Amendment made : No. 110, in page 35, line 6, leave out 25th ' and insert 26th '.—[ Dr. Gilbert.]
|stated in paragraph 5 below are satisfied, then, if the person liable for the whole or part of the tax so elects—|
|(a) the value of the trees or underwood shall be left out of account in determining the value transferred on the death; but|
|10||(b) tax shall be charged in the circumstances mentioned in paragraph 2 below in accordance with paragraph 3 below.|
|(2) An election under this paragraph must be made by notice in writing to the Board within two years of the death or such longer time as the Board may allow.|
Tax chargeable on disposal of trees or underwood
|15||2.—(1) Subject to the following provisions of this paragraph, where, under paragraph 1 above, the value of any trees or underwood has been left out of account in determining the value transferred on the death of any person, and the whole or any part of the trees or underwood is disposed of, whether together with or apart from the land on which they were growing, then, if the disposal occurs before any part of the value transferred on the death of any other person is attributable to the value of that land, tax shall be charged in accordance with paragraph 3 below.|
|(2) The person liable for the tax chargeable under this paragraph shall be the person who is entitled to the proceeds of the sale or would be so entitled if the disposal were a sale.|
|25||(3) Sub-paragraph (1) above does not apply to a disposal made by any person to his spouse.|
|(4) Where tax has been charged under this paragraph on the disposal of any trees or underwood tax shall not again be charged in relation to the same death on a further disposal of the same trees or underwood.|
Basis and rate of tax chargeable under paragraph 2
|30||3. Where the value of any trees or underwood has been left out of account in determining the value transferred on the death of any person and tax is chargeable under paragraph 2 above on a disposal of the trees or underwood, it shall be charged on the following amount, namely,—|
|35||(a) if the disposal is a sale for full consideration in money or money's worth, on the net proceeds of the sale; and|
|(b) in any other case, on the net value, at the time of the disposal, of the trees or underwood;|
|40||and at the rate or rates at which it would have been chargeable on that death if that amount, and any amount on which tax was previously chargeable under that paragraph in relation to the death, had been included in the value transferred on death and the amount on which the tax is chargeable had formed the highest part of that value|
Credit for tax charged under paragraph 2
|45||4. Where a disposal on which tax is chargeable under paragraph 2 above is a chargeable transfer, the value transferred by it shall be calculated as if the value of the trees or underwood had been reduced by the tax chargeable under that paragraph.|
Conditions of relief
|50||5.—(1) The conditions referred to in paragraph 1 above are that the deceased either was beneficially entitled to the land throughout the five years immediately preceding his death or became beneficially entitled to it otherwise than for a consideration in money or money's worth and, subject to sub-paragraph (2) below, that—|
|(a) if the land is situated in Great Britain, the land is managed in accordance with a plan approved by the Forestry Commissioners under a forestry dedication covenant or forestry dedication agreement within the meaning of the Forestry Act 1967; and|
|55||(b) if the land is situated in Northern Ireland, either a grant with respect to the land has been made under section 2 of the Forestry Act (Northern Ireland) 1953 or the land is managed in accordance with a plan approved under section 3(l)(c) of that Act in connection with the Planting and Maintenance of Woodlands Scheme administered by the Department of Agriculture for Northern Ireland for the purposes of those sections.|
|60||(2) In the case of a person dying before 1st January 1976 paragraphs (a) and (b) of sub-paragraph (1) above do not apply and, in the case of a person dying before 1st January 1981—|
|65(a) the condition in sub-paragraph (l)(a) shall be deemed to be satisfied if a forestry|
|dedication covenant or a forestry dedication agreement in respect of the land has been offered to the Forestry Commissioners and the offer has not been refused; and|
|70||(b) the condition in sub-paragraph (l)(b) above shall be taken to be satisfied if a grant has been applied for or a plan for the management of the land has been submitted to the Department of Agriculture for Northern Ireland for approval and the application or approval has not been refused.|
|6.—(1) In this Schedule—|
|(a) references to the value transferred on a death are references to the value transferred by the chargeable transfer made on that death;|
|75||(b) references to the net proceeds of sale or the net value of any trees or underwood are references to the proceeds of sale or value after deduction of any expenses allowable under this Schedule so far as those expenses are not allowable for the purposes of income tax; and|
|80||(c) references to the disposal of any trees or underwood include references to the disposal of any interest in the trees or underwood (and references to a disposal of the same trees or underwood shall, where the case so requires, be construed as referring to a disposal of the same interest).|
|(2) The expenses allowable under this Schedule are, in relation to any trees or underwood the value of which has been left out of account on any death,—|
|85||(a) the expenses incurred in disposing of the trees or underwood; and|
|(b) the expenses incurred in replanting within three years of a disposal to replace the trees or underwood disposed of; and|
|(c) the expenses incurred in replanting to replace trees or underwood previously disposed of, so far as not allowable on the previous disposal.—[Mr. Joel Barnett.]|
Brought up, and read the First time.
I beg to move, That the schedule be read a Second time.I referred to this schedule one night last week and told the House broadly what it was intended to do. Since what I said on that occasion is available to hon. Members in the Official Report, it may be as well for me to leave it at that, to allow hon. Members to move the amendments which they have tabled to the schedule, and to reply to those.
The House will welcome the fact that some relief has been made for forestry, and, although I shall be critical of the exact nature of the relief included in the schedule, any crumb of bread is better than no loaf at all. This is a small step in the right direction.It is appalling that a totally new tax regime for an important industry like forestry should have been decided as a result of two short debates in the small hours with no consultation with the industry concerned. Instead, we have a schedule slapped down on Report which, under the timetable, it is impossible to probe in depth or to seek to amend in such a way that amendments could be made, because there is no further parliamentary consideration of this schedule after today. I am certain that the Government will have to come back to this House with a new proposal for forestry. I do not know whether the Ministry of Agriculture has been consulted. I am sure that the tree-growing interests have not been. If we are to decide our tax affairs in this way, we court disaster by getting them wrong. Even at this late stage, I urge upon the Chief Secretary some amendments which he would do well to accept so that some confidence may return to this industry which was hit by a sort of taxation tornado when this wretched Bill was first published. Let me make it clear first that the Opposition have never sought to find loopholes through forestry. I made that clear on several occasions in Committee, as did others of my hon. Friends. We are seeking a régime in which forestry can operate profitably and successfully and can expand. We do not seek to open up ways of avoiding the tax for those who are not foresters. I wish that the Chief Secretary had not made the accusation which I heard last week in one of the interminable debates which we had. I know of no occasion when anything said from the Opposition benches can be open to that charge, and nothing which I say now is intended to open a loophole for anyone other than genuine foresters. It was unfortunate that the Government should send a copy of this charming letter from the Minister of State, Department of the Environment to all hon. Members. It reads :
I can continue the ditty : "Plant a tree in '73, plant no more in '74, cut em' alive in '75." That will be the result of this piece of legislation. I turn now to the amendments which I think should be the substance of this short debate. First, the amendments are not entirely as they were put down. Many of my right hon. and hon. Friends' names have been removed leaving my name against practically all, some of which 1 did not put down. However, I am happy to shoulder the burden for all the amendments which carry my name, although I had asked that some be taken off the paper. I hope that the Chief Secretary will not make any points about the curious collection of amendments under my name. I believe that there has been a printing mistake of some magnitude. I make no complaint. I am merely explaining what I think has happened. The first group of amendments is perhaps best represented by Amendment (a), which deals with whether the value of the land upon which the forest grows should be exempt. We discussed this point in Committee. The Chief Secretary rather brushed it aside by saying that he did not believe that forestry land was worth anything, so it was not any great hardship to pay capital transfer tax on the value of forestry land. I said at the time, and I repeat, that forestry land can be worth a great deal. I think that in the West of England there are values of between £50 and £200 per acre for forestry land. I have been making some inquiries. In some areas with forests the land could be worth £300, £400 or £500 an acre. The major problem is what valuation will be put upon forestry land in the case of a death or transfer. A valuer might say that land with a forest upon it is not worth very much, that it is the trees which carry the bulk of the value. Alternatively. if the trees were cut down or the land had never been planted and the land were returned to agriculture, he might say that it would be worth £400, £500 or £600 an acre. We need a definition of the basis upon which forestry land is to be valued. Otherwise it will be left to the capriciousness of the Revenue whether it is inclined to say that the land is worth very little or what would be bid for it. Forestry land which attracted planning permission could have a great value. What happens in a situation like that? If the land is to be charged to tax, the concession for the trees could often be of little value. In the first 20 years of a wood's life the land is almost bound to be worth more than the trees. If the owner who inherits a forest through transfer has to pay tax on the value of the land, he will probably have to cut down the trees to pay that tax and will no doubt attract capital transfer tax on the felling of the trees. This awful cat's cradle of tax will be enveloping. I strongly urge that the land should be exempt with the trees. If, as the Chief Secretary believes, the land is valueless, his concession is worth very little to the Treasury and virtually costs him nothing. But the concession could be worth a great deal more than nothing in other directions because damage to the industry would be avoided. The next group of amendments is best represented by Amendments (bb) and (cc), which seek to charge to tax the value of the trees not at the time that tax becomes chargeable but at the time that the transfer was made. I may not have explained that very well. If on transfer through death the trees are worth £20,000 and 10 years later the new owner sells or cuts down the trees, I suggest that he should be charged on the value of the trees at the time of coming into possession of them, which would be £20,000, not on their value when he cuts them down, which might be very much more." National Tree Week has the full support of the Government and the Department of the Environment … but depends upon the goodwill of tree-lovers everywhere for its success. The Council has asked Sydney Chapman to act as Director … You may remember that he, when an MP, campaigned successfully for the ' Plant-a-Tree in '73 ' year."
I find it difficult to distinguish between any inflationary factor in the value of an estate and the separate point of the increased value of the trees through growth between death and the subsequent payment of tax. Does the hon. Gentleman agree that it is desirable to distinguish between those two matters in the drafting of the Bill?
The amendments to which I am referring simply relate to the tax being charged on the value at the time of the original transfer. It is possible that 20 or 30 years later both the growth of the timber and of inflation will have contributed to changing that value. The hon. Gentleman underlines my point that is a wild guess what the value would be and what the tax chargeable at that later stage would be. We are dealing with somebody who not only cashes in his forest and goes away to spend his money but cuts it down because it is mature and the time has come to replant. It is material to know how much value should be put upon it because that will determine how much tax is charged at that stage. That matter is strongly urged by the Forestry Committee of Great Britain. Indeed, that point is reinforced by what the Chief Secretary said on 5th March when new Clause 8 was being discussed:
That seems to give substance to what I am saying. In the new schedule we have a rate of tax which applies upon the sale or the felling of trees, not on death. Perhaps the right hon. Gentleman was not referring to the same point. Those words indicate to me that the right hon. Gentleman thought that the new schedule applied to value on death, not on sale. The next point that I want to urge on the Chief Secretary relates to the rate of tax. Here we have three amendments which I should mention briefly in passing. Amendment (ii) allows the forestry estate to be separately aggregated from any other property of the donor or transferor. Therefore, when it comes to paying the tax at some later stage, that tax is lessened by virtue of the fact that only the forestry property is included in the estate. Amendment (jj), which the right hon. Member for Down, South (Mr. Powell) will doubtless develop, proposes the mean or average, not the highest, rate of tax on the person who owns the woodland. That again would ameliorate the level of tax to be paid. Amendment (kk) is perhaps best mentioned with this group because it explores what other taxes would be payable on the felling of mature timber. It is complicated, but at present Schedule D can be payable, and for companies corporation tax can be payable on the profits made. Presumably, capital gains tax also comes in somewhere here. The Chief Secretary would do the House a favour if he were to give a careful description of what other taxes will apply. If capital transfer tax at its penal rates is to be levied on the profits from growing trees, there is little need to levy other taxes as well. However, it is not clear to me what other taxes will be leviable, and I hope that the right hon. Gentleman will help us by giving an exact account of them. On the question of the taxation of whatever profit arises, I had hoped to see in the schedule the acceptance by the Government of the flat-rate tax which we come fairly near to agreeing about in Committee. I am not suggesting that the Chief Secretary has gone back on an undertaking. He never gave one. However, he seemed attracted by the idea of a flat-rate tax. The defects of the present suggestion in the schedule are numerous. It means that the bigger the forest the higher will be the level of tax, thereby causing all forests to become very small after a certain number of generations, because every time they are cut down half of the land and of the timber will go in tax, and, therefore, not so much can be replanted. It is a measure designed to reduce the size of forests, nor for ecological reasons but for taxation reasons. That is anomalous. As I told the Chief Secretary in Committee, the truth is that foresters do not cut down a whole forest every 100 years and then replant it. Every few years they cut down a bit of a forest and then they replant it. There are thinnings coming down every 20 or 30 years which have value and which can be sold. Every year a balance must be drawn as to the profit made. The profit can be made only from the felling of trees, and from nothing else. Every year capital transfer tax will have to be paid on the year's trading profit on the forest. This is a very odd concept because it is supposed to be a tax on capital to start with. It is standing logic on its head to have to bring in all the reliefs and all the complications of the rest of the Bill which we have discussed over the last few weeks in order to assess the size of the chargeable transfer which was represented by cutting down an acre of woodland. The Chief Secretary knows very well that this calculation will, in fact, be done every year by every substantial forest owner if he declares a profit at all, because he will have felled trees and cashed in on their value. If the Government really mean this, it would have been better had they applied some form of income tax or corporation tax to the profit rather than capital transfer tax, which is intended not for such circumstances but for gratuitous transfers of wealth from one party to another. I am sorry to have detained the House for so long on these points, but they are important. Finally, 100 years of an oak forest or 80 years of a mature softwood forest have represented capital tied up both in the land and in the trees. The interest which should have been payable on those capital investments is automatically, so to speak, ploughed back in, because very often little or nothing comes out of the investment until maturity and felling. So included in the expenses which can set against the profit which is defined in the schedule should be the interest which has been forgone on the capital which has been invested. If we are to deny that, we are to deny the servicing of the capital in forestry as well as to tax that capital to capital transfer tax on maturity. In that context certainly I mention Amendment (eee), which is an attempt to assess the interest forgone, which should not then be treated as capital and taxed under this schedule when the trees reach maturity." A third point is that the rate of tax in relation to woodlands will be the rate or rates which would have applied on death."—[Official Report, 5th March 1975 ; Vol. 887, c. 1605–6.]
Whilst my hon. Friend is dealing with this important question of an owner's continuing investment in a forest—that is, with his never cashing in the whole value of it—will he also comment on the fact that dedicated woodlands, which are a requirement under the schedule, require that immediately felling takes place replanting should take place? Therefore, the cash is never drawn out of forestry when it is dedicated.
My hon. Friend is quite right. The Government have wisely allowed the cost of replanting to be deducted from the profits. What I am worried about is that the sum will have to be done each year. Each year the cost of any replanting, thinning, maintenance, fencing, and so on, will have to be set against any profit. The calculation will be extremely complicated before it will be possible to arrive at the taxable profit under this schedule.If on top of that it is necessary to work out what capital transfers have been made by the owner, what his rate of tax is, whether he can pass something on to his wife or to his child on her marriage, the matter will be of endless complication. Incidentally, it will be of great help for one's daughter to get married if one is a forester, because one will be able to make use of the £5,000 allowance to plant a few more trees. These calculations are nothing to do with forestry and they should not be treated in this way. I urge all these amendments on the Chief Secretary and conclude by saying only this. Welcome though the Government's recantation is—that they do not want to expose forestry to the full rigours of the tax—the schedule is thoroughly ill-thought-out and thoroughly inappropriate to the job it was designed to do. I ask the Chief Secretary to organise discussions with the private forestry industry and with his colleagues in the Ministry of Agriculture, Fisheries and Food and with others who have a part to play in such discussions and to hammer out a new sort of relief for forestry which will meet the bill and do the trick properly. I ask the Chief Secretary to listen to the Forestry Committee of Great Britain and the Forestry Commission together rather than to his hon. Friend the Member for Luton, West (Mr. Sedgemore) and to others of his hon. Friends who have been urging him not to go even this far.
Great though my respect for those hon. Gentlemen is, the broad woodlands of Luton, West and Bebington do not seem to me to have left on their minds that deep and intimate knowledge of this important industry which it is necessary to have before considering this taxation régime.
Much has been made during these debates on forestry about the big part that timber can play on saving imports. The Chief Secretary will agree that the decisions that we take now will not influence the size of our timber imports and our balance of payments this year or next year, because these are influenced by the number of trees which are growing now. However, those matters will be influenced by the number of trees which are planted over the next 10 or 15 years. Getting the schedule right will ensure that the right amount of trees is planted for the future. The Chief Secretary will agree also that if the home-grown timber industry is to flourish it must have an orderly system of marketing.One of the real troubles I see arising from the schedule is that if someone inherits an acreage of trees which are 30 or 40 years old, it might well pay him better to cut down those trees and sell them—to the pulp mill at Fort William, if he is in Scotland—rather than to allow them to go on and become of greater value, because it appears that under the schedule growers of timber will be required to pay capital transfer tax on the maximum value if they allow trees to go on to complete maturity.
I should like to take up the question mentioned by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) who referred to a statement by the Chief Secretary, as reported in Hansard at c. 1605–6, that the rate of
tax chargeable is the rate which would have applied on death. It would be helpful to the House if, before any more hon. Members speak in this debate, the Chief Secretary would make clear exactly how he interprets this schedule which we are discussing. The Forestry Committee of Great Britain and many other forestry interests to which I have spoken during the weekend are under the impression that the rate of duty will be charged on the value of the timber at the time that it is cut down. This is not what the Chief Secretary said.
I was referring—and I thought this was clear on rereading it to the rate applicable to the estate of the man who died.
I still do not think the right hon. Gentleman has helped us very much. He said that the rate of tax would be that which applied at death. All the forestry interests which have written to me say that they believe that the rate of duty will be the rate on the value of the trees as and when they are cut down.
The hon. Gentleman is dealing with two points. One is the rate applicable to the estate of the man who died and the other is the question of the value. The value is at the date of sale. There are two separate matters.
The Chief Secretary says that if somebody dies and the trees are cut down the next day, the duty is assessed on their value. But if the trees are transferred to the man's successor and are cut down in 25 years' time, the capital transfer tax is assessed on the value of the trees at the time that they are cut down. The House should recognise that if we do not get over the inflation which we are suffering at the moment, irrespective of the value of the timber, and if the value of money continues to fall, not only is capital transfer tax charged on their increased value at the date of death, but tax is also charged when the trees are cut down in 20 or 25 years' time since the original owner died.I thought the Chief Secretary said during our debates that capital gains tax did not apply to forestry. But on the basis of the value of timber 20 or 25 years after the death of the owner, I am certain that, unless we completely cure inflation, a measure of capital gains tax is being introduced as a result of the change in the approach to the taxation of forestry compared with our approach in the past. We are not talking about trees which are growing now. We are concerned with trees which are to be planted in the future. I believe that forestry should play a very big part in the country's economy in the future. We may be fortunate enough to solve our balance of payments problem in the next 15, 20 or 25 years, in that we may not have to import the same amount of oil as we have imported in the past, and, therefore, we shall get a relief in the matter of oil imports. However, unless we adopt the right approach to tree planting now, the balance of payments situation in 20 or 30 years' time will be very much out of balance and will cause us distress and trouble. Treasury Ministers have got out of balance in their belief that people have planted trees in order to avoid tax. When we debated the original clause on this subject in Committee of the whole House, the Chancellor of the Exchequer said that four-fifths of all private planting was carried out by forestry interests and others who were trying to avoid income tax. I wrote to the Chancellor of the Exchequer on 4th February asking whether he could tell me where this information came from. Today I received a letter from his private secretary, dated 6th March—over a month since he made that statement in the House—saying that he was still unable to answer my question. I am sure that the Chancellor of the Exchequer got this idea because somebody said to him "There is a lot of tax fiddling in forestry and you ought to clobber it ". That is basically untrue. Having written to him in February, I cannot understand how his secretary should have delayed for over a month before saying that he did not know the answer. Did he merely pull this idea out of the air—that it was a good thing to plant trees in order to avoid tax? I read a very good article in the Scotsman which referred to the late Professor Anderson, professor of forestry at Edinburgh University just after the war. when a good deal of work required to be done in replanting woods which had been devastated during the war. The article says:
This is a point which the Treasury Bench apparently has not appreciated. According to this article in the Scotsman, 70 per cent. of the Economic Forestry Group Owners in Scotland own 350 acres or less, so the average investment in Scotland yields a comparatively small amount of money. There are from 38,000 to 40,000 acres of forests in Scotland and the average planting held in any one person's hands is not more than 250 to 300 acres. If this is so, the contention put forward by the Treasury Bench that people plant trees in order to avoid tax cannot he true. The forestry interests have approached the Treasury and said that they agree that it is not right that people should have the facility suddenly to make death bed purchases. The forestry interests themselves put forward the suggested periods of seven or 10 years, and now the Treasury favour a five-year period. All the reasons which the Treasury put forward for discouraging private planting have been entirely discounted. In an age of inflation, to gross up tree values and charge at the top value will bring ruination to forestry, and the Treasury Bench should accept these amendments."He was among the first to point out that forestry brought capital into the rural economy and an investment once made, could not be returned. Had he been with us today he might have added that if things go wrong with, say, North Sea oil, the entrepreneurs can pull up their rigs and go or if Chrysler see too much red in a factory's balance sheet they can close it. Once the trees are in they are there and Professor Anderson emphasised how essential it was to have grants and fiscal incentives to establish woodlands."
I shall refer to Amendments (t), (ee) and (jj) to the Government's new schedule.Northern Ireland is a part of the Kingdom very poor in woodland, but the fate of forestry and the maintenance of woodlands there is not for that reason unimportant. On the contrary, it is vital not only that the woodland which exists should be maintained and replaced but that its area should be extended. It is to the far-sightedness of the great developers and landlords of the eighteenth century that a great part of Northern Ireland today owes what might be called its English aspect. But for them, it would be a country entirely without trees, as it was at the beginning of the eighteenth century, and we are now in a period when replanting and renewal and a deliberate forestry and woodland policy are particularly important. There is, therefore, no less interest in this schedule and the impact of the tax upon forestry in Northern Ireland than there is in other parts of the Kingdom. The first of our amendments, Amendment (t), is put down to secure an explanation from the Chief Secretary of the words in lines 19 and 20 of paragraph 2 of the new schedule—
It may well be that those words owe their presence there to a beneficent purpose, and sometimes, in endeavouring to understand them, I have fancied that I caught a glimmer of the meaning—that it might be intended somehow to avoid a double impact of the eventual taxation. But I think that the words and their effect are sufficiently obscure to justify an explanation from the Chief Secretary, and I hope that he will give it. I come now to the point made by both hon. Members who preceded me in the debate, the hon. Members for Cirencester and Tewkesbury (Mr. Ridley) and for Fife, East (Sir J. Gilmour). The principle of the new schedule is the deferment of capital transfer tax upon the value of trees or underwood until the time when disposal occurs. That being so, the double problem arises in handling that deferment : at what time shall the value be struck, and at what point of time shall the rate be struck? The Government have so far given a different answer to those two questions. They propose that the value should be struck now, as it were, at the time of the disposal, but that the rates shall be as at the time of death. It is to be noted that that means not only rates in the sense in which the Chief Secretary used the term in an intervention just now—namely, the rate resulting from the composition of the value transferred at the disposal—but the rates ruling under the tax law at the time. We are not looking forward here for a year or two, as I fear we are in much tax legislation, but we are looking forward in this legislation, if it is to make any sense, in terms of decades, and there will be big changes, or one presumes that there may well be big changes, in the rates of capital transfer tax if the tax should survive at all. The Government have therefore been inconsistent. They have come down on opposite sides of the same fence. I think that they took the right decision when they selected the date of death for the purposes of the rate, and that should also have been the point selected for the purposes of valuation. It has been said—for example. by the hon. Member for Berwick-upon-Tweed (Mr. Beith)—that inflation enters into this question and that a future Chancellor of the Exchequer might be loth to see tax levied in a future year upon the value at the date of a past death. To that my reply is that, since the prime responsibility for inflation rests upon the Government, or series of Governments, they cannot come back and claim against the citizen that they are entitled to mulct him for the progress of inflation since the relevant date ; namely, the death which resulted in the deferment of the charge which would otherwise have fallen due. 5.45 p.m. We shall be wiser on this question also when we have heard the Chief Secretary's response to Amendment No. (kk) to the Government's new schedule put down by the hon. Member for Cirencester and Tewkesbury, that is, when we know how far, if at all, capital gains tax may intervene in the ultimate sum due by way of tax upon disposal. I propose that the relevant dates both for the purposes of valuation and for the purposes of fixing the rate should be the date at which capital transfer tax would but for this schedule have been paid namely, the death in question. I turn now to the question of the rates. It has been said already that in working out the rate one must assume that the value of the trees or underwood when disposed of will form the top slice ; that is to say, that they will attract the highest part of the rate leviable on the estate. In this matter, I believe, there is no absolute logic to which one may appeal, as one could in my previous proposition. It is possible for the Chief Secretary to say : Here is a piece of the value transferred upon a death the capital transfer tax on which is being deferred, but when it comes eventually to be levied the Revenue will have its pound of flesh and it will put that value back where it would have been, on the top of the total pile of the value transferred at the relevant death. That is one approach, but, of course, it is the least favourable to the interests of forestry, and it is the approach which exerts to the maximum the claims of the Treasury. Moreover, as the hon. Member for Cirencester and Tewkesbury argued, it is by no means the only reasonable approach. The alternative is to say that a whole period of time—whatever it may be, perhaps many years—has followed since the relevant death, and now we shall levy the capital transfer tax upon the value realised at the disposal. At least, that is how the schedule stands. We would rather say that it should be levied upon the value which the trees or underwood disposed of had at the time of the death. So let us look at the tax which the value transferred, other than that of the trees and underwood, bore at the time of the death and impose that rate of tax now on this deferred portion. My hon. Friends and I have sought to achieve that result by substituting the word "mean" for "highest ". Others have sought to do it by a more complicated method ; for example, that in Amendment (ii). We must not simply treat this provision as a means of going back to the circumstances of the death and, as it were, reconstructing them and in so doing make the assumption that the trees or underwood would, in fact, have constituted the top slice. My plea to the Government, therefore, is that they should not charge upon the trees and Underwood the maximum which any conceivable line of argument would produce but that, in a spirit of reasonableness and, I would even say, deliberate encouragement to forestry and the maintenance of woodlands, they should charge a mean rate upon the value of the transfer when the deferred tax is eventually imposed. If these two amendments are made, and I think that they will be urged, in different forms, by most of those who contribute to the debate, they will represent a considerable improvement and will remove some of the remaining sense of injustice which is felt by those who have no interest in the matter but the maintenance of forests and woodlands as part of the economy and ecology of the Kingdom."…if the disposal occurs before any part of the value transferred on the death of any other person is attributable to the value of that land …".
I acknowledge immediately the debt which we all feel to the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) for the work that he has clearly done on the subject and for the way that he moved the amendment.It is extraordinary that even at this late stage someone of such an astute mind as the right hon. Member for Down, South (Mr. Powell), and a former Treasury Minister to boot, should find it necessary still to be asking the Chief Secretary questions about what parts of the schedule mean. I cannot remember an occasion when such a major new tax provision was put before the House at such a late stage in our consideration and under the guillotine. When last did we have at such a late stage such a major proposal which by its very nature attracted so many amendments that they were labelled with up to three letters of the alphabet? The Government deserve the severest censure for the way they have handled the whole question of the taxation of forestry. There was considerable alarm among those concerned with forestry when the Bill was first published. I expect that there are few forests in Leeds, Heywood and Royton and the other places represented by Treasury Ministers. I expect that those Ministers were under the impression that the proposals affected only a relatively small number of wealthy landowners, but that is far from the truth. In the last few months they have affected the interests of many who work in forestry, including many of my constituents, and a lot of them are not highly paid. I believe that the Government have totally misunderstood the nature of private forestry in Britain. Their activities in the last few weeks have certainly been most detrimental to a large number of people. The only thing to be said in the Government's favour is that they have at least introduced the five-year rule for deathbed purchases. That is something which the genuine foresters have been urging on the Government for some time. The idea that the country in general, or even my constituency, is filled with plantations owned by octogenarian gentlement from the Home Counties is a long way from the truth. The loophole is being closed, and its closure we surely welcome. That does not justify the remainder of the Government's proposals, however. The hon. Member for Fife, East (Sir J. Gilmour) was seeking to make the point that the whole of this proposed tax on forestry is, by definition, retrospective. Unlike any other form of activity I can recall, someone who is already engaged in planting trees is therefore committed, regardless of what changes the Government may make or may wish to make. He cannot unplant his trees, or the next year, as with agriculture, decide to do something else to take advantage of changed economic circumstances. He is stuck with a decision taken in good faith, and in a very real sense the Government are breaking faith with those who have for various reasons undertaken planting. The right course for the Government, therefore, would have been to withdraw the imposition of the CTT on forestry at least until they had consulted the forestry interests. After that they could bring forward sensible and comprehensive proposals. I remind the Government that they have another Finance Bill, God help us, only a few weeks away. It is not as though they were going to have to wait for another full year before tackling this subject. I believe there is a need to encourage still further the home production of timber. The Government's activity has resulted in a down-turn of planting of 51 per cent. in the private sector in Scotland in the last season. Over the United Kingdom as a whole the effect of the uncertainty in this last winter has been to negative in planting terms everything that was achieved in Plant a Tree Year. It was laughable that we should have been treated over the weekend to pictures of the Prime Minister planting one tree in the grounds of Chequers, bearing in mind the wreckage which has been caused to forestry by the Government's activtities over the last few weeks. I hope at this late stage that the Government will repent and accept some of the amendments. We shall support those amendments.
The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) rather flattered the Members on the Government Front Bench by referring to their actions as being a small step in the right direction. Perhaps what they have done does not go as far in the wrong direction as their previous ideas, but it still leaves a tremendous amount to be desired.As for the comments by the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel), I must emphasise that much of my party's opposition to the Government's stance on this matter stems from the fact that in a constituency like Argyll, and in many other rural areas like Scotland, forestry is the small man's business. As the hon. Member for Fife, East (Sir J. Gilmour) said, many of the holdings are very small and are not the province of the wealthy landowners. Many of the people who work on these holdings are either workers themselves or what one might consider to be small business men—timber contractors of one kind or another who have been penalised twice. They have been penalised by the blow struck at the forestry industry, and they have been penalised by the other parts of the Bill which strike a blow at small businesses. The question of the valuation of these afforested areas is vital. It is not only illogical but perhaps wicked to say that when someone dies consideration of the trees on his estate will be held over and that the value will be set at its level 20 or 30 years later and charged to the dead man's estate. We have heard the hon. Member for Roxburgh, Selkirk and Peebles refer to retrospective taxation, but this surely brings in an entirely new principle—the taxation of someone who is dead. Only a few weeks ago my party spoke of bringing about a "green revolution" which would be of immense value to Scotland and would enable it and other parts of the United Kingdom to enjoy the benefit of being once more a large-scale primary producer in an industry which is clearly coming into its own again. Gone are the days when one could read of learned City-based economists describing the Forestry Commission as a daft idea. Now we are appreciating the foresightedness not only of the Ulster landowners of the eighteenth century who planted trees but of the people in Britain in the twenetieth century who planted forests which in areas like mine are only now reaching maturity. What folly to wait until these trees mature and then to create the situation in which they will be felled, in which the estates on which they grow will be mismanaged, and in which the whole industry will be brought to its knees. My party calls its forestry policy its "green revolution ". I am sorry to say that my party sees the Government's measures on forestry as the "red revolution ".
I hope that the Chief Secretary will realise that four parties have been taking part in this debate but that they have spoken with but a single voice, and all have urged on the Government a last-minute repentance. Because or their obsession with this deathbed nonsense, the Government have set a mantrap to catch a mouse, and it is quite ridiculous that they should have persisted with their insane endeavours. I hope that they will listen to what has been said and will realise that their schedule does not go anywhere near meeting the valid arguments advanced this afternoon.We have here probably the best illustration to date of the extreme stupidity of rushing a major tax revolution through Parliament. That is what it is all about. We should like the Chief Secretary to explain exactly how his new schedule meets the new points that have been made and that he says the Government have accepted. I would say to the Chief Secretary in this context that it is no crime not to understand, but it is a crime to pretend to understand. That is what the Government are doing. I hope that the Chief Secretary has had his attention drawn to the telegram sent to the Chancellor of the Exchequer on Thursday by the Scottish Landowners' Federation saying that it was
This was the point made by the hon. Member for Argyll (Mr. MacCormick), and the telegram called on the Government to recognise it. However, lest it be thought that this is a particular group of landowners in Scotland, let me draw the attention of the Chief Secretary to the representations last week of the Forestry Committee of Great Britain referring to his statement of 5th March that the rate of tax in relation to woodlands would be at the rate or rates that would have applied on death. The committee said:" greatly concerned at decision to assess capital transfer tax on sale value of timber instead of on value at date of death. The Government's amendment will have disastrous effects on private forestry and employment in Scotland ".
That, too, was a point graphically made by the hon. Member for Argyll. This is not just a matter of the interests of the Timber Growers' Association and the Scottish Landowners' Federation. If the Government see those organisations as being beyond the pale because they represent landowners, I draw the attention of the Chief Secretary to the Association of Professional Foresters. Here are many ordinary workers who have certainly made a proper social contract with the community in the dedication with which they have pursued their extremely important industry but who have not been properly recognised. There is the point made by Mr. Phillips, their secretary, who wrote to Members last week saying:"This is not so. The effect of the Government's decision to assess the tax on the sale proceeds, not as previously on the value at death, means that the tax will be paid on a value which will frequently be several times higher than at the time of the previous death …".
It is monstrous—and I use that word determinedly—that the Government should not have had any consultations with these organisations representing ordinary workers. The Government claim time and again that they have the interests of the workers at heart, that they wish them to have a fair deal, but the jobs of these workers are being jeopardised. As another of their leaders, Mr. Yull, reminded us, these workers have been forced by the present Government into having to contemplate emigration because they cannot see a properly secure future for themselves and their industry. This is a silly situation because, as the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) rightly said, all the Government need to do is to take away this proposal. We are to have another Finance Bill—Heaven preserve us—in eight or 10 weeks' time. It is a fearful thought, but it nevetheless gives the Government a breathing space. There are those of us on this side of the House who are totally opposed to this tax, but all we are saying this afternoon is that at least the Government should operate it properly. If they have accepted the case for forestry being accorded special treatment, as they say they have, they should bear in mind the force of our arguments, think about it again and come back with a new clause and schedule that will meet the case so admirably made this afternoon by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), the right hon. Member for Down, South (Mr. Powell) and others. However, if that sort of argument carries no weight with them and cannot dissuade the Government, let them be reminded in purely materialistic terms of the enormous importance of timber to our balance of payments. After oil and food, it is this country's largest import. We import more timber than does any other country apart from Japan. In 1974, timber imports, cost £1,878 million. If the pleas of ordinary workers and the legitimate and proper requests of the timber growers and the urgings and entreaties of hon. Members of all parties have no effect, let the Government at least think of the financial considerations and of the importance to the environment. My hon. Friend the Member for Cirencester and Tewkesbury quoted the letter of the Minister of Sport urging us all to support Tree Planting Week. I shall support it in my constituency by planting a tree on Friday [HoN. MEMBERS: "Why bother?"] My hon. Friends ask why I should bother. [HoN. MEMBERS: "He's cutting it down."] The Chief Secretary may well be performing that task if we are not careful. All that can be done by Tree Planting Year and Tree Planting Week and by encouraging the appreciation of trees is certainly being undermined by the Government's clumsy handling of this situation. It has already been said that some 30 million trees that would have been planted this winter have not been planted mainly because of the uncertainty created by the Government's tax arrangements. I do not want to detain the House any longer because there is much more of importance to discuss this afternoon. However, without making invidious distinctions, I suggest that there is no more important debate than this, no more important topic for the country's future. Considered from the standpoint of scenic beauty, the environment, the economy, or the interests of workers, this is a subject of major importance. Having accepted that forestry deserves special treatment, the Government should at least accept the proposal so powerfully supported by the right hon. Member for Down, South. At best they should accept the suggestion of the hon. Member for Roxburgh, Selkirk and Peebles and defer the implementation of their scheme by another eight or 10 weeks, when they will have had the chance to talk to the workers and to consider the case that we have made and then to do something constructive and sensible." Owing to the shortness of time which has been allowed between the publication of the amendments and the Debate of the Report Stage this week, we have been unable to consult Members fully ; neither have the Government made any approaches to organisations such as our own representing those employed in the private sector, who jointly with the British Foresters' Action Group represent some 10,000 people employed in the industry."
I must declare an interest as a woodland owner. I am therefore one of the toads under the harrow.What depressed me about the Chief Secretary's speech was not what he said about the tax but rather that he seemed to think that he had secured the future of forestry in this country. That is not the case. Many effects of the tax have been mentioned—the effect on employment, environment and so on—but I wish to concentrate on the fact that replanting will be largely reduced, if not eliminated, by the tax. Essentially, forestry is a long-term business. I have been given some interesting studies of two identical businesses, one a forestry business and the other an industrial or commercial business. Each was given the figure of £150,000 on the date of transfer, not an excessive sum in either case. When one comes to work out the tax—that is the tax on the small business on the one hand, and the tax on the forestry business on the other—one finds that the tax payable on the latter is more than double that payable on the former. This seems to me to be quite mad, because it is a tax on growth, pure and simple—growth of the trees—and those figures were worked out on a very modest rate of increase. Some hon. Members said last week that we should not worry so much about the private sector but should let the public sector take over. I urge the Treasury Bench to have discussions with the Forestry Commission, because it obviously has no desire to take on small forestry enterprises all over the country. It is not geared to do that. What happens under these arrangements in the case of windblow or fire? What happens to the payment of tax in those two instances? That is not clear. What about selective forestry? Paragraph 2 of the new schedule contains the words :
Am I right in thinking that if someone practises selective forestry—which is a fairly normal form of forestry in the South of England—it means that after the transfer has taken place he is taxed on a single oak tree which he fells? What about the question of thinnings, which was mentioned by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley)? If what my hon. Friend said is right, it means that a business which is geared to a set rate of felling will find that if it has to pay tax at a rate of 50 per cent. it will have to fell double the number of trees which it had originally planned to fell, and the whole business will start to run down progressively. There is no getting away from that. It is not clear what happens on a subsequent death before tax has been paid on the previous transfer. If the figure is completely reassessed, there could be a 100 per cent. tax on certain plantations. What should happen in these cases is that only the incremental value should be charged on the second transfer or death as the case may be. It is essential that the land in a dedication agreement should not have to pay capital transfer tax, because to charge the tax is a breach of faith. Softwoods mature in 80 years, while hardwoods take 100 years-plus. A dedication agreement is entered into between the owner and the Government over that period, and, therefore, to change the tax base during that period is, in a sense, a breach of faith, and, therefore, the amendment dealing with this is essential. The point has been made by nearly everyone who has taken part in the debate that the value should be the value at the date of transfer and not at the date of disposal. This is essential, because this is the real killer for a business such as forestry which has a very low rate of return. I do not wish to detain the House for very much longer. I urge the Chief Secretary to think again, even at this late hour. It is right that he should take action on the five-year rule. This is what so many people have been urging was wrong, and action should have been taken before now to deal with it, but, as a result of these changes, the Chief Secretary is dealing essentially with genuine foresters who are trying to make a successful enterprise of forestry. If no action is taken, replanting in the private sector will disappear, and I cannot believe that that is the result desired by the Government."and the whole or any part of the trees or underwood is disposed of ".
I shall not detain the House for more than a few moments. I am sorry to note that again the Minister of Agriculture, Fisheries and Food is not with us. During the progress of the Bill, both in Committee and on Report, it has become abundantly clear that the interests of agriculture and forestry, which should be looked after by the right hon. Gentleman, have not been put internally as they should have been. It is becoming increasingly clear that the Ministry of Agriculture is unable or unwilling to comment on the effects of the tax on either agriculture or forestry.There seem to be three specific points which are lacking in the new schedule, most of which has been mentioned. First, there is the failure to include woodlands if occupied with other agricultural land. The point about this was made by my hon. Friend the Member for Buckingham (Mr. Benyon) and particularly concerns some of our best hardwood trees. The isolated oak tree is a particular example. The new schedule will give a considerable incentive to farmers to fell these trees, which not only contribute a considerable amount of timber but add beauty to the countryside. The omission of gifts inter vivos seems to be explained. I have no idea why forestry should not be alleviated on this basis. Perhaps the Chief Secretary will comment on the matter. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) made the point about the land on which trees grow. The argument for this is obvious, and it seems illogical not to include it. Despite repeated requests to him to deal with it, the Chief Secretary has said nothing in answer to the point about tax evasion in forestry. By its special nature, this industry requires special tax treatment. It is a unique industry, and it is understood only by a number of people involved in it. It is clearly not understood by the Treasury. The Scottish Landowners' Federation and other interests have put it to the Treasury that it should close the tax loophole and leave the genuine foresters alone, but their pleas have been rejected. It is estimated that about 30 million trees have not been planted because of the threat of CTT. I can only say what has been said so many times already. When a major tax of this sort is introduced without proper preparation its effects turn out in the oddest places and can do immense damage if it is not properly considered either by a Select Committee or by some other procedure. My hon. Friend the Member for Buckingham referred to the low rate of return in the forestry industry, and in an intervention I commented that no sooner has a tree been felled, particularly on dedicated woodland, than replanting has to take place as a requirement of the felling permit. Therefore, if one assesses the actual rate of return for a given period one finds that because of this permanent investment the figure is very low and compares most unfavourably with agriculture.
Was not that borne out by the Treasury memorandum which was produced two or three years ago, which said that trees were hardly worth planting?
We must not get diverted into an argument about the Forestry Commission, but that organisation, which is so deeply involved in tree planting, does not show a very good return on the national investment.I admit that we are not dealing with totally altruistic people who invest in forestry, because there is a profit, but the return is very low indeed. It seems to me that both agriculture and forestry have been the victims of this tax because of the actions of unknowing and, regrettably, uncaring Ministers. The Chancellor of the Exchequer should look very closely at the points that have been made in this debate and others on these two subjects and try in his forthcoming Budget to put things at least partly right.
The Government's original forestry proposals produced something akin to panic among timber growers, with the result that there has been an estimated loss of close on 30 million trees which would otherwise have been growing for the benefit of future generations. The new schedule does something to put matters right, but, by reason of the dismay which was sown by the Government, it is grossly inadequate. The Government should have taken much more time and, above all, should have consulted many more people before proposing something which will result in the loss of jobs and the loss of valuable raw material, and cause great damage to the environment.I wish to speak simply as a Welsh Member whose countryside is distinguished largely by the wealth of beautiful trees, often uneconomic to their owners, many of which will be cut down unless the Government can put some heart back into timber growers. The Emperor Vespasian assured himself of a place in the history of France because he put a tax on public lavatories. Every public lavatory in France is now familiarly referred to as a vespasienne. I should hate to think that the Chief Secretary, a most civilised and urbane man, would earn his memorial because every clump of cut down, black and rotting tree stumps became known henceforth as a Barnett.
I support the amendment. It is getting near the eleventh hour, but I hope that the Chief Secretary will take notice of what has been said about it. Forestry is important for the United Kingdom, but it is even more important for Scotland, particularly in West Aberdeenshire, where it gives a lot of employment.We are now running an import bill of some £2,500 million for forestry, which is approaching the size of our oil deficit and the cost of our food imports. Yet the Government here are taking action which mitigates against the production of more trees in this country. Although in Britain, and especially in Scotland, there is so much room available for forestry, Britain has a smaller forestry percentage per acre than nearly every other country in Europe. That is a ridiculous state of affairs. We should be giving encouragement to forestry, not discouragement. Reference has been made to the telegram which has been received from the Scottish Landowners' Federation. The federation has also brought to our notice a list of curtailed or abandoned investment projects brought about by the threat of the tax. I cannot understand why the Government do not realise the difference between forestry and other forms of business, including agriculture. A softwood forest takes up to 75 years to mature and a hardwood forest up to 150 years. Even the people who have been accused of tax evasion do not themselves benefit, neither do the next generation. The beneficiaries are two or three generations ahead—and at least the country got trees. As we come to the end of our long debates on this Finance Bill and all the nights and early mornings in Committee, as a new Member of the House there is one memory I shall take away. That is the sheer, utter stubbornness of the Labour Government, their unwillingness to listen to reason and their refusal to consider in one package this tax, the wealth tax and capital gains tax. For doctrinal reasons the Government have pushed the tax through, unamended, without thought. At the beginning of the debate, long before we went Upstairs, I said that this hastily-drawn-up Bill was drafted either by fools or knaves, by morons or Marxists. I have come to the conclusion it is the latter. We are dealing with knaves and Marxists, and that is why the Government have pushed the Bill through against all reason. Once again, I ask the Chief Secretary to take back the Bill and reconsider the capital transfer tax proposals.
In rising to intervene briefly in this debate I declare a small personal interest.The general considerations have been so eloquently deployed by my hon. and right hon. Friends that I shall limit my intervention to a few specific questions with which I hope the Chief Secretary will deal explicitly. The first is a question which I ventured to address to the Chancellor of the Exchequer in an earlier debate. What consultations, if any, have been held with the Forestry Commission about the basis of capital transfer tax on forestry? If there have been none, why not? If there have been any, what conclusions were reached? What was the advice tendered to the Chancellor of the Exchequer by the Forestry Commissioners? My other question is of a more technical kind, and it is deployed by Amendment (bbb). It relates to the interaction of income tax and capital transfer tax when the woodlands are cut and sold. Supposing the transferee is to be assessed under Schedule D on the proceeds of cutting, and supposing there is a charge to capital transfer tax carried forward from a past death. A taxpayer might pay more than 100 per cent. when he came to cut. There may be a simple answer, but 1 cannot find it within the recesses of the schedule. If there is a simple answer I hope that the right hon. Gentleman will give it. If not, I hope that he will treat this as another and cogent reason why this ill-thought-out measure should be withdrawn and reintroduced on another occasion.
I hope to draw the attention of the Chief Secretary to a specific question, as other hon. Members have covered the ground so well. I endorse what my hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel) said and pay tribute to the amendments in the name of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley).I remind the Chief Secretary that the Chancellor received from my constituents, who are forestry workers—not the landowners—three petitions reiterating how deep is their concern. I hope that he will bear this in mind when he blames the disagreement on the views of the landowners alone. I want particularly to ask the Chief Secretary about the limitation of the schedule to dedicated woodlands. Dedicated woodlands provide only about 37 per cent. of the hardwoods. A large amount of hardwood plantation of considerable environmental importance is outside the area of dedicated woodlands. The reference to dedicated woodlands is probably included because the Opposition stressed strongly that it would be absurd for one Government body to enter into dedication agreements and another Government body to undermine them by taxing dedicated woodlands at a critical rate. Naturally, we welcome the inclusion, but the limitation means that an enormous amount of planting will be seriously threatened. I am thinking especially of small copses of parkland timber and timber planting which would not naturally be the subject of dedication agreements. A question was asked whether consultations have taken place with the Forestry Commission. Does the commission see the necessity of redefining dedication agreements? If tax concessions are to be based on dedication agreements, the agreements must be extended to cover a far wider range of timber planting, including smaller plantations and scattered planting of environmental value, trees in parkland, small copses, small shelter belts, and so on. Is the Forestry Commission willing to accept this new approach to dedication schemes? If it is not, such planting will be threatened. Experience to date is that the Forestry Commission, perhaps for good reason, has wanted to confine and limit the operation of dedication agreements to certain kinds of planting. The whole approach to dedication must be revised if it is to be made the sole basis of tax concessions. I shall be grateful for the Chief Secretary's comments on that point, although I hope he will look favourably on a considerable number of amendments.
There are 30 amendments, and I shall do my best to reply to them all in detail. The assumption behind many of the arguments—it is certainly the assumption of the hon. Member for Argyll (Mr. MacCormick), although I do not know whether this is the view held by the Scottish National Party—is that forestry should not be taxed at all. The assumption is that the major reason for planting was that it presented an opportunity for less estate duty to be paid, and without that relief there would be very little new planting.
I have written to the Chancellor asking for the source of his information that four-fifths of planting was carried out for reasons of tax evasion. He has not yet replied. Everything that the right hon. Gentleman says has been proved false.
I have not yet dealt with that point. I shall be happy to deal with it later. So far, I have made a perfectly innocent remark, and I do not know what the hon. Gentleman is getting excited about. I have said that the assumption behind most of the speeches is that without the old estate duty relief, or something like it, we shall not get the number of trees planted that hon. Members wish.I turn to the details. First, there is the argument of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) about Amendment (a). This adds to the relief for woodlands relief on the value of the land. Hon. Members have failed to understand the purpose of the schedule, which is to help growing crops. We recognise this. In certain cases of hardwood there will be four or five generations-130 or, perhaps, 150 years—before the crops mature. We recognise that it would be unfair to tax them at each successive death. The question of land is entirely different. We have gone a long way in giving the relief we have given, a relief for one special type of asset. To extend that relief much further would be to go too far. I cannot accept the amendment relating to land. The hon. Member for Cirencester and Tewkesbury is obviously getting a little tired as we come to the end of our proceedings, because his example was not as good as the many he gave us in Committee. He cited the case of a man possibly having to chop down his woodland because planning permission had been granted. If that was so the land was worth a substantial sum, and I can see no reason why it should be exempt from capital transfer tax.
The right hon. Gentleman is obviously getting a little tired, because he has just told us that it could take four or five generations to grow mature oaks. He is right, for once. How are the four or five generations to pay four or five swathes of capital transfer tax on the land under which the trees grow? Trees cannot be grown without land.
I am obliged to the hon. Gentleman. I am always glad to learn. It is useful to know how trees grow. I regret to tell him that I can see no reason why capital transfer tax should not be paid on the land, given that the trees have been cut down and the land used for building. If it is agricultural land, forming part of an estate, it gets the relief applicable to agricultural land. I cannot go along with the hon. Gentleman's suggestions.A major amendment was moved by the hon. Member for Cirencester and Tewkesbury and referred to by the right hon. Member for Down, South (Mr. Powell). The right hon. Member dealt with two issues. The first one he sought to persuade me to accept on logical grounds. He recognised that the second one might not be wholly logical, and he tried to persuade me in order to encourage the planting of woodlands. I hope to show him that there is no logic in either case. The right hon. Gentleman said that because we are deferring the point at which capital transfer tax will be charged, it is illogical to tax the woodland at the final point of sale. He said that if a man owns woodlands and dies there will be no capital transfer tax at that point, and therefore it will be taxed at a later date when the woodlands are sold or mature. With respect to the right hon. Gentleman, what he said is somewhat illogical and a little churlish. The assets in question will now go through four or five generations without liability to tax. That is a substantial amount of relief. The right hon. Gentleman suggests that not only should there be no relief at the point of death but that later we should go back to that point and say that it should be taxed at the lowest value. The relief we are giving is quite substantial. It ensures that there will be no need to chop down woodlands because there will be no tax liability through any of these generations to which the hardwoods pass. Only at the point of sale will there be a tax liability. To suggest that we should add to the unfairness against other owners of assets, who have their assets taxed through every generation, by taking the lowest possible value of the woodland and taxing it at that rate is not logical. It is going much too far, and I cannot go along with that amendment. The next amendment concerns aggregation, a point raised by the right hon. Member for Down, South and the hon. Member for Cirencester and Tewkesbury. Various amendments have been tabled. One tabled by the right hon. Member for Down, South suggested that there should be no aggregation with the estate of the person dying. The amendment tabled by the hon. Member for Antrim, South (Mr. Molyneaux) suggested a mean, or average, rate. The right hon. Gentleman did not seek to persuade me on grounds of logic. He simply sought to persuade me on the ground that his amendment would encourage the planting of trees. We are seeking specifically to do that because we are ensuring that there is no tax liability throughout the whole of the 150 years, if that is what it is, before the trees are chopped. That is quite a substantial relief. There is no tax liability. [Interruption.] The hon. and learned Member for Dover and Deal (Mr. Rees) said that he had an interest in these matters. He must recognise that the burden of the case is not to help the small woodland owner who has nothing else—the small woodland owner does not need to have non-aggregation of other assets, since he does not have any. We are talking about the wealthy woodland owner who has other assets as well as his woodland. If they do not have many other assets, there is no problem. This group of amendments is designed essentially to help the wealthy woodland owners. I suggest to the hon. Gentleman that their representations go too far. We have given substantial relief in this schedule and yet they still want more. I am sorry to have to say that they want more not for the small woodlands owner but for the very wealthy.
The hon. Member's comment from a sedentary position is about as relevant as his speech was.
The Chief Secretary is not quite right. Even a small and poor woodlands owner has other assets in the form of the land, as I keep telling him. There is no point in his being made to pay on the land. It does not help the exemption for the trees. This non-aggregation amendment is an alternative to the amendment dealing with allowing the land. If we do not aggregate the land and the trees there will be a lower rate on the trees at the time they are sold.
I am sorry to have to tell the hon. Gentleman that he does not seem to be seeing the wood for the trees —or the wood for the land. I dealt with the amendment on land. I shall be happy to go over it again but I thought that the Opposition wanted to make progress. I dealt with that amendment and said that I did not feel able to accept it for reasons that I gave. For the reasons that I have just given I do not feel able to go along with the argument in favour of non-aggregation.The hon. Member for Cirencester and Tewkesbury and others dealt with Amendment (kk) concerning income tax, capital gains tax and corporation tax. The hon. Member raised some of these matters in Committee. I said then that he had raised an interesting point, namely, that woodlands should be taxed for income tax and corporation tax. I pointed out that in the main they are not subject to income tax now. Nor are they subject to capital gains tax. I see the hon. and learned Member for Dover and Deal looking at me quizzically. I assure him that no capital gains tax is payable on the sale of woodlands.
I appreciate that. I hope that the right hon. Gentleman is coming to the point I made, namely, that it is not true to say that woodlands are not subject to income tax. They may be under Schedule B, although I agree that that is not usually a heavy impost. Since I have declared an interest I will say that I am assessable, with a great many other people, under Schedule D. I would like the right hon. Gentleman to take that into account in replying.
The hon. and learned Member will appreciate that I cannot deal with his personal tax affairs because I do not know anything about anyone's personal income affairs. I can tell him, and he has recognised this, that in the main there is no income tax. Tory Members have naively failed to recognise that in the main not only is there no liability to income tax but woodlands owners are in a very favourable position as regards income tax. During the years before the trees are matured, maintenance costs can be set off against the owner's other income. This is the owner for whom the hon. Member for Buckingham (Mr. Benyon) asked me to provide relief—the owner who has other assets with other income. That other income would be relieved from tax because of the way the income tax system works and because there are no profits, only expenses, and all those expenses are set off against his other income.There is, therefore, not only no income tax liability on woodlands ; there is a negative income tax, in that there is a set-off against other income. When the trees come to maturity, as the hon. and learned Member for Dover and Deal recognised, in the main they are subject to tax at a tiny level under Schedule B. Amendment (kk) is therefore unnecessary—[Interruption.] Before the hon. and learned Member has apoplexy, let me assure him that I am coming to his other point.
Do not stop him!
My hon. Friend the Member for Meriden (Mr. Tomlinson) is acting in an uncharacteristic manner. I am sure he would not want me to do the hon. and learned Gentleman any harm.The other amendment related to interest on moneys invested. Again, I do not feel able to agree that this should be allowed as a set-off for capital transfer tax. This is, first, because there is already a substantial set-off for income tax purposes and, secondly, because, as has been said, when trees are sold, invariably new trees—saplings, seeds or whatever—are planted—in land, I am assured. There are already grants available for such planting, and I do not feel able to go further and give additional tax relief. 6.45 p.m. The right lion. Member for Down, South spoke about Amendment (t). He thought there might be a little obscurity here. The relief for woodlands is framed so that when the charge to capital transfer tax is made on the proceeds of a sale the charge is made in respect of only the last previous owner's death. Amendment (t) would alter this, so that the tax would be chargeable in respect of each preceding death on which the relief had been given. I am sure that that is not what the right hon. Member intended.
As I pointed out, the amendment is for the purpose of clarification. If the right hon. Gentleman is now saying that it all reverts to the last relevant death out of a series of perhaps four generations, what has happened to his argument to the effect that if other amendments we have been discussing were accepted we would be moving right back to the original death, 100 or 120 years ago?
I thought that that was the purport of the other amendments. I hope that I have satisfied the right hon. Gentleman that there is no need for this amendment.The hon. and learned Member for Dover and Deal referred to Amendment (bbb). If the timber is sold off and income tax is borne on the net sale proceedings it would in the main be under Schedule B, as we have both recognised. [Interruption.] I am sorry ; we shall have to leave it that I recognise that. It could be a harsh solution to take those proceedings under the capital tax regime. This is the purport of the hon. and learned Gentleman's case. In practice, substantial sales of timber are hardly likely to come fully within the charge to income tax precisely because the assessment will come under Schedule B. That is why the hon. and learned Gentleman, in his peregrinations through the Revenue courts, may not have come across timber cases too often. They never paid any tax.
I am infinitely obliged to the Chief Secretary for giving way. Will he address himself to the point put to him. It is very likely—or it is at least possible—that the transferee, when he comes to cut will have to pay tax under Schedule D. It would be easy for me to demonstrate that he may have to pay well over 100 per cent. if, if I understand the right hon. Gentleman correctly, such a person will have to pay capital transfer tax on the net proceedings of the sale and income tax under Schedule D. It is not good enough for the Chief Secretary to slide away from this point by saying that we all know that this person will be assessed under Schedule B. This is not so, unless the right hon. Gentleman can give us the assurance that in every case the transferee will be able to opt for Schedule B just before capital transfer tax comes to be paid. Will he give the House that assurance? If not, will he face the fact that he may well be imposing a charge to capital transfer tax and income tax amounting to well over 100 per cent. in some quite simple cases?
I do not accept those extreme examples. In Standing Committee the hon. and learned Gentleman gave us many examples, all of which were misguided or misplaced. He should know, as indeed should the right hon. Member for Cambridgeshire (Mr. Pym), that in most cases they will be taxed under Schedule B—[Interruption.] I doubt whether anybody would opt to pay income tax under a regime higher than that used in Schedule B.
It is an option which an owner can make for his lifetime. It must apply to all his woodlands. I do not know whether the right hon. Gentleman has comprehended the nature of that option. It may not be possible for such a person to avoid that income tax.
It would be strange for a man to opt to pay income tax at a higher level when he can pay tax under Schedule B at a lower level.The matter of dedication was mentioned. There was no question of misleading anybody. The most modern dedication scheme was introduced only in October 1974. Therefore, it would be well known to anybody using the scheme that there was to be a capital transfer tax. It was mentioned in March 1974 and there was a White Paper on the subject in July. Therefore, there is no question of any bad faith. I was asked whether we had had consultations with the Forestry Commission about dedication schemes. I am happy to say that we have had such discussions. The commission was consulted particularly about this feature of the relief—that is to say, that trees planted must come within the dedication scheme. The commission is aware of all these points. 'The new dedication scheme—basis three—goes down as far as woodlands of one hectare in size, or about two and a half acres, and will take in small woods. The new dedication scheme modifies the proposed scheme moving from a preoccupation with timber production to a more broadly-based concept of social benefit. It is possible that there may be some isolated copses or uneconomically-planted woodlands which the Forestry Commission would be unwilling to accept into dedication schemes under the present criteria. I accept that, but in the main it is extremely unlikely that that type of small area would be highly valuable for purposes of CTT.
Will the right hon. Gentleman consider the situation in which there is a series of small environmental plantings, all of very much less than two and a half acres?
If there are such small plantings the value is likely to be small, and therefore the CTT is also likely to be small.
Did the right hon. Gentleman's consultations with the Forestry Commission take in matters other than dedication? If so, what advice did he have about those other general matters?
I had consultations with the Chairman of the Forestry Commission and many others. As the right hon. Gentleman will know from the advice which he received when in office, it is not the custom—it is certainly not mine—to tell the House or anybody else what that advice is.
Will the right hon. Gentleman say how many consultations he had with representatives of the forestry workers, and also with the Timber Trade Federation?
I thought that the people who came to see me represented not only their capital but the people who worked for them. That was the impression they gave me.I think I have dealt with the greater part, if not all, of the amendments which have been brought to my attention. There seems to be a wholly false assumption about the whole question of capital transfer tax in relation to forestry and woodlands generally. There is no reason whatever to assume that CTT has been responsible for any drop in planting [HON. MEMBERS : "Oh."]. If that is the case, it is a most peculiar Opposition argument. They are suggesting that the major reason for planting trees is to be able to escape estate duty.
The Chief Secretary has made a ridiculous statement. The fact that there was so much uncertainty when the Government's scheme was first mooted is obvious, since they did not plant trees to the tune of some 30 million.
That is precisely what I said—namely, that the Opposition appear to be arguing that the reason why owners did not plant trees was that they were no longer able to obtain estate duty relief [An HON. MEMBER : "What about the profit?"] I do not know how that affects their profit. We are talking about estate duty. Nobody is talking about profitability ; we are talking about the tax. The argument has been that only because of the existence of estate duty relief were trees planted—[HON. MEMBERS : "No.") What on earth are the Opposition talking about then? What is the burden of their case? The profitability has not changed. The profitability is the same before and after CTT. The schedule which I have presented to the House gives substantial relief to a specific and important asset—namely woodlands. The amount of relief given passes over a number of generations. It is very generous to a particular asset, as opposed to many other assets which, equally, have a small economic return.I hope that the Opposition will examine what they are suggesting. They are suggesting that we should give further relief not so much to small woodland owners but to the very wealthy woodland owners who will already be given substantial relief by the provisions of the schedule. I think they are asking me to go very much further now, and I must ask my right hon. and hon. Friends to resist any amendment to the schedule.
Before he sits down, will the right hon. Gentleman deal with two points which many of us have raised on innumerable occasions? [HON. MEMBERS : "He has already sat down."] First, what is the position regarding unemployment in forestry in the future, and, secondly, what is the situation in regard to imports in the years ahead?
I congratulate my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) on a clear, concise and moderate introduction of these amendments, despite the fact that the names of his hon. Friends appear to have been taken off the Amendment Paper inadvertently. The manner in which he opened the debate was evidence of the fact that we can get along perfectly well with just my hon. Friend's name against these important amendments.Many protests have been made about the rushed nature of these complicated matters. We are not aware of any substantive consultations which have taken place between the Treasury and forestry interests between the end of the Committee stage and Report. It may well be that the right hon. Gentleman the Chief Secretary has had one meeting with outsiders, but we are not aware that consultations have taken place. Since the whole basis on which forestry is to be taxed under the CTT has been changed between Committee and Report stages, it would have been desirable if there had been much fuller consultation. I have a telegram which was sent by the Vice-Chairman of the Forestry Committee of Great Britain to the Chancellor of the Exchequer, emphasising the regrettable lack of consultation and unnecessary haste. The Government fail to understand that forestry is a long-term industry and deserves long-term and mature consideration. We do not believe the new clause has received that full and proper consideration which it deserves. We do not expect Treasury Ministers to have a detailed knowledge of every single specific industry and in dealing with woodlands we are embarking upon a technical area of the tax law. I hesitate to intervene between such experts as the Chief Secretary and my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) but in a moment I should like to refer to the option available between Schedule B and Schedule D, because I think it is important. 7.0 p.m. The debate has fallen into several categories. We must deal first with the amendment which seeks to place the valuation on the same date basis as the rate of tax. The right hon. Member for Down, South (Mr. Powell) referred to the matter at some length. The amendment was mentioned as one of our two major amendments by my hon. Friend the Member for Cirencester and Tewkesbury. The Chief Secretary said that it was illogical for the right hon. Gentleman to say that death should be taken as the point for the rate and valuation because the Government had already given substantial concessions. He went on to say that the request was churlish. This shows a total lack of understanding on the part of the Chief Secretary of the fact that we are dealing with a particular and special industry which, throughout the whole of our estate duty legislation, had been recognised as such. What may well happen now is that the trees will be felled before maturity. Under the legislation before us it is possible to conceive tax being payable on rates of capital transfer tax which were prevailing 100 years earlier. I do not believe that it is logical to put on the statute book a system which could lead to somebody paying a rate of tax when he sells, say, an oak tree, which had been settled 100 years before the sale. The Chief Secretary said that the right hon. Gentleman was churlish in suggesting that there was something illogical about this. I see nothing illogical about it at all. Indeed, the illogicality lies in the new proposal which the Chief Secretary is bringing forward.
The Chief Secretary kicked the bottom out of that argument by pointing out that the words in paragraph 2 caused paragraph 3 to refer to the latest and not the earliest of a series of deaths and successions.
The right hon. Gentleman also referred to that, and I shall come back to it later.The next most important amendment concerns the levying of capital transfer tax on the top slice. There is a feeling among the Chancellor's advisers—I am sure they have not changed their view since I was at the Treasury—that forestry and woodlands are a potent source of avoidance and are therefore to be deplored. I remember very well that when we were in office we had cause to look at the basis upon which woodlands were treated. I can remember very well the recommendations that were put forward to us. It is the task of Treasury Ministers to examine advice with great care. We cannot put a great industry like this in jeopardy because there is a feeling on the part of advisers, and it appears, on the part of the Chancellor of the Exchequer, that this whole area is motivated wholly by tax avoidance. That is simply not the case. To tax on the top slice is harsh and unfair. My hon. Friend the Member for Cirencester and Tewkesbury talked about the value of the land being exempt from the provisions of the schedeule. The Chief Secretary's reply was "We brought this new schedule forward because we were concerned that this was a case where we were dealing with growing crops ". I think that those were his words. We are not dealing, however, with a field of wheat ; we are dealing with a crop which may take 100 years or more to mature. When my hon. Friend asked that the value of land should be included, he was absolutely right. How can it be sensible for the land upon which the trees are growing to bear four or five bites of capital transfer tax when the trees themselves are to exempted until they are sold? Surely this cannot be logical. I should like to give a personal example. I must here declare an interest. I have a farm of my own, on which I have been planting shelter belts. Since these are shelter belts for horticulture, I hope that the value of the land is not less than £500 an acre. It may be worth £1,000 an acre. I have planted 5,000 trees, and the planting was finished a few days ago. Although these trees may pass through five generations without capital transfer tax being payable, is it intended, or is it logical or sensible, that the land upon which they are growing, which may well have a value of up to £10,000 an acre, for all I know, in 100 years' time, to have to bear repeated slices of capital transfer tax through the generations, although the trees do not? The Chief Secretary has not answered that point.
I hope that the hon. Gentleman has taken the point that the agricultural value of the land for capital transfer tax purposes will be the multiple of the rental value, which will be considerably lower than the figure he has given.
I am well aware that the valuation of agricultural land is on a multiplier basis rather than a market value basis, but I cannot possibly say what the margin between a multiplier of the agricultural rents and agricultural value will be in a generation's time. It may well be that the concessions which the Government have made may not be valuable at all in a generation's time. I hope that it will be, but it may not be. [Interruption.] I agree that the margin is narrowing all the time.I turn to the question of the dedication scheme. The Chief Secretary said that he had consulted the Forestry Commission on the widening of the dedication scheme arrangements. The matter is extremely important, because as the schedule stands the scheme does not include a great deal of our woodland. There was a dispute between my hon. and learned Friend the Member for Dover and Deal and the Chief Secretary about Schedule B and Schedule D. I find it difficult to believe that the majority of people who own small woodlands and who are therefore not in business as major woodland owners, will opt for taxation under Schedule B. I should have thought that the majority of people who own small amounts of woodland will pay tax under Schedule D. The Chief Secretary implied that the whole thing was a racket, because people who might be paying tax under Schedule D could offset their maintenance expenses and other expenses against tax throughout the period. He suggested that they were in some way having a double benefit. How can that be the case? If they are under Schedule D, they are merely offsetting allowable expenses against other income in the way allowed throughout the Schedule D arrangements. There is nothing different here from the normal taxation arrangements. The point made by my hon. Friend the Member for Cirencester and Tewkesbury about thinnings—known in some quarters as "underwood "—is also valid. When somebody inherits woodland, no capital transfer tax is paid. Is it the case that each year, as the thinnings are sent away to a pulp mill, capital transfer tax will arise when those thinnings are sold? My hon. Friend was absolutely right. It is nonsense if capital transfer tax, which is meant to be a capital tax, works as a revenue tax. It appears that, at great inconvenience and trouble to the accountants and others concerned, there would be a liability to the tax year by year as the thinnings or the underwood were sold to the pulp mills.
The logic of what the hon. Gentleman is saying is that as thinning goes on throughout the period, year after year, there will never be any capital transfer tax. Is that what the hon. Gentleman is saying?
I am saying that if a person inherited woodlands, and the capital transfer tax was not then payable, as he sold the thinnings year by year a piece of capital transfer tax would be payable each year.
What is the alternative?
My hon. Friend was making the point that an administrative burden of a revenue tax nature was then placed upon the woodland's owner, when we are dealing here with a capital transfer tax, which is presumably not meant to apply to individuals annually.I must protest that although we have had this debate attended by my hon. Friends the Members for Aberdeenshire, West (Mr. Fairgrieve), North Angus and Mearns (Mr. Buchanan-Smith), Fife, East (Sir J. Gilmour) and the hon. Members for Roxburgh, Selkirk and Peebles (Mr. Steel) and Argyll (Mr. McCormick), there has been nobody here from the Scottish Office. As far as I am aware, nobody from the Scottish Office was here for the recent debate. The forestry industry is a major industry in Scotland, and Ministers from the Scottish Office should have been here to listen to the debate. What is more, as far as I am aware no representative from the Ministry of Agriculture has been here. It would have been right and proper for Ministers from that Ministry to be present. The reason for their absence must be that they are embarrassed by the Treasury's measure. The Chief Secretary suggested that we were claiming that if it were not for avoidance we should have no woodlands. In fact, the estate duty arrangements which have long existed for woodlands were placed on the statute book because our forebears knew that it was a particular industry needing particular measures for its encouragement. It is monstrous for the Chief Secretary to say that the shortfall in planting this year, which I understand to be about 30 million trees, is not attributable to the tax, when the representatives of the Forestry Commission of Great Britain and all those concerned with the industry say specifically that the plantings have not taken place because of the muddle over the tax and the manner in which the original proposals were brought forward.
Division No. 135]
|Adley, Robert||Bennett, Sir Frederic (Torbay)||Brittan, Leon|
|Aitken, Jonathan||Bennett, Dr Reginald (Fareham)||Brotherton, Michael|
|Alison, Michael||Benyon, W.||Brown, Sir Edward (Bath)|
|Arnold, Tom||Berry, Hon Anthony||Buchanan-Smith, Alick|
|Atkins, nt Hon H. (Spelthorne)||Bitten, John||Buck, Antony|
|Awdry, Daniel||Biggs-Davison, John||Budgen, Nick|
|Bain, Mrs Margaret||Blaker, Peter||Bulmer, Esmond|
|Baker, Kenneth||Boscawen, Hon. Robert||Burden, F. A.|
|Banks, Robert||Bowden, A. (Brighton, Kemptown)||Butler, Adam (Bosworth)|
|Beith, A. J.||Boyson, Dr. Rhodes (Brent)||Carlisle, Mark|
|Bell, Ronald||Bradford, Rev Robert||Carson, John|
in the Bill. If the right hon. Gentleman says that the total uncertainty that has prevailed is not the cause of the shortfall, he must think not only that my hon. Friends are fools but that all those who plant woodlands and everybody who advises them are fools as well.
We seem to start from a different position from the Government in all these debates. The Opposition want to see our woodlands and rural employment preserved, whereas the Chief Secretary seems obsessed with removing any possibility of what he described as avoidance of capital transfer tax and any kind of special concession for special industries.
In Scotland, one in six of the rural workers is engaged in forestry. More than half the rural workers in the private sector are engaged in the industry. They are greatly concerned about the way in which the whole business has been handled by the Government.
When we saw in today's newspapers a picture of the Prime Minister planting a tree, we were ashamed to think that the Government should introduce this ill-thought-out measure. My hon. Friend said that we did not want any crumbs of comfort. We have had none. I hope that before the next Budget the Chief Secretary will have time to consult the woodland interests, look into the matter in greater depth, obtain a greater knowledge of the great industry, and introduce proper amendments to his original proposals.
Question put and agreed to.
Schedule read a Second time.
Amendment proposed to the proposed schedule : (ii) in line 42, leave out ' highest ' and insert ' mean '.—[ Mr. Powell.]
Question put, That the amendment be made to the proposed schedule:
The House divided : Ayes 255, Noes 272.
|Chalker, Mrs Lynda||Howell, David (Guildford)||Powell, Rt Hon J. Enoch|
|Channon, Paul||Howells, Geraint (Cardigan)||Prior, Rt Hon James|
|Churchill, W. S.||Hurd, Douglas||Pym, Rt Hon Francis|
|Clark, Alan (Plymouth, Sutton)||Hutchison, Michael Clark||Raison, Timothy|
|Clark, William (Croydon S)||Irving, Charles (Cheltenham)||Rathbone, Tim|
|Clarke, Kenneth (Rushcliffe)||James, David||Rawlinson, Rt Hon Sir Peter|
|Clegg, Walter||Jenkin,Rt Hon P.(Wanst'd & W'df'd)||Rees, Peter (Dover & Deal)|
|Cockcroft, John||Jessel, Toby||Rees-Davies, W. R.|
|Cooke, Robert (Bristol W)||Johnson Smith, G. (E. Grinstead)||Reid, George|
|Cope, John||Jones, Arthur (Daventry)||Renton, Rt Hon Sir D. (Hunts)|
|Cormack, Patrick||Joseph, Rt Hon Sir Keith||Renton, Tim (Mid-Sussex)|
|Costain, A. P.||Kershaw, Anthony||Ridley, Hon Nicholas|
|Craig, Rt Hon W. (Belfast E)||Kilfedder, James||Ridsdale, Julian|
|Crawford, Douglas||Kimball, Marcus||Rifkind, Malcolm|
|Critchley, Julian||King, Evelyn (South Dorset)||Roberts, Michael (Cardiff NW)|
|Davies, Rt Hon J. (Knutsford)||King, Tom (Bridgwater)||Roberts, Wyn (Conway)|
|Dean, Paul (N Somerset)||Knight, Mrs Jill||Ross, Stephen (Isle of Wight)|
|Dodsworth, Geoffrey||Knox, David||Ross, William (Londonderry)|
|Douglas-Hamilton, Lord James||Lamont, Norman||Rost, Peter (SE Derbyshire)|
|du Cann, Rt Hon Edward||Lane, David||Sainsbury, Tim|
|Durant, Tony||Langford-Holt, Sir John||St. John-Stevas, Norman|
|Eden, Rt Hon Sir John||Latham, Michael (Melton)||Shaw, Giles (Pudsey)|
|Edwards, Nicholas (Pembroke)||Lawrence, Ivan||Shelton. William (Streatham)|
|Elliott, Sir William||Lawson, Nigel||Shepherd, Colin|
|Emery, Peter||Lester, Jim (Beeston)||Shersby, Michael|
|Evans, Gwynfor (Carmarthen)||Lewis, Kenneth (Rutland)||Silvester, Fred|
|Ewing, Mrs Winifred (Moray)||Lloyd, Ian||Sims, Roger|
|Eyre Reginald||Leveridge. John||Sinclair, Sir George|
|Fairbairn. Nicholas||Luce, Richard||Skeet, T. H. H.|
|Fairgrieve, Russell||MacCormick, Iain||Smith, Cyril (Rochdale)|
|Farr, John||McCrindle, Robert||Smith, Dudley (Warwick)|
|Fell. Anthony||McCusker, H.||Speed, Keith|
|Finsberg, Geoffrey||Macfarlane, Neil||Spence, John|
|Fisher, Sir Nigel||MacGregor, John||Spicer, Michael (S Worcester)|
|Fletcher, Alex (Edinburgh N)||Macmillan, Rt Hon M. (Farnham)||Sproat, Iain|
|Fletcher-Cooke, Charles||McNair-Wilson, M. (Newbury)||Stainton, Keith|
|Fookes, Miss Janet||McNair-Wilson, P. (New Forest)||Stanbrook. Ivor|
|Fowler, Norman (Sutton C'f'd)||Madel, David||Stanley, John|
|Fox, Marcus||Marshall, Michael (Arundel)||Steel, David (Roxburgh)|
|Fraser,Rt Hon H.(Stafford & St)||Marten, Neil||Steen, Anthony (Wavertree)|
|Freud, Clement||Mates, Michael||Stewart, Donald (Western Isles)|
|Fry, Peter||Mather, Carol||Stewart, Ian (Hitchin)|
|Galbraith Hon. T. G. D.||Maude, Angus||Stokes, John|
|Gardiner, George (Reigate)||Maudling, Rt Hon Reginald||Stradling Thomas, J.|
|Gardner, Edward (S Fylde)||Mawby, Ray||Tapsell. Peter|
|Gilmour, Rt Hon Ian (Chesham)||Maxwell-Hyslop, Robin||Taylor, Teddy (Cathcart)|
|Gilmour, Sir John (East Fife)||Mayhew, Patrick||Tebbit, Norman|
|Glyn, Dr Alan||Meyer, Sir Anthony||Temple-Morris, Peter|
|Goodhart Philip||Miller, Hal (Bromsgrove)||Thomas, Dafydd (Merioneth)|
|Goodhew, Victor||Mills, Peter||Thompson, George|
|Goodlad, Alastair||Miscampbell, Norman||Townsend, Cyril D.|
|Gorst, John||Mitchell, David (Basingstoke)||Trotter, Neville|
|Gow, Ian (Eastbourne)||Moate, Roger||van Straubenzee, W. R.|
|Gower, Sir Raymond (Barry)||Monro, Hector||Vaughan, Dr. Gerard|
|Grant, Anthony (Harrow C)||Montgomery, Fergus||Viggers, Peter|
|Gray, Hamish||Moore John (Croydon C)||Wainwright Richard (Colne V)|
|Grieve, Percy||More, Jasper (Ludlow)||Wakeham John|
|Griffiths, Eldon||Morgan-Giles, Rear-Admiral||Walters Dennis|
|Grimond, Rt Hon J.||Morris, Michael (Northampton S)||Warren, Kenneth|
|Grist, Ian||Morrison, Charles (Devizes)||Watt, Hamish|
|Grylls,. Michael||Morrison, Hon Peter (Chester)||Weatherill, Bernard|
|Hall, Sir John||Neave, Airey||Wells, John|
|Hall-Davis, A. G. F.||Nelson, Anthony||Welsh, Andrew|
|Hampson, Dr Keith||Neubert, Michael||Whitelaw, Rt Hon William|
|Hannam, John||Newton, Tony||Wiggin, Jerry|
|Harrison, Col Sir Harwood (Eye)||Nott, John||Wigley, Dafydd|
|Hastings, Stephen||Onslow, Cranley||Wilson, Gordon (Dundee E)|
|Havers, Sir Michael||Oppenheim, Mrs Sally||Winterton, Nicholas|
|Hawkins, Paul||Page, John (Harrow West)||Wood, Rt Hon Richard|
|Henderson, Douglas||Page, Rt Hon R. Graham (Crosby)||Young, Sir G. (Ealing, Acton)|
|Heseltine, Michael||Pardoe, John|
|Hicks, Robert||Parkinson, Cecil||TELLERS FOR THE AYES:|
|Higgins, Terence L.||Penhaligon, David|
|Holland, Philip||Percival, Ian||Mr. Spencer Le Marchant an|
|Hordern, Peter||Peyton, Rt Hon John||Mr. James Molyneaux.|
|Howe, Rt Hn Sir Geoffrey||Pink, R. Bonner|
|Abse, Leo||Ashton, Joe||Barnett, Rt Hon Joel (Heywood)|
|Allaun, Frank||Atkins, Ronald (Preston N)||Bates, Alf|
|Anderson, Donald||Atkinson, Norman||Bean, R. E.|
|Archer, Peter||Bagier, Gordon A. T.||Benn, Rt Hon Anthony Wedgwood|
|Ashley, Jack||Barnett, Guy (Greenwich)||Bennett, Andrew (Stockport N)|
|Bidwell, Sydney||Gourlay, Harry||Noble, Mike|
|Bishop, E. S.||Graham, Ted||Oakes, Gordon|
|Blenkinsop, Arthur||Grant, George (Morpeth)||Ogden, Eric|
|Boardman, H.||Hamilton, James (Bothwell)||O'Halloran, Michael|
|Booth, Albert||Hamilton, W. W. (Central Fife)||O'Malley, Rt Hon Brian|
|Boothroyd, Miss Betty||Hardy, Peter||Orbach, Maurice|
|Bottomley, Rt Hon Arthur||Harper, Joseph||Ovenden, John|
|Boyden, James (Bish Auck)||Harrison, Walter (Wakefield)||Padley, Walter|
|Bradley, Tom||Hattersley, Rt Hon Roy||Palmer, Arthur|
|Bray, Dr Jeremy||Hatton, Frank||Park, George|
|Brown, Hugh D. (Provan)||Healey, Rt Hon Denis||Parker, John|
|Brown, Robert C. (Newcastle W)||Hooley, Frank||Parry, Robert|
|Brown, Ronald (Hackney S)||Horam, John||Pendry, Tom|
|Buchan, Norman||Howell, Denis (B'ham, Sm H)||Perry, Ernest|
|Buchanan, Richard||Hoyle, Doug (Nelson)||Phipps, Dr Colin|
|Butler, Mrs Joyce (Wood Green)||Huckfield, Les||Prentice, Rt Hon Reg|
|Callaghan, Jim (Middleton & P)||Hughes, Rt Hon C. (Anglesey)||Prescott, John|
|Campbell, Ian||Hughes, Mark (Durham)||Price, William (Rugby)|
|Canavan, Dennis||Hughes, Robert (Aberdeen N)||Radice, Giles|
|Cant, R. B.||Hughes, Roy (Newport)||Richardson, Miss Jo|
|Carmichael, Neil||Hunter, Adam||Roberts, Albert (Normanton)|
|Carter, Ray||Irving, Rt Hon S. (Dartford)||Roberts, Gwilym (Cannock)|
|Carter-Jones, Lewis||Jackson, Colin (Brighouse)||Robertson, John (Paisley)|
|Cartwright, John||Jackson, Miss Margaret (Lincoln)||Roderick, Caerwyn|
|Castle, Rt Hon Barbara||Jay, Rt Hon Douglas||Rodgers, George (Chorley)|
|Clemitson, Ivor||Jeger, Mrs Lena||Rooker, J. W.|
|Cocks, Michael (Bristol S)||Jenkins, Hugh (Putney)||Roper, John|
|Cohen, Stanley||Johnson, James (Hull West)||Rose, Paul B.|
|Colquhoun, Mrs Maureen||Johnson, Walter (Derby S)||Ross, Rt Hon W. (Kilmarnock)|
|Concannon, J. D.||Jones, Alec (Rhondda)||Rowlands, Ted|
|Conlan, Bernard||Jones, Barry (East Flint )||Ryman, John|
|Cook, Robin F. (Edin C)||Jones, Dan (Burnley)||Sandelson, Neville|
|Corbett, Robin||Judd, Frank||Sedgemore, Brian|
|Cox, Thomas (Tooting)||Kaufman, Gerald||Selby, Harry|
|Craigen, J. M. (Maryhill)||Kelley, Richard||Shaw, Arnold (Ilford South)|
|Cronin, John||Kerr, Russell||Sheldon, Robert (Ashton-u-Lyne)|
|Cryer, Bob||Kilroy-Silk, Robert||Shore, Rt Hon Peter|
|Cunningham, G. (Islington S)||Kinnock, Neil||Short, Rt Hon E. (Newcastle C)|
|Cunningham, Dr J. (Whiteh)||Lamble, David||Short, Mrs Renée (Wolv NE)|
|Dalyell, Tarn||Lamborn, Harry||Silkin, Rt Hon John (Deptford)|
|Davidson, Arthur||Lamond, James||Silkin, Rt Hon S. C. (Dulwich)|
|Davies, Bryan (Enfield N)||Latham, Arthur (Paddington)||Sillars, James|
|Davies, Denzil (Llanelli)||Leadbitter, Ted||Silverman, Julius|
|Davies, Ifor (Gower)||Lee, John||Skinner, Dennis|
|Davis, Clinton (Hackney C)||Lewis, Arthur (Newham N)||Small, William|
|Deakins, Eric||Lewis, Ron (Carlisle)||Smith, John (N Lanarkshire)|
|Dean, Joseph (Leeds West)||Lipton, Marcus||Snape, Peter|
|de Freitas, Rt Hon Sir Geoffrey||Litterick. Tom||Spearing, Leslie|
|Delargy, Hugh||Lomas, Kenneth||Spriggs, Leslie|
|Dell, Rt Hon Edmund||Loyden, Eddie||Stallard A. W.|
|Dempsey, James||Luard, Evan|
|Doig, Peter||Lyon, Alexander (York)||Stewart, Rt Hon M. (Fulham)|
|Dormand, J. D.||Lyons, Edward (Bradford W)||Stoddart, David|
|Douglas-Mann, Bruce||Mabon, Dr J. Dickson||Stott, Roger|
|Duffy, A. E. P.||McCartney, Hugh||Strang, Gavin|
|Dunn, James A.||McElhone, Frank||Strauss, Rt Hon G. R.|
|Dunnett, Jack||MacFarquhar, Roderick||Summerskill, Hon Dr. Shirley|
|Dunwoody, Mrs Gwyneth||McGuire, Michael (Ince)||Taylor, Mrs Ann (Bolton W)|
|Eadie, Alex||Mackenzie, Gregor||Thomas, Mike (Newcastle E)|
|Edelman, Maurice||Mackintosh, John P.||Thomas, Ron (Bristol NW)|
|Edge, Geoff||Maclennan, Robert||Thorne, Stan (Preston South)|
|Ellis, John (Briggg & Scun)||McMillan, Tom (Glasgow C)||Tierney, Sydney|
|Ellis, Tom (Wrexham)||McNamara, Kevin||Tinn, James|
|English, Michael||Madden, Max||Tomlinson, John|
|Ennals, David||Mahon, Simon||Tomney, Frank|
|Evans, John (Newton)||Marks, Kenneth||Torney, Tom|
|Ewing, Harry (Stirling)||Marquand, David||Urwin, T. W.|
|Faulds, Andrew||Marshall, Dr Edmund (Goole)||Varley, Rt Hon Eric G.|
|Fernyhough, Rt Hon E.||Marshall, Jim (Leicester S)||Wainwright, Edwin (Dearne V)|
|Flannery, Martin||Mason,Rt Hon Roy||Walden, Brian (B'ham, L'dyw'd)|
|Fletcher, Raymond (Ilkeston)||Meacher, Michael||Walker, Harold (Doncaster)|
|Fletcher Ted (Darlington)||Mellish, Rt Hon Robert||Walker, Terry (Kingswood)|
|Foot, Rt Hon Michael||Millen, Bruce||Ward, Michael|
|Ford, Ben||Miller, Dr M. S. (E Kilbride)||Watkins, David|
|Forrester, John||Miller, Mrs Millie (Ilford N)||Watkinson, John|
|Fowler, Gerald (The Wrekin)||Mitchell, R. C. (Soton, Itchen)||Weetch, Ken|
|Fraser, John (Lambeth, N'w'd)||Molloy, William||Wellbeloved, James|
|Freeson, Reginald||Moonman, Eric||White, Frank R. (Bury)|
|Garrett, John (Norwich S)||Morris, Alfred (Wythenshawe)||White, James (Pollok)|
|Garrett, W. E. (Wallsend)||Morris, Charles R. (Openshaw)||Whitlock, William|
|George, Bruce||Morris, Rt Hon J. (Aberavon)||Willey, Rt Hon Frederick|
|Gilbert, Dr John||Mulley, Rt Hon Frederick||Williams, Alan (Swansea W)|
|Ginsburg, David||Murray, Rt Hon Ronald King||Williams, Alan Lee (Hornch'ch)|
|Golding, John||Newens, Stanley||Williams, W. T. (Warrington)|
|Wilson, Alexander (Hamilton)||Woodall, Alec||TELLERS FOR THE NOSE|
|Wilson, William (Coventry SE)||Wrigglesworth, Ian|
|Wise, Mrs Aurdey||Young, David (Bolton E)||Mr.Donald Coleman and|
Question accordingly negatived.
Schedule added to the Bill.