts tax. That being so he cannot properly talk about avoidance, let alone evasion, if people chose to give away their property and not pay the tax. Will the hon. and learned Gentleman be more discriminating in his use of language?

It was stated, correctly, from the Front Bench that since 1910 a levelling-out of wealth has been intended. Because people have been allowed to get away with avoidance for so long the so-called middle classes have suffered. Wealthy people in the cities have put their speculative gains short-term into land to avoid taxes, and that is why our genuine farmers are now threatened.

The hon. Member for Ludlow (Mr. More) is a famed estate owner and a great authority on forestry. He looks after his woods with loving care. He is one of many people who are threatened because for years Governments have allowed people who have never seen a tree save from a car or a railway carriage window to put their money into investment companies to buy land as a means of avoiding this tax.

When a tax is imposed Parliament and successive Governments have a duty not to discriminate between taxpayers and to make sure that the tax is applied fairly. The Chancellor is now taking an excessively blunt weapon to try to deal with this matter and will crush many worthwhile people in the process.

5.0 p.m.

Surely the hon. and learned Gentleman's analysis cannot be correct. Death duties have been in existence for 60 or more years.

Well, for 80 years, and yet the high price of land about which he complains is quite recent. It did not happen between the wars and has nothing to do with the so-called avoidance of estate duty. It is quite different.

The hon. Gentleman's intervention reminds me of Mark Twain's advice to a young man: "Buy land, young man, they don't make it any more." There is a great deal of truth in that. It partly accounts for what happens in an inflationary society to the value of land, especially when tax concessions are given. One only has to own land by purchase for 10 minutes before one dies to get 45 per cent. death duty relief. Who can possibly justify that? That provision, with no limits to it, partly contributed to the high price of land.

I believe that the Chancellor of the Exchequer would be well advised to withdraw the clause and reconsider the matter. The whole subject of capital gains in a highly inflationary situation, together with the whole question of land, should be considered as an entity and not in separate sections, as we are considering it in this Bill and in other Bills. I believe that the Chancellor's main objectives are right, but what he is doing is quite different from what Lloyd George sought to do in 1910. He tried to curtail the excess amassing of wealth and to tax great property holdings because they brought with them sustained power and influence which was entirely due to ownership of property and not to the ability to create wealth. I can understand the attack that was made on the system at that time, and this country would not tolerate the vast unjustified inequalities of wealth which we had in the past, and to a considerable extent still have today. Nevertheless, I believe that there should be certain specific reliefs. It has already been pointed out that the tax will have a devastating effect on forestry. Lloyd-George in 1910 exempted forestry because he had a far greater knowledge of the rural scene than has the present Chancellor of the Exchequer, who no doubt has a far greater knowledge of the industrial scene than had his illustrious predecessor.

This tax could have a devastating effect on farming and farm units, and a much more careful look is needed at the proposed farming exemptions. I agree with the views expressed by the hon. Member for Caernarvon (Mr. Wigley) on the farming problem, and I would also grant concessions to genuine agricultural estates where there are genuine tenancies, but there would have to be an upper limit.

There should, clearly, be considerable changes in respect of charities and concessions to enable the national heritage to be safeguarded.

I am certain that the weapon adopted by the Chancellor in this clause is not worthy of him. What was necessary—and this should have been done years ago, and proposals on this score were not accepted by Conservative or Labour Governments—was that the loopholes in the tax system should be closed to make sure that the many systems of discretionary trusts, and so on, were brought under control. It should have provided that people who were intended to pay estate duty should have paid it and there should have been many and precise exemptions in the national interest. But the Chancellor with this proposed tax is bound to cause all kinds of troubles which no doubt he does not envisage or intend. It will cause hardships which, in the national interest, we should avoid.

I wish to support all that has been said by other speakers about the importance of our national heritage, and I wish to emphasise one or two points.

It is important that amenity land surrounding historic houses should be included in any scheme, and I also believe that the chattels within those houses should be covered in Clause 29 and, if necessary should be accepted by the Treasury in lieu of tax if kept in the house.

It is also important that the Historic Buildings Council should vet claims on tax exemptions. That council already has much experience in dealing with claims for assistance in the restoration of houses and would be the right body to deal with the matter. Furthermore, we should take the opportunity to put right the way in which value added tax discriminates against the repair and maintenance of historic houses. It is quite ridiculous that when a house is pulled down and a replica put in its place VAT need not be paid, but if the house is repaired VAT is imposed. That is one anomaly that should be cleared up, because the view now in all parts of the House is that we should as far as possible maintain the use of existing buildings rather than pull them down and rebuild.

I turn to the subject of forestry. I was a little disappointed to hear my right hon. Friend the Chancellor on one aspect of this problem. I agree that we should kill any attempt to dodge tax in this respect and, as has been said earlier, there has been speculation in land, but I should like to remind my right hon. Friend that it has been Labour Party policy for many years to encourage forestry. That involves the planting of further areas as well as keeping existing forests in being. We need a scheme in which the Government assist in planting without its being used as a way of speculating in land. More planting certainly needs to be undertaken.

My right hon. Friend's predecessor, Hugh Dalton, had a great love of trees and believed in the expansion of forestry, and in his Budgets allocated more money to the forestry authorities. However, we must recognise that we cannot meet the programme drawn up after the war to run to the end of the century, without a firm planting policy. The plan was that there should be a planting policy up to the year 2000, to reach 5 million acres inclusive of existing forests and their renovation. We are still a million acres short of that programme. We should be going ahead now to complete that programme by the year 2000.

Much should be done and can be done by the Forestry Commission, and if my right hon. Friend can put more money at its disposal, so much the better. But we should also welcome assistance from private capital and investment in forestry to help in the completion of that programme. If we can give assistance, as we rightly do, to hill sheep farming, we should give similar assistance to forestry farming. I am sure that a scheme could be drawn up to give comparable assistance to forestry using private capital, without at the same time allowing the abuses which have happened in the past in tax fiddling and land speculation. Therefore, I ask my right hon. Friend to look sympathetically at new planting of forests, because we need that extra million acres by the end of this century. We should take as much help as we can get in doing so from private capital.

Is the hon. Gentleman aware, as I am sure he is, that the future livelihood of 10,000 forestry workers not employed by the Forestry Commission is at stake on this clause?

I was coming to that point. I took the chair this week at a meeting at which we heard the views of representatives of many of these people. I agree with my hon. Friend the Member for South Ayrshire (Mr. Sillars), who said last night that whatever changes we make in the law now, we must think of the people working in private forestry, and avoid putting them out of work.

I remember, as a very young man, the disastrous May Committee set up by the Labour Government of 1929–31, which reported in favour of an enormous number of economies in those pre-Keynsian days. It was battles over that report which brought down the Labour Government. The succeeding National Government largely carried out those economies, one of which involved the destruction of vast numbers of young trees in nurseries ready to be planted. Planting programmes everywhere had to be drastically cut, by both the Forestry Commission and others. Bonfires were made of vast numbers of young trees.

We do not want another such bonfire, but planting programmes are being cut. Whether such trees are planted by the Forestry Commission or private interests, that is a national disaster. We need a positive approach. A great deal of our land is better used for forestry than for any other purpose. Much of the upland rushland, which can never make good sheep herbage, would be better devoted to this purpose. We should not attach too much importance to representatives of town organisations, like the Ramblers' Association, which do not like trees and are frequently anti-conifer fanatics. I am all in favour of mixed forest from the point of view of amenity, but from a national point of view much of our land is suitable only for conifers. By the end of the century 5 million acres of land actively producing timber will provide an important contribution to our balance of payments, which we shall always be able to use.

Without agreeing with the various tax fiddles which have taken place, I believe that constructive help to private forestry is needed. All over western Europe, private forestry has to have some government assistance of the sort that we give to hill sheep farming. I do not depreciate the great work of the Forestry Commission, which I hope will be expanded, but that does not preclude a positive approach to all sides of forestry.

If I had been able to catch your eye last night, Mr. Thomas, I would have made many of the points that the hon. Member for Dagenham (Mr. Parker) has made about woodland and agriculture, but many other hon. Members have already done so, so I do not propose to follow him in that. It is obvious from the speeches which we have heard in this debate, especially the magnificent speech, yesterday, of my right hon. Friend the Member for Finchley (Mrs. Thatcher), that the Chancellor does not have the political support to carry this tax unamended as regards woodland. I think that he realises that changes will have to be made.

I want to talk about something which has not been raised today—the effect of the tax on the building industry. Under our new rules, I should declare a prospective interest, having been asked to join the board of a building company. I have provisionally accepted, but it has not yet been finalised.

Those hon. Members who know the industry will know that building firms are normally small and local, doing a number of different things—usually family businesses. Very few industries—agriculture, of course, is another example—are so family based. A number of hon. Members have used the phrase, "when we go into Committee" but since we actually are in Committee, it will not be unreasonable, I think, to mention a couple of factual points to assist the argument.

5.15 p.m.

There are basically six components in what is loosely known as the construction industry. The first comprises very large general contractors dealing with all sorts of building and civil engineering work. In April 1970, only 78 firms out of 73,400 in the whole country employed more than 1,200 men. The second component consists of substantial firms employing between 600 and 1,200 men, of which, in April 1970, there were only 132. Third, there are medium-sized firms employing between 115 and 600 men, of which, in April 1970, there were 1,053. Fourth, there are small firms of general builders employing between 14 and 114 men. There were 10,738 such firms at that time. The fifth component consists of the very small firms employing between two and 14 men, of which there were 21,000. Finally, there are the self-employed people working on their own—not "Jumpers" but such people as village carpenters—of whom there were 20,355.

Those figures clearly show that the building industry is made up overwhelmingly of small firms employing very few men—basically family businesses. This tax will have an absolutely ruinous effect on the industry's structure unless it is changed. The Chancellor may disapprove of the structure of the industry, but he should not try to change it, by fiscal means, without a proper explanation to the country. That is what will happen. I want to give three examples of the effect of the tax.

The first example is that of a medium-sized building firm operating near London, worth just over £1½ million, which has been earning annual net profits in the two most recent years of £104,000. It employs more than 400 people. If the chief proprietor were found to own two-thirds of the business and to have outside possessions—residence, furniture, private investments, and so on—of no more than £40,000, the capital transfer tax scale in the Bill would entail a tax, on his death, of £630,000, the proportion attributable to his share in the business being £606,000.

To meet a liability of £606,000, quite apart from any charge for interest incurred by his executors, would thus almost fully absorb his entire share of the profits—nearly £70,000, assuming them to continue at the current level—for between eight and nine years. I need hardly stress the practical impossibility of withdrawing funds on anything like that scale when the need will be to plough back large sums for investment and to finance stock appreciation. In fact, more than 90 per cent. of the book profits of that firm have been ploughed back over the last few years.

My second example is that of a rather smaller firm, employing 230 people, which is worth £530,000 or so and has average annual profits of £31,000. The tax payable on a two-thirds share of the firm as part of the estate of a proprietor with £40,000 of outside possessions, which would come to £180,000, would once again amount to between eight or nine times the entire yearly net profits earned by that proprietor's stake in the business.

My third example is that of an even smaller local building firm, with 75 employees, worth about £90,000, which has been yielding profits between £4,000 and £5,000. Even in the lower reaches of the CTT table of rates, a two-thirds proprietor's share in the business would give rise to a tax bill of almost £17,000, which would absorb nearly six times his yearly share of the net profits. Those are all absolutely ruinous figures. It would mean the destruction of those businesses and lead to a basic change in the structure of the building trade. This tax has not been thought through, or discussed, or examined and it cannot be made to work.

Small building firms are the firms which repair people's houses, which build houses in small numbers, and which do the small jobbing work on local houses which is so essential. If, by compulsion, because of this tax, small building firms are merged with bigger firms, that sort of work will not be undertaken, because it does not appeal to the larger building firms. That is why the tax must be changed. It is a bad tax. I shall have the greatest possible pleasure in opposing the clause.

You asked me to be brief, Mr. Thomas. In response to your request, I shall be as brief as I can. I shall achieve that by trying to avoid going into some of the very important points of detail here, partly because we shall be going back to them in Standing Committee.

We need a great deal more clarification from the Chancellor on some major points of principle concerning the clause and the capital transfer tax in general. Even before this Government came into office, as the Green Paper introduced by the Conservative Government made clear, we had the highest burden of capital taxation of any developed country and no doubt of any country in the world. Whether it is measured as share of gross national product, share of total taxation, or taxation per head, we had the highest burden. Therefore, why has the Chancellor thought it right, or proper, or necessary, either economically or socially, to increase this burden still further, not merely by the capital transfer tax but also by the proposed wealth tax?

Why this particular capital transfer tax? We know that there were defects in the old estate duty. That is why the Green Paper was produced. Some of those defects or loopholes were not of great consequence. Others were serious imperfections in estate duty, which could be rectified, and the Green Paper pointed out ways of doing this.

We now have something which goes far beyond that. When the Government's programme goes through completely this will be the second fresh instalment in a multiplicity of taxes on capital. To these should be added the surcharge on investment income. In the last century there was a great argument on the question whether the tree, the capital, or the fruit, being the investment income, should be taxed. Here, both the tree and the fruit are taxed heavily.

On the subject of trees, because of the time factor I shall not follow the points which have been made about the damage to forestry. It will be very serious. This is symbolic. It is very often said of private companies with great truth—
"Tall oaks from little acorns grow."
Here, the Chancellor is not merely clobbering the private companies. To show what he is doing he is clobbering the symbol as well and trying to cut down the oaks and, indeed, destroying the acorns and the saplings in between.

We need to know why this tax has been introduced. We have had no sort of explanation. The right hon. Gentleman has given us a number of reasons which justify the idea of a capital transfer tax, perhaps, but quite why we need a wealth tax and a capital transfer tax we have yet to be told.

Many of my right hon. and hon. Friends will not agree with me on this, but I think that there is a reasonably strong case for a wealth tax at a modest rate on all wealth, subject to certain exceptions, in replacement of all other taxes on capital, including the capital gains tax and the surcharge on investment income.

The question arises—why the capital transfer tax, and why the capital transfer tax at this swingeing rate? We must ask whether the Chancellor really knew what he was doing—whether he changed his mind after the Budget Statement, or what happened. In the Budget Statement he referred to the capital transfer tax, naturally enough, and said:
"I therefore propose to introduce this year in my second Finance Bill a tax on lifetime gifts … but the rates will not necessarily be as high as in estate duty."—[Official Report, 26th March 1974 Vol. 870, c. 313.]
Anybody hearing that was entitled to assume that the right hon. Gentleman was talking about the rates on gifts. It now turns out that he was talking about nothing of the sort. It appears that he was talking about the rates on the diminution in the value of the donor's estate, that diminution taking into account the tax payable. This is not a tax on the gift at that rate. This is a tax on the gifts plus the tax. In other words, the rates of tax on the gift itself are far higher than the estate duty rates.

The estate duty rates were as high as they were because it was understood that they applied to only a proportion of a deceased's estate, because he would give a certain amount during his lifetime and the tax would be on the remainder. This is a totally different concept and it is therefore wholly inapplicable to say that if those rates were appropriate to a certain proportion of the estate, they, let alone much higher rates, as these are, are applicable to the lot.

As the hon. Member for Welwyn and Hatfield (Mrs. Hayman) rightly pointed out, the Chancellor said in his White Paper that the treatment of charities under this tax would be no less generous than the treatment accorded them under the existing estate duty legislation. This is manifestly not so. It has been demonstrated that the treatment of charities in this legislation is far harsher than under the previous estate duty legislation. The Chancellor, who, I see, has the White Paper, will find that that statement is in it, categorically and unequivocally.

How was it possible for that statement to be made and for a Bill then to be introduced on totally different lines? Was the Chancellor unaware of the change, or did he change his mind? The Committee is owed an explanation. The fact that the right hon. Gentleman last night announced that he intends to make some concessions to charities—which I welcome—proves my point.

I move on to the question, what lies behind the tax itself? This is an attack on private property of all kinds. It is a total attack on private property, which will wholly alter the type of society in which we live. It is also an attack on the family. It is specifically an attack on the family business—the combination par excellence of the family and private property as represented by the family business. It has been pointed out that this tax will make it impossible for a family business to go beyond one generation. If a business cannot go beyond one generation, most people will not think it worth while to build up a family business.

I fully realise that many Labour Members will welcome this and would like to see the end of the private company, the end of the family business, and, indeed, the end of all private property of any significance. I do not believe that the Chancellor and some of his colleagues share those views. My reason for not believing that the Chancellor shares those views is that he has made speeches about the need for a vigorous and thriving private sector.

5.30 p.m.

I cannot believe that the Chancellor shares those views, but he must answer this question: is it his intention to create a Marxist economy and a Marxist society in place of the mixed economy and the society which we now have? If that is his intention, we can readily see what is behind the Bill. If it is not, he must reconsider this clause, because that will be the effect of it, whatever his intention, fairly soon. It is possible that there will not in fact be too serious an effect, since I do not expect the present Government to last beyond this Parliament, after which a Conservative Government pledged to repeal the tax, will come in and certainly do so. But if the tax were to continue for longer than the lifetime of this Parliament it would undoubtedly have the effect which we have described. Is that what the Chancellor wants?

The Chancellor said that he wanted to avoid distortions, but he has introduced a new distortion here, because it is only the transfer of material capital which gives rise to the tax. That gives an incentive for distortion, for wealthy people, if any such still exist, to buy for their children the most expensive form of private education they can find—perhaps the Chancellor wants that—so that their earning power may be increased. That form of investment in their children will not attract this punitive tax, whereas any other form of investment will. Does the Chancellor welcome distortion of that kind? That inevitable consequence was pointed out by Professor Harry Johnson, of whom, no doubt, the right hon. Gentleman has heard.

The Bolton Report confirmed—if confirmation were needed—the importance of small companies and private companies in our economy. We all know how much better industrial relations are in small companies and private companies. Does the right hon. Gentleman deny that? Does he want to do away with it? Does he want to destroy this form of company?

As for the family, I put one point to the Chancellor, and I am sure that the hon. Member for Bolsover (Mr. Skinner) will be with me here. The Chancellor talked last night of his great attachment to widows, telling us how he was trying desperately, through this tax, to help widows, of whom he was fond and for whom he had such genuine concern. How many hon. Members are aware that, under this proposed tax, if one of them were to invite his widowed mother to make her home with him, saying, "Do not be alone in your old age; we shall have you with us and look after you", he would be liable to be taxed on the rent he would have charged his widowed mother, had he charged her a market rent? There could be no more direct attack than that on the very concept of the family.

I come now to the question of avoidance and evasion. I shall not go into matters of avoidance. The Chief Secretary is a well known expert there, and he will no doubt be able to tell us whether or not the tax avoidance advisers will get the better of the Bill. I do not know. What I do know is that this tax will lead to evasion on a massive scale. It is a form of tax which is easy to evade. The Government know that. That is why they have introduced a sort of snooper's charter into the Bill. They want taxpayers' professional advisers to snoop and help the Government.

It is an easy tax to evade, and it will be evaded. It will lead to a deterioration in tax morality. What is more, those who evade the tax will have support not from me but from the Government. I remind the Committee of what the Secretary of State for the Environment said on 6th November last, when he defended what the Clay Cross councilors had done, saying that the Housing Finance Act
"infringed the tacit agreement as to what is permissible and what is not … it offended a basic sense of natural justice"—
adding that he had
"never known an Act of Parliament which so outraged the feelings of large numbers of moderate councillors up and down the country."—[Official Report. 6th November 1974; Vol. 880, c. 1077–81.]
There will be a feeling of outrage about this tax among a great number of people—many more than there are councillors in this country. There will be a feeling of offence against natural justice, of offence against the basic instinct of human kind—the desire to own property, the desire to have independence, and the desire to help fellow members of the family. This tax will be felt to be contrary to natural justice and contrary to humanity. That is why it will be evaded. I ask the Chancellor to think again and to withdraw this clause and the tax, pending further consideration.

Like the Chancellor of the Exchequer, I have been here day and night on this Bill, and, in a way, I regret that the member of the new triumvirate who has just joined us, the hon. Member for Luton, West (Mr. Sedgemore), is at this stage not allowed to participate in the debate. I hope that he will be able to catch the eye of the Chair at some stage.

Without doubt, Clause 17 is to be regarded not just as a provision in the Bill but as a parting of the ways for this country. Having heard what hon. Members on both sides have made clear to the Chancellor, I am convinced that it will be the great divide, as was said late last night, between a mixed economy and an economy falling more and more under the control of one small and diminishing group.

I am interested in forestry, but I am far more interested in the social effect which the tax will have on the country as a whole. Already in the newspapers it has been called penal or Draconian. To call it a Draconian tax is an insult to the memory of the tyrant Draco. Draco at least made himself famous by introducing the death penalty for idleness. This tax will introduce a major penalty for the industrious. The idle shall glory, and the industrious shall suffer. That is what this is all about.

The proposals made by my right hon. Friend the Member for Finchley (Mrs. Thatcher) and my hon. Friend the Member for St. Ives (Mr. Nott) should have the most serious consideration—either drop the tax or put it back to be properly looked over and worked out, with proper consultation.

Yesterday, one excuse given by the Chancellor for not following the excellent proposal made by the Liberal Party—that the recipient of the gift rather than the donor should be the taxworthy party—was administrative inconvenience. He chucked that proposal out, on the ground of the Treasury's fear of administrative inconvenience.

Let the knights of the Treasury—this applies to the Treasury under both parties—consider who it is who suffers. It is not they who suffer from administrative inconvenience. The ordinary industrialist in this country has been suffering that inconvenience over the past 25 years.

Yes, under both Governments—and under a Liberal Government even more, if there ever was one. During the past 25 years there have been no fewer than 420 major changes in company taxation in this country. In Germany during that period there have been 20 such changes. In America there have been about 40. I sometimes think that the Treasury is inhabited by gremlins or harpies, with the privilege, throughout the ages, of power without public responsibility. To say that the Government cannot move because of administrative inconvenience is the last resort of a political knave.

I turn to the question of what faces the country today. I believe that this tax, masked though it is by the case of the rich widow, or by this or that concession, will eventually move inevitably to the creation of a great division between those who wish to acquire wealth and those who wish to spend it as fast as they get it. I believe that in order to make democracy function properly, all political parties must aim not to achieve the nationally divisive. It may be blamed on my party that there has been a confrontation with the trade unions, but if we are now going to have a confrontation from the other side with those who wish to put by for their families, the whole system of democracy in this country may well be undermined. I take no less serious a view of the situation than that.

Today, we see an economic situation which, however optimistic one may be, seems somewhat out of control—a situation in which the people are inebriated with inflation, and companies are horrified for the future, where the talk is of eat, drink and be merry. We have a sort of economic Balthazar's feast, and now we have the writing on the wall, if this Bill goes through. "MENE, MENE, TEKEL, UPHARSIN". I believe that this is one of the great issues in the history of our country, as the Chancellor said last night. I believe that the aim of a political party, the aim of society, the aim of the House of Commons, is not to proletise the people or to embourgeois them, but to try to ennoble those things which are in the human spirit, and that consists of the reward of energy, initiative and drive. It is for this issue that the Tory Party will fight and fight and fight again.

I would not aspire to reach the heights of oratory which were attained by my right hon. Friend the Member for Stafford and Stone (Mr. Fraser), and for that reason I shall, like other speakers, make my remarks brief. I am concerned with the effect of the tax on Scotland. The tax, or its effects, may amuse the hon. Members for Bolsover (Mr. Skinner), Keighley (Mr. Cryer) and Luton, West (Mr. Sedgemore), who have just arrived, but I can assure them that it is no laughing matter in Scotland. I wish to deal briefly with the subject of forestry. Scotland possesses about half the United Kingdom's total of forestry, and half of that is in private hands. It gives direct work to about 20,000 people in Britain and can give indirect work to about 200,000. We know that, taking the top possible limit, the life of softwood is 75 years and of hardwood up to 150 years. That is three and six generations respectively, and three and six times that such owners will pay tax.

Only recently the House was talking about the problem of beef producers who could not change in three years from beef to cereals, as is possible in such industries as textiles, of which I have a passing knowledge. In forestry, the change would take a generation, and that is totally and utterly impossible. This country pays a £2,000 million import bill for forestry products, and it is disgraceful that, of all European countries, Britain has the third lowest percentage of acreage under trees, when Scotland should have the highest percentage.

5.45 p.m.

I need not go into the question of amenity and conservation, which has been dealt with by other speakers. However, the very thought of this Bill has hit at morale and the thoughts for the future of those in the industry. Already, in my constituency an order for 50,000 young trees has been cancelled, and forestry workers are worried about their prospects.

There is one dangerous point about this legislation. Even if it is not implemented—even if it only goes as far as the draft Bill—that has been enough to make people think about their future. If the proposal has reached the stage of a draft Bill now and goes no further, within two decades from now it could still reappear and become law, and where would that leave the forestry industry?

Does the hon. Member agree that a Scottish Government would not do to forestry what the United Kingdom Government are seeking to do now?

That would depend entirely on the calibre of the Scottish Government and on which party formed that Government. If it were the party which the hon. Member represents I could not hazard a guess what would happen, because he and his hon. Friends have different policies depending on which of the two main parties they belonged to initially.

I wonder about the drafting of the clause. What will it do for small companies, charities, agriculture and forestry? Are these points left up to the draftsmen, or do the politicians provide the leadership? In other words was the Bill drafted by fools or knaves? Was it drafted by morons or Marxists?

In the past we have all agreed that agriculture—it is even more the case with forestry—must not become a political football. In its present form the clause is too bad to amend. The Chancellor must take it back and rethink the whole issue.

I do not know whether I qualify under the strictures delivered on my party by the hon. Member for Aberdeenshire West (Mr. Fairgrieve), but I can put my hand on my heart and say that I came from neither of the parties that he mentioned. I joined the SNP directly, and it is the only party I have ever belonged to.

I should like to clarify a matter which was not directly touched upon by my hon. Friend the Member for Moray and Nairn (Mrs. Ewing) last night. The Scottish National Party wants to see the gap between excessive riches and extreme poverty narrowed. If it could be abolished I am sure that that would suit the majority of the Scottish people. In the sort of world we live in, however, I do not expect that to happen until the Day of Judgment, when we expect that the rich will be sent empty away. In any case, you cannot take it with you.

It is interesting that all the bodies which have approached me on the subject of the tax have agreed that there should be some form of tax on inheritance, so that it would appear that everybody is in favour of some sort of tax. I do not share the sentiments expressed by some Conservative Members because I am not on the side of the great land owners. There are plenty of hon. Members in the House who will speak for them. I came here to speak for the ordinary folk of Galloway. I have not looked up the history of my constituency, but I should not be surprised if I were the first person out of the common folk of Galloway ever to have represented that constituency in the House. In other words, I speak for the people who could not give their daughters a marriage gift of £5,000. Indeed, I speak for many people who could not give them 5,000p.

I have another advantage in speaking in the debate, which is that I have been a forest worker. For seven years I was a servant of the Forestry Commission, for two years as a labourer, when I earned about £6 a week. That was in about 1953–54. When I left the commission's service in 1960, having worked as a humble forest surveyor with a compass and chain, I was earning, as a ganger, the princely sum of £13 a week. It is for the forest workers that I want to speak. I compliment the hon. Member for South Ayrshire (Mr. Sillars) on his spirited defence of them last night.

It has be said that loopholes needed to be plugged, and that there has been speculation through forestry. Unfortunately, if I had to choose between some speculation and jobs for my friends in Galloway, and no speculation and no jobs, I should have to tolerate a little speculation—but I hope that the Chancellor will find a way to stop the speculation and continue the jobs.

If it is a case of the great estates gradually falling to pieces, I hope that the Government will see to it that when farms go on to the market there is a way to provide capital for young men who want to farm them themselves, and that there will not be an excuse for investors who do not know one end of a cow from another to buy the farms.

I hope that I may congratulate the Chancellor on his assurances of last night about forestry. Being a forest worker is a contemplative occupation, because one person plants and somebody else reaps. It is only right that the crop should be taxed once in the rotation.

I also hope that the Chancellor's rather short night's sleep will have allowed him to sleep on his assurances, and that he will be able to tell us more about them today. It is his final attitude to farming, forestry and small businesses that will determine my attitude to the Bill tonight and in its final stages.

There have been excellent speeches in the debate, both last night and today. Mine will not be of that calibre, but I know something about some of the matters which have been mentioned.

My interest, which I must declare, is that I have a small business. It was started by my grandfather, and my son is now a partner in it. I have, I hope, a fifth generation coming along. The business is representative of many small firms throughout the country giving employment to 40 to 100 people. The death knell for these small businesses would mean the destruction of employment in the countryside and of the whole of our way of life there.

I also have a forestry interest, in that I have a part in the management of seven or eight estates in Norfolk, all of which have many small woodlands. Despite what many people have said, these wood lands are given over to hardwood production. I doubt whether they are run for profit. They are certainly not run for tax evasion. They are beautiful, and make quite a difference to the landscape, as do the beech woods in Gloucestershire. If we see the hardwoods felled all over England, the countryside, which hundreds of thousands of people from America come to see, will be totally changed.

Like the hon. Member for Galloway (Mr. Thompson), I have worked in woodlands, but I was not paid to do so. When I was a prisoner of war I went to work digging up tree stumps in the woodlands. It was probably the hardest work I am ever likely to do, but it was also the most pleasurable I have ever done, because it meant getting outside the barbed wire.

The Forestry Commission and the private woodlands in my part of the country work hand in hand. They both employ excellent workers, many of whom we saw here the other day. Those workers and the farm workers are some of the best workers in the land. I entirely agree that their pay, which is low, is by no means enough. They are fine men and skilled men. Anyone who has to fell trees, trim trees, plant trees and look after them, or to look after the machinery on small farms, including corn machinery and harvesting machinery, which now costs many thousands of pounds, must be highly skilled.

The lack of confidence engendered by the new tax is extraordinary. Representatives of the National Farmers' Union's Norfolk branch today told the Norfolk Members that that lack of confidence is leading to a drastic cut in investment in farming. That will mean a cutback in food production, when we want every ounce of food that we can grow in this country to improve the balance of payments by saving on expensive imports. In my part of the world we need investment in new or improved sugar beet factories, and we need to grow more sugar beet.

If many small farmers have to sell up, and cannot pass on their farms to their children, confidence in the industry will be reduced, and in due course that lack of confidence will spread throughout the countryside.

The keen interest that the Chancellor has taken almost throughout the debate has convinced me that he did not realise the full damage that the tax would do. In fact, he admitted that it would do far more damage to forestry than he had thought. Therefore, I ask him to reconsider the clause and, if necessary, present it again, but after full consultation with those who know what they are talking about in the various branches of this great countryside industry.

6.0 p.m.

I shall not weary the Committee with a long speech after the many long hours of debate. After listening to many of the speeches I feel that I have heard a similar theatrical performance elsewhere. I have in mind the spine-chilling third act when the felling of the orchard takes place in Chekhov's play "The Cherry Orchard". We all know the symbolic importance of that act as the precursor to the Russian Revolution.

I am delighted that my right hon. Friend the Member for Finchley (Mrs. Thatcher) has made the commitment to repeal this vicious confiscatory tax. At least we have a spark of hope from that promise. I shall not attempt to summarise the excellent speech of my right hon. Friend the Member for Farnham (Mr. Macmillan). However, I shall try to summarise the underlying attitudes of the angry middle-class workers who have recently, in myself, acquired—I hope—a modest person to articulate at least some of their views, despite the highly significant jeers from the Labour Members accompanied by the sneers of the Chancellor of the Exchequer. Those sneers will not go unnoticed in the country outside.

The hon. Member for Luton, West (Mr. Sedgemore) asks, "which country?" The question that we shall be dividing on is simply whether we believe in a collectivised society—a society in which the individual counts for nothing and the State for everything—or in a free society, in which invention, thrift and ingenuity can germinate at the grass roots of industry and society and grow from one generation to another, from self- employed units to much larger units embracing organised unions.

This is a pernicious, damaging and malicious clause, which will do a whole range of things to change the face of our society. It will destroy the mobility of ownership, it will encourage the squandering of growing resources before they have ever grown beyond the seedling stage, and it will result in the pre-emptive nationalisation of emergent new small businesses belonging to self-reliant and self-employed people before they have even had a chance to come to fruition. It will drive into exile skilled and trained talent from our society. That talent will seek its livelihood in other parts of the world. It will strangle charity, assassinate thrift and smother all undeveloped initiative and invention.

Who wants to invent things to be put on the market in a country which will grab them whenever there is a transfer of ownership? I can think of few occasions when I shall go into the "No" Lobby with more determination. I shall be determined to reject an abhorrent and obscene offspring of humbug and malice which has been conceived in almost total ignorance, and certainly by the ignorance of back-bench Labour Members.

My hon. Friend the Member for Hendon, North (Mr. Gorst) spoke with eloquence and anger. I have heard every speech in this debate and I now feel more angry than when I entered the Chamber last night I have no interest to declare in a business that I own or might inherit or any acres that I might inherit. I have none of those things. Labour Members should get rid of the folk myth that Conservative Members come only from rolling acres. We do not. Many of us have backgrounds no more affluent than those of many Labour Members.

I wish to dedicate my political life to advancing various propositions. One of them is that there can be no freedom without economic freedom. That means the freedom to earn and to own, to give and to save and to prosper.

I have always been unhappy about the principle of estate duty. I must make that plain. What has been taxed during life is plundered at death. CTT does away with one of the more gruesome acts of plunder. We welcome that for widows, for example, but up to now people have been deluded. Some have given this tax a welcome that it does not deserve. I hope that the forceful and eloquent debate that has taken place over the past many hours will dispel any illusions that people may have. This is the most penal fiscal measure ever to be laid before the House. It is the most dramatic illustration of the Government's revolutionary concept of taxation. Its purpose is not to raise revenue but to change the whole structure of society. This is government by confiscation on a scale that is unknown this side of the Iron Curtain.

Last week in Committee on the Finance Bill I referred to the Government as the scourge of the saving classes. Today we see Clause 17 cast success as a deadly sin and make a virtue of envy. The Government's motto is to punish the thrifty, smother the inventive and outlaw the man of enterprise. Can those be the aims of men of sensitivity? I accept that there are men of sensitivity on the Government benches.

There are not many here. When we consider the present company it would be extremely difficult to name them.

There are in the Chamber people who revel in the destruction of what has taken lifetimes to build. I have a fundamental belief in British democracy, and I cannot imagine that there is a true majority on the Government benches who would see that best of ambitions, the striving for one's family, made an unfair practice.

It is one thing to tax a man's earnings and to tax all his transactions, but it is quite another to say that he shall be discouraged from using the fruits of his success to build a stake in society, to maintain his business and to give security to his family. It is a curious logic to proclaim, as the Chancellor has done, a belief in a mixed economy and to bemoan the level of investment in industry, and then to urge the use of what I would describe as a fiscal blunderbuss to those who take heed of what has been said.

It is strange too for those Labour Members who often and rightly decry the more materialistic aspects of modern society to erect a tax system which will effectively destroy the desire to save and invest in objects of lasting worth. The worker who receives £3,500 a year—there are many of them these days—and who fills his house with trashy perishables, spending his substance on passing fancies, is to be prized above the man of care, taste and discrimination who saves for his family and who might, through taste and discernment, acquire possessions which appreciate in value. The spendthrift might find comfort in the bosom of a Socialist Brittania, but the Government are impaling the saver on the trident.

I cannot believe that the clause could be the calculated design of any true British Government. Are they totally in the grip of those who would wreck the social order so that from the ashes of a mixed economy a Marxist Valhalla may be built? If it is fairer opportunities and greater equality that Labour Members want, the opportunity to aspire to nobler things as my right hon. Friend the Member for Stafford and Stone (Mr. Fraser) so eloquently said, we should offer greater equality to enjoy the best in life.

In the estimation of certain Labour Members, that might involve the taxing of gifts. I see the Patronage Secretary—it is rather unusual to see him here at this stage of the day—nodding his head. It might be necessary to involve the taxing of gifts in the estimation of Labour Members; it might be necessary to tax wealth. If that is necessary, however, they should look for examples of how to do it to the west of the Iron Curtain and not to the east of it. There may be philosophical objections, and very strong objections, which I share, to the very principles of this tax, but at least if we are to have it I hope that the Chancellor will heed the many pleas which have been made from the Opposition on behalf of forestry in particular, an industry which is of paramount importance to this country and which will be killed within a generation unless there are true concessions.

I hope, too—the Chancellor gave some indication last night—that our national heritage will be safeguarded. My hon. Friend the Member for Bristol, West (Mr. Cooke) spoke eloquently about that in our debate last night. By safeguarding that heritage, another of our prime industries—tourism—would be safeguarded. But although there are millions of people who can visit our stately homes and admire our woods and beautiful countryside—and long may they be able to do so—there are millions who wish to save and prosper on their own account, to found their own businesses and to carry on the traditions that have been left to them. If this tax is passed, in its present penal and confiscatory form, they will have no tomorrow to which to look forward and we shall have a peculiar mixture of the peasant economy and the corporate State erected on the ruins of the present Government's financial policies. This country will become what Turkey was in the nineteenth century—the sick man of Europe.