Skip to main content

Orders Of The Day

Volume 78: debated on Wednesday 8 May 1985

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Finance Bill

(Clauses 3, 10, 35, 40, 54, 64 and 87 and schedules 12, 16 and 22)

Considered in Committee [Progress 7 May]

[SIR PAUL DEAN in the Chair]

Clause 64

MODIFICATION OF INDEXATION ALLOWANCE

4.6 pm

I beg to move amendment No. 12, in page 59, line 26, leave out 'indexation allowance' and insert 'chargeable gain'.

My hon. Friend the Member for Croydon, South (Sir W. Clark) is unable to be here today, and in the absence of any more alluring invitations I have agreed to become his PPS for this debate. As we see eye to eye on these matters, I thought that I should say what he would have said had he been here.

Last year my right hon. Friend the Chancellor of the Exchequer promised to reform capital taxation, especially capital gains tax, in the 1985 Finance Bill. The indexation provisions that we are debating today appear to represent the full extent of that reform, and, of course, the reliefs given are most welcome.

One widely recognised anomaly—which I believe Treasury Ministers also recognise—is that the system of capital gains tax as it now applies has ceased to be a capital gains tax in the general sense and has become a 17-year inflation tax covering the years 1965 to 1982. That results from the indexation provision introduced by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) when he was Chancellor.

Confusion surrounds the tax, and that makes it an inefficient and ineffective tax. It is also an unjust tax, especially for the long-term investors who acquired their assets during the 17-year period or who held assets when the tax was introduced. It was introduced as a short-term tax, but, in effect, we have removed that element of the tax and made it bite hardest against those who have held assets for a significant period. That will become worse as the years go by and as the number of those investors diminishes.

There will also be considerable administrative difficulties. The new rules, especially those allowing indexation losses—which I welcome—are complex. Schedule 16 adds an additional eight pages to the statute book, which I regret because that means more work for accountants and lawyers. I do not complain so much about that as about the additional work for business men, especially those involved in small and family businesses.

Those who remember the administrative difficulties surrounding valuation when the tax was introduced in 1965, hardly relish the problems and the administrative and accountancy costs of now determining the March 1982 values, especially for land and unquoted family companies.

A simple solution to those difficulties is contained in the amendment. Far from seeking to extend the indexation provisions, which would be cumbersome and complex, the amendment seeks the simple solution of treating property as having been acquired in 1982.

This change would incur a cost, I do not deny, but in terms of its rationality, there is much to be said for it. For example, the complicated 1965 transitional provisions would cease to be important and it would no longer be necessary to delve into history to calculate, for example, allowable expenditure. Valuations, in particular, would relate to a period much more within the practical experience of practitioners and valuers.

Furthermore, fewer valuations would be required. At present, it is possible that before computing the chargeable gain, the land or other asset concerned must be valued both for a 1965 and a 1982 value. The amendment seeks a simplification in that the 1965 or other valuation would no longer have to take place.

The amendment would be particularly helpful to those family businesses that have been carried on through long-established companies where the double charge to capital gains tax on liquidation inhibits the sensible reorganisation of the business. Those are valuable reforms that we might make in this complicated tax as it now stands, a tax which will bring in a diminishing revenue year on year as real gains only are taxed and not the inflationary gains that we have had since the tax was introduced.

If my right hon. and learned Friend the Chief Secretary is not minded to accept the amendment, he might care to consider another way in which this part of the Bill could be simplified. It comes in the form of a simple suggestion that has been put forward by the Institute of Directors. The institute proposes that after an asset has been held for seven years, it should drop out of the charge to tax and should not be available for a loss to be acquired for the purposes of computing one's capital gains tax liability. That alternative also merits consideration.

Consider, for example, an asset which has maintained its real value throughut the period up to 1982. We find an extraordinary situation. By April 1982, the asset would have accumulated an inflationary taxable gain—which will still be taxable after the Bill has become an Act unless an amendment is accepted—of 85 per cent. of its real value if it were originally acquired in April 1965; of 75 per cent. if acquired in April 1975; and of 42 per cent. if acquired in April 1978. That is not acceptable.

Is the hon. Gentleman aware that at a time when Ministers repeatedly ask the British public to take in the waste and cut out excess, to accept cuts in social services and education spending and to accept increases in bus fares, it sticks in the throat to have him move an amendment which would effectively reduce the amount raised by way of capital gains tax, a tax that is paid by few people in society and invariably by those with great wealth? Is he aware that he is not serving the national interest by moving this amendment, particularly when in Manchester, which is close to his constituency, hundreds of thousands of people are living in poverty and deprived circumstances? Why does he favour the few at the cost of the many?

I do not accept the premise on which the hon. Gentleman makes that intervention. The simplification which this tax change would bring about would mean that many people who are now engaged in activities which can hardly be regarded as productive would turn their energies elsewhere, which in turn would produce more real jobs in the economy and thus contribute towards the creation of that enterprise culture which we have done so much to achieve in the past six years. Priorities in expenditure are, of course, for the Government to determine, and I have not denied that a cost would be incurred in making this change. I am pleading for a more rational tax system, which I hope Opposition Members will support.

4.15 pm

There is an injustice involved in this tax, which is a clog on free markets because there is—to the extent that it taxes inflationary and not real gains—a considerable disincentive to disposing of assets to reinvest the money, at least in certain types of company. To that extent it prevents individuals from making investments which are likely to be most productive.

There are many reasons to support the amendment and other forms of reform that are proposed in the area about which I am speaking. I will not go further into the detail of the argument. I seek only to invite the Government to take two steps. The first is to admit that there is no justification for not giving relief in some appropriate form, not necessarily by means of indexation, for pre-1982 inflation, except in terms of the cost to the Exchequer, which will diminish year by year. Secondly, I want my right hon. and learned Friend to promise action in future, so long as Exchequer costs can be justified, to remedy the injustice.

I support the amendment, which was tabled in the first instance by my hon. Friend the Member for Croydon, South (Sir W. Clark). I must at the outset declare a distinct personal interest, having just agreed to sell an asset in my ownership; and if the Committee agreed to the amendment, I should not be liable to a substantial payment by way of capital gains tax to which I shall otherwise be liable.

Having spoken for myself, I know that I am speaking for thousands of my constituents and hundreds of thousands of other citizens who are obliged to pay what I consider to be an unfair form of capital gains tax.

I do not disagree with the idea of a capital gains tax being levied in cases where people make a regular income—and I am not saying that it is wrong that they should do so—by achieving small capital gains in the course of their work, such as those who work in the commodity markets. It is right that where they are using capital gains as a form of income, something equivalent to income tax should be levied.

It seems absolutely wrong, however, for us to retain this survival from the great inflation of the 1970s. It is the wrong way to raise a capital gains tax. It is, in fact, a capital levy rather than a respectable tax and it should not be continued in the Bill.

The Government are obviously ashamed of this form of taxation because they have started nibbling away at it again. Their right course, however, would have been to have got rid of the tax altogether in so far as it refers simply to inflationary gains. There are many reasons for that. For example, it is a random levy. It is not raised on everyone who owns capital but on those who manage their assets competently and who decide to change their portfolios so as to invest in the future rather than to hold on to the investments of the past. It does not touch people who are content to hold on to yesterday's investments.

It is wrong also on the Treasury's part in that it is continuing to use this tax as something which, as the Minister said on Second Reading, is regarded as a source of revenue. If the Government were to use the proceeds from this capital levy as capital, that might be more respectable, although it would still be wrong. As he admitted, the Treasury simply raises this money as a capital levy and then applies it as revenue. This is yet another insight into the muddled thinking of the Treasury which does not distinguish properly between the capital account and the revenue account. This tax also distorts the capital market.

The hon. Gentleman has made a point about regarding a capital gain as revenue. How does the hon. Gentleman think the Treasury regards the sale of British Gas? Does it regard the sale as revenue or not?

The hon. Lady has put her finger on an extremely serious point. The Government need capital and revenue. They should differentiate between the sources of the money that they take from society, and have a properly stated capital account and revenue account. Until we have that, we shall never be able to penetrate into what the Government are doing with regard to the economy.

This tax distorts the capital market because it prevents the adjustment of share prices which would benefit rising companies seeking new funds. It helps to sustain the price of shares in companies which are suspected by investors but because of the tax they do not sell, because they are not prepared to suffer the loss involved in changing their holding. This is a drag on the stock market's efficiency.

The tax also has the effect of diminishing the private sector of the stock market. In past years it has been decided that unit and investment trusts and the like are not required to pay this tax when they change their portfolios, but private sector investors must continue to do so. The diminishing private sector faces a particular penalty because of the way in which the Government continue to raise this capital gains tax.

The stock market in London is being weakened because there is a diminishing number of people to make up their minds on a particular issue. The herd of institutional investors tend to move in the same way at the same time. The London market is becoming dangerously unstable. It is wrong that we should diminish the number of people who are willing from time to time, because of their personal knowledge, judgment and ability, to draw on other sources of advice, to take a contrary view to that of the market.

The Government are acting against their own best principles in continuing this tax. It is the opposite of the ideal of private thrift and self-provision. Lately we have heard my right hon. Friend the Prime Minister—I think that all Conservative Members agree—say that she wants to initiate an era in which everyone can be a capitalist. Yet the Treasury is continuing with this unfair form of capital gains tax. It is particularly inapposite at a time when we want to place more emphasis on the need for people to provide for their own retirement through personal pension schemes. People who obtain a pension through one of the established institutions will be able to rely on a body that is exempt from taxation, including capital gains tax. People who try to provide for their old age through their own earnings will remain in the category of those who are hit by this tax.

The Government have done a great deal with regard to indexation and have taken away much of the stigma of this tax for people making their first investment choices; but it is still wrong to impose a retrospective tax on inflation. If we want capitalism to succeed, we must take off the brakes. I understand the sincerity of the hon. Member for Workington (Mr. Campbell-Savours)—he is not in the Chamber now—who is concerned about the burden of taxation and the way in which the Government plan their expenditure within a limited budget; but it is wrong to raise money from the capital market by confiscation. If the Government want to raise money from the capital market, they should pay for it on market terms, and not by relying on obsolete legislation, which imposes a partial and unfair capital levy. It is the role of the House to watch what the Executive is doing when levying taxation on our people. Unfortunately, all too often, hon. Members fall down on that role because the major Opposition party regards itself as the party of high taxation and welcomes increases in taxes. It is not prepared to stand up for the people who are unfairly taxed.

I have heard hon. Members, from the same party as the hon. Gentleman, who revel in the idea of increasing taxation, making the rich squeak, and so on. I do not say that there should not be taxation, but it must be proved to be necessary and shown to be fair. This tax is neither, and that is why the Committee should accept the suggestion made by my hon. Friend the Member for Tatton (Mr. Hamilton).

Although we are sorry that my hon. Friend the Member for Croydon, South (Sir W. Clark) has not been here to move his interesting amendment, I am sure that we are all glad that my hon. Friend the Member for Tatton (Mr. Hamilton) resisted more alluring invitations. How could there be a more alluring invitation than one to participate in a debate in Standing Committee on capital taxation, especially in relation to the Finance Bill? I congratulate my hon. Friend the Member for Tatton on his discrimination and the sensitivity with which he moved the amendment. I am sure that hon. Members welcome also the contribution of my hon. Friend the Member for Kensington (Sir B. Rhys Williams) who has thought long and deeply about this and other matters relating to the operation of our capital markets.

The amendment is not restricted to the elimination of the inflationary element of gains accrued before 1982. In fact, it moves the whole base line forward, taking the matter a good deal further. There may be a case, although it was not developed in full, for moving the base line forward—my hon. Friends the Members for Tatton and for Kensington touched on the matter of simplicity—but that is a slightly broader case than that based on inflation between 1965 and 1982.

A short-term gains tax was introduced in case VII of schedule D which was set up in the Finance Act 1962. It was limited to the disposal of most assets within a year, but disposal of real property within three years. Such was the appetite of the Labour party, for a period from 1965 the short-term gains tax was run in double harness with the longer-term capital gains tax with which we are still saddled. We abolished that short-term gains tax. We are left purely with what might be called a long-term gains tax.

I take the point made by my hon. Friend the Member for Tatton about the ravages of inflation. No doubt we shall have a chance to consider the general principles underlying this aspect when we consider the motion that the clause stand part of the Bill. I have no doubt that that occasion will be admirably utilised by the hon. Member for Thurrock (Dr. McDonald).

We can consider how equitable it is to have something which is described as a capital gains tax but which, to a degree, impinges on inflationary and not real gains. I point out one practical reason for suggesting to the Committee that it should resist the blandishments of my hon. Friend the Member for Tatton. The cost will be £550 million. My hon. Friend would say that that demonstrates the extent of the damage. The amendment, however, goes wider than inflationary gains—it brings the base line forward. The cost would be considerable.

The amendment would be slightly capricious in its effects. For example, between 1965 and 1982 agricultural land increased in value, on average, by about 750 per cent. while voting shares increased by 250 per cent. In both cases, there were dramatic increases. Moving the base line forward for all assets, regardless of their quality, would have a capricious impact.

My hon. Friend the Member for Tatton rested his case on the ground of rationality, which I think, on closer investigation, meant simplification. I would be the first to commend any amendment that was designed to simplify this extraordinarily arcane and complex field of law. I suspect that many of the complex provisions with which capital gains tax is presently encrusted would survive. I doubt whether real simplification would be achieved. The logic of my hon. Friend's case is that the tax should be abolished. That raises an interesting area of debate, but it is not one that my hon. Friend has chosen to employ on this occasion.

When an original base line was introduced at the time the first capital gains tax was levied in 1965, the taxpayer was given the option of adopting a time apportionment method to arrive at his capital gain or of taking the 1965 base line. I notice that, perhaps in the interests of simplicity, my hon. Friend the Member for Croydon, South chose not to introduce that concept in the amendment. Not all taxpayers will feel that the suggested solution was as equitable as my hon. Friend the Member for Kensington has suggested. My hon. Friend widened the debate. He reflected on the impact of such capital taxation on the operation of capital markets. I take his point. May I be bold enough to advance the general proposition that few forms of direct taxation do not distort the operation of the markets to a degree? Regrettably, few civilised states have been able to dispense with direct taxation.

We could have an interesting debate on the relative merits of direct and indirect taxation and how they impinge upon the markets, but I suspect that I should be travelling a little wide and that even your indulgence, Sir Paul, might be strained to the limit. I merely leave my hon. Friend and the Committee with that thought.

4.30 pm

The hon. Member for Thurrock mentioned the composition of Government accounts and asked whether the yield of capital taxation should be allocated solely to capital expenditure. I should be the last to claim perfection for the public expenditure White Paper although, in a constitutional and perhaps in a personal sense, I have to accept responsibility for it. I was happy to do so in our debates before Easter.

The Committee will, however, recall that one of the innovations and improvements introduced was table 112 which sets out capital expenditure. If my hon. Friends study that table, they will see that the Government's capital expenditure is running at £22 billion per annum—considerably more than the yield of capital taxes and privatisation. I hope that the Government meet the point acceptably made by my hon. Friend the Member for Kensington. I am not claiming perfection for Government accounts and if we can set out that point with greater clarity, we shall endeavour to do so.

We have had an interesting debate. My hon. Friend the Member for Tatton has conceded that the amendment goes a little wider than he wished. The general principles have been well deployed. I hope that my hon. Friends will feel that they have had a sufficient airing. I hope that my hon. Friend the Member for Tatton will recognise that for many reasons, in particular the practical ground of cost, I cannot commend the amendment to the House. I hope that I shall not tax the patience of the House too much if I ask it to accept that capital gains tax is now on an acceptable and sustainable basis.

I accept what my right hon. and learned Friend says about the case made for the amendment. I said at the end of my remarks that I was looking for an indication from him that it was only cost that was preventing the Government from accepting a measure of indexation for the period 1965–82, that the Government would keep the matter under review and that when we could afford to introduce such a reform, the Government intended to do so.

I should like to be able to succumb to my hon. Friend's blandishments, which are so moderate and charming. It is natural that cost oppresses the Chief Secretary. One must be interested in the brutal facts of public finance. However, I ventured to deploy one or two other points which oppressed me. I should hate to say that my mind or those of my right hon. and hon. Friends were ever closed to the possibility of improving our tax system, for many parts of which I could not claim perfection.

The considerable reforms will be tested in the clause stand part debate. There may be criticisms from the Opposition. There may be unanimity on that aspect of our fiscal affairs, but somehow I doubt it.

I hope that my hon. Friends will support me in feeling that if clause 64 and the schedule attached to it commend themselves to the Committee, the tax will, at any rate for all present purposes, be regarded as acceptable and sustainable. I hope on that basis that my hon. Friend the Member for Tatton will not feel disposed to press the amendment to a Division.

I was going to say that my arguments had been overcome by the suavity, knowledge and skill of my right hon. and learned Friend which make him such an asset to the Treasury team; but I find it necessary to contradict one point—his suggestion that capital gains tax is now on an acceptable and sustainable basis. I cannot agree with that. I hope that this is a matter that the Treasury will bear in mind when planning the taxation changes to which we look forward during the Government's term of office, if not during the course of the Bill.

My right hon. and learned Friend said that the amendment goes wider than the inflationary issue. It therefore goes wider than the intention for which I was arguing, and I shall not seek to divide the Committee on the issue, although that had been my intention when I first rose.

I ask my right hon. and learned Friend to realise that many people in this country sincerely believe that this form of taxation is wrong. The Government should not indulge in practices which are unfair and damaging to the capital market and which are contrary to the Prime Minister's principles.

Amendment negatived.

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

The Opposition felt that the debate on amendment No. 12 was a matter for the Conservative Benches, but I must commend the hon. Member for Kensington (Sir B. Rhys Williams) for the refreshing honesty with which he put his arguments. He referred to the fact that he had a strong and immediate personal interest in the outcome of the matter. That is refreshing and, as we have heard this afternoon, it was a better performance than that of some other hon. Members.

The theme of the hon. Member's argument on the amendment is relevant to clause 64. Clause 64 and the amendment aim to inflation-proof capital gains. We should pause on that issue for a moment because the underlying principles will require justification by the Chief Secretary.

Clause 64 represents the Government's determination to protect a section of the community against the ravages of inflation. We can perhaps understand that, but we cannot understand the fact that the Government set a stony face against the request of others in the community—teachers, nurses, civil servants and others—to have their income inflation-proofed. Last night, the Chief Secretary was asked to justify the unequal treatment given to one section of the community compared with another, and he manifestly failed to do so. An important issue is at stake here which affects many poor people, and he should explain why the Government are prepared at some cost to inflation-proof the gains made by a tiny proportion of society and to do nothing for teachers, nurses, civil servants and many other public servants. Not only does the clause require a general justification of that kind, but it needs rather a special justification these days. After all, it could better be argued in the past that the main source of capital gains was inflation but now, and perhaps only recently, returns on investment might be regarded as real returns rather than inflationary gains. Therefore, one could say that the Government, in introducing a clause such as this which has as part of its purpose to protect capital against inflation, are doing it at just the wrong time. They are doing it when people are making real returns rather than merely inflationary gains.

The Government cannot have it both ways, of course. They cannot say on the one hand that they have conquered inflation and on the other that they need to protect capital gains from the ravages of inflation. They have to go for one line or the other. They cannot have both at the same time.

The Government might well argue that they are out to promote wider share ownership and therefore they must protect such shareholders from an overbearing tax burden. They want direct investment in equities by individual shareholders in their own right and as a substitute for investment through financial institutions. The Government might argue that reductions in capital gains would stimulate growth in the number of small shareholders which, of course, the Government have stated as their purpose. However, since no tax is payable on gains in any one year of up to £5,900 after the Budget, and exemptions are available for unit and investment trusts, the prospects of any small shareholder being liable for capital gains tax directly or indirectly are very remote. Therefore, small shareholders will not gain particularly from the clause because they are unlikely to be liable for capital gains tax anyway.

The hon. Member for Kensington, in an honest and open speech, made the important point that the Government are nibbling away at capital gains tax. I think that some members of the Government would very much like to abolish capital gains tax at one fell stroke, but instead the Government, perhaps because that would be too obviously a favour to the better off in society, have decided gradually to reduce the impact with the various changes that they have made, including clause 64. Indeed, there are—although the Chief Secretary, I am not surprised to notice, did not outline them—good arguments for having capital gains taxation, and it is worth while mentioning one or two of them. It is important to keep the general principles in mind before we get lost in the details of a complicated clause such as this.

Many would say that there is nothing wrong with stock market speculation and that it provides a valuable financial function in a free market. They might go on to say that, although it has that kind of function, there is no need to give speculators what amounts to a substantial tax incentive to play their chosen role. One might continue the argument by saying that if investors are allowed to make capital gains tax some kind of optional tax and to accumulate a tax credit by establishing short-term losses—which, indeed, is the sort of thing that can be done under the indexation rules in clause 64—then the whole of capital gains tax would become a farce, yielding no revenue. If that were the end product, it might be cheaper and more sensible to have no tax.

4.45 pm

A capital gains tax does not discourage investment. The right way to encourage investment is not to be soft on capital gains but instead to have a sensible and effective regime of capital gains tax. Such arguments will be put forward for having a capital gains tax. Indeed, they were put forward by the Chancellor in The Sunday Telegraph in 1962. I wish that he had stuck to the principles that he there set out clearly and rather well instead of abandoning them and taking up some of the options which he so clearly decried in that article, especially the one about establishing short-term losses, thus making the whole tax a farce. It is a pity that he did not stick to his earlier principles because then we would have a fairer tax regime than we shall have after the passage of the Bill.

The changes in capital gains tax are designed to benefit the better off. Some of them already find a capital gains tax useful—and I am aware, of course, that the Government have eliminated one of those with the bond-washing measures that have been introduced—because it is convenient to take returns in the form of capital gains taxed at 30 per cent. with a threshold of £5,900 a year and indexation rather than taking returns as income taxed in full at up to 60 per cent. Therefore, the structure of capital gains tax already gives a clear incentive to seek capital gain rather than income, and to choose equity investments rather than deposits or gilts. But incentive already existed before the changes in the Budget and, apart from the bond-washing proposals, the Budget has done little to alter that.

The kind of people who benefit from the changes proposed in the clause are not the small shareholders or the people on average or below average incomes; they are portfolio investors, wealthy individuals with a share portfolio. The changes will also benefit corporations with liquid resources which would themselves take out portfolios as investments. The indexation will reduce chargeable gains generally and will reduce the tax base for such companies. Those who will benefit from the changes in the clause are therefore a fairly small minority of the population and certainly to be numbered among the better off. To them the Government propose to give more money, and to do so at great expense.

Although I do not agree with the amendment, I think that the hon. Member for Kensington rightly made the point that the measures are complicated, and they will certainly be complicated to administer. Not only will they lead to a growth in the activities of accountants and others, but they will also increase the activities of the Inland Revenue staff. Extra staff will probably be required to be taken on by the Inland Revenue as a result of the clause. I suggest the following figures, and it will be interesting to know whether the Chief Secretary agrees with them. The increases in staff will probably begin not before April 1987. They will lead to an increase of 190 in that year, 360 in the following year and 455 in the year following that. Thereafter, the figures of extra staff required will probably begin to decline somewhat.

It is difficult to estimate the costs of the extra staff, but undoubtedly they would have to be staff at a fairly high level—tax officers or inspectors. It would not be cheap. At the current salaries, they would probably cost the Revenue about £10,000 in salary plus the additional expenses of employment. The tax change is expensive to administer. The Opposition would not necessarily object to the employment of more staff, and we would certainly not object to the employment of higher grade staff, but we object to the fact that the Government are introducing a measure which will cause more staff to be employed by the Inland Revenue to give money to those who do not need it—the better off.

The changes follow the watering down of capital gains tax, which took place under the previous Chancellor of the Exchequer. In 1980, there was a big increase in the gains exemption, from £1,000 to £3,000. The benefit was extended by no longer withdrawing the exemption from those whose gains were obtained at above that level. The allowance was bumped up again in 1982 to £5,000, and increased each year thereafter in line with the retail price index. In 1982, the previous Chancellor began indexing the CGT base, but the changes that he proposed and that were passed pleased nobody. They were complicated and difficult to administer. All the changes have, at least in the long term, reduced the amount of revenue which can be expected from CGT to a quarter or less of what it would otherwise have been. Therefore, this nibbling away at CGT has reduced the amount of revenue that the Government can expect from it.

The Chancellor in his 1985 Budget continued that process with the indexation provision and with the introduction of the pooling of assets provisions. There is no need for me to go into detail because those provisions are spelt out in the clause and schedule.

The Chief Secretary said that the Chancellor had now reached an acceptable form of CGT, and that it would be unlikely that any further changes in the form of capital gains tax would take place. He may be right. Few further changes are needed if the Financial Times was correct in saying:
"Very few private investors will ever again have to pay capital gains tax, as a result of the changes announced on Tuesday."
The Investors Chronicle, which was more anxious in welcoming the changes, said of them:
"Most significantly they mean that CGT for all investments made after March 1982 is now a tax on real net gains, an important step forward."
I can understand the qualified welcome that the Investors Chronicle gave to the changes. Its comments show the extent of the Government's changes.

The pooling provisions mean that, as more shares are bought, the latest pool increases in size and value, and eventually investors will have only one pool—the post-1982 pool. Given that the overall upward trend in share prices—that has been true for the past two years—is averaged out, the CGT payable on the disposal of shares is less than it would have been if the pooling arrangements had not been introduced. In other words, both the indexation of changes and the reintroduction of pooling contained in clause 64 mean that the amount of revenue that the Government can obtain in future from CGT will be far less than it might otherwise have been. For that reason, it is easy to see why the Chancellor says that the tax is now on a broadly acceptable and sustainable basis, and why the Government have delighted all but their greediest critics.

Amendment No. 12 was designed not to iron out anomalies, as its proponents said, but to allow the March 1982 costs to be used in place of the historical cost so that the entire gain accruing before March 1982 would become tax free. It is easy to see the benefits that would follow from such a change, and why the Chief Secretary suggested that the cost of that would be immense. Obviously, the benefits from such a change would have particularly favoured property companies, for example. The Government have certainly pleased many of the better off, but it is plain that they can never give enough to keep some of them happy.

One or two features of the changes that the Government have made in clause 64 may mean that they will be more generous than they had intended. Perhaps the Chief Secretary would comment on that. Compound indexation is now possible under the rules.

Let us suppose that one has a holding in securities in a company called Blacks, and one bed and breakfasts one's shares each year. Every time one sells, one receives the benefit of that year's indexation because one buys back at a higher price—inflation plus any growth in the value of Blacks' shares. The following year's indexation allowance is based on a percentage of the new acquisition costs, not the real costs to the owner of the shares. No real extra costs are incurred in the buying and selling that takes place. At present, nothing in the clause or schedule prevents a benefit from compound indexation of that type.

I ask the Chief Secretary to consider a further case. Let us suppose that a portfolio now worth £50,000 was bought in 1984 when the Financial Times all-share index, which I am using, was 102 points below its present level. The indexation allowance based on the March retail price index figures gives a real gain in one year of 70 points. The portfolio is now worth £50,000 and was valued in May 1984 at £41,892. That is a difference of just over £8,000. The indexation allowance amounts to £2,549 and the exemption level is £5,559. The capital gains tax indexation allowance in clause 64 and the annual allowance will allow a £50,000 portfolio to be bed and breakfasted every year without CGT liability.

5 pm

I am not sure whether the Government intended the changes to produce such an effect. If they did, the changes will benefit the better off alone in the community. Not many of my constituents have portfolios of £50,000 that could be treated in such a way. If they intend the change to have that effect, they are being wrongly over-generous in these apparently straitened times by allowing the better off to pay no tax. If they did not intend such generosity, they should introduce amendments to tidy up the provisions of clause 64 and schedule 16, because at present they contain nothing to prevent that from happening.

The Chief Secretary will be aware that as soon as the Government introduce such a measure, and the other anti-tax avoidance measures contained in the schedule, the tax-planning industry goes to work to find other loopholes. I draw his attention to "Gremlin Corner"—it is aptly named—in the 4 May 1985 edition of Taxation, which states on page 87:
"Another tax planning point is that it will be possible to create … an artificial allowable loss by purchasing a high-coupon gilt and selling it within the year (but after 27 February 1986). Even if the purchase and sale prices are the same, indexation allowance will create a capital gains tax loss. This stratagem is likely to appeal to institutional investors and individuals paying income tax at 40 per cent. or less."
They are not the most well off in society, but they are among the better off. What action will the Government take to prevent that tax avoidance? We wish to hear the Chief Secretary's views on that point.

By introducing the changes in capital gains tax, the Government are helping exactly the same people as they helped last year when they abolished investment income surcharge. That benefited people with investments of £75,000 or more—again, not many of my constituents have £70,000 tucked away in investments. We were told that the full-year cost of that would be £360 million. Immediately after that Budget, The Times described the abolition of investment incomes surcharge as
"A tremendous bonus for the rich, and especially the idle rich."
The cost of that change, together with the £155 million that it will cost to introduce the changes in clause 64, would be just enough to cover the payment of long-term supplementary benefit this year to those who have been unemployed for more than a year. That would cost the Government £500 million, but I bet that if we asked the Chief Secretary now whether the Government would be willing to benefit the long-term unemployed in that way, he would say, "We do not have the money to do that. We cannot possibly make such a change, because we do not have £500 million in the kitty." Yet the abolition of the investment income surcharge and the changes in capital gains tax could easily cover the payment of much-needed benefits to people who are not among the idle rich, but who have been forced by the Government to be idle. For that reason, we oppose the presence of the clause in the Bill.

Unlike the hon. Member for Thurrock (Dr. McDonald), I welcome the presence of clause 64 as a necessary relieving provision. I shall address my remarks to subsection (5).

I especially welcome subsection (5) because, without it, the clause would have provided for the creation of a new Doomsday Book at March 1982. It would have been necessary, on any future capital gain, to agree with the Inland Revenue a value at March 1982. I welcome the inclusion of the provision that the taxpayer must make a claim before the new provisions can operate. Such a provision will ensure that many taxpayers will not have to bear the expense of establishing a value at 1982 to claim what may, especially as a result of the Government's partial success in reducing inflation, be fairly limited relief.

The fact that the new provisions will operate only following a claim by a taxpayer will ensure that the compliance costs inherent in the clause will be limited. At the same time, the benefit of the relieving provision will go where it is most needed.

May I ask my right hon. and learned Friend to clarify the status of a claim under subsection (5)? Is it irrevocable, or can it he withdrawn at any time? I have a special reason for asking that question, because I must contrast the relieving provision in clause 64 with what was admitted to be a relieving provision in the 1965 legislation that introduced capital gains tax. The then Labour Government saw clearly that the operation of capital gains tax would be grossly unfair—it was grossly unfair anyway, given the inflation that they later created—to those who had old assets that fluctuated markedly in value. Therefore, they introduced a provision for valuation at April 1965, but it was introduced only on the basis of an irrevocable election by the taxpayer.

The result was that a taxpayer who owned an asset such as jewellery, a painting or land, which was a chargeable asset that he had sold and which fluctuated in value over the years, was given, not a relieving provision but a ticket in a lottery. The result of the lottery was that he entered, and could end up paying substantially more tax as a result of entry, or he did not enter and wondered what would have happened had he entered.

If the claim under subsection (5) is irrevocable, in some circumstances exactly the same effect could occur. The taxpayer could elect for the indexation provisions to apply and could then discover that, as a result of the opinion of the district valuer, which could be upheld by the courts, the value of his asset at March 1982 was considerably lower than it originally cost.

I take it that the intention of clause 64 is not to penalise the taxpayer, but to compensate him for inflation. Therefore, it would seem rather unfair if, as a result of the provision, the taxpayer ended up paying more tax, particularly when such additional tax liability would be based solely on the opinion of one or more valuers.

The evil that I have outlined could have been dealt with already in the clause. If my right hon. and learned Friend the Chief Secretary can assure me that a claim made under subsection (5) can be withdrawn at any time prior to determination of the capital gains tax assessment for the year, even my slightest doubts about the clause will be immediately withdrawn. If, on the other hand, it is intended that a claim under the clause should be irrevocable, I should like to draw my right hon. and learned Friend's attention to the possibility of bolstering the relieving provision by introducing what is known in the Department of the Environment as a cost floor. As a result, the valuation arrived at after a claim under subsection (5) could be no less than the actual cost of the asset. In that way, my right hon. and learned Friend would ensure that the clause achieved what I understood it originally set out to do, which was to provide a measure of tax relief where it was needed rather than an arbitrary tax charge in certain cases.

I am not quite following the point made by the hon. Member for Bristol, North-West (Mr. Stern). It seemed like a piece of special pleading. I smelt a Rees about half way through his speech.

If the hon. Gentleman was saying that the backdating to March 1982 does not apply unless there is a claim so capital gains is charged on the whole increase in value since the date that the asset was purchased after 1965—in other words, the consequences of the two great inflations, that of Labour and that of the Conservatives—it seems a little mysterious. Perhaps the Chief Secretary will explain when he winds up. Does it mean that the taxpayer has to claim that the gain measured is only since March 1982 for it to be the operative gain? if not, is he then assessed on the whole gain accruing since the date of purchase?

If the hon. Gentleman reads the clause, particularly subsection (4), he will find that the indexation allowance dealt with under the clause is indexation of a valuation at March 1982. Subsection (5) brings in valuation at March 1982 whereas the existing law provides for indexation on original cost.

Surely that means a Domesday assessment of what valuations were at 1982. I was making the point simply to show the difficulties under which some of us in the Opposition, particularly myself, labour when dealing with such a measure. For me, it is extremely complex and difficult to follow. That is why the Government have been able to get away with so much. Such a change in the legislation brings about quiet, back-pocket giveaways. It is difficult for the non-accountant and non-specialist tax person to understand it. Conservative Members are away making the money while the Government slip money into people's back pocket, with the capital gains that will be sanctioned under the measure. Mum's the word. I suppose that the message is, "Mother sent the money." In the meantime the rest of the country is not clear about what is going on. It is another of those back-door giveaways carried through under the guise of complex legislation, with no warning to the country as to exactly what is going on. That is why I have worn trousers of this bright colour today, to express my opinion of the legislation and the basic principle behind it—it stinks.

5.15 pm

Clause 64 takes more of the teeth out of capital gains tax. In a sense, it might be a measure of the Government's political menopause, a confession that the fight against inflation is not over, but certainly lost. If the Government are to index gains, they are admitting that inflation is about to accelerate, as most of the figures seem to show. No more can they give us the stern imperative, "Don't worry about the taxation of inflationary gains because we are bringing down inflation, thanks to the brilliant success that we have had." It has been a success in ruining the economy. That struggle has now failed. Our inflation rate is still higher than that of our industrial competitors, certainly higher than the rate in countries with which we are competing most directly. Our unit costs are going up more rapidly, and the Government are seeking to cushion the effects of that failure for their supporters by the change in capital gains tax. The Prime Minister is obsessed with fighting inflation and with the value of sound money. She wants it sound because she has more of it than most other people.

The indexation provisions cost about £10 million and the giveaway costs £155 million. Those are substantial sums, given to a section of the population that has no claim to that money and does not deserve it. It could be used for other more important and, from the point of view of economic development, more useful purposes.

On whose behalf is the measure being carried through? An interesting example is given by The Economist on 23 March 1985. Joe Bloggs bought a second home in 1975—presumably in Wales, so that he could keep warm in the winter. It cost £30,000. He sold the house in 1985 for £100,000, realising a gain of £70,000. Supposing that retail prices have trebled since 1975, and have risen by 15 per cent. from March 1982 alone, before the Budget the man would have subtracted for inflation only £4,500, which is 15 per cent. of £30,000, bringing his taxable gain to £65,500. Supposing his house was worth £80,000 in 1982, he would subtract £12,000, reducing his taxable gain to £58,000. If he had no other capital gains to eat up his allowance, now increased to £5,900, he would pay £15,630 in capital gains tax, which is £2,250 less than under the old system, and substantially less than it would have been under our system. Inflationary gains should be taxed.

That is an example of a person with a substantial profit on the sale of his second home. One might also make a substantial profit on the sale of shares. Such people benefit by the measure. It is an interesting reflection of the attitudes and perceptions of the Government. They are deaf to the pleas of the sections of society who have been hardest hit by the unemployment and depression that the Government have generated. They are deaf to the pleas of the disabled and the charities. They are deaf to the pleas of the unemployed and the pensioners. However, they are ever alive and alert to the pleas of the small section of people who benefit massively from such measures.

The Chancellor talks about capital gains tax now being "on a sustainable basis". He means "on a declining basis". A chart in the capital gains tax revenue forecast by the Institute of Fiscal Studies shows, on the basis of the measure, even more than on the basis of the 1982 measure, a substantial and steady falling away in the revenue from capital gains tax. Even on 1984–85 prices, there will be a substantial and steady falling away in capital gains tax revenue after this year. By the 1990s, it will be down from the present levels to about £600 million. By the turn of the century it will be down to £400 million at 1985 prices.

The Government are literally taking the teeth out of the capital gains tax by this clause, which is why we should oppose it. It is a particularly tawdry part of a tawdry Budget. Perhaps the Chief Secretary can tell us the scale of wealth of those who will benefit from this measure, and what effect it will have on incentives. The Government are constantly telling us about incentives, but this is a gift to those who have, and has nothing to do with incentives for business or for those who put money at risk for the growth of the economy. It is a giveaway to people with substantial sums of money, second homes and shareholdings. Will the Chief Secretary give us examples of the people who will benefit from this measure and explain what benefit that will bring to the economy and to incentives generally?

This Budget is only a pathetic half-measure, but the fact that it is cautious and restrained does not mean to say that the giving has stopped. It goes on, but at a lower level and to a narrower class and a narrower section of society—the giving slows down. What does it have to do with improving the real wealth and the dynamic strength of the British economy and bringing jobs to our people? It is shovelling money into the pockets of the well-off.

I understand the wish of the hon. Member for Thurrock (Dr. McDonald) to introduce teachers' and nurses' pay into the debate on capital gains tax, but the relevance and the logic, if there were any, of the argument were lost. It is a misconception that pay increases at or above the level of inflation provide any long-term protection against the effects of inflation. Experience suggests that such a process has the effect of stoking up inflation to the detriment of all, but particularly to the detriment of those on fixed incomes.

Seeking to ensure that capital gains tax is levied only on real gains and not on inflationary gains, which erode the underlying value of chargeable assets, has no such inflationary effect. Therefore, I welcome the measures in clause 64 to extend relief against taxation on inflationary gains. The Labour party would like to see a tax that should be described not as capital gains tax but rather as inflationary gains tax. With its appalling record in government of high inflation and its desire to impose ever higher capital taxation, one can see the attractions of the two. If a Labour Government could stoke up inflation and then heavily tax capital on those inflationary gains, they would have a strong source of revenue but not a moral one.

Like my hon. Friends the Members for Tatton (Mr. Hamilton) and for Kensington (Sir B. Rhys Williams) I am sorry that it was not possible this year to go further in providing fuller indexation relief against inflationary gains for capital gains tax purposes. However, I recognise the need to make choices in the Budget judgment about how the limited resources available for tax relief should be deployed. I have made it clear on previous occasions that I believe that the choice of concentration on national insurance contributions and over-indexation of income tax thresholds were the right priorities this year.

However, I hope that my right hon. and learned Friend the Chief Secretary will not close his mind to the possibility of extending the indexation allowance in later years. It could be done on a creeping basis by moving back to 1981 then 1980 and so on. If he cannot be persuaded on that, it could be done on a time exemption from capital gains tax, which would provide a more simple basis for the tax, and one that would not be too inequitable.

The title of this clause sounds modest—"modification of indexation allowances". That sounds an innocent proposal, but having listened carefully to the admirable and lucid exposition of what it implies from my hon. Friend the Member for Thurrock (Dr. McDonald), I begin to understand that this is not the simple measure implied by its title.

The principle of inflation-proofing or indexation is not anathema to Labour Members. We are in favour of it when there is obvious cause and justification, for instance in indexation of benefits. There is not a philosophical divide but a pragmatic divide, which is on whether this form of indexation will be either effective or desirable, and whom it will affect and profit. This is not similar to the indexation of benefits.

There is a good case for indexing at times of high inflation, but we are constantly being told by the Government that this is not a time of high inflation and that they have cured inflation, and it seems a strange moment for the Chief Secretary and the Chancellor to introduce such a proposal. There have been higher stages of inflation under the Government, but they choose now to introduce something that would protect investors, perhaps with some justification, from the ravages of high inflation. However, this is being done at a time when, although inflation is rising again, it is rising from a fairly modest base at a fairly slow rate. It remains to be seen whether that will continue.

I am glad that the hon. Gentleman has conceded in principle the idea of indexation. He has said that now inflation is low, the proposals are not necessary, and somebody who had bought an asset after inflation fell will benefit little from the indexation proposal. However, a good many people purchased their assets in the 1970s and have had a considerable amount of inflationary gain that would be taxed as a capital gain. Protection is still needed for them.

It is strange to do this now, when the Government could have made a more effective and urgent case for it at other times. I take the point that we are including in this measure assets that reflect back to a period of a lower base.

The Committee should be concerned with the financial effect of clause 64. My hon. Friend the Member for Thurrock quoted from the Investors Chronicle, and made it clear that some individuals—we should remember that these are well-off individuals, whose gains will be well over £5,000 in any year—may be paying less tax. Will the Chief Secretary confirm that this is the case? Is it true that the typical investor who makes gains of £6,000 a year on his investment income will be paying less tax? The Committee would benefit from clarification of those points, or confirmation.

Will the Chief Secretary confirm that the yield for the Treasury will fall, and will he specify what the fall in revenue yield resulting from this provision will be? Will it be more or less expensive to administer this? Hon. Members on both sides of the House recognise that capital gains tax is an expensive tax to collect. I suspect that the fairly long and technical provisions of the Bill will make it a great deal more expensive. Will the Chief Secretary include in the net gain, to the Revenue—or loss as I fear it will be—the figures for increased administration costs, if there are going to be some?

The hon. Member for Tatton (Mr. Hamilton) and others have said that this measure could have some effect on the incentive to invest and to take risks on the stock market. We have constantly urged the Government to take more steps to encourage greater investment in the future of this country in both tangible and intangible forms, so the desire for greater investment is common to both sides. What we want, however, is more investment in good projects. We want good and intelligent investment. By indexing losses and allowing marginal gains to be turned into losses, this measure will effectively reward unfortunate and ill-judged investment. Is that really the intention? Will the Chief Secretary explain why those provisions are included in the clause? Both sides wish to encourage good investment, but we do not wish to encourage poor or faulty investment.

5.30 pm

I hope that the Chief Secretary will also address himself to the fact that only very wealthy, large-scale investors will benefit from the measure. The Government are always telling us how much they wish to encourage small investors through the sale of British Telecom and the proposed sale of British Gas. If the Chief Secretary is honest, however, he will confirm that this clause is utterly irrelevant to any widening of the base of individual investment in companies in this country and will benefit only the well off who already invest in shares. I hope, therefore, that the right hon. and learned Gentleman will not try to argue that this is an incentive for new investors. Anyone in a position to benefit from it—that is, anyone making more than £5,000 per year in capital gains—is almost bound to be investing in the equity market already, so I hope that the Government will not try to imply that this is all part of their move to widen individual share portfolios.

The question is whether the provision will be effective even as an encouragement to those who are extremely well off and already invest. Recent history shows that in the past 10 years private investors have to a large extent failed the country in terms of investment in United Kingdom shares. In replying to the first amendment, the Chief Secretary referred to the substantial investment in United Kingdom land in the early 1970s, which drove up land values for both agricultural and building land. I suspect, however, although I do not have figures to prove it, that the individual investor has not done well by this country in terms of investment in manufacturing industry and the Financial Times index generally. Indeed, I suspect that a considerable proportion of the £40 billion capital outflow from this country has been the result of investments by very wealthy individuals.

I hope that the Chief Secretary will give figures to show the significance of individual investors in our equity market, as I suspect that the percentage of the equity market taken up by individual shareholders is very low indeed. Perhaps the right hon. and learned Gentleman will also tell us how many individual investors will benefit from the clause.

The hon. Member for Tatton referred to the encouragement that the clause would give to greater mobility of investment. I hope that the Chief Secretary will comment on that. I do not know a great deal about the stock market, but I should have thought that, above all, companies seek stability of investment. Those which have performed very well in the past 10 to 15 years seem at a cursory glance to be those with a stable, steady investment base—Marks and Spencer, for example—because they know what their level of investment and security has been, rather than those which have been the subject of wild speculation and have gone up and down. Perhaps hon. Members who are more expert in these matters will confirm that mobility of investment and frequent switching of investment does not benefit British industry. If the clause is designed to encourage that, as the hon. Member for Tatton suggested, is it really a good thing?

I am very confused about why the Government want this change at all. Will the Chief Secretary tell the Committee how effective the present tax situation is? Does he have figures showing capital gains tax as a percentage of all capital gains made in any one financial year? I suspect that the effective rate of tax as a proportion of capital gains is very low. I believe, as I am sure do Conservative Members and tax lawyers throughout the country who are experts on these matters, that the complexities of the tax make it relatively simple to avoid even without these indexation provisions. If the Chief Secretary has figures for the effective rate of capital gains tax, the Committee would be very interested to know them.

If capital gains tax is effective—I fear that it is not—why should the Government seek to change it? If it is ineffective but the Chief Secretary believes that there is validity in it, surely he should tighten and not loosen the tax. The Government are moving in entirely the wrong direction. The clause is not the moderately worded measure that it appears to be from the title in the margin of the Bill. As my hon. Friend the Member for Great Grimsby (Mr. Mitchell) has said, it is an example of the Government being extremely sensitive to the supplications and vested interests of those who are already very well off. Although we all want to improve performance and investment in manufacturing industry, I doubt whether the Chief Secretary can prove that these changes will benefit manufacturing industry in this country. These changes will merely benefit those investors who are very wealthy already. For those reasons, I am confident that Opposition Members will vote against the proposal.

The hon. Member for Stoke-on-Trent, Central (Mr. Fisher) made a characteristically speculative intervention. He queried whether this was a modest clause. The most powerful evidence of the modesty of the clause came in the powerful speeches of my hon. Friends the Members for Kensington (Sir B. Rhys Williams) and for Tatton (Mr. Hamilton) and in the amendment in the name of my hon. Friend the Member for Croydon, South (Sir W. Clark) which they supported. My hon. Friend the Member for Slough (Mr. Watts) also pressed us to go further.

There is clearly a divide between Members on the scope and importance of the clause and it is perhaps a deep philosophic divide. That was the tenor of many speeches from Opposition Members. They may not attach so much importance to private property or to the operation of the capital market and private investment in the British economy as we do.

The hon. Member for Stoke-on-Trent, Central asked how many people would be affected and what would be the width of these changes. The best I can say is that the changes will affect about 120,000 people and institutions within the area of capital gains tax, corporation tax and chargeable gains.

I was asked about the current yield. If one takes capital gains tax, which is the tax on individuals, and corporation tax on chargeable gains, it is just about the £1 billion mark. The tax likely to be forgone is of the order of £155 million. That, I would have thought, amply demonstrates the modesty of the clause.

The hon. Member for Thurrock (Dr. McDonald) advanced a theme which seemed to find favour with several of her hon. Friends. They said that this would benefit a very small, privileged section of our community. That was the thrust of the case made against the clause and the schedule. That is an extraordinary proposition—that equity is to be denied to those who have a certain amount of capital assets and is to be reserved only for those who are not likely to be within the charge to capital gains tax. If there is a case for equity—and I shall demonstrate that there is—it applies just as surely to those who have capital assets as to those who do not. We can debate whether there should be a tax on capital gains, but I hope that there will be unanimity in the Committee that where the tax goes a little further, and because of the ravages of inflation, particularly in the 1970s, it bites deeply into gains which are largely inflationary—I take account of the point made by my hon. Friend the Member for Kensington—we should, so far as possible, try to eliminate those inflationary gains.

I have searched the powerful debates in 1965, when long-term capital gains tax was first introduced. I cannot attribute to the Labour members of the then Treasury Bench the intention that it should bite on inflationary gains. I should like to think that what we did in 1982, and what I am commending today, is in harmony with the underlying concept of the tax as it was introduced in 1965.

From the Opposition's contributions to this debate I am led to suppose that the Labour party has perhaps changed its philosophic approach. We have not heard a great deal about the Opposition's plans for capital taxation, and it would have been helpful had the hon. Member for Thurrock—speaking with all the authority of the Opposition Front Bench—told us what kind of capital taxation system they would have devised had they been in power.

It is a rather one-sided debate if we are purely defending the ameliorative measures that we are introducing without knowing what is in the Opposition's mind. They have been very frank on the basic philosophy and are saying that equity should be reserved for those who are not likely to be within the charge of capital gains tax. They seem to be suggesting that, in relation to capital taxation in the fiscal sector, equity is as dust in the balance.

Let me give some of the underlying figures to explain why we believe that this modest clause—over-modest to some of my hon. Friends—is long overdue. In the 20 years between 1965, when capital gains tax was first introduced, and 1985, the retail price index has risen by 535 per cent. It is worth pondering that sombre figure because it indicates the extent to which so-called chargeable gains subject to capital gains tax contain a very large inflationary element. In a philosophic or economic sense they do not represent true gains—they are inflationary gains. If one believes in a properly operated capital market and that people should be encouraged to save and invest in this country, this is a problem to which any Government are bound to address themselves.

5.45 pm

The hon. Member for Thurrock made a powerful speech and asked many questions with which I shall attempt to deal, but she and her hon. Friends have not faced this essential question. The hon. Member for Stoke-on-Trent, Central should have done so, because he said that the private investor had failed this country. He also made the extraordinary proposition that we should encourage good investments and discourage bad ones. So say all of us, whether we speak from the Treasury Front Bench or as private investors! We all want good investments.

Does the hon. Gentleman take this a stage further and argue that we should deny loss relief to those who have made unfortunate investments? Of course we all want good investments in both a private and public capacity, but the hon. Gentleman must recognise—I am sure that he has devoted his keen intellect to this problem—that there is a risk dimension to investment.

After all, our great economic institutions often started as small risky enterprises. Had the Opposition's philosophy prevailed—thank heaven it did not—there would not have been very much investment to nourish those great institutions. There may be an opportunity in the Committee to hear from the Opposition how we should encourage good investment and identify it. When the hon. Member for Stoke-on-Trent, Central has told me, I shall no doubt profit from his advice and will be able to see how I can translate his views into practical legislative form.

While recognising the imperfections and weaknesses of our judgment in this area, we think it is fair to cream off a modest amount of real gains for the state and to afford relief for real losses. That is the underlying philosophy behind the clause. I have given the expense, but that is a fair price to pay to try to reduce the charge to what I believe was the Labour party's real intention when it introduced capital gains tax in 1965. It could, dare I say it, have thought a little bit more about the detail. On some other occasion we shall no doubt be privileged to hear what the Opposition's long-term plans are for the future. We want to know how far they have advanced beyond 1965.

The hon. Member for Thurrock and the hon. Member for Stoke-on-Trent, Central asked about administrative costs. That is a pertinent question. The hon. Lady gave a figure of 460 by 1989, whereas I would suggest 455—but what is five between both sides of the Committee? This may seem an increase in the administrative burden to Somerset house. The Economic Secretary will shortly commend the abolition of development land tax, and there is a point which may just change the hon. Lady's mind on whether to press abolition of DLT to a Division. That will release about 250 people expert in the valuation of land and buildings who will be available to take on that role in relation to capital gains tax.

Will the Chief Secretary confirm that this is already a very expensive tax to collect and administer? Is it really wise to introduce changes to that tax which make it still more expensive to administer? Notwithstanding the fact that savings will be made elsewhere in the Finance Bill and that 200 staff will be released to deal with this, the Minister seems to be putting additional expense on a tax which I am sure he will concede is one of the most expensive that the Treasury collects.

Perhaps the most expensive is development land tax, but the Economic Secretary will give the full figures in a moment. The hon. Gentleman is absolutely right. This is not a very cost-effective tax, particularly when one takes into account the compliance cost of the individual taxpayer. The Committee should always bear that dimension of our fiscal system in mind, and should ask whether we are placing an unfair burden on individual taxpayers. As the hon. Member for Stoke-on-Trent, Central will know, we do not allow tax relief for professional advice. The Government must always reflect whether this is over-complex and upon the administrative burdens that we are placing on the Inland Revenue. As Chief Secretary, I am deeply conscious of that point. I am charged with overseeing the costs of running the Government, if I may put it that way. The hon. Member for Stoke-on-Trent, Central is absolutely right. We have to be sensitive about compliance costs as they affect the individual taxpayer.

I should like to pretend that this will result in massive simplification. However, when I contemplate schedule 16 I do not put that forward as the paramount reason. The real conclusion to which the hon. Gentleman's shrewd questions drive me is that possibly capital gains tax ought to be abolished altogether. I do not know whether he wishes to impel me in that direction if he is serious about simplification, the reduction of the administrative burden and compliance costs. I have probably taken the hon. Gentleman's arguments a little further than he intended. Nevertheless, he may care to ponder that point.

The hon. Members for Stoke-on-Trent, Central, for Thurrock and perhaps for Great Grimsby (Mr. Mitchell) asked about the small taxpayer. The Committee recognises that the Government have increased the threshold to £5,900, which will take the small investor out of capital gains tax liability. If a beneficent Conservative Government continue to preside for some time over the economy it is possible that the small taxpayer will not be brought back within liability to capital gains tax. To return, however, to the philosophical point, I hope I carry my right hon. and hon. Friends with me when I say that I believe that the large investor is just as entitled to equity as is the small investor.

This is a play on words. I appreciate the hon. Gentleman's wit. He knows that he is dragging a rather malodorous red herring across my track. The hon. Member for Thurrock asked me a shrewd and complicated question about an investment in Black and company. It is not for me to advise the hon. Lady on her investments. Professional advisers formerly went away and reflected upon Finance Bills after they had become law in order to advise their clients. Now, it seems, they are to obtain free advice from the Opposition Front Bench. We live in stirring times. This will enliven our debates in Committee. If I understood the full complexity of the hon. Lady's bed-and-breakfasting scheme, which would continue for a period of five years, the tax result would be the same. However, if the hon. Lady chooses to bed and breakfast year after year she will get her relief or pay her charge a little earlier. When I have read the full report of this debate in Hansard I may find that I have not fully appreciated the subtlety of her scheme, in which case I shall write to her and make my reply public. I should not wish the outside world to be misled either by my advice or by hers.

Since we are dealing with technical points, may I say that my hon. Friend the Member for Bristol, North-West (Mr. Stern) put forward a very important point about a claim for relief. He was absolutely right to fasten upon this point. We do not wish to saddle the taxpayer with a burden which he may be unable to foresee due to valuation eccentricities. Provided that the assessment has not been finally determined and that revocation does not take place within the period of two years during which a claim can be made, it can be withdrawn.

As for the hon. Lady's interesting technical points, she raised matters which have been canvassed in both the Financial Times and the Investors Chronicle. The tax is broadly in a sustainable and acceptable form. If, however, imperfections are revealed we shall be ready to look at them if they disadvantage either the taxpayer or Somerset house.

Is it recognised by the Treasury that there is an imperfection in the tax, in that it still remains a levy purely on an inflationary gain?

As my hon. Friend will recognise, it will not be a levy on future inflationary gains. However, total relief will not be offered for pre-1982 inflationary gains, and that is a matter of profound regret. The full cost of the amendment supported by my hon. Friend would be £550 million. Although the whole of that figure does not represent inflationary gains, a large proportion of it—about three fifths—is represented by such gains. I take my hon. Friend's point, and as I say it is a matter of profound regret.

To return to the point made by the hon. Lady, the suggestion has been made that the indexation provisions could be used by those seeking to establish a short-term capital gains tax loss on gilts and other debt instruments where counterbalancing gains do not normally arise. If the Government were to conclude that countervailing action was necessary, we should be prepared to introduce amendments at a later stage. I hope I have reassured the hon. Lady that it is no part of our philosophy that anything the Government do should contain imperfections of that kind.

This has been an interesting debate. It has ranged from points of fine detail to points of high philosophy. I hope that at the end of the day the Committee will be persuaded by the equity argument: that this tax should bite on real, not inflationary, gains. Whether a person has £70,000 worth of investments, or more, or less—I pick on that figure only because the hon. Lady chose that figure and I know exactly why she did so—he is entitled to a broad measure of equity from the tax system of this country. The measure will also encourage further savings and investments and a freer working of the capital markets. This must lead to an even greater and better flow of investment into the manufacturing and service industries. On both counts I hope that the Committee will accept the clause and agree that it does justice to a very important case.

May I deal first with two points of detail before I comment upon the general principle? First, on Black and company, the Chief Secretary has dodged the point and he ought to look at it again. One receives the compound allowance and a greater indexation allowance if one bed and breakfasts every year rather than if one holds for five years without bed and breakfasting. The Chief Secretary ought to examine that example again and introduce amendments to avoid a gain of that kind. As for extra staff and simplification, the class IV contributions would have been reduced from 6·3 per cent. to 5·3 per cent. if the Government were serious about simplification, yet that has not been done. It was made clear by the Financial Secretary in last night's debate on the class IV contributions that 60 extra staff would be required. A figure of over 400 extra staff was given for the administration of capital gains tax.

The Financial Secretary suggested that this increase would be offset by the transfer of about 250 staff because of the abolition of development land tax. We do not support abolition, but because of the Government's majority presumably this measure will be passed. The result is that the Government will still have extra staff, extra expense and more complicated taxes to administer. Those points have not been fully answered by the Chief Secretary.

The Chief Secretary accused us of holding the view that equity should be reserved for those who are not likely to face the possibility of paying capital gains tax. That is not our view. We are committed to a fair tax regime for capital and income. The point is that the treatment should be fair between one group and another. We must face the fact that only those who will make a gain of at least £5,900 in any one year are likely to pay capital gains tax. Moreover, additional allowances are available as a result of those measures. That is far more, just like the exemption limit, than many people in Britain receive as their total gross income in any one year. That is why we want equal and fair treatment for all taxpayers, not just that group with whom the Chief Secretary is so much concerned. We are most concerned that those who have suffered most at the hands of the Government—those on average and below average earnings—should be taxed fairly.

6 pm

As the Chief Secretary well knows, because he has considered these matters for a number of Budgets now, any Budget that is put before the country and Parliament has a number of priorities. Certain inequities might need to be ironed out in some sections of the tax system. The removal of each of those inequities will have a cost. It is a matter of the Government's priorities. The Opposition's quarrel with the Government's priorities is that they constantly choose to redress what they see to be inequities and injustices in the tax system for the better off. That is why we object to clause 64. The Government continually fail to give priority to those on average and below average earnings, who have suffered at the Government's hands.

At the end of my previous speech I referred to those who benefited last year from the abolition of the investment income surcharge and who will benefit this year from the changes in capital gains tax to the tune of about £500 million. I also referred to the payment of long-term supplementary benefit to the long-term unemployed. In the use of that £500 million, the Government have shown where their priorities lie. It has gone to 120,000 taxpayers who are liable to capital gains tax instead of to the 1·2 million long-term unemployed who are idle through no fault of their own.

It is not that we think that people who pay capital gains tax should not receive fair treatment. Of course they should. We quarrel with the Government's priorities. They will not treat the poor with fairness, justice, consideration and sympathy. That is why we oppose the clause.

I rise to intervene only briefly because a part of my annual ritual activities in the House is to speak on this matter. We have never in any way managed to influence the Government by any amendment to capital gains tax or capital transfer tax legislation since 1979, when I was elected to the House. The reason is simple: the Government do not want to know. All they want to do is press on with the substantial tax reductions for the better off in society. Once again, the Minister sits in his seat, as he has done for the past three years, and laughs because he finds these matters most amusing. The Government simply intend to press on making these reductions which everyone knows to be quite immoral.

Last week, during the county council election campaign I took a chair and put it on the pavement outside a chemist's shop in Maryport in my constituency. I stood on the chair and set out to explain to my electorate exactly what had happened in the Budget. I went through each of the measures and when I got to taxation I spent a few moments commenting on the reduction in capital gains tax. As I began to explain what had happened, I saw increasing expressions of anger on the faces of the people who were standing across the road listening to my speech.

Suddenly, a motor car came round the corner covered in Tory streamers and a man opened the window, leaned out and told me that I was talking rubbish in addressing my comments to the £150 million allocation to the small group of people in society to whom we have referred today. Suddenly, from the back of the crowd that had gathered around where I was speaking, two eggs appeared. Both of them shot across in front of me and landed on the bonnet and windscreen of the car. The Conservatives protested and drove off.

The point that I am trying to make is simple. When the public learn from Budget debates such as this where the money is being spent, in so far as it is being spent on subsidising the better off in society, they become increasingly angry. The problem that Labour Members have had over the past six years in trying to get that message out of the House.

Last year, during my contribution to a debate on the Budget, I addressed myself to the press lobby. I told them not to refer to me because I was irrelevant, but just to the issue when they reported what happened in Parliament that day. I told them to refer to the fact that in that Budget statement the Government were handing back £280 million in the form of free tax concessions. As usual, none of that reached people outside the House and nobody knew.

This year, in the allocation of time for debates in the Chamber on this year's Budget, we have tried, through the normal channels, to ensure that this debate took place during prime time in the House of Commons so as to ensure that people outside learned what was happening. Once again, we must tell them that on this occasion the Government are now spending a further £150 million—money which is being raised on the back of the deprivation of the great majority of people in British society.

The Minister does not give a damn. He is not interested. He believes that as part of this incentive society, which he is always telling us is at the heart of conservative philosophy, there is a need to interfere with capital taxes in this way. That is a load of tripe. It is a load of old rubbish. We all know that the only thing which motivates business men in this society is the demand for their products. First, the product must be right, and, secondly, a market must exist with a means of distribution into that market. That is the only incentive that a business man needs. He does not need interference in the capital gains tax and capital transfer tax mechanisms to ensure that he has the incentive to go out and start a business. In representing that position to the House once again this year, the Minister completely misunderstands the very people he represents. The right hon. and learned Gentleman might say that I was not here to hear his reply, but I was upstairs in the Public Accounts Committee where we were dealing with another equally absurd area of Government policy—the rate support grant and its allocation to local authorities.

In every area of financial management, the Government are wrong. They will continue to be wrong because they start from the wrong base. Next year the Government will introduce yet again an indexation measure. "Indexation of losses" is an absurd term. It is another little mechanism introduced by the Government to ensure that those who make are able to cover themselves when they lose. It is a grubby little measure, typical of this Government's Finance Bills.

I only wish that the public could hear the Chief Secretary. I do not support the televising of Parliament, but I wish that they could see and hear the right hon. and learned Gentleman. I should like the public to be able to respond to the insensitivity which the Minister has repeatedly demonstrated over the years. If the public were able to hear one of our debates on capital gains tax and capital transfer tax, they would understand the Government's real priorities and the Conservatives would never survive another general election.

Question put:

The Committee divided: Ayes 225, Noes 154.

Division No. 201]

[6.11pm

AYES

Adley, RobertAtkinson, David (B'm'th E)
Alexander, RichardBaker, Nicholas (N Dorset)
Alison, Rt Hon MichaelBaldry, Tony
Arnold, TomBatiste, Spencer
Ashby, DavidBeaumont-Dark, Anthony
Aspinwall, JackBellingham, Henry
Atkins, Rt Hon Sir H.Bendall, Vivian

Best, KeithHawkins, Sir Paul (SW N'folk)
Biffen, Rt Hon JohnHawksley, Warren
Blackburn, JohnHayes, J.
Blaker, Rt Hon Sir PeterHayhoe, Barney
Boscawen, Hon RobertHayward, Robert
Bottomley, PeterHeathcoat-Amory, David
Bottomley, Mrs VirginiaHickmet, Richard
Bowden, A. (Brighton K'to'n)Hicks, Robert
Bowden, Gerald (Dulwich)Hill, James
Braine, Rt Hon Sir BernardHolt, Richard
Brandon-Bravo, MartinHowarth, Alan (Stratf'd-on-A)
Brinton, TimHowarth, Gerald (Cannock)
Brown, M. (Brigg & Cl'thpes)Howell, Rt Hon D. (G'ldford)
Browne, JohnHowell, Ralph (N Norfolk)
Bruinvels, PeterHunt, John (Ravensbourne)
Buck, Sir AntonyJackson, Robert
Budgen, NickJessel, Toby
Bulmer, EsmondJohnson Smith, Sir Geoffrey
Burt, AlistairJones, Gwilym (Cardiff N)
Butcher, JohnJones, Robert (W Herts)
Butterfill, JohnKellett-Bowman, Mrs Elaine
Carlisle, John (N Luton)Kershaw, Sir Anthony
Carlisle, Kenneth (Lincoln)Key, Robert
Carlisle, Rt Hon M. (W'ton S)King, Roger (B'ham N'field)
Cash, WilliamKnight, Gregory (Derby N)
Channon, Rt Hon PaulKnight, Mrs Jill (Edgbaston)
Chope, ChristopherKnowles, Michael
Churchill, W. S.Knox, David
Clark, Dr Michael (Rochford)Latham, Michael
Clarke, Rt Hon K. (Rushcliffe)Lawrence, Ivan
Clegg, Sir WalterLeigh, Edward (Gainsbor'gh)
Cockeram, EricLennox-Boyd, Hon Mark
Colvin, MichaelLester, Jim
Conway, DerekLewis, Sir Kenneth (Stamf'd)
Coombs, SimonLilley, Peter
Cope, JohnLloyd, Ian (Havant)
Cormack, PatrickLloyd, Peter, (Fareham)
Couchman, JamesLord, Michael
Cranborne, ViscountLyell, Nicholas
Critchley, JulianMacfarlane, Neil
Currie, Mrs EdwinaMacKay, Andrew (Berkshire)
Dorrell, StephenMaclean, David John
Dunn, RobertMaples, John
Durant, TonyMather, Carol
Dykes, HughMaude, Hon Francis
Eggar, TimMellor, David
Evennett, DavidMerchant, Piers
Eyre, Sir ReginaldMeyer, Sir Anthony
Fallon, MichaelMiller, Hal (B'grove)
Farr, Sir JohnMills, lain (Meriden)
Favell, AnthonyMitchell, David (NW Hants)
Fenner, Mrs PeggyMoore, John
Fletcher, AlexanderNeale, Gerrard
Forman, NigelNeubert, Michael
Forth, EricNicholls, Patrick
Franks, CecilOppenheim, Phillip
Fry, PeterOsborn, Sir John
Gale, RogerPage, Richard (Herts SW)
Galley, RoyParris, Matthew
Gardiner, George (Reigate)Pawsey, James
Gardner, Sir Edward (Fylde)Peacock, Mrs Elizabeth
Garel-Jones, TristanPortillo, Michael
Goodhart, Sir PhilipPowell, William (Corby)
Goodlad, AlastairPowley, John
Gow, IanPrice, Sir David
Gower, Sir RaymondProctor, K. Harvey
Greenway, HarryRaffan, Keith
Gregory, ConalRees, Rt Hon Peter (Dover)
Griffiths, Peter (Portsm'th N)Rhodes James, Robert
Ground, PatrickRhys Williams, Sir Brandon
Grylls, MichaelRidsdale, Sir Julian
Hamilton, Hon A. (Epsom)Roberts, Wyn (Conwy)
Hamilton, Neil (Tatton)Rossi, Sir Hugh
Hampson, Dr KeithRost, Peter
Hanley, JeremyRowe, Andrew
Hannam, JohnRyder, Richard
Hargreaves, KennethSackville, Hon Thomas
Harris, DavidSayeed, Jonathan
Harvey, RobertShaw, Sir Michael (Scarb')
Haselhurst, AlanShelton, William (Streatham)

Shepherd, Richard (Aldridge)Twinn, Dr Ian
Silvester, Fredvan Straubenzee, Sir W.
Sims, RogerViggers, Peter
Smith, Tim (Beaconsfield)Waddington, David
Soames, Hon NicholasWakeham, Rt Hon John
Speller, TonyWalden, George
Spence, JohnWaller, Gary
Spencer, DerekWalters, Dennis
Spicer, Jim (W Dorset)Ward, John
Stanbrook, IvorWardle, C (Bexhill)
Steen, AnthonyWatson, John
Stern, MichaelWatts, John
Stevens, Lewis (Nuneaton)Wells, Bowen (Hertford)
Stewart, Andrew (Sherwood)Wheeler, John
Stewart, Ian (N Hertf'dshire)Whitfield, John
Sumberg, DavidWhitney, Raymond
Taylor, John (Solihull)Wiggin, Jerry
Taylor, Teddy (S'end E)Winterton, Mrs Ann
Temple-Morris, PeterWinterton, Nicholas
Terlezki, StefanWolfson, Mark
Thompson, Donald (Calder V)Wood, Timothy
Thompson, Patrick (N'ich N)Yeo, Tim
Thorne, Neil (llford S)Young, Sir George (Acton)
Thornton, Malcolm
Thurnham, PeterTellers for the Ayes:
Townend, John (Bridlington)Mr. John Major and
Trotter, NevilleMr. Tim Sainsbury.

NOES

Adams, Allen (Paisley N)Eastham, Ken
Alton, DavidEdwards, Bob (W'h'mpt'n SE)
Archer, Rt Hon PeterEwing, Harry
Ashdown, PaddyFatchett, Derek
Ashton, JoeField, Frank (Birkenhead)
Atkinson, N. (Tottenham)Fields, T. (L'pool Broad Gn)
Bagier, Gordon A. T.Fisher, Mark
Barnett, GuyFoot, Rt Hon Michael
Barron, KevinForrester, John
Beckett, Mrs MargaretFoster, Derek
Beith, A. J.Freud, Clement
Bennett, A. (Dent'n & Red'sh)Garrett, W. E.
Bermingham, GeraldGeorge, Bruce
Bidwell, SydneyGilbert, Rt Hon Dr John
Blair, AnthonyGould, Bryan
Boothroyd, Miss BettyGourlay, Harry
Boyes, RolandHamilton, James (M'well N)
Bray, Dr JeremyHamilton, W. W. (Central Fife)
Brown, R. (N'c'tle-u-Tyne N)Harrison, Rt Hon Walter
Bruce, MalcolmHart, Rt Hon Dame Judith
Buchan, NormanHeffer, Eric S.
Caborn, RichardHogg, N. (C'nauld & Kilsyth)
Callaghan, Jim (Heyw'd & M)Holland, Stuart (Vauxhall)
Campbell-Savours, DaleHowell, Rt Hon D. (S'heath)
Canavan, DennisHowells, Geraint
Carlile, Alexander (Montg'y)Hoyle, Douglas
Carter-Jones, LewisHughes, Robert (Aberdeen N)
Clarke, ThomasHughes, Roy (Newport East)
Clay, RobertHughes, Simon (Southwark)
Clwyd, Mrs AnnJanner, Hon Greville
Cocks, Rt Hon M. (Bristol S.)John, Brynmor
Cohen, HarryJohnston, Russell
Concannon, Rt Hon J. D.Jones, Barry (Alyn & Deeside)
Cook, Frank (Stockton North)Kaufman, Rt Hon Gerald
Cook, Robin F. (Livingston)Kennedy, Charles
Corbett, RobinKinnock, Rt Hon Neil
Corbyn, JeremyKirkwood, Archy
Cowans, HarryLamond, James
Craigen, J. M.Lewis, Ron (Carlisle)
Cunliffe, LawrenceLewis, Terence (Worsley)
Dalyell, TanLitherland, Robert
Davies, Rt Hon Denzil (L'lli)Loyden, Edward
Davis, Terry (B'ham, H'ge H'l)McDonald, Dr Oonagh
Deakins, EricMcKay, Allen (Penistone)
Dewar, DonaldMcKelvey, William
Dixon, DonaldMcNamara, Kevin
Dormand, JackMcTaggart, Robert
Douglas, DickMcWilliam, John
Dubs, AlfredMadden, Max
Duffy, A. E. P.Marek, Dr John
Dunwoody, Hon Mrs G.Maxton, John

Maynard, Miss JoanSheldon, Rt Hon R.
Meadowcroft, MichaelShore, Rt Hon Peter
Michie, WilliamSkinner, Dennis
Mikardo, IanSmith, C.(lsl' ton S & F'bury)
Millan, Rt Hon BruceSnape, Peter
Miller, Dr M. S. (E Kilbride)Spearing, Nigel
Morris, Rt Hon A. (W'shawe)Steel, Rt Hon David
Nellist, DavidStewart, Rt Hon D. (W Isles)
O'Brien, WilliamStott, Roger
O'Neill, MartinStrang, Gavin
Orme, Rt Hon StanleyThomas, Dafydd (Merioneth)
Owen, Rt Hon Dr DavidThomas, Dr R. (Carmarthen)
Park, GeorgeThompson, J. (Wansbeck)
Parry, RobertTinn, James
Patchett, TerryTorney, Tom
Pavitt, LaurieWainwright, R.
Pendry, TomWallace, James
Penhaligon, DavidWareing, Robert
Pike, PeterWigley, Dafydd
Powell, Raymond (Ogmore)Wilson, Gordon
Prescott, JohnWinnick, David
Radice, GilesWoodall, Alec
Randall, StuartWrigglesworth, Ian
Redmond, M.
Richardson, Ms JoTellers for the Noes:
Roberts, Allan (Bootle)Mr. Sean Hughes and
Roberts, Ernest (Hackney N)Mr. Frank Haynes.
Sheerman, Barry

Question accordingly agreed to.

Clause 64 ordered to stand part of the Bill.

Schedule 16

INDEXATION

Question proposed, That this schedule be the Sixteenth schedule to the Bill.

I do not wish to detain the Committee, and will speak briefly about paragraph 19, My hon. Friend the Member for Colne Valley (Mr. Wainwright) and I tabled two amendments only yesterday which, understandably, were not selected. I wish to seek advice from Treasury Ministers on the contents of paragraph 19, and do not argue a particular point.

There is an element of confusion among substantial financial institutions, such as the pension funds, about the meaning of paragraph 19 and it would be helpful to clarify the position. The Inland Revenue press circular said that in relation to holdings paragraph 19
"provides the general ordering rule that securities shall be identified with those acquired earlier rather than later."
It than has in brackets the initials FIFO, which I assume mean first in, first out.

If I understand the paragraph, it sets out for the purposes of capital gains tax the order of identification of assets disposed of. Paragraph 19(2) changes the rules that have applied since 1 April 1982. No doubt the Chief Secretary will confirm my understanding of that.

Under the 1982 legislation, assets were identified on a last in, first out basis, which ensured that indexation relief was kept to a minimum. The Budget statement provided that indexation relief should be extended, but the Finance Bill goes beyond anything mentioned in the statement—it provides for the introduction of a first in, first out basis of identification.

Financial institutions have built up their holdings over many years. The new rules entail identification of disposals with the earliest acquisition, so that disposal of part of the holding will give rise to a significantly higher gain than would have obtained under existing legislation. In large part that gain will reflect inflation before the introduction of indexation. The practical consequence will be that the institutions will not sell any holdings that have been held for many years simply to avoid the penal taxation that might apply if my understanding of the schedule is correct.

That would be undesirable. It would inhibit the institutions' freedom to manage their portfolios efficiently. More importantly, it would reduce the tax take to nil. Portfolio managers are not daft and they will freeze their holdings. The intention of the Budget statement was to relieve inflationary gains rather than increase the yield of capital gains tax.

The amendment that we tabled yesterday sought to establish whether we understood the position correctly. Treasury Ministers should make the position clear so that appropriate adjustments can be made and steps taken by portfolio managers to resolve these questions.

Is the hon. Gentleman trying to reduce the capital gain and therefore reduce the tax, or is he trying to increase the capital gain and therefore increase the tax?

That is a fair question. I am not arguing a case. I followed the debate yesterday——

No, I am not sitting on the fence. If I am given the opportunity, I want to say that I freely supported the attitude taken by the hon. Member for Thurrock (Dr. McDonald) and the Labour party in our previous debate. I agree that we should seek to maximise the amount of money from capital gains tax. I am worried about the position where the changes by default would end up with the tax take being reduced. Portfolio managers will freeze their holdings if the first in, first out principle applies. I hope that I have answered the question as clearly as possible.

There is confusion about the interpretation of paragraph 19. I am not trying to be clever—mine is a probing speech. Senior portfolio managers, who know far more than I about these provisions, are confused. It would be useful if the Chief Secretary could clarify the position.

6.30 pm

I had noticed the amendments that the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) had tabled. I appreciate his concern and I shall respond to his remarks as lucidly as I can.

The hon. Gentleman will recall that between 1965 and 1982 the FIFO rule—first in, first out—applied. After a measure of indexation was introduced in 1982, both the FIFO and LIFO—last in, first out—rules applied. Now we are reverting to the original intention of the legislation, to FIFO, and I shall list the advantages that we see in returning to that.

We hope that it will leave taxpayers at the earliest opportunity—of course, it is within their control whether it will be so—with one holding of shares and one pool of expenditure. It will therefore be a considerable simplification, and simplification is sought by hon. Members in all parts of the Committee.

It will no longer be necessary to keep details of shares acquired more than 20 years ago. That should be particularly helpful for those with computer programmes. The effect of the rule on individual taxpayers—I appreciate that the hon. Member for Roxburgh and Berwickshire was concerned more with institutions—will depend on the price and acquisition date of their holdings. They will have to check on their position in that respect.

The hon. Gentleman pointed out that people with big, pre-1982, gains might be frozen, as it were, into a particular position. I regret that, but it must be for them to judge. I explained clearly in answer to the first set of amendments to clause 54 moved by my hon. Friend the Member for Tatton (Mr. Hamilton) and when replying to the debate on the last series of amendments that, in our view, the tax is now in a sustainable and acceptable form. That does not, however, rule out minor amendments. It is for people to draw their own conclusions on that.

I do not believe that the provision will necessarily have the consequences that the hon. Gentleman forecast, but he is right to say that the position should be made absolutely clear. While the language may seem somewhat convoluted—it is a complex subject—I hope that I have explained what the provisions convey. We shall look again at the wording. In the meantime, I hope that I have conveyed the intention of the Government.

It would not be in order for me to ask questions about amendments that have not been selected. However, if the wording of those amendments were set out in a document other than the Order Paper and were submitted to the Chief Secretary, would the right hon. and learned Gentleman reply that what was proposed would cost or save the Exchequer money?

It is difficult to forecast. It would depend on the judgment of the managers of individual portfolios. It would vary according to the composition of the portfolio, how much of it was pre-1982 and post-1982, what the shares were and whether the managers took the view that eventually something more dramatic might happen to the tax in question.

I hope that I have conveyed the Government's intention. I hope, too, that the schedule conveys our intention. I promise the Committee to look again at the words of the provision to see whether there is any possible ambiguity. If there is, we shall return with a suitable amendment.

Question put and agreed to.

Schedule 16 agreed to.

Clause 87

ABOLITION OF DEVELOPMENT LAND TAX AND TAX ON DEVELOPMENT GAINS

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

For three hours, we have been debating provisions which give away £155 million to people with some of the highest incomes in the nation. As we come to clause 87, we debate provisions which give away more money—another £50 million—to people who are very well off.

We are debating what is called development land tax, which was introduced some years ago as a tax on the development value of land. In effect, it is a tax on the increased value of land, usually agricultural land, resulting from planning permission being granted by a local authority.

I hope that the whole Committee will agree that such an increase is a windfall gain—a gratuitous gain. The land has increased in value as a result of planning permission. That increase has been created by the community, and we oppose the abolition of development land tax because the Labour party believes that part of that increase should be returned to the community.

The tax was originally introduced by the then Labour Government in 1976. It accompanied the Community Land Act of the previous year. That Act was repealed by the Conservatives on their return to office.

It can be argued, therefore, that the raison d'etre for development land tax was removed by the abolition of the Community Land Act. However, our case is that the development land tax is justified in its own right. We believe it right that society should insist that part of this windfall gain should be used for the benefit of society and that the money should be recovered through a special tax.

There have always been exemptions from development land tax. When the tax was introduced by the Labour Government, there was an exemption for local authorities and similar bodies. Charities were also exempt; the exemption in that case applied to land which they already owned on 12 September 1974. That ensured that they would not pay tax if the land was developed after that date. It is interesting to reflect—in view of yesterday's debate in Committee about charities and the extension of VAT to newspaper advertisements—that when Labour Members argued yesterday for an exemption from VAT on those advertisements to be given to charities, the Conservatives resisted our pleas. Conservative Members did not take that attitude in 1976 when development land tax was introduced. They then claimed to be friends of charities and pressed the Labour Government to extend the exemption to charities which acquired land after that date, so enabling them to develop it and make a tax-free development gain. In considering this issue, we are entitled to contrast the words of Conservative spokesmen some years ago on the introduction of development land tax and the dogmatic and doctrinaire attitude—they would describe it as fiscal neutrality—which prevailed in the Government's arguments yesterday.

There has always been another exemption from development land tax. That applied to a person building a house for his or her own use. The increase in value in that instance, resulting from the granting of planning permission, has always been exempt from the tax.

Similarly, exemption has always existed for industrialists who develop land for their own use. Under the scheme introduced by the then Labour Government, payment of the tax was deferred until the property developed by the industrialist was eventually sold, if it should ever be sold. No tax arose at the time of development because the Labour Government wished to encourage industrialists to build factories and expand industry.

The Labour Government gave another exemption. From the beginning, the first £10,000 profit made from the increased value of the land as a result of planning permission was exempt. An individual, company or trust could profit to the tune of £10,000 a year as the result of planning permission being given for land which was to be developed, and was not taxed on this profit.

That exemption of £10,000—call it a tax allowance—applied from 1976. When the Conservatives came to power in 1979 they increased that exemption to £50,000, and at the same time they reduced the rate of tax from 80 to 60 per cent. Those changes cost the Revenue £10 million in a full year.

Two years later the Conservatives extended to commercial developments the deferment applying to industrialists. In other words, if a person built an office block in a city, the tax did not apply until the office block was eventually sold by the developer, provided that the developer had been using it for his own purposes. I have not been able to ascertain the cost of that minor change. I accept that it was probably quite small. I mention it only so that we may have a full picture of the way in which the Government have gradually cut the revenue from this tax on windfall gains.

In 1984, the deferment became an exemption for industrialists and commercial developers. In that year, the Conservatives—fresh from the election victory of the year before—decided that, if a property had not been sold within 12 years, deferment would become exemption, and the developer would not be liable for development land tax. We were told that the change cost the Revenue £4 million. In the same Finance Bill, the Government increased the threshold from £50,000 a year to £75,000 a year, at a cost to the Revenue of another £9 million.

Finally, this year, the Chancellor announced that he intended to abolish this tax and that the measure would cost £50 million in a full year to the Revenue.

We have seen a series of changes and slices in this tax. It reminds me very much of the way in which, some years ago, Russian foreign policy was described as "slicing the salami". We are told that the final act of abolition will cost £50 million. The true cost of Conservative policy on development land tax has been at least £73 million in a full year.

I emphasise that this abolition of development land tax does not mean that the person who benefits from the windfall gain resulting from planning permission will not pay any tax on the gain. Of course, that person will still be liable to pay capital gains tax, which is levied at 30 per cent. The figures that I have cited—£50 million for the cost of abolition and £73 million for the total cost of what the Government have done—are net figures after allowing for the offset effect of capital gains tax.

It is important to note that more tax will be paid by the small landowner because of the abolition of development land tax. He will have benefited in the past from an exemption of £10,000 under the Labour Government, which was increased progressively to £50,000 and then to £75,000 under the Conservative Government. The person who was exempt from tax will become in the future liable to pay capital gains tax at 30 per cent. because a similar exemption from capital gains tax amounts to only £5,900. The Government are benefiting not only the people who receive windfall gains resulting from planning permission given by local authorities but the people who make the greatest gains. They are not benefiting the people who make only small gains.

It is important to contrast the effect of the abolition of development land tax on the tax rate, because there will only be a capital gains tax of 30 per cent. on these development gains. I contrast that tax with the taxes that this Government levy on earned income. People pay income tax on their earned income at a rate of 30 per cent. increasing to 60 per cent. This year, the rate of corporation tax is 40 per cent. The tax on the windfall gains which have been wholly unearned and undeserved will only be 30 per cent.

When the Development Land Tax Bill was introduced by the Labour Government, the Conservative party opposed it. Conservative Members were, however, always careful in debates to distance themselves from any suggestion that those unearned profits should not be taxed. Indeed, on Second Reading the spokesman for the Conservative party—he is now a Minister—moved an amendment that accepted
"that increases of land values resulting from planning decisions should bear a special tax".
and the Conservative party did not vote against the Second Reading.

6.45 pm

In an earlier debate, the Chief Secretary told the Committee that the Economic Secretary would reply to this debate on the Government's behalf. I know that the Economic Secretary took great interest in the introduction of this tax. He told the House during the debate on Development Land Tax Bill that he had some personal experience of increases in development value because of his directorship in a company that had developed a site in London for a hotel with the additional aid of a special grant. He could therefore bring his experience and expertise to the subject—I make no criticism of that—so the Economic Secretary—the hon. Member for Hertfordshire, North (Mr. Stewart)—participated in the Second Reading debate on the Development Land Tax Bill. He told the House that he regretted the fact that there was not a common approach between the Conservative and Labour parties. He accepted that there needed to be a tax on the gains made as a result of planning permission being given. He said:
"we accept that planning gains should attract some special tax."
—[Official Report, 15 March 1976; Vol. 907, c. 954, 1035.] I emphasise the words "special tax". Those words were also used by some of the hon. Gentleman's colleagues.

When the Economic Secretary explains the Government's decision to abolish development land tax, will he explain where the "special tax" is? Where is the special tax which the Conservative spokesman when in Opposition, agreed should be levied on these windfall gains resulting from planning permission?

During the debate on the Development Land Tax Bill and elsewhere, Conservative spokesmen argued for what they described as an "infrastructure charge" to be paid by developers. Where is the infrastructure charge to be introduced by the Conservative Government on the abolition of development land tax?

Any fair-minded person reading the debates on the introduction of this tax would have expected a Conservative Government, if they abolished development land tax, to introduce a new tax. Conservatives would regard it as a tax on better lines, but it would nevertheless be a tax on those unearned profits that arise solely as a result of a line drawn on a map by someone in a planning office. In those days, when in opposition, the Conservatives did not dare to contest the need for an additional tax. They only complained about its level and the method by which it would be levied. They said that they thought that a rate of 80 per cent. was too high and argued in the House and in Committee for a rate of 60 per cent. In one sense, it follows that we cannot complain about the reduction to 60 per cent. in 1979. Anyone who looked at the debates could have expected a Conservative Government to reduce the rate from 80 per cent. to 60 per cent., but could not have expected the tax to be completely swept away without being replaced. This tax was described repeatedly by Conservative spokesmen in the House and in Committee as a special tax that was entirely justified.

The Conservative party manifesto in 1983 did not refer to the abolition of development land tax. The Chancellor has boasted of abolishing three taxes. He refers to the abolition of the national insurance surcharge, an abolition that we supported; the abolition of the investment income surcharge, a measure which we strongly opposed; and the abolition of development land tax, which we oppose equally strongly. The abolition of development land tax gives back £50 million in a full year to people who are already well off. It does not fulfil a Conservative party manifesto commitment or election pledge. The Conservative party manifesto in 1983 did not refer to the possibility of the abolition of development land tax. I understand that it was referred to in the guide issued to Conservative candidates in 1983, but they were not encouraged by the Government to expect the abolition of development land tax.

I have not read the guide but I am told that it contains the statement:
"The tax remains in place to control the possibility of abuse."
What will happen about those abuses? The 1983 guide for Conservative candidates admitted that there were some abuses. What else does that sentence in the guide mean? What will be done to control the abuses that two years ago Conservative central office admitted were liable to take place if the tax was abolished?

The Labour party will oppose the abolition of the tax not just because it gives £50 million to people whose need is far less than that of many others in our society, but because it goes back on everything that the Conservative party said when in opposition.

I rise, as is the custom in these matters, to declare an interest as a consultant partner in a firm of chartered surveyors which might in the past have earned fees from acting for clients who were contesting tax claims with the development land tax office in Middlesbrough. In a sense, I am declaring a reverse interest because that firm may lose fees it might otherwise have received had my right hon. Friend the Chancellor of the Exchequer not made that welcome and overdue announcement in his Budget speech.

I remember when the Government of which the hon. Member for Birmingham, Hodge Hill (Mr. Davis) was not a member introduced the Community Land Bill in 1975. It was an act of political vindictiveness. At a stroke it froze the supply of land that builders—the largest employers of skilled labour—wanted to enable them to build homes for the first-time buyers over whom that same Government were weeping crocodile tears.

If that tax was so bad why were those record house building years in the United Kingdom?

They were not record years for house building in the private sector. They may have been record years for house building in the public sector, but that record did nothing to reduce council house waiting lists.

I remember the introduction of the Development Land Tax Act 1976 by the Government of which the hon. Member for Hodge Hill was a member. They introduced it because the Community Land Act 1975 was seen patently not to work, to do the reverse of what it was designed to do, and to freeze the supply of land. What happened? The supply of land dried up completely. When bank finance became more readily available, the money fell into the hands of secondary and tertiary banks and property speculators who made profits hand over fist and contract against contract. No foundations were dug. No brick was laid. No house was built, and the level of homelessness increased.

The supply of land will increase only through the operation of market forces—supply and demand working in partnership—and if this punitive tax, which last year was 8 per cent. higher than corporation tax and which is now well above the level of that tax, is abolished. Land prices will stabilise and the construction industry will feel that it can buy land at realistic prices and offer properties built on that land at prices that people can afford.

Opposition Members fail to accept that an impost of 60 per cent. has the effect of increasing the cost of land by 60 per cent. It discourages the land owner from bringing that land forward for development. The hon. Member for Hodge Hill said that he looked for a replacement tax to contribute towards infrastructure costs. That tax exists. Capital gains tax will continue to be paid by the private landowner and corporation tax will be paid by the company that sells land. How can he say that a reduction in taxation which will guarantee to increase the supply of land and stimulate the construction industry, and the jobs created thereby, is not a good measure? How can he say that with a corporation tax rate of 35 per cent. there is no replacement taxation? How can he say that a form of taxation whereby development gains cannot be offset against development losses is a good form of taxation? How can he say that a form of taxation that costs the development land tax office in Middlesbrough more to collect than the Exchequer receives is a good form of taxation? It is nonsense.

I look to the construction industry to respond now to my right hon. Friend's welcome announcement in the Budget speech and to buy land, and for landowners to make land available at realistic prices so that builders can employ the skilled labour that a boost to home ownership will require which is waiting for the jobs. That will benefit young married couples on council waiting lists in my constituency and that of the hon. Member for Hodge Hill who want to get on to the ladder of home ownership. A reduction in the 60 per cent. punitive rate of taxation will release more land at realistic prices.

I listened with great interest to the speech of the hon. Member for Mid-Staffordshire (Mr. Heddle). He plainly represents interests connected with land speculation.

On a point of order, Mr. McCartney. The hon. Gentleman has made a statement which, with respect to him, I believe is a slur. I declared an interest as a consultant in a firm of chartered surveyors, not an interest in the matter to which he referred.

I shall not discuss the interests of the hon. Member for Mid-Staffordshire any further, but if the cap fits he should perhaps wear it.

As my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) said, development land tax was introduced by the Labour Government in 1976. It was introduced to offset windfall profits made from the sale or the development of land. Many of us will remember what happened to land prices in the early 1970s. In the south-east of England prices went berserk. There was enormous abuse in the sale and exploitation of land. Ordinary people suffered. For that reason, I oppose the abolition of development land tax.

7 pm

As my hon. Friend the Member for Birmingham, Hodge Hill pointed out, the profit arises from the land tax at a time when a local authority grants planning permission to a developer of a piece of land or to somebody who wants to sell a piece of land for a particular purpose or use. However, I think that the development land tax legislation introduced by the Labour Government was reasonable. It created exemptions. As a result, organisations such as charities and local authorities which serve community interests were exempt, as were people who built houses for their own use on land that they owned. That to my mind seems perfectly reasonable.

In the years since the last Labour Government introduced the development land tax, the Conservatives have been chipping away at it. I would like to have been a fly on the wall listening to all the lobbying that must have taken place by property speculators and the like of the various Ministers and Departments, pleading to be given an opportunity to make the kind of profits that they had made hitherto.

In 1981, the fairly new Conservative Government extended the exemptions to which I have referred to cover commercial organisations.

If I may pursue the point that my hon. Friend made about lobbying and arm twisting, things are done in a far more genteel fashion in the Conservative party than they are in the Labour party. It is in fact not arm twisting or anything similarly painful, but the dangling of prospects. I suggest to my hon. Friend that, as part of the inquiry into the processes that went on behind closed doors, he should ask how many property companies made substantial donations to the Conservative party.

I am grateful to my hon. Friend because in fact that was implicit in my comments. That is why I said that I would like to have been a fly on the wall listening to the various probing questions. I am sure that all the briefs coming into the various ministerial offices would have suggested that, if there could be a relaxation of the tax, there must be good prospects for the Conservative Government. I would not like to say that that actually happened, but there are doubts in my mind as to how all this took place.

The 1981 change provided an opportunity for the organisations concerned with the development of office blocks to have a relaxation of this form of taxation. In my view, we are discussing here large organisations and rich institutions that invest in office blocks and other real estate. The debate is really about whether we should be giving relief to organisations of that kind or helping the ordinary man in the street. That is the general thrust of what is being said. The clause is yet another measure introduced by the Conservative Government that results in money going from the less well off to the ultra-rich and to the very well off. That has been the philosophy of the Government since they were elected in 1979.

After the change in 1981 came the 1984 change whereby, the Government altered the deferment arrangements of development land tax for industrial and commercial development to complete exemption. Certain conditions had to be met. One was that the property would not be disposed of within a 12-year period. This was another chipping away of the development land tax for the benefit of landowners who, I think one could say, would generally be pretty rich people or institutions.

The Government seem to be intent on encouraging land speculators and land speculation. When the Labour Government were in power, they introduced the development land tax at 80 per cent., but soon after coming to power in 1979 the Conservative Government relaxed the rate to 60 per cent. The original scheme introduced by the Labour Government in 1976 was reasonable in that the first £10 million of profit—this is on a per annum basis—was exempt from development land tax. That was a reasonable legislative measure and, for the life of me, I cannot understand the reason for this change except, as I said earlier, that I believe that there has been some arm twisting and, as we know, the Government are intent on supporting the very rich at the expense of the less well off. These facts can be substantiated. The people and institutions whom we have been discussing are a tiny minority of very well off people.

In 1984, the Conservative Government increased the exemption allowance to £75,000. Now they propose to abolish development land tax. I understand that that will cost the Exchequer about £50 million in 1985–86. If the Minister and some of his hon. Friends would only visit my constituency to see for themselves the social conditions, the appalling housing and the deprivation in the area, I feel almost certain that they would understand why I am so bitterly opposed to the priority of the Government in taking £50 million and giving it to property speculators.

In Committee yesterday, we debated advertisements in newspapers. In a long debate, many hon. Members expressed strong feelings about this form of taxation, which I believe is approximately equivalent to the amount of revenue that would be lost by the complete removal of the development land tax. In the debate, hon. Members said that many ordinary people wish to insert advertisements in newspapers at the time of a family bereavement or on the occasion of a birth or silver wedding. These advertisements are important to many people. As a result of the Government's measure, a tax of 15 per cent. will be imposed. This is just one example of the Government's priorities. They are giving £50 million to landowners and speculators and adding to the cost of advertisements in local newspapers to the detriment of ordinary people.

Many changes have taken place since 1979. Hon. Members who took part in last year's debates on the Finance Bill will realise the insidious way in which the Government have introduced these taxation changes. We heard then of tax relief for stud farm owners, and a form of tax relief for company directors whose children are educated at their companies' expense. The most galling thing is that, when Parliament was debating that legislation last year in the early hours of the morning, the Press Gallery was empty. As my hon. Friend the Member for Workington (Mr. Campbell-Savours) pointed out, it is galling to realise that the general public are often unaware of the extent to which taxation changes are taking place.

This is a question of priorities. As someone has said, Socialism is the choice of priorities. That is why we are so bitterly opposed to the clause. Why did the Government not use the money to avoid petrol costing £2 a gallon? That would have helped those who live in rural areas and those who must use their cars to collect their prescriptions. The increase in the cost of petrol is tough on many people. It is right that we should oppose the abolition of development land tax.

I am delighted that we are debating this matter on the Floor of the House rather than in Committee. I hope that the press will pick the matter up, and that people will realise the extent to which the Government have been taxing the poor and giving money to the rich for almost six years. The net effect is that the rich have become extremely rich and the poor extremely poor. About 18 months ago, "Breadline Britons" reported that nearly 8 million people were living in poverty. The way in which the Government are allowing poverty to continue while at the same time they are feathering the nests of rich property owners and speculators is shameful.

I had not intended to speak, until the hon. Member for Mid-Staffordshire (Mr. Heddle) referred to some figures for which he did not produce statistics. I went to the Library to examine the statistics and they make interesting reading. They show that the Government have no case for introducing this concession. There is no need for it. The hon. Gentleman was right that there are more private sector starts than previously. In 1977, the first year for which the tax existed, 134,810 houses were built in the private sector. In 1978 the figure increased to 157,000, and in 1983 it had reached 167,000. There is always a need to build more houses, but these figures show a successful policy, which is based on raising development land tax. The tax paid does not impede growth in the private sector; indeed, it is supporting the private sector house building programme.

I thank the hon. Gentleman for giving way, and ask him to consider the following fact. The properties built in 1977, 1978 and 1979 were built not on land which was bought between 1977 and 1979, but on land bought by builders up to five years ahead of their building programme. Therefore, his statistics are of little relevance. The hon. Gentleman referred to the welcome increase in starts in 1983. The houses were built on land which was subject to a lower rate of development land tax—it had fallen from 80 per cent. to 60 per cent.—which was introduced by my right hon. and learned Friend the then Chancellor of the Exchequer in his Budget of 1980—not 1979 as the hon. Member for Kingston upon Hull, West (Mr. Randall) said earlier.

As that is the hon. Gentleman's response, perhaps he will examine the position a little further back to see whether his argument continues to hold water. In 1973, there were 215,000 private sector starts. By 1974, the figure had collapsed to 105,000. It then increased to 149,000 and to 154,000. My point is that the policy has not damaged the growth in private house building. Every suggestion that it has is negated by the figures that I have produced today. When the Minister replies, he must prove to the House that there is a need to remove the tax, to ensure that growth can take place where it has not taken place. He cannot prove that, because the statistics show that growth has taken place.

I wish to ensure that people outside the House do not misunderstand the figures. Although there has been a growth in private sector housing development, there has been a collapse in the public sector from 132,000 in 1977 to 47,000 in 1983. The figure is even lower this year. That means that this year the total figure of 214,000 for all dwellings is lower than for any year under the Labour Government. We have won the argument in every respect.

7.15 pm

The hon. Gentleman said that the benefit from the reduction in tax would be passed on to the consumer, but that does not happen. That is not how the market works. The benefit is not passed on in the free market. What happens is the same as what happens in the enterprise zones. Although there has been a rates subsidy, its effect has made little difference to the market cost to the manufacturer or tenant in taking a site. Rents have merely increased. The market, not the question whether there is a tax, determines the cost of land. We are merely handing over the £50 million or net £20 million to landowners. The whole exercise is a waste of time. If it could be proved that the abolition of DLT could lead to an abundance of new land coming onto the market, there might be an argument for it. However, it will not do that. Abolition of DLT has no influence on the number of private sector starts.

We can show that. It is clear that if the tax is removed, a substantial number of landowners would put their land on the market. That would increase the supply of land on the market, which would, of necessity, reduce prices. In my professional capacity, I have seen that the phasing effect, which takes place to take account of annual exemptions, has meant that many landowners have released their land in parcels in order to take maximum account of the annual exemptions available. That has delayed the flow of land on to the market.

I only wish that my memory were better. I recall a time during the past four years—my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) may have served with me on that Finance Bill—when we discussed an amendment which dealt with land banks being held by building companies. It appeared that they had a tax problem because they were holding such large tracts of land. There is no shortage of land available to building companies today. Indeed, some companies say that they are carrying too large a pool of land. They want a demand for homes and an expansion of public sector moneys to ensure a construction programme. Building companies say that they have the land, yet the hon. Gentleman seeks to prove that more land will be forthcoming. It may be that the building companies do not need the land, as it is already available.

The hon. Member for Mid-Staffordshire is a free marketeer and is in the estate agent business, land valuation, or whatever. He is in that set and he knows exactly what I mean. He knows that the only determinant of land values is the free market. If we hand over the net £20 million, we will merely give it to people who do not need it. If it could be proved that the provision would reduce the value of housing, we might have to take the clause seriously, but it cannot be proved. When the Minister replies, he must prove that the abolition will lead to more houses being built, and that the consumer will benefit. If he cannot do that, he should withdraw the clause.

My hon. Friend the Member for Workington (Mr. Campbell-Savours) should disregard the siren voices from the Conservative party, because arguments along those lines can always be produced to defend a concession to a vested interest, which this clause essentially is. The fact that they cannot produce better arguments than the ones that we have heard during this debate is a testimony to how tawdry the concession is.

The argument that the concession will increase housing starts is completely fallacious. That depends on interest rates, and the Government's prolonged policy of high interest rates has crucified not only house buyers and those who have mortgages, but house builders. It inhibits them from buying land and building the land banks that they need to ensure continuity. Interest rates will be the real determinant of housing starts, not this concession, which will go straight into the pockets of the developers and the property companies. It will certainly not come back to the consumer.

I cannot emphasise enough what is happening here. The Opposition Front-Bench spokesmen were right to pick this clause on development land tax, and the earlier clause on capital gains tax, for debate on the Floor of the House. There is no need for either concession.

This concession will do nothing to stimulate the economy or the housing market beyond what is determined by interest rates. It will do nothing for economic efficiency, jobs or growth. It is the straightforward concession of a substantial sum of money to the Government's fat friends——

Perhaps I am one of the Government's fattest friends. I am an engineer, not a property developer or a financier. The hon. Gentleman said that there would be no advantage to the consumer. Is it not right that many British institutions hold many acres of land? The trade unions and other bodies invest their pension funds in those institutions. Therefore, if there is a tax advantage to those institutions in the sale or development of their land, the money will accelerate and enhance the pension funds in which trade unions and many other disadvantaged bodies are pleased to place their money. Would they not obtain a better yield? The hon. Gentleman's argument is incorrect.

The hon. Gentleman's intervention takes us completely away from the point, but it demonstrates the paucity of argument for this measure. His was an especially far-fetched argument. If he is advocating that the pension funds should be allowed to buy and sell land more easily so that their money will be, not far-fetched but far-carried and invested overseas—following the huge outflow of investment from Britain—that will stimulate the free market, but it will be of no great advantage to British citizens or to the creation of jobs.

This measure is a straight giveaway of the sort that is normally trundled through Committee at dead of night. My hon. Friends were right to ask that it be debated in the early evening. Regrettably, the press, with their usual inattention to such sordid manoeuvrings, are not here to highlight it. But what is happening deserves to be screamed from the rooftops, because houses will continue to be built, provided that interest rates allow it. This concession to the Government's fat friends is justified by double talk and by devious and largely inaccurate arguments.

The day after the measure was announced by the Chancellor in his Budget statement, The Times carried an article stating that the property industry welcomed it. But the industry did not say, "Thank you, Chancellor, for £50 million," which is what it is about. It said that the tax would consume much of its time. The £50 million would appear to be purely incidental. It is a straightforward benefit about which nothing is said.

Development land tax, which was rightly introduced by the Labour Government in 1976, is part of a long tradition of attempts, some more successful than others, to ensure that the return on the increased value of land, which comes through no effort on the part of the owner, accrues to the agency which causes that increase in value—the community. Is it not right, in principle, that that unearned windfall should accrue to the community? There are always practical difficulties in that, but they can be solved. The principle of development land tax is so glaringly right as to be incontrovertible.

The tradition goes back to the unearned increment of land tax which Lloyd George introduced in 1909. After the "people's Budget" of that year, Trafalgar square was filled with an enormous crowd singing:
"The land, the land, 'twas God that gave the land,
The land, the land, the ground on which we stand.
Why should we be beggars with the ballot in our hand?
God gave the land to the people."
That crowd was led by Winston Churchill. They were celebrating the taxing of the unearned increment of land value, which is part of the development land tax introduced by the Labour Government. It is a long-standing principle that the increase accruing as unearned profit to developers and owners should be taxed for the benefit of the community.

The hon. Gentleman is wrong. The 1947 Act removed from landowners the right to do what they wished with their land. They had to obtain permission. Before 1947, a man could do what he wished with his land. The hon. Gentleman is suggesting that the concession whereby those rights may be given back should then be the subject of taxation. It stands logic entirely on its head.

That was not my argument. I was saying that it is right to take back some element of the unearned improvement in land values. The principle has been a long-standing part of fiscal legislation and endeavour, dating back to the "people's Budget" of 1909.

One can argue about planning permission and how it should be pursued, but one cannot argue that people who have done nothing to increase the value of land should benefit from that increase, as they would if development land tax was abolished. It is an unearned profit, and it is right to tax it.

It has been shown that the income can be taxed without inhibiting development. Indeed, my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) produced telling figures in support of that argument. Despite all that the Government have done to increase interest rates, depress the building industry and drive builders into bankruptcy, there is still development, except in public sector housing. It is not true to say that the tax has inhibited development. The increase in value should be taxed because it is a socially produced increase from which the full benefit should not accrue to the landowner. It should accrue to the community.

Labour introduced development land tax, which accompanied the Community Land Act. It was intended as a step towards public ownership of all development land. That would seem to be right in principle. One can argue about the way in which it is operated and about whether one needs to go to the full 100 per cent., but the tax is an attempt to see land values accrue to the community, which in itself, is right. The idea was that there should be public ownership and that the profits should accrue to the community. That was the essence of the argument. It was a tax on the windfall profit.

7.30 pm

The exemptions allowed under the Labour Government were adequate to ensure that the system functioned efficiently and fairly. Local authorities, charities and anyone building a house for his own use have always been exempt. If an industrialist developed land for his own use, the tax was deferred until the property was sold, under Labour's scheme. Labour exempted the first £50,000 profit per year by any developer. Therefore, there were sufficient exemptions and allowances to make it a fair system and to embody the principle that I have emphasised is important.

I am glad to see the Liberals here in their serried ranks to back us, as they did in 1909, with the people's Budget. However, their Social Democratic party allies are not here—they were not here yesterday either. The new members of the alliance are not as strong in the defence of Lloyd George's tradition as we are in the rest of the House.

The principle is right and fair and should be maintained. What has been done by the Government is a straightforward, vicious, nasty, sordid and tawdry concession to their fat friends.

I am glad to respond to this debate on development land tax, particularly because, as the hon. Member for Birmingham, Hodge Hill (Mr. Davis) reminded us, I was involved in the legislation when it was originally introduced in 1976.

The hon. Member for Hodge Hill rightly said that the measure does not represent the removal of all tax from transactions which, up to now, have been subject to development land tax. The amount concerned will fall to be taxed not only under income tax but under capital gains tax, or corporation tax for companies. However, I must correct one thing that he said. I understood him to say that a small landowner would be worse off because tax would be payable if there were no DLT whereas, had there been DLT, the amount would have fallen within the exempt amount. That is not correct. The exempt amount may exempt the taxpayer from DLT. However, as with the exempt amount on transactions that give rise to DLT, all the remaining part of any profit or gain is taxable in the ordinary way. Therefore, it will not have the adverse effect that the hon. Gentleman suggested.

Several hon. Members reminded us that DLT was part of the community land scheme arrangements of the previous Labour Government. Under Labour, there was the Central Land Board in 1947, the Land Commission and the betterment levy in 1967, and the Community Land Act and development land tax in 1976. The hon. Member for Great Grimsby (Mr. Mitchell) said that he thought that nationalisation of development land was the direction in which we should go. Not only do I disagree with that in principle as a Conservative, but in practice the consequences of all those proposals have not met the expectations of those who introduced them.

Development land tax has caused many problems, many foreseen by my hon. Friends and me when we were considering the proposals nine years ago in Committee. A tax at a rate of 80 per cent. rising to 100 per cent., backed with powers for local authorities to acquire all development land, was more in tune with the theoretical ideas of Socialist planning than with the practical realities of the construction industry, in development and in bringing forward land for building. That is the way in which things have turned out.

I should like to correct another impression that Labour Members give. It is that development land tax is substantially the province of rich landowners and that the windfall gains of which they speak are such a social evil that they should be taxed at penal rates. In fact, less than half of those who pay the tax are individuals. Most of the tax charges are assessed against companies, statutory undertakers, builders and so on. It is because the groups involved in building and development are most subject to the tax that so many problems have been caused.

I was asked by the hon. Member for Hodge Hill to say why the Government were proposing the abolition of the tax when, nine years ago, in Committee on the Development Land Tax Bill, I and other spokesmen for the Conservative Opposition had accepted that there was a case in principle for the taxation of such gains. The simple answer is that there was a case in principle for the taxation of such gains in the circumstances of the 1970s, with high prospects of inflation and substantial speculative gains at that time. However, not only is there no case for such a tax today because inflation is now much reduced—the inflationary conditions that encouraged speculation no longer apply, and so long as the Government have anything to do with it, they will not return—but there is no case in the foreseeable future for such a tax, which has such an adverse effect on development and construction.

I was asked to give proof. Of course one cannot prove the future, but nine years ago we gave projections of what was likely to happen under the tax. They have proved far more accurate than the claims that were made by Labour Members at that time. I can quote some opinions to justify our belief. Several estate agents such as Savills, Knight Frank and Rutley and Grant and Partners have said that abolition of DLT will increase the supply of residential building land. They have said that it will have an entirely beneficial effect by releasing sites for development, enabling industrial companies to move to more suitable sites, and helping housebuilders. The House Builders Federation believes that it will encourage landowners to sell land for development. The Incorporated Society of Valuers and Auctioneers says that it will
"encourage the building industry and employment".
Those comments are on the positive side. The strongest case for the abolition of DLT is the inhibiting effect that it has had on commercial activity and on building and development in recent years. It is expensive and difficult to administer, not only for the Inland Revenue but for the taxpayer. It has provided a significant impediment to the functioning of the market, and has undoubtedly damaged industry and commerce——

I shall elaborate on what I have said because I am invited to do so by the hon. Gentleman.

I give one of many examples which have been brought to the attention of Ministers by assiduous Members. For example, a major firm in west London employing hundreds of workers and exporting the vast bulk of its products to overseas markets felt unable to move out of its present outmoded premises and into a larger factory because of the threat of development land tax. It did not have the resources to finance the cost of replacement premises. In another case, an export-oriented firm in the Midlands was faced with a choice of staying put or moving to a better site with a reduced work force because of development land tax liability on the disposal of its existing site. These are the restrictions to expansion and limitations to employment that are being removed by the abolition of development land tax.

Lest Labour Members should repeat their charge that this is merely Conservative rhetoric, I point out that representations along these lines have come——

The Minister's examples have all been on commercial properties. Can we have an example on residential properties, because the Bill covers that?

I have given the Committee a number of comments from those who are more expert than I am to judge the impact on building land. Examples could be produced from many constituencies where shortages of development land have made difficulties for house building. This tax goes far wider than house building because it affects commerce and industry. Many hon. Members have been pointing out in the past few years the difficulties that development land tax has created for them. The fact that such examples are put to Ministers by Labour Members should show that the tax that the Labour party introduced is doing the damage that we had the foresight to see at that time.

This is an inefficient tax because it is extremely complicated and at a punitive rate. The cost of collecting this tax is higher than that of any other tax on the statute book. It is more than three times as expensive as capital gains tax to collect, more than twice as expensive as capital transfer tax and seven times as expensive as stamp duty. That is the gross cost against the gross yield. The gross yield of development land tax is, in part, offset against other taxes that would be payable in the normal course of events if development land tax did not apply. The cost against yield tends to be significantly higher than 7 per cent.

Over the nine years in which it has been in operation, the gross yield before the cost of collection and the offset against other taxes that would have been paid has only been, on average, about £40 million a year. The latest year for which we have figures, two years ago, shows that the cost of collecting it gross is £1 to every £13 of tax, so it is extremely inefficient and expensive for the Revenue to administer the tax.

The tax is also burdensome to the taxpayer. One case has come to the notice of the Inland Revenue recently in which the taxpayer, assessed for liability of £1,800, could demonstrate that the incidental costs of dealing with that transaction to the taxpayer were £10,000—more than five times the amount of the cost itself.

We have heard the exorbitant incremental cost of collection as against the net tax yield, after taking into account taxes that would otherwise be paid, but that assumes that that tax is paid in one year. Does my hon. Friend agree that that tax is phased over an eight-year period, so the net benefit to the Revenue is even less than this figure suggests?

7.45 pm

Payment is phased over a 10-year period as a result of a Conservative amendment that somewhat alleviated the burden of the tax. However, despite the improvements that we have made since we have been in office, such as the increase in threshold and the improvement in instalments, there are inherent problems in a tax where so much of the liability is deferred. The number of cases in which tax on deferred liability has been collected is still in single figures, although there are probably several hundred, if not thousands, of cases where this is being stored up, and continuing to produce problems for the future. Only one in 10 of the inquiries made about the potential charges of development land tax by the Inland Revenue results in a charge to tax.

However, a great deal of Revenue staff and taxpayers' time is taken up in dealing with the necessary inquiries and investigations. Not surprisingly, this tax has acted as a drag on the market, has discouraged development and caused congestion in the building and property markets.

The circumstances of inflation, speculation in the 1970s and so on have changed the markets. However, there is another important change that has come about recently and made it untenable to continue with this tax. That is the change in the rate of corporation tax. While it was at a rate of 52 per cent. against 60 per cent. for development land tax, the latter charge was higher than that of the corporation charge, but not catastrophically so. Various allowances could not be offset against it, so it was a more demanding tax than corporation tax.

When corporation tax is reduced to 35 per cent., as it will be next year, the gap between the rate of corporation tax and the rate of development land tax will be so wide that there will be a significant difference to the taxpayer according to which he is assessed. Therefore, the exact valuation of how much profit or gain should fall on development land tax and how much on corporation tax will be a more significant factor that taxpayers will have to take into account. That will increase the burden both to the taxpayer and the Revenue and to the problems of valuation, adjustment and so on.

Under current circumstances, all the practical arguments are against keeping this tax on the statute book. It is the most inefficient and expensive tax and it has done increasing damage as years have gone by and more and more cases have become liable, either through deferment of liability or through locking in cases that could otherwise be treated in the normal way in the market. The tax has produced little revenue and done a great deal of harm to development. I am glad that tonight we have the opportunity to remove it for good and all.

The hon. Member for Mid-Staffordshire (Mr. Heddle) said that the 1967 Act did not work, and that the Labour Government had therefore introduced development land tax in 1976. The Economic Secretary also had several omissions in his list of previous attempts to tax development gains. Like the hon. Member for Mid-Staffordshire, he forgot to mention that the 1967 Act, which may or may not have worked, was not the reason for introducing the tax in 1976. The tax that was introduced in 1967 was abolished by the 1970–74 Conservative Government. However, that Government had a change of heart, and this fact was omitted not only by the hon. Member for Mid-Staffordshire, who could be forgiven for forgetting about it because he was not in the House at the time, but, more significantly, by the Economic Secretary. When he read his list of taxation measures on development land, he forgot to mention that in 1973 the Conservative Government re-introduced a tax on development gains.

The hon. Member for Mid-Staffordshire then used the adjective "vindictive". He thought that the introduction of a tax on development gains was vindictive. Is he then describing the Economic Secretary as having been vindictive in 1976 when he said that there should be a special and additional tax on development gains? All those words were used by the present Economic Secretary and many other Conservatives when development land tax was introduced. Is the hon. Member for Mid-Staffordshire accusing his right hon. Friend the present Minister for Overseas Development of having been vindictive? We all know that that would be totally out of character.

Many other Conservative Members also accepted the need for such a tax. I have always observed the convention of not referring to hon. Members unless I have told them that I intend to do so, but I believe that that convention arose due to the possibility of hon. Members being attacked in their absence. As I am not making any attack, I make no apology for referring to words, used by Conservative Members in 1976, with which I fully agree. The hon. Member for Wolverhampton, South-West (Mr. Budgen), with whom I rarely agree, said:
"I accept that it is right that there should be an additional tax upon those values which arise from the granting of planning permission"
and
"We accept that there should be some level of taxation at a higher level than the rates for capital gains tax generally".—[Official Report, Standing Committee J, 23 March 1976; c. 15–18.]
Another Conservative, the hon. Member for Hove (Mr. Sainsbury), said:
"We accept the need for a special rate of tax on the granting of planning permission. Our argument is not whether there should be a tax but what its rate should be."—[Official Report, Standing Committee J, 23 March 1976; c. 33.]
There was no reference to inflation or speculation, but a clear reference—not a vindictive reference—to the community's justification for taxing these windfall gains arising from the granting of planning permission, so I think that the hon. Member for Mid-Staffordshire went a little over the top in his comments today.

The hon. Gentleman may be surprised to hear that a developer in this country, like so many others, went abroad because of this stupid tax and is now building large housing estates in Canada instead of continuing to provide jobs and homes for the people of this country. Does the hon. Gentleman accept that it is not all take for the speculators because many get their fingers severely burnt and suffer great personal financial losses?

It is always difficult to discuss individual cases when they are not identified, but the hon. Gentleman cannot have appreciated the impact of development land tax. It does not apply to developers. It applies to people who own land and sell that land after planning permission has been given. There is a difference between a developer and a landowner. In one of those previous debates the hon. Member for Rutland and Melton (Mr. Latham) referred to the people who would pay the tax as land vendors. There is a great difference between a land vendor and a developer.

The Economic Secretary has said today that development land tax is justified only if there is inflation or speculation. I regard that as merely an excuse. Conservative Members made no reference to inflation or speculation when they supported the introduction of a special tax on these development gains in 1976.

The hon. Member for Mid-Staffordshire has described the tax as vindictive. My experience of debates on Finance Bills has been that Conservatives always claim that taxes on the rich are vindictive.

The hon. Member for Mid-Staffordshire also said that a tax of 60 per cent. on these unearned, windfall gains increased the price of land. If that is so, why was that rate suggested by Conservative Members in 1976? The Labour Government introduced a rate of 80 per cent. The Conservatives did not argue about the principle of the tax, although they might have done things a little differently and allowed more exemptions, but they urged that the correct rate was exactly the rate that is now being abolished.

Further, as my hon. Friend the hon. Member for Workington (Mr. Campbell-Savours) has pointed out, the price of land and of houses is determined not by the tax but by the market. Contrary to the claims of the hon. Member for Mid-Staffordshire, development land tax has not been responsible for the increase in house prices.

The hon. Member for Bournemouth, West (Mr. Butterfill) offered a much more sophisticated explanation of the economics of development. He said that, if the tax is removed, landowners will put land on the market, which will reduce the price. But when the rate was reduced from 80 per cent. to 60 per cent. and the exemption was increased from £10,000 per year to £50,000 per year and then to £75,000 per year, no evidence emerged—and the Economic Secretary has produced none today—to suggest that those changes resulted in any extra land coming forward. When the Labour Government introduced the tax at 80 per cent., Conservative Members claimed that if only the rate could be reduced to 60 per cent., land would be put on the market. The rate was reduced to 60 per cent. six years ago, but we are still waiting to see all that land being released for development.

Then the hon. Member for Mid-Staffordshire says that the supply of land will increase only if there is free operation of market forces. I prefer the words used by the hon Member for Wolverhampton, South-West when he pointed out on a previous occasion that the granting of planning permission was a distortion of the free market. It is disappointing that there has been no contribution on this from the Liberals on this issue today. I understand that they were much more forthcoming some years ago. When John Pardoe represented the constituency of Cornwall, North, he pointed out that there was no such thing as a free market in development land and that the supply was limited by definition to what the planning officials were prepared to draw their pencils round. In other words, the supply is artificial. The supply is created by planning decisions, and the value of the land is created by those planning decisions. It is thus right that a proportion of that value should return to the community.

If there were any validity in the argument that a change in the fiscal arrangements would release land for building, why did the report on land for housing produced by the Select Committee on the Environment in the Session 1983–84 fail to mention this point? That three-volume report identified a whole list of obstacles to the release of land for housing, but there was not one reference to the effect of development land tax. There is no valid evidence to suggest that the tax is preventing land from becoming available for house building.

The other argument adduced by the Economic Secretary in his attempt to justify the abolition of development land tax was that the tax was paid not by individuals but by companies. I believe that he is wrong. I have studied the assessments for the calendar year ending 31 December 1983 by status of taxpayer set out in the Inland Revenue statistics for 1984. Those figures show that over a period of four years, disposals of land by individuals and trustees were greater than those made by companies and builders, that the value of the land involved was greater, and that the tax paid by individuals and trustees was more than double that paid by land companies and builders. I think that the Economic Secretary has got his figures wrong. If there is a fault in my research, no doubt he will write to me to explain why his statistics do not match those of the Inland Revenue.

The Economic Secretary also told us that the tax should be abolished because it is expensive to collect. He informed us that collection cost 7 per cent. of revenue, and he also referred to the calculation—it is the same figure put differently—that it cost £1 for every £13 of revenue. Those figures were valid in 1983. In the Finance Act 1984, this Conservative Government increased exemption from £50,000 to £75,000, and when asked to justify it, they told the Committee that it would remove no less than one third of the transactions from liability to tax—the transactions which produced the least revenue. Therefore, I suggest that the Economic Secretary has got his figures wrong. He referred to the figures for 1983, but the position was changed by the Finance Act 1984. He voted for that provision, whereas the Labour party voted against it. The hon. Gentleman was there, but obviously was not listening to the Chief Secretary.

8 pm

The Economic Secretary was most unfair to the Committee when he referred to two companies—which understandably he did not and could not name—which would not move from their factories because they feared the imposition of development land tax. The hon. Gentleman knows that there are exemptions for companies which use premises for their own manufacturing activity, and that if they were in those premises for 12 years or more, they were not liable for tax.

I do not accuse the Minister of breaking faith as a Treasury Minister in referring to them because he was given the information by his hon. Friends. However, such evidence should be placed before the Committee so that the Opposition can know who these companies are. We need to know much more about those companies and their circumstances before the Minister can reasonably expect the Opposition to accept his argument.

The hon. Gentleman referred to a list of organisations which welcomed the abolition of DLT. I did not write the names down, but I was left with the thought, "They would, wouldn't they?" He said that they claimed that abolition would lead to more land being made available. We do not believe it. That is an excuse to justify the giveaway, just like the excuse to justify the reduction of tax paid by people on the highest incomes. This Government always say that a reduction in the tax paid by people on the highest incomes will lead to more jobs for the unemployed, but after six years we are still waiting for the evidence.

Not only Socialists support the idea of taxing unearned gains from the development value of land; as my hon. Friend the Member for Great Grimsby (Mr. Mitchell) said, this cause has been advocated by Liberals and radicals for years. Past and, I hope, present Liberals believe that this tax should be levied. Only a few years ago, the Conservatives also joined us in a great consensus on this issue, but they have now changed their minds. When the tax was introduced, Conservatives accepted the argument for a special tax on these windfall gains. That was when they were in opposition. Now they are in government, and they are using the opportunity to give away £73 million to wealthy landowners.

Question put, That the clause stand part of the Bill:

The Committee divided: Ayes 184, Noes 117.

Division No. 202]

[8.3pm

AYES

Adley, RobertBrowne, John
Alexander, RichardBruinvels, Peter
Arnold, TomBuck, Sir Antony
Ashby, DavidBudgen, Nick
Aspinwall, JackBulmer, Esmond
Atkins, Robert (South Ribble)Butterfill, John
Atkinson, David (B'm'th E)Carlisle, John (N Luton)
Baker, Nicholas (N Dorset)Carlisle, Kenneth (Lincoln)
Batiste, SpencerCarlisle, Rt Hon M. (W'ton S)
Beaumont-Dark, AnthonyCash, William
Bellingham, HenryChannon, Rt Hon Paul
Bendall, VivianChope, Christopher
Best, KeithClegg, Sir Walter
Biffen, Rt Hon JohnCockeram, Eric
Blackburn, JohnColvin, Michael
Blaker, Rt Hon Sir PeterConway, Derek
Boscawen, Hon RobertCoombs, Simon
Bottomley, PeterCope, John
Bowden, A. (Brighton K'to'n)Couchman, James
Bowden, Gerald (Dulwich)Critchley, Julian
Brandon-Bravo, MartinCurrie, Mrs Edwina
Brinton, TimDickens, Geoffrey
Brown, M. (Brigg & Cl'thpes)Dorrell, Stephen

Dover, DenMather, Carol
Dunn, RobertMaude, Hon Francis
Evennett, DavidMerchant, Piers
Eyre, Sir ReginaldMoore, John
Fallon, MichaelNicholls, Patrick
Farr, Sir JohnPage, Richard (Herts SW)
Favell, AnthonyParris, Matthew
Fenner, Mrs PeggyPawsey, James
Forman, NigelPeacock, Mrs Elizabeth
Fox, MarcusPercival, Rt Hon Sir Ian
Franks, CecilPowell, William (Corby)
Freeman, RogerPrice, Sir David
Fry, PeterProctor, K. Harvey
Gale, RogerRaffan, Keith
Galley, RoyRees, Rt Hon Peter (Dover)
Gardiner, George (Reigate)Rhodes James, Robert
Gardner, Sir Edward (Fylde)Rhys Williams, Sir Brandon
Garel-Jones, TristanRidsdale, Sir Julian
Goodhart, Sir PhilipRoberts, Wyn (Conwy)
Goodlad, AlastairRost, Peter
Gow, IanRowe, Andrew
Gower, Sir RaymondRyder, Richard
Greenway, HarrySackville, Hon Thomas
Gregory, ConalSainsbury, Hon Timothy
Griffiths, Peter (Portsm'th N)Sayeed, Jonathan
Hamilton, Hon A. (Epsom)Shaw, Sir Michael (Scarb')
Hamilton, Neil (Tatton)Shelton, William (Streathan)
Hampson, Dr KeithShepherd, Richard (Aldridg)
Hanley, JeremySilvester, Fred
Hargreaves, KennethSims, Roger
Haselhurst, AlanSmith, Tim (Beaconsfield)
Hawkins, Sir Paul (SW N'folk)Soames, Hon Nicholas
Hawksley, WarrenSpeller, Tony
Hayes, J.Spencer, Derek
Hayhoe, BarneySpicer, Jim (W Dorset)
Heathcoat-Amory, DavidStanbrook, Ivor
Heddle, JohnStern, Michael
Hickmet, RichardStevens, Lewis (Nuneaton)
Hicks, RobertStewart, Ian (N Hertf'dshire)
Hind, KennethSumberg, David
Hogg, Hon Douglas (Gr'th'm)Taylor, John (Solihull)
Holt, RichardTaylor, Teddy (S'end E)
Howarth, Alan (Stratf'd-on-A)Temple-Morris, Peter
Howell, Ralph (N Norfolk)Terlezki, Stefan
Hunt, John (Ravensbourne)Thompson, Donald (Calder V)
Jackson, RobertThompson, Patrick (N'ich N)
Jessel, TobyThornton, Malcolm
Johnson Smith, Sir GeoffreyThurnham, Peter
Jones, Gwilym (Cardiff N)van Straubenzee, Sir W.
Jones, Robert (W Herts)Viggers, Peter
Kellett-Bowman, Mrs ElaineWaddington, David
Key, RobertWakeham, Rt Hon John
King, Roger (B'ham N 'field)Walden, George
Knight, Gregory (Derby N)Waller, Gary
Knight, Mrs Jill (Edgbaston)Ward, John
Knowles, MichaelWardle, C. (Bexhill)
Knox, DavidWatson, John
Latham, MichaelWatts, John
Lawler, GeoffreyWells, Bowen (Hertford)
Leigh, Edward (Gainsbor'gh)Wheeler, John
Lennox-Boyd, Hon MarkWhitfield, John
Lester, JimWhitney, Raymond
Lilley, PeterWiggin, Jerry
Lloyd, Ian (Havant)Winterton, Mrs Ann
Lloyd, Peter, (Fareham)Winterton, Nicholas
Lyell, NicholasWolfson, Mark
Macfarlane, NeilYeo, Tim
MacKay, Andrew (Berkshire)
Maclean, David JohnTellers for the Ayes:
Major, JohnMr. Michael Neubert and
Maples, JohnMr. Tony Durrant.

NOES

Alton, DavidHughes, Sean (Knowsley S)
Archer, Rt Hon PeterHughes, Simon (Southwark)
Atkinson, N. (Tottenham)John, Brynmor
Banks, Tony (Newham NW)Jones, Barry (Alyn & Deeside)
Barnett, GuyKennedy, Charles
Barron, KevinKinnock, Rt Hon Neil
Beckett, Mrs MargaretKirkwood, Archy
Beith, A. J.Lamond, James
Bennett, A. (Dent'n & Red'sh)Leighton, Ronald
Bermingham, GeraldLewis, Ron (Carlisle)
Bidwell, SydneyLewis, Terence (Worsley)
Blair, AnthonyLitherland, Robert
Bray, Dr JeremyMcDonald, Dr Oonagh
Bruce, MalcolmMcKay, Allen (Penistone)
Buchan, NormanMcKelvey, William
Caborn, RichardMcNamara, Kevin
Callaghan, Jim (Heyw'd & M)McTaggart, Robert
Campbell-Savours, DaleMcWilliam, John
Carlile, Alexander (Montg'y)Madden, Max
Clark, Dr David (S Shields)Marek, Dr John
Clay, RobertMaynard, Miss Joan
Cocks, Rt Hon M. (Bristol S.)Meadowcroft, Michael
Cohen, HarryMilian, Rt Hon Bruce
Cook, Frank (Stockton North)Miller, Dr M. S. (E Kilbride)
Cook, Robin F. (Livingston)Nellist, David
Corbett, RobinOakes, Rt Hon Gordon
Cowans, HarryO'Brien, William
Craigen, J. M.O'Neill, Martin
Dalyell, TamOrme, Rt Hon Stanley
Davis, Terry (B'ham, H'ge H'l)Park, George
Deakins, EricParry, Robert
Dewar, DonaldPatchett, Terry
Dixon, DonaldPavitt, Laurie
Dormand, JackPendry, Tom
Dubs, AlfredPenhaligon, David
Dunwoody, Hon Mrs G.Powell, Raymond (Ogmore)
Eastham, KenPrescott, John
Edwards, Bob (W'h'mpt'n SE)Radice, Giles
Evans, John (St. Helens N)Randall, Stuart
Ewing, HarryRedmond, M.
Fisher, MarkRichardson, Ms Jo
Foot, Rt Hon MichaelShort, Ms Clare (Ladywood)
Forrester, JohnSkinner, Dennis
Foster, DerekSnape, Peter
Freeson, Rt Hon ReginaldSpearing, Nigel
Garrett, W. E.Steel, Rt Hon David
George, BruceStewart, Rt Hon D. (W Isles)
Gilbert, Rt Hon Dr JohnStrang, Gavin
Godman, Dr NormanThomas, Dafydd (Merioneth)
Gourlay, HarryThompson, J. (Wansbeck)
Hamilton, James (M'well N)Tinn, James
Hardy, PeterTorney, Tom
Hart, Rt Hon Dame JudithWallace, James
Heffer, Eric S.Wareing, Robert
Hogg, N. (C'nauld & Kilsyth)Wilson, Gordon
Howell, Rt Hon D. (S'heath)Winnick, David
Howells, Geraint
Hoyle, DouglasTellers for the Noes:
Hughes, Robert (Aberdeen N)Mr. Frank Haynes and
Hughes, Roy (Newport East)Mr. Austin Mitchell.

Question accordingly agreed to.

Clause 87 ordered to stand part of the Bill.

Schedule 22 agreed to.

Bill (Clause 3, 10, 35, 40, 54, 64, 87; and Schedules 12, 16, and 22), reported, without amendment; to lie upon the table.

Sports And Recreational Facilities

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Sainsbury.]

8.17 pm

During the last Adjournment debate that I initiated, on the subject of sporting links with South Africa, my hon. Friend the Under-Secretary of State for the Environment commenced his remarks by telling me that he felt that I had said some things which, in his words, were better left unsaid. Since we now have a fair amount of time for this debate, I hope that he will take ample opportunity, as possibly will other hon. Members, to explore this very relevant and important subject of the loss of playing fields and sports facilities.

I am particularly grateful to you, Mr. Deputy Speaker, for the opportunity to enlarge upon this subject because of my deep disappointment that on 25 January I was allowed only a few minutes in which to introduce my Sports Fields and Recreational Facilities Bill. I was disappointed because of a seemingly deliberate Government tactic to prevent me from developing the argument. I was also disappointed because other hon. Members who wanted to speak were unable to do so. My disappointment was best summed up by Mr. Peter Lawson, the secretary of the Central Council of Physical Recreation, who referred to the Bill being
"callously talked out by indifferent and insensitive politicians."
Many sportsmen and others cannot understand parliamentary procedure, and it is disappointing that a fairly modest Bill which would have cost the Government very little was deliberately talked out and now has very little chance of reaching the statute book. That is why I am particularly grateful for this opportunity, not to go over old ground again but to provide fresh evidence and, moreover, give my hon. Friend the opportunity to make a full and detailed reply.

At a time when relations between Parliament and sportsmen are probably at an all-time low because of the various controversies involving football hooliganism, the abolition of the Greater London council and the consequential uncertainty for sport and the controversy surrounding the Sports Council, it does this House no good if certain modest and reasonable Bills which have all-party support are prevented from being discussed on the Floor of the House. I hope that this Adjournment debate will give an opportunity to the Government and my hon. Friend to mend a few of the fences which were broken on the previous occasion. That is the first reason that I bring this subject to the attention of the House.

The second reason is the welter of correspondence that I have received since the Bill was launched in December and the mass of evidence that has been brought to my attention, to the attention of other hon. Members and to the CCPR of the real threat to our sports facilities and playing fields. There is a real danger that some of those facilities are being lost. Perhaps the biggest problem of all is that nobody seems to know, not even Her Majesty's Government, exactly how much land has been lost and what land is in danger of being developed.

Since the short debate on the Sports Fields and Recreational Facilities Bill, I have received numerous pieces of evidence from a mass of individuals and some fairly high-powered organisations. For example, the National Playing Fields Association has been in touch with me, as has the London Sports Council; the National Council for Schools' Sports: Hampshire county council; Highgate Harriers athletics club, an old and famous club; the Football Association; the Association of Kent Cricket Clubs; numerous residents groups throughout the country, mainly from England but some from Wales; numerous parent-teacher associations, local councils and local councillors and numerous individuals from cities, towns and the countryside, all with a genuine fear that our sports fields and facilities are under threat from developers and that we in the House, and we as a Government, are not taking enough notice of that threat.

Let me quote three examples to illustrate my point. An article appeared in The Birmingham Post which will be of particular interest to the right hon. Member for Birmingham, Small Heath (Mr. Howell), who I am pleased to see in his place on the Opposition Benches. A long article talks about
"The lost fields of glory".
It talks about the fight that various authorities and interested parties have been taking to Birmingham over the past few years and the rather desperate plight in which they now find themselves. As the article says:
"in the past five years they have been too late to save 10 industrial or social club football pitches"—
"they" being the Sports Council—
"too late to stop four cricket squares and one rugby pitch from being ploughed up; too late to prevent 11 netball courts, three bowling greens and 21 tennis courts from closure; too late to rescue 43·3 acres of lost land in Birmingham 1972–80, 24·6 acres in Wolverhampton, four acres in Dudley, 11·1 acres in Sandwell, 11·5 acres in Walsall; nearly 100 acres in all. And these figures are by no means complete. They were supplied by industry—who, often the guilty party, was being asked to give evidence against itself."
In the same article the local area chairman, Judith Mackay, is quoted as saying:
"We must take aggressive action to preserve and improve. And people must be alert to possible closures. One borough council asked us what we knew about one site and it was discovered by accident that five or six others were in jeopardy."
I do not believe that Birmingham is an isolated case in the instances that I have just listed.

I received a letter from the British Amateur Rugby League Association which, again, will be of particular interest to my hon. Friend the Minister, who I believe was at the magnificent rugby league cup final on Saturday.

It may well have been. I accept that from the hon. Gentleman.

In a letter to me dated 25 January 1985 the British Amateur Rugby League Association said:
"One of our major problems has been acquiring playing fields to cope with our phenomenal growth in recent years, and I know that many other sports also have difficulties in acquiring playing fields."
The third quote I received only this evening from the chairman of Chelsea football club, from where I was prevented from going to watch my team, Luton, in action by the earliness of this debate. I spoke to Ken Bates, the chairman, who has been in correspondence with me about the Bill and who has expressed his disappointment that the Government did not see fit to give it more time. He says:
"We owe it to succeeding generations to preserve our playing facilities at all levels of the game."
That is from the chairman of one of the most successful first division sides in the country.

Finally, let me quote the words of my hon. Friend the Minister at the CCPR conference on 23 November 1981 in Bournemouth, when he talked about land use. He said:
"We must all use our imagination, With land, for example, that precious resource we must harbour for our and future generations, we must keep and make the most of what we have. We must also watch opportunities for extending our stock. For example, there is sometimes available land of apparently poor potential; that is small or oddly shaped and of little use to the conventional builder or developer. This land may well be sold cheaply and could then be used for a range of sporting activities—squash courts, or urban ski slopes, kick-about areas or playgrounds."
I am sure that my hon. Friend will remember that well and I think that every hon. Member will support those words.

Of the various powerful lobbies that have brought evidence before me, the two most powerful are the CCPR, which I have already mentioned, and the Sports Council. At the annual general meeting of the CCPR about two weeks ago the matter was brought up yet again. In his report at that meeting, the chairman again emphasised the sale of so-called surplus playing fields and the CCPR's alarm that that matter was not being closely monitored by the Government. That particular meeting was presided over by His Royal Highness Prince Philip. He is an interested party in this subject and is also president of the National Playing Fields Association.

The chairman of the CCPR, speaking with the authority that he does, has time after time brought the matter, as indeed has the CCPR, to the attention of hon. Members and the Government. They have fought and instigated a vigorous campaign which resulted in a document which they circulated to all hon. Members, called "Sports Fields at Risk".

The CCPR also has a national register which in 1982 reported that some 2,370 acres were on the land register for disposal, and within a year another 1,277 acres were added to that survey. The estimated acreage now is some 5,500 which is on the register of land subject to disposal. The CCPR has for some time urged the Government to remove that land from the land register. I shall be interested to hear what my hon. Friend has to say about that. Suffice it to say that vast tracts of land are at risk because they are on the land register.

Of course not every acre and playing field could justifiably be kept for sports facilities, but those figures show the magnitude of the problem that we face. In the "Sports Fields at Risk" pamphlet, the CCPR concentrates almost entirely on falling rolls in schools. It quoted DES figures that between 1983 and 1990 rolls will fall by some 23 per cent. in the secondary sector. There is no doubt that local education authorities, under the DES instruction of pamphlet 909, are considering selling more land now for building than ever before.

We should not be surprised at that, given the falling rolls. I understand that some fields are bound to come up for reasonable disposal. But what worries me is that when the numbers start to rise again, as they will—there is already some sign of that—some sports fields and facilities will have been developed and will be concrete for ever.

I am also worried that in some inner city and urban areas children whose only fields are school sports fields will, when that school closes, find that a blade of grass is almost a rarity, which people have only in their gardens. Space in towns and cities must be conserved. It is a sad fact that the Inner London education authority is bussing children out of town because no space for games is available near their schools.

Another powerful lobby, the Sports Council, has expressed concern about the Minister's co-operation. I add my tribute to that of the Minister to the retiring chairman, Mr. Dick Jeeps, who spoke up for sportsmen and for their freedom to play wherever they want to play. He was a tireless worker and will be a great loss to the Sports Council. I regret the manner of his going. But perhaps we should not discuss that tonight. He will be sorely missed and it is unfortunate that he thought it necessary to resign.

The Sports Council produced in 1984 a document on the loss of industrial sports grounds and set out the targets that should be acknowledged as interest in sport grows. For example, about 3 million people play soccer—and the numbers are rising. In almost every town and village all the available pitches are used fully. In Birmingham, 44 pitches are still needed by the Birmingham football association.

The Football Association says that in 1971 a total of 36,904 clubs were members. In 1980, the last year for which figures are available, membership had risen to 39,730 clubs. The Rugby Football Union reported a membership in 1965 of fewer than 1,000 clubs. In 1979 it reported 1,840 clubs as members. If sports fields continue to disappear and be developed, the need for them will outstrip the facilities, particularly as the amount of leisure available increases alongside the popularity of the sports.

The Sports Council, funded by the taxpayers, states in its document:
"The basic conclusion is that the loss of one strategically located playing field can be critically important."
A field which is no longer available is lost forever.

We should look ahead and hope for constructive movements. I salute the Government's attempts, through the Sports Council, to make people more active in sport, but the facilities must be made available. It is nonsense to spend £500,000 on encouraging people to be active in sport when pitches are being lost to the developers. We must take account of the increasing number of school leavers who will want sports facilities. All our citizens are bound to have more leisure time. We must consider the health of our citizens. The Government are trying to promote healthy activities, but they must provide facilities for the various sports.

We must also think about conservation. The Wildlife and Countryside Act is popular and well used. It has conserved parts of the country that would have been lost without it. Perhaps special parcels of land should be set aside for sport so that they cannot be built upon. In terms of national prestige I am also worried about the quality of our national games, particularly those played upon grass fields. If pitches are not available that must have some effect on how well we do.

I support the Government stance on the Olympic games. It would be a great fillip to sport if the Olympic games came to Britain, but it would be a shame if the number of pitches and fields available on which people can train were reduced.

No one seems to know exactly what the problem is. No Government Department has been able to tell me what acreage of school playing fields has been lost. I pay tribute to the initiatives taken industrially with the 100 firms. However, the Government should not be remembered for losing playing fields and other sports facilities for ever.

8.36 pm

I disagree deeply with the hon. Member for Luton, North (Mr. Carlisle) on a number of issues, but tonight he has done a considerable service to the House by choosing this subject and by the manner in which he has described some difficult problems.

I am a member of the main organising committee of the 1986 Commonwealth games in Edinburgh. My capacity is not merely honorary, because I have attended all but one of the meetings and I have taken my membership extremely seriously.

I must say bluntly that bids for hosting the Olympic games—whether by Manchester, Birmingham or London—will be harmed unless we can be sure that the Commonwealth games will be organised efficiently in the best British tradition. It will do no one a disservice if I say that that is in doubt. I speak frankly as a member of the organising committee, with butterflies in my stomach about what will happen in 1986.

My right hon. Friend for Birmingham, Small Heath (Mr. Howell) and I went to many of the functions and events organised in 1970. We were relaxed because we thought that the Edinburgh games would be a success. I pay tribute to Sir Herbert Brechin, who was chairman of the games committee, and others. We never had any doubts that on the day all would be well. However, today, a year ahead, I have a queasy feeling about the 1986 games. Does the Minister share the uncomfortable feelings and suspicions that all might not be well on the day?

There are a number of issues involved, one being the vexed question of the velodrome. Rightly or wrongly, it has been open to the wind and rain and is warped. I have seen it and I know that it is unsafe in anything like its present condition. It will not be acceptable to cyclists riding at any speed. Does the Minister share our concern? If so, what should be done? If we do nothing, either we will come into disrepute not only with the cycling fraternity but with many others who believed that Edinburgh could provide the facilities. We need a new velodrome, which must be covered at considerable expense or it will go the same way as the present velodrome in the Scottish climate. We must face the fact that we cannot have an open-air velodrome. That means money with a capital M——

Order. I realise that the hon. Gentleman is raising an important point, but it is a little wide of the subject of the Adjournment. The Minister might find it difficult to reply to his points. Perhaps he could relate his remarks to the subject of the Adjournment, which is the loss of sports and recreational facilities.

With the greatest respect, Mr. Deputy Speaker, although I understand your ruling, you will appreciate that all the facilities to be provided for the Commonwealth games and, if we have them, the Olympic games, will be designed and intended for the recreation of the mass of ordinary people. Therefore, the subject of the velodrome to be provided for the Commonwealth games in Edinburgh must be important to the recreational needs of Scotland. I ask you to consider that aspect.

I am grateful to the right hon. Gentleman. I am sure that the hon. Member for Linlithgow (Mr. Dalyell) will be able to link his remarks to the subject of the Adjournment.

The subject on the Order Paper is the loss of sports and recreational facilities. I am talking about the loss of a velodrome, which is definitely a sports and recrational facility. Because of a whole series of circumstances and because of an unwillingness to pay the money to cover the velodrome last time around, we now have an unsatisfactory velodrome. Are we to turn to our Commonwealth partners and say, "Sorry, we cannot afford to do anything about it."? At the end of the day, the reputation of the British people and the Government are at stake. If we say sorry to the cyclists at this stage, questions will be raised about our fitness to provide facilities. I emphasise that it is no good bidding for the Olympic games if we have a smudge on our copy book because we have not provided the promised facilities for the Commonwealth games.

I do not want to go into the problems of facilities for boxing and various other sports, unless the Minister would like to say something about that. The problems are real, but the subject may be out of order. However, it is legitimate to raise a matter that worries the organising committee of the Commonwealth games. What happens if, at the last moment, Commonwealth countries decide to pull out of the games because of the New Zealand rugby tour? It is high time—and the sooner the better—that the Government made it clear to the New Zealand Government that we disapprove of the rugby tour of South Africa——

I know that the hon. Gentleman takes a different view, but I am entitled to say that we are concerned about a fiasco at the last moment. I want to know what the Minister thinks about it. There is only a year to go and time is not on our side.

My hon. Friend the Member for Falkirk, East (Mr. Ewing), amid some ribaldry during Question Time this afternoon because he was thought to be paddling a Scottish canoe, said that if there was a bid for the Olympic games we should do what other countries have done and have some of the events 400 or 500 miles away from the main centre—as, indeed, happened at Los Angeles. I support the serious bid by Manchester, which I visited recently. There is a considerable argument for staging the Olympic games in a city in the north of England. However, I hope that serious thought will be given to the possibility of spreading some of the events.

I have known Colonel Satterthwaite since my Army days and I pay tribute to him for what he has done. At one stage he had the dubious distinction of being my commanding officer. I think highly of him. For more than 30 years he has played a great part in the provision of facilities. Like the hon. Member for Luton, North, I have listened to his arguments and I hope that the work of the National Playing Fields Association will be fully supported. I agree with the hon. Gentleman about the CCPR and the falling rolls—a problem that has been fully explained by our mutual friend, Mr. Peter Lawson.

I was attracted by the hon. Gentleman's idea of SSSIs. Planning permission for valuable community land is far too easily given by local authorities of all parties, which should know better, for short-term financial gain.

Perhaps the hon. Gentleman will agree that in many cases unfortunate decisions are made by the Secretaries of State on appeal. In several cases where local authorities have been against development, the Secretary of State concerned allowed the development to go ahead. That is why the Government should be involved.

I know of two such cases, and it was wrong of the Secretaries of State involved to give assent to development plans. They involved traditional sporting facilities in communities, and one was the responsibility of the Secretary of State for Scotland. It is no good saying that there are alternatives, because they all take time.

I echo the question posed by the hon. Member for Luton, North. What about SSSIs for sporting facilities? Together with my right hon. Friend the Member for Birmingham, Small Heath I spent 100 hours of my life in the Committee stage of the Wildlife and Countryside Act and I know the difficulty of SSSIs, but, given the frailty of certain local authorities and certain Secretaries of State—and not confined to one party—there is an argument for SSSIs. I do not expect the Minister to produce an answer off the top of his head tonight, but it is an idea worth consideration.

I do not want to rub salt in the wounds, because I know that the Scottish Conservative party conference is taking place and I do not want to take advantage of grief. The West Lothian county cricket club ground at Bogfall, which is a modest ground with small attendances, is paying twice the rates of the place where I shall be making a speech on Monday evening—the city of Worcester. Worcester has a famous county cricket ground that welcomes the Australians and heaven knows who else, but it pays half the rates of the modest Linlithgow ground.

This is not the time to go into the problem of Scottish rating, but there is a heck of a problem for junior football clubs, cricket clubs and other sporting facilities that are being hit amidships by the level of rates. However, if anyone could have offered comforting words on that subject, it would have been done before now. I cannot restrain myself from saying that it is a very real problem for sporting facilities in Scotland.

8.50 pm

I was pleased to be a co-sponsor of the Sports Fields and Recreational Facilities Bill which my hon. Friend the Member for Luton, North (Mr. Carlisle) presented some weeks ago. In that measure, he sought to establish a form of registration of sporting land, and I entirely support his concern for the protection of land that is suitable or is currently being used for sporting and recreational purposes.

In a climate of high unemployment—a social problem that will be with us for a long time—the ability to offer the people an outlet for their energies by way of sporting activities is a small but important way of easing the depressing burden of enforced idleness due to unemployment.

I accept that not all land is being used properly. I have no doubt that, on careful inquiry, it might be found that some land is surplus to requirements or is unsuitable. However, we should handle this issue with the greatest care because land currently being used for recreational purposes, once lost is extremely difficult to bring back into that use.

I particularly draw the attention of the Minister to what I can only describe as the extraordinary activities—I am being remarkably polite in using that phraseology—of my county council in Nottinghamshire. A memorandum in October 1983 said:
"As you know, neither the Chairman of the Education Committee nor the Director of Education is aware of the investigations which have been taking place."
In a letter, one of the officers wrote:
"No site has been discussed with the District Councils and it is quite possible, therefore, that these proposals may well conflict with the thoughts and ideas of the District Councils."
I was one of those district councillors. I was indeed highly surprised at the outcome of those so-called investigations and the bald announcement that large areas of land in my area were up for grabs. Many of them were school playing fields that were properly being used for sport and recreation, and they should continue in that use. Happily, some of our district councils have used the planning mechanism to ensure that that little subterfuge did not become a practical reality, at least not in large measure.

Precisely because of that behind-closed-doors practice, which is still possible, we must seek from the Minister some way of protecting ourselves against the loss of sporting and recreational land in that way. We talk of local automony, local democracy and so on. Nevertheless, this place must have a role in national policy in this sphere and must offer hon. Members a means by which we can protect ourselves if and when a local authority abuses the autonomy that it is given. There must be a means by which we can say, "That is unreasonable. That is unjust. You are selling land in your area that is rightly reserved for recreation."

It was reasonable, therefore, for my hon. Friend the Member for Luton, North to seek a mechanism by which the public at large would be aware of the existence of a register of land designated for sport and recreation. Then, if a local authority—it would be acting properly in certain circumstances—claimed that certain land was surplus, that would be public knowledge, there would be public discussion and the ultimate decision would be reasonable and fair and be seen to be so. At present, under existing legislation, that protection is not available because there is no such register. I know what happened in my county. I would not wish it to happen elsewhere.

8.55 pm

I congratulate the hon. Member for Luton, North (Mr. Carlisle) on taking advantage of the opportunity to widen the scope of the Adjournment debate that he has initiated. I also congratulate him on following through from his unfortunate experience with his private Member's Bill.

We have far too few debates on sport, as I know from experience. I am sure that the Minister shares that view. Indeed, it does not help Ministers if pressure is not placed on them by hon. Members and if insufficient interest is shown in the whole subject.

As we are discussing recreational facilities for the broad mass of the people, I can tell the House from experience that sport is a cultural pursuit—it is the people's culture—which attracts the excitement and attention of a greater proportion of the population than is attracted to any other leisure pursuit, and I define "sport" in terms of recreation, too. We are, therefore, grateful to the hon. Member for Luton, North not only for providing this opportunity but for raising half a dozen or more subjects of considerable interest.

I join him in expressing appreciation to Mr. Dick Jeeps for his work as chairman of the Sports Council. He was originally appointed by me. He brought a breath of fresh air into that organisation and we are grateful to him for that. The hon. Gentleman referred to Mr. Jeeps' comments about sportsmen playing wherever they wished to play. I am not sure that in public Mr. Jeeps went as far as the hon. Gentleman suggested, although in private he may well have done so, and that is the one reservation I have about his chairmanship. Nevertheless, the House should express its appreciation to him, as I do from the Labour Benches and as I am sure the Minister will.

The Minister will forgive me for saying that if the newspaper reports are accurate about Mr. Jeeps' successor, we on these Benches will be glad to welcome him. When I was Minister, Mr. John Smith produced an outstanding report on the future of lawn tennis. He is chairman of one of the most successful football league clubs and is a business man of great acumen.

I do not ask the Minister to comment on whether the rumours are right, in advance of his statement tomorrow, but if the rumours are right, as I believe them to be, we shall be fortunate to get Mr. Smith to give time for the chairmanship of the Sports Council. We wish him well and assure him of our support.

My hon. Friend the Member for Linlithgow (Mr. Dalyell) raised two important points concerning the Olympic games and the Commonwealth games. I have always believed that one cannot divorce the relationship between sport at the highest echelons—the winning at that level of gold medals and the rest—from the inspirational effect that that has for large numbers of youngsters at the grass roots of society. The two aspects are linked.

Whenever Britain has been successful in sporting events—recently, we had four distinguished gold medal winners in ice skating events and, going back to my days as Minister, I recall when Ann Jones won at Wimbledon—there has been an upsurge of interest in sport. The tragedy is that we are not prepared to provide the necessary facilities for people who think, "If Torvill and Dean can win a gold medal, perhaps I should have a go at that." The justification for Britain's participation in international sport—apart from the fact that it inspires pride in our country, establishes goodwill internationally and sets standards—has always been the inspiration to play sport that it creates throughtout the land, and that should not be taken lightly. Britain's bid for the Olympic games, in which, I believe, the Under-Secretary of State is very much involved, is justified on the ground that the games will create enormous interest and result in new facilities.

It is important to consider who will finance the games, which may cost several hundreds of millions of pounds. I understand that the Under-Secretary of State says that he would like a private enterprise Olympic games, as was the case in Los Angeles. That is why the hon. Gentleman has supported the proposal and has encouraged various cities, including London, to bid for the games. One would hope that private money would be raised to finance the games, but an enormous amount of public money must also be found and decisions of great public importance must be made. Each of the cities involved in the bidding—whether it is London, Birmingham, Manchester or anywhere else—is short on infrastructure and facilities. It will cost a great deal of money to provide them. For example, London has nowhere to put a village. It would have to build a village capable of housing between 16,000 and 18,000 people. That would require public investment. That was the point that I was trying to make during Question Time today. Even if London has the necessary stadiums and private enterprise facilities, an enormous amount of public investment is still required.

The bid to host the Olympic games will not be taken seriously until the Government state their intentions with regard to providing opportunities and infrastructure. The Government's silence on those matters has createc great concern.

The right hon. Gentleman has mentioned those cities that are bidding to host the Olympic games. I join him in hoping that Britain succeeds. Will the right hon. Gentleman join me in putting Nottingham's claims to my hon. Friend the Under-Secretary of State? That city—the "queen of the midlands"—has the national water sports centre and has the ability to be the venue for three of the Olympic disciplines. It does not need a penny to be spent on infrastructure, because the infrastructure is already there.

As I was partly responsible for the decision to site the national water sports centre in Nottingham, I fully endorse the hon. Gentleman's point. We are unlikely to be able to hold the rowing and canoeing events in a city other than Nottingham. Nottingham is bound to play a central role. A word of warning is necessary, however. It is a city that must bid for the Olympic games. With the exception of the rowing and canoeing events, possibly the shooting and equestrian events and the yachting events, which obviously cannot take place in a city but must take place near a coastal area, the International Olympic Committee will expect all events to be held within a city. The IOC will expect one village and not two, as was the case in Los Angeles, to be created. That is why I referred earlier to the siting of an Olympic village. I think that what happened in this respect in Los Angeles will never be repeated.

I regret that I was not in the House this afternoon at Question Time, but I was helping to open a sports facility at Flitwick in my constituency. Will the right hon. Gentleman allay the fears that some of us have about some of his earlier reported remarks? When it was mooted that the Olympic games should come to a British city, he gave the impression that he was somewhat against the idea. Can we have his categorical assurance that he would fully support the British Olympic Association and any part that the Government may have to play if the Olympic games were to come to this country?

I do not know why Conservative Members persist in leading with their chins. The hon. Gentleman has done so. I shall support the bid and in 1979 when I was the Minister responsible for sport I said that the British Olympic Association's bid to bring the games to this country had the Government's full support. I do not blame the Minister, but the incoming Conservative Government promptly ditched that bid. If they had not done so, we should have had the 1988 Olympic games, which are due to be held in Seoul. The Conservative Government were completely opposed to the idea and refused to support the British Olympic Association. I do not want to go over history. I am glad of the conversion and I support the bid.

The hon. Member for Luton, North may have misunderstood my comments. There is some scepticism in the world of sport about the ability of anywhere, except possibly Barcelona, to hold the 1992 games. Barcelona is the home town of the president of the International Olympic Committee. He is likely to retire in 1992 and he is committed to having the games in his country in that year. I understand that.

I fully support the bid, if it is a practical proposition, but I think one is entitled to express realism or scepticism.

I am grateful to my hon. Friend the Member for Linlithgow for mentioning the Edinburgh games. We are back to the essential problem of the Olympic bid—what money are the Government prepared to put into the games? My hon. Friend kindly mentioned the 1970 games with which I was considerably involved. The Labour Government gave financial support. The existing stadium—not the swimming pool which, to its credit, Edinburgh council built—and the velodrome were the result of considerable Government investment.

As I understand it, the Government have not offered a penny to Edinburgh for the 1986 games, and have no intention of doing so. That is not the way to convince the world that we are serious about international sport. Some things are rightly left to private enterprise. I am not against that, but I am against them being left completely to private enterprise.

The Minister should ensure that funds are available for the velodrome, which is a matter of great anxiety. It will be a tragedy if those facilities are not provided. I know that the Minister is as anxious as we are that the games should succeed. I ask him to intervene, and if funds are a difficulty, to ensure that the problems are quickly overcome. It is not asking too much of the Government that they should put some money into facilities for the Edinburgh games.

I shall not comment at length about what my hon. Friend said about the New Zealand rugby tour. I am not sure that he is being as fair to the New Zealand Government as he should be. No Government could have been more forthright. In conference, the Commonwealth Prime Ministers have twice asserted their support for the Gleneagles agreement and the importance of maintaining it. It is no credit to the Rugby Football Union that it persists in following a selfish attitude.

Of course people are free to take their own decisions, but freedom means accepting responsibilities as well as asserting liberties. The difficulty with the RFU is that it asserts its liberties but refuses to accept responsibility for the state of sport within the Commonwealth or for any sport other than its own.

That is a lamentable situation.

I deal next with some of the important points that were raised by the hon. Member for Luton, North. I can endorse almost all that he said. I am grateful to him for referring to the Birmingham experience. A large number of sports grounds have been lost in the area. The hon. Member for Nottingham, South (Mr. Ottaway) made an important point in giving his experience, particularly with regard to planning refusals.

Nothing like enough is being done by planning committees, and certainly by Ministers and Government, to assert the importance of green belt and open space land. When planning requirements are being considered, the role of open space in an urban situation, particularly for people living in towns and cities, is a matter of cardinal importance at an inquiry. I must accept a little responsibility because I served as a Minister at the Department of the Environment, so I am in no way trying to make a point against the Minister in party terms. However, we do not assert sufficiently the need, when inquiries are being held, to include in the equation the community good and the importance of open spaces, playing fields or sports fields.

Industrial sports fields in Birmingham have been lost mainly because industrial sports on a Saturday afternoon are no longer as important as they were when people worked a five-and-a-half-day week before the last war. There has been an enormous change in the number of industrial sports fields. To go back almost 20 years, an inquiry into these matters was conducted by a member of the Sports Council. I asked an eminent executive of ICI, Bob Gibb, to conduct it. We might do well to take the Gibb report on industrial sports fields out of the pigeon hole and consider it again. Its theme was that when a sports field becomes surplus to the use of the employees of a firm, it should go the community as a whole. He also said, rightly, that industrial sports fields should not just be open air, but the concepts of an industrial sports club must include the provision of indoor facilities.

I hope that the Minister will tell the House that he can do something to instruct planning committees and inspectors to take into account the recreational needs of the community as a whole when taking their decisions.

The Government got into difficulties when they issued a recent circular to education authorities and universities instructing them to sell off their surplus land. In an urban situation there cannot be any such surplus sports land at a time when 4 million people are unemployed. The need for a leisure service is greater now than it has ever been in the history of the country. How can we talk about football hooliganism on the one hand, which is an inevitable result of the boredom of the unemployed in society——

I take issue with the hon. Gentleman. If one makes an analysis of many of the people who get into trouble, one will discover that this occurs because the discipline of work and of the workplace no longer exists in their lives.

I challenge what the right hon. Gentleman has said. He stated that football hooliganism was almost a direct result of unemployment. He will understand, because he is much travelled and is experienced in these matters, that in the worst unemployment areas, particularly in the north and sometimes in Scotland, the amount of football hooliganism relative to the the population is tiny. All the problems that have arisen in the last few months in particular have been in the south. How does the right hon. Gentleman relate the lower unemployment rate in the south and the higher unemployment rate in the north to what he has just said?

Order. We are going rather wide of the Adjournment debate, which is about the loss of facilities.

The problems last Saturday with Manchester City supporters in the hon. Gentleman's constituency had nothing to do with the south of England. That adequately answers the hon. Gentleman's intervention. It could not have had anything to do with the south of England because Notts County was playing Manchester City. The hon. Gentleman will not deny that vandalism and associated problems are on the increase. This debate is about whether we have the facilities, whether they are available to the public and whether we have leadership. It cannot help the 4 million unemployed to sell educational playing fields. I would be astonished if the hon. Gentleman denied that. That is the simple point which I have sought to make in this part of our discussions. I am glad to see from the hon. Gentleman that at least we have reached agreement again.

I shall now deal with the pricing policy of many local authorities for facilities. Although we are debating the loss of facilities, the Government's policy on rates, which effectively prices out the people whom we wish to attract to our sports facilities, is doing no good. I hope that the Minister will think it right to take an initiative on that. Unless we see sport as a social service to the whole community, in the same way as the health and education services are, we shall never get the matter right. It depends on pricing policy.

Many people have come to see me, including some Manchester United supporters. I asked them why they got into trouble, and they replied that they wanted to play five-a-side football but none of the local sports halls would let them in because they could not afford the high charges. Pricing policy is an important aspect of sports halls, swimming baths and similar facilities.

I now come to the rating policy, from which we are suffering. In Birmingham we have recently had an action sport programme. It was well thought out, and designed to have sporting leaders, such as great athletes, going out into local communities to persuade people to use the facilities and to be active. In answer to a question earlier today, the Minister or one of his colleagues said that all our programmes were pump-priming exercises. The Government get them on the road and then hand them over to local authorities. The Sports Council suddenly told Birmingham city council that, although it had paid the whole cost last year, it would pay 50 per cent. this year, 25 per cent. next year and nothing thereafter. That would be all right if Birmingham could spend what it wanted to spend on the programmes within its rate resources. However, a Department of State has told the council that it cannot do that, and that if it does, that Department will rate-cap it and ensure that it limits its expenditure. There is an inherent contradiction in the social policies that the Government wish to follow and the rating policy which prevents local authorities from following that same policy. I do not want to be party political——

All the most intelligent statements come from the Labour party, as the hon. Gentleman knows. I am seeking to raise genuine problems, which I hope the Minister will consider. Certainly, rating is a matter of the greatest importance.

Another aspect of rating policy——

Does the right hon. Gentleman appreciate that rating is a matter of priorities? The local authority must work out its priorities. If it works them out badly and goes over the limits, it will be rate-capped. The right hon. Gentleman's argument is false.

Order. I hope that the House will not get into a debate about rating policy, which is wide of the subject of the Adjournment debate.

You will appreciate, Mr. Deputy Speaker, as I move on to the removal of buses to take school children to playing fields and swimming pools, how related those matters are. It is no good having swimming baths if the local authority cannot afford to transport children to them. That is happening in my constituency. School after school is writing to me and saying, "Because of the restrictions on rating expenditure, the education department has told us that our children cannot go to the playing fields or swimming baths." I simply relate the problem without dwelling on it for too long.

The right hon. Gentleman is using the licence of the Chair to an extraordinary extent. Nottinghamshire county council is seeking to prevent children from non-maintained schools—private sector schools—from using swimming baths, playing fields or other facilities that their parents have paid for through rates and taxes. The loss of school buses has nothing to do with the problem. As my hon. Friend the Member for Leicestershire, North-West (Mr. Ashby) said, the priorities are in the hand of the local authority, which has thoroughly abused them.

I do not understand the language that the hon. Gentleman is using. If what I said has nothing to do with the problem, why is he raising it? Why is he telling us that the action of Nottinghamshire county council is adversely affecting those people? I shall acquaint myself with the problem, because the leader of Nottinghamshire county council used to be a councillor in my constituency. He is a good friend of mine and I shall talk to him about the matter. I believe that all schoolchildren should be encouraged to use facilities for physical education——

I shall not give way, because I should incur the displeasure of the Chair.

I cannot give way again, because I have given way many times. I am glad to provide this seminar for Conservative Members.

I am glad to hear that, but I shall not give way, because I wish to move on from playing fields and swimming baths——

No. I am a good referee, and once I have taken a decision I, like you, Mr. Deputy Speaker, stand firm. I do not wish to produce yellow or red cards.

I commend to the Minister the policy in Birmingham, in the hope that he will review it sympathetically. The city council has just decided—it is a magnificent all-party decision—that the use of schools and educational facilities outside school time should be the responsibility of the leisure services department. The Minister and I have made many speeches about the importance of educational facilities being used outside school hours and at weekends. I am glad to report to the House that Birmingham has agreed such a policy. There will be difficulties with the present financial climate, but the policy is that all Birmingham schools, playing fields and swimming pools can be used by the entire community at all times outside school hours. We should be grateful for the lead of Mr. Demian, the director of leisure resources in Birmingham, and for the fact that the proposal has been taken up enthusiastically by party leaders on both sides of the council.

It is interesting that the right hon. Gentleman has said that Birmingham is trying to encourage all school children to use the facilities. Will he prevail on the Greater London council, particularly the Inner London education authority, to do exactly the same? The GLC has what is really an apartheid policy, in that if one is in the state system, one may use all the facilities, but if one is outside the state system, one does not have a hope. Can we not have equal treatment, because, after all, children are children? Will the right hon. Gentleman prevail on the Labour ILEA to do the same for all children?

I am sorry that I gave way, because it is obvious that the hon. Gentleman was referring not to the point that I was on, but to the point made by his hon. Friend the Member for Nottingham, South (Mr. Brandon-Bravo). I shall comment on it only to say that I shall acquaint myself with the problem, which I undertook to do with the hon. Member for Nottingham, South as well.

It is not for us in the House fully to endorse the policy of any one local authority. However, a local authority has now decided unanimously, on an all-party basis, to endorse, after all these years, the very policies that we have been putting forward, to ensure that school facilities are used, and opened up for the adult population at times other than school time. I hope that the Minister will find it possible to say a word of support.

I should like to refer to children's play. I endorse what my hon. Friend the Member for Linlithgow (Mr. Dalyell) said about Colonel Bob Satterthwaite and his wonderful work with the National Playing Fields Association. That organisation has embraced the needs of children's play. The Minister has been coy recently about that area. I remember the Prime Minister making a statement that the hon. Gentleman would be specifically responsible for children's play in future. That announcement was made about two years ago, since when not one word has been uttered about it as far as I can trace. [HON. MEMBERS: "That is not true."] I am pleased to hear it.

Where has the right hon. Gentleman been?

I have been watching the Minister, which is probably why I have not heard anything.

If the Minister has been active in the area, perhaps he can tell us what initiatives have been taken to extend play facilities for children around the country. As the National Playing Fields Association does not feel that much has been achieved, I hope that the Minister can set its mind at rest. Only three weeks ago I went to a conference in another part of the House, in which Colonel Bob Satterthwaite was a leading participant, speaking on this subject. He gave instance after instance of the effect of rate support grant policies on the withdrawal of playing facilities for children. Therefore, if the hon. Gentleman has been active and if there is a good story to tell, by now it should have percolated to the National Playing Fields Association and others in that area. I am happy to raise the matter now so that the Minister can inform us about what is happening.

This has been an interesting opportunity to raise many matters that are of mutual concern, even if we do not entirely agree on everything. I am grateful to the hon. Member for Luton, North for raising the matter, and giving the Minister the opportunity to reply in detail to the many points that have been raised.

9.23 pm

I checked the Order Paper for 8 May 1985, and began to wonder where I should have been tonight. It states:

"On the Motion for the Adjournment of the House under Standing Order No. 1 Mr. John Carlisle proposes to raise the subject of the loss of sports and recreational facilities."
That is a most important subject. Many equally important subjects have been raised by hon. Members on both sides of the House, but they will understand that the most important element and main thrust of the debate is the subject raised by my hon. Friend the Member for Luton, North (Mr. Carlisle).

My hon. Friend has pursued the matter for some time. He feels passionately about it. I regret that a certain air of levity has entered into the debate with one or two comments by the right hon. Member for Birmingham, Small Heath (Mr. Howell). He must understand that one of the first things that I shall do is to ask my officials to guarantee that between 1964 and 1970, and 1974 and 1979, not one half an acre of land was lost for alternative development purposes. That is one of the most important things that I shall check.

I endorse the comments made by my hon. Friend the Member for Luton, North and by the right hon. Member for Small Heath about the chairman of the Sports Council. I wish to be associated with their comments, and those remarks in the media should not be pursued too far. I regret that Mr. Jeeps is resigning and we all wish him well.

The hon. Member for Linlithgow (Mr. Dalyell) has raised a number of points, and it is difficult for me to comment in too much detail on them. I have been to Edinburgh twice in the past 21 months, given the concern of Kenneth Borthwick and his committee, to have a look at the various facilities. The hon. Member for Linlithgow understands the roles of the Scottish Office and my Department in this and he knows that I should like to have an update to see where things stand and how things are. I guarantee to pass on his comments to my hon. Friend in the Scottish Office and to try to find out a little more about the programme. I understand the urgency in all this and I wish to try to find out from the organising committee what its views of his comments are, because that is important.

Like the right hon. Member for Small Heath, I do not wish to be party political. However, there must inevitably be a question mark whenever there is extremism in county hall or city halls. There must be mounting anxiety about some people who have made observations and comments, and we see that in a number of city halls.

I shall not comment about the effect of rugby tours because it is too early to do so. The British Lions tour is due to take place in South Africa next year and a tour by the All Blacks may take place next year. That will undoubtedly force its attention on members of the Commonwealth, but I am satisfied that the Government do all that they can to ensure that everybody understands that the Government are full supporters of the Gleneagles declaration. I understand the hon. Member for Linlithgow's concern about these things, but I cannot comment because I am not up-to-date about the precise preparations for the various facilities on which he touched. I shall find out a little more and come back to him later.

When the hon. Gentleman goes on his visit, will he have a quiet, listening meeting with the Edinburgh district council? It is all very well to talk about extremism in city halls, but they have extreme problems. I assure the hon. Gentleman that Alec Wood and his colleagues have a serious point of view to put. The Minister should listen and talk to them.

I listen and talk to everybody who is elected. Sometimes, the vibrations of the actions of people in city halls can have an adverse effect and give rise to failure and lack of confidence, as my hon. Friends would agree.

Many matters have been raised this evening. I cannot comment on all of them, because my hon. Friend the Member for Berkshire, East (Mr. MacKay) has caught your eye, Mr. Deputy Speaker, and is to introduce an Adjournment debate on a subject that interests him. However, my hon. Friend the Member for Luton, North has rightly drawn some specific matters to the attention of the House. Like him, I am anxious to ensure that the Sports Council and the provision of opportunities for sport and recreation today meet the needs of the communities. We are all familiar with the growth in the demand for all manner of sporting activities. We all welcome the increasing participation in recent years, as everyone's leisure time has expanded. We recognise the benefits for the community in health, fitness and sheer enjoyment. As the right hon. Member for Small Heath said, it is the people's culture.

The Government have made clear their commitment to help meet this important need, particularly in the deprived urban and rural areas, so I understand the broader anxieties behind the debate. My hon. Friend the Member for Luton, North shares our concern that there should be adequate facilities for local communities. The debate is not about aims and concerns, because we share them. It is about gaining a balanced assessment of overall provision, taking account of the gains and losses of facilities to gauge the nature and level of a problem about which my hon. Friend has talked, which is undoubtedly real in some areas and situation. I do not deny that for a moment.

My hon. Friend has concentrated on the losses, but we must also consider the general context. He gave a graphic illustration of the losses in Birmingham, as did the right hon. Member for Small Heath, but from my knowledge of that excellent city I should have thought that what the city council has achieved more than compensates for the losses. There are some superb new facilities which automatically reduce the net loss.

All the providers of facilities in this country—the the public and private sectors, the voluntary movement, and so on—are united in the aim to achieve more and better facilities and opportunities for sport and recreation. The common efforts have been successful and we must all strive to ensure that that trend continues. There are more and better facilities in this country than there were 20 years ago when some of us here today were more actively and pleasantly employed participating in sport on a regular basis.

For example, we now have the better part of 1,000 public swimming pools and more than 1,000 indoor sports halls of more than 26 m by 16·5 m. In 1970, there were only 24 sports centres in the whole of England. There are now 27 ice rinks, a net gain of 10 since 1970. We have 66 synthetic athletics tracks compared with 12 in 1970, and 210 purpose-built tennis courts compared with 100 in 1970. We now have 50 all-weather artificial grass pitches. In 1970 there were none. There are also many non-grass artificial pitches. We now have more than 1,000 golf courses, 185 indoor bowls halls and 65 artificial ski slopes. It seems that we are now tending to go indoors.

I acknowledge those improvements; both Governments can take pride in the additional facilities that have been provided. My hon. Friend will, acknowledge, however, that some of our great national sports—including cricket, his own first love—need grass pitches. Does he agree that if those grass pitches disappear, the compensation offered by indoor or all-weather pitches will not necessarily produce champions in those sports?

I sympathise with that observation and I shall come to it in a moment. I wish to emphasise the Government's record, which I am sure is important to my hon. Friend and indeed to the whole House.

First, I remind the House that we have increased the Sports Council grant from £15 million in 1979 to more than £30 million in 1985—a cash increase of more than 100 per cent. In addition, there has been a substantial investment in sport and recreation facilities through my Department's urban programme and other relevant programmes such as the derelict land scheme. Such investment is currently about £35 million per year. More than 1,700 facilities have been built with the aid of central Government funds in the last two years alone.

Of course, the major contribution to providing new and improved facilities has come from local authorities and from the efforts of voluntary bodies and the private sector. In sport and recreation we can still find a common thrust uniting all sectors of the population which I am sure many of us would like to see repeated in other areas of endeavour. The private sector, too, has risen to the challenge of increased demand for provision—both on its own and in partnership with the public sector. Excellent examples of recreation provision for all ages and interests are Thorpe Park and Alton Towers and partnership schemes include the new docklands arena and the Westminster children's sports centre.

As the House knows, there has been a particular growth in minority sports. Traditionally, when most of us were at school we played football or rugby and cricket and did some running when it rained. There was not much variety, but nowadays the range of opportunity is almost endless. When the right hon. Member for Small Heath first came to office he probably grant aided about 20 sports. There are now more than 140 governing bodies of sport. This is reflected in the diversity of sports grant aided by the Sports Council. We recognise 150 governing bodies of sport and other sporting bodies such as the British Olympic Association, the Central Council of Physical Recreation, the Sports Aid Foundation and the National Playing Fields Association. I, too, pay tribute to Colonel Satterthwaite and I am much relieved to know that the background of the hon. Member for Linlithgow includes a spell of service under his excellent leadership.

Current grants to governing bodies for 1983–84 totalled £5·8 million for administration, coaching, training and international competition. At the grass roots level, the Sports Council grant aids many clubs and organisations throughout the regions to encourage participation. In 1983–84 it gave capital grants and loans totalling £5·7 million to a wide range of projects.

Many of the new facilities are geared to the boom in interest in indoor activities. This may in part be due to the desire to escape the British weather, but needs change, and the type of provision must reflect that. Indeed, the general household survey has shown that participation in indoor sports more than doubled, from about 10 per cent., or nearly 4 million, of the adult population in 1973, to a massive 22·7 per cent., or more than 8·5 million, in 1980.

The continuing growth in demand for indoor facilities is reflected in the phenomenal increase in indoor sports centres which I quoted earlier. Phenomenal growth means constant demand, and one way in which that demand is being met is the Sports Council's standardised approach to sports halls. This was introduced in 1984 as an off-the-peg local facility built to a standard design with the aim of providing a venue for many facilities. This has developed in partnership with the construction company Bovis. Ten "SASHes", as they were called—standardised approaches to sports halls—were built in 1984, and at Bitterne in Southampton, 6,000 people used the facility on its opening weekend. In Eastbourne, 2,000 memberships were sold during the first two weeks of the operation.

It is interesting to note that the Sports Council has invested some £2·25 million in that initial programme. In 1983–84, grants totalling £2·8 million were allocated towards the provision of 30 local indoor dry facilities, 22 dual indoor dry facilities, six new playing pitches, six upgraded playing pitches, 18 changing room pavilion accommodation facilities, 14 artificial outdoor surfaces, nine new swimming pools, three refurbished pools, 10 water recreational countryside schemes and 19 specialist facilities—for example, for bowls, riding and golf.

I do not apologise for giving that shopping list, because my hon. Friends must understand exactly what the alternative development and diversification now is as a compensation towards the losses which may be occurring in the traditional sort of sports which we played.

Another example is the huge increase in artificial grass pitches, which have many obvious advantages over natural grass. They lend themselves more readily to multi-use, such as hockey, football and volleyball, and to more intensive use. Thereby, they reduce sport's dependence on natural grass.

This range of opportunities and type of provision represents a substantial change and achievement which we should not ignore in a debate of this kind. Some playing field losses may be a result of this change of character of demand, which is now catered for through new provision of a different kind. We now go indoors more than previous generations to play sport.

The general household survey has shown a fall in the number of adults participating in football—perhaps the sport most associated with outdoor "natural grass" playing fields—from 3·3 per cent. of the population in 1977 to 3 per cent. in 1980. The growth rate of football clubs has slowed significantly in the last decade, although there are still some 40,000 clubs, with 1 million people playing each weekend. Perhaps the advent of artificial pitches with their more intensive use may prompt an upward swing in participation. I do not know, but we must be ready for that moment.

On the other hand, water sports recreation has grown phenomenally over the last decade, both in participation and provision. This is an additional sector which my hon. Friend must consider. For example, in 1970 it was estimated that there were 3,280 members of water ski clubs; by 1980, membership had increased to 10,000. In 1970, there were about 31,000 members of sailing clubs; by 1980, that had reached more than 65,000. To match the growth in participation, new facilities have been developed, including Grafham water, Rutland water, Kielder, Cotswold water park, docklands and Thorpe park.

However, our proud record is not just in new provision. We are also very good at making the best use of existing facilities. I am in a particularly good position to make that statement, because a year or so ago I took an initiative to find out how much community use there was of sports facilities owned by industry and commerce. As my hon. Friend knows, I wrote to the chairmen of the 100 top companies and nationalised industries asking them about community use of their facilities. I learned that most of these facilities are already open to the local community, and I am glad to say that the companies concerned have confirmed their commitment to local people and to continuing this vital contribution to the community.

There remains, of course, some potential for expanding community use of industrial facilities. The Sports Council has undertaken discussions at the local level with some of the companies I wrote to, and it looks as if some new opportunities may emerge. The Government, the Sports Council and sports bodies generally must all continue to look for fresh or improved opportunities of this kind, but it is clear that we are already doing very well, and I express my gratitude to all those companies which are helping us nationally and locally to make the best use of the facilities we have.

Additionally, my colleagues in the Department of Education and Science have confirmed in a recent survey that most schools allow some dual use of their sport and recreational facilities. All of us involved in sport regard schools as a vital stock of facilities. I was encouraged by what the right hon. Member for Small Heath said about Birmingham. My admiration for the director of leisure services in Birmingham is endless. There is scope for opening up new opportunities. We have therefore launched with the Sports Council a new initiative, under the tital "Opening Doors". A very useful booklet has been issued setting out the lessons of good practice through examples from all around the country. I am grateful for the comments of my hon. Friend the Member for Luton, North on this subject. Backing up this fresh publicity is some additional money in the Sports Council's grant for this year and next year for allocation to new dual-use schemes.

In this general context of achievement and progress, losses in facilities must not become a negative force. I understand the concern that we should not take more steps backwards than forwards. That is clearly not the case, as the record of provision shows. A recent survey by the Sports Council clearly showed that in all areas losses are well outweighed by gains in facilities.

No doubt, however, there are losses in particular places that the local community regrets. That is a matter of genuine concern, which I can understand. Some losses are inevitable, as they always have been, when owners, public or private, dispose of land. Land obviously remains a scarce resource in this country. Sometimes it will be used for other pressing local needs—for example, for housing or industry—which my hon. Friend will understand only too well. People need houses in which to live. New units for the new technologies are needed. Progress in this direction is essential.

Here is another important context for this debate. The Government encourage local authorities to dispose of surpluse land. I am sure my colleagues will agree that that must represent sound financial management. We must all take the broad view of need. Sometimes the urgent requirement locally will be for a use other than recreation. That is inevitable. It is up to the local authority. The House will also be aware that falling school rolls inevitably mean that some schools can shed facilities. Statutory instrument 909 prescribes minimum requirements. We should regard it as a protection rather than as a threat, because for the first time ever it provides minimum requirements. I take my hon. Friend's point about the possibility of a marginal increase in the birth rate in some areas which will affect attendance at certain schools. This is possibly a threat, but we can pursue the matter with the Department of Education and Science and find out what the trend is.

There are realities that the House will accept, but let us continue to agree about the objectives and concerns in sports provision. My hon. Friend and I can agree about these, as well as about the realities. However, let me come to the question of what actions might be considered to overcome the problem of losses.

My hon. Friend has suggested in the past, through his recent private Member's Bill, and today that there is a need to centralise control, monitor the loss of sports facilities and introduce new statutory provisions. Is there a need for a new and centralised control? I am bound to wonder whether this is appropriate. The need and demand for any sports facilities can only be assessed locally. Let us look at the existing statutory and local controls to see whether they meet the concern expressed by my hon. Friend.

There are provisions in the planning Acts which give ample opportunities for organisations and individuals to express views and objections on proposed disposals, or changes of use, of recreational facilities. Local inquiries into planning appeals and applications called in for decision by the Secretary of State are normally held in public, giving a further opportunity for interested organisations and individuals to put their views and objections. In addition, schedule 23 to the Local Government, Planning and Land Act 1980 requires local authorities to publish notice of their intentions to dispose of open space land in the local press for at least two weeks. Local authorities are also required to consider any objections before taking any final decisions. Also, of course, any development of privately owned recreational land requires planning permission and must thus be subject to local scrutiny and objection. That is how the system works.

My hon. Friend has also proposed that local authorities and other owners of recreational land should be enabled to sell that land to sports organisations at less than the market value. Local authorities are already able to do this, with the Secretary of State's approval, and similar provisions apply to other bodies mentioned in schedule 16 to the Local Government, Planning and Land Act 1980.

My hon. Friend has also suggested a need to introduce a new requirement, that an applicant for planning permission shall be obliged to accompany his application with a certificate stating whether the proposed development does or does not involve sports facilities, and, where such facilities are involved, that the applicant should notify the Secretary of State of the application.

The first of those requirements, which would apparently apply to all planning applications, would further add to the documentation accompanying applications for planning permission, and to that extent would be contrary to the Government's general policy of reducing such documentation to an absolute minimum.

Moreover, if, as it appears, the essential aim of the proposal is to ensure that all applications involving the development of sports facilities are brought to the attention of the Secretary of State so that he may consider calling them in for his own decision, there are existing powers—in section 25 of the Town and Country Planning Act 1971 and article 15 of the Town and Country Planning General Development Order 1977—by which that purpose could well be achieved.

However, it would be most unlikely that there would be an extensive use of the powers of call-in of applications relating to sport and recreation facilities. Under the Town and Country Planning Act 1971, Parliament has entrusted the primary responsibility for the day-to-day control of development to local planning authorities. Therefore, it can only be in the exceptional case, where, for example, matters of more than local importance arise, that the Secretary of State's intervention could be justified.

Additionally, the Secretary of State already has a power under section 25 of the 1971 Act to prescribe the form of applications for planning permissions.

I am grateful to the Minister for what he has said in the last four or five minutes, because it is of considerable importance. It would help to give confidence to sports bodies if he were able to assure the House that when any contested planning application is being decided in his Department where a sports issue has arisen he will be involved in that decision. If he can tell us that, I am sure that it will go a long way to assist us to accept what he is saying.

Where applications are brought to the attention of my Department and not resolved locally, I involve myself very much in such issues and developments. That is an integral part of my responsibilities in the Department.

This is a useful debate because it was a pity that technically my hon. Friend's Bill was talked out some months ago. That is a slightly unfair assessment because the Opposition spokesman had only about two minutes on his feet. I do not want the House to be misled. Time was short.

Somewhere there is a misunderstanding by the CCPR about the application of land registers and the role of the Secretary of State and local authorities. It is important to understand that. The suggestion that the Secretary of State should compile a register is inconsistent with our wish to reduce administrative burdens on local authorities and also with the nature of what is essentially a local matter. I do not want us to compile another central register.

Land registers exist to promote the better use of land. They are designed to bring to light the unused and under-used land in the ownership of pubic bodies and expose their plans for that land to public debate. Equally, local authorities are required to make the registers available to the general public. My Department has instructed public bodies not to include on the registers
"land which is both held and used as public open space or for recreation."
Thus, any playing fields that are recorded are either unused or under-used.

An instruction also states that land held for future operational needs should be included. Therefore, it does not follow that land on the registers is to be disposed of or lost to sport. I want to make it clear that using the registers as a basis for assessing the loss of pitches is, at best, misleading.

Already, the Sports Council regional offices are using the copies of the registers at my regional offices to identify sites of odd shapes, sizes or locations which properly command low prices in the general market. I am touched that my hon. Friend referred to my excellent words of 1981 at the CCPR conference, because they get better with the passing of years. One of the better ways to use sporting and recreation organisations is to try to find land which can be used.

My hon. Friend raised many matters, including the Olympic games. I shall write to him about aspects with which I cannot deal tonight. We shall have to wait for the feasibility study. I am aware of the limitations and shortages and of what has to be done. We can speculate, but we all know about the gaps in the network of facilities in our major cities. I do not push the interests of any one city, but I am anxious to ensure that the Government work closely with the British Olympic Association. I remain at its disposal when it has completed its feasibility studies.

I understand what the Minister says and I have every confidence in the British Olympic Association. It has to make an assessment of the various cities which have put in a bid and as that involves substantial public investment the Government cannot opt out, even in the early stages, of assisting in the making of that assessment.

The Government are not opting out, nor will they. Some of the right hon. Gentleman's earlier remarks were a little fudged in that because of the passage of time, they did not bear any resemblance to the facts. No guarantee was given that the games would come here in 1988. The selection depends upon many factors. There was no guarantee of a London selection.

We must examine my hon. Friend's arguments closely. I shall reply later to any points with which I do not deal tonight because the subject is important, although it has been exaggerated in some respects. I do not single out any individual, but we should not deny that substantial progress has been made in recent years. Public, private and voluntary sectors have co-operated to expand local opportunities for sport and recreation. We must continue that progress. In doing so, I agree that we must guard against hurtful losses, especially in sensitive areas.

This debate is about means and not objectives. It is not for the Secretary of State or me to sit in judgment on local losses of sports fields, except where that is necessary and appropriate through the planning appeal system.

However, perhaps more locally based machinery of some kind is needed to provide a reliable database of overall provisions which, in turn, might better inform local decisions. I therefore suggested at a meeting that I had in February with the chairman and secretary of the Central Council of Physical Recreation that they get together with the Sports Council to see whether there is a need for, and a means of, better monitoring gains and losses in sports provision in the regions. Something might be done through the Sports Council regional offices, or the regional councils for sport and recreation which already play a vital role locally. Any new proposals will I hope take account of my comments today. I shall keep the House informed.

Berkshire (Development)

9.58 pm

I appreciate the opportunity to discuss excessive development in Berkshire. I thank my hon. Friend the Under-Secretary of State for his courtesy and understanding, particularly when I led a delegation of constituents to his Ministry recently. I believe that his courtesy was a result not of his being a Berkshire resident, but because he appreciates the problem.

We in Berkshire who are opposed to excessive development are not Luddites. Over the years we have accepted large scale development with good grace. We are happy to allow modest infilling and further development, such as providing a five-year supply of building land. However, we are no longer asked to provide only that. Our area is one of natural growth and development and because of that the Ministry has decreed that we should find land for 8,000 extra houses in the central Berkshire area.

Berkshire is a narrow, east-west county. The eastern end, which covers part of my constituency, is within the green belt, so it cannot be developed. At the western end, there is an area of outstanding natural beauty on the downs, which also cannot be developed. Therefore, those 8,000 houses——

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Major.]

Those 8,000 houses have to be crammed into a relatively small area between Reading and Berkshire. The bulk of them will be north of Bracknell, which has been asked to provide 5,150 houses. That will destroy the local village communities—such picturesque villages as Warfield, Binfield, Chevey Down and Winkfield Row will be flooded with new houses. There are no more than 600 or 700 houses in Warfield, but it is expected to provide an additional 3,000 houses.

We have a responsibility to future generations to preserve these communities and our countryside. The development will take place immediately north of the town of Bracknell, which most independent observers believe is the most successful of our new towns. It has already exceeded its natural level of development and to extend it further would be not only dangerous to the surrounding villages but would do a great harm to Bracknell itself. That is why the campaign against further development has the people of Bracknell shoulder to shoulder with the villagers. They wish to have green fields and open countryside near their new town that they can use and enjoy.

We do not have the infrastructure to accommodate the new houses, and there is no way that in the foreseeable future funds will be available to provide adequate roads or ample schools and hospitals. Therefore, if we proceed with the new houses there will be terrible bottlenecks on the roads, longer waiting lists in our hospitals and further overcrowding in our schools where the pupil-teacher ratio is already far too high.

The developers tell us that there is a demand for the houses. I refute that, because there is not a local demand. Anyone visiting Bracknell will see a number of "For Sale" boards, many of which have been erected for many months. There is no shortage of houses for sale or to let. If the new houses are built, they will be purchased mainly by people moving out of London where, mainly under Labour-controlled councils and the GLC, they have suffered high rate increases. They will commute back to London each day on our good rail and motorway links to the capital city.

We have no objection to commuters living in our county, but it is fair to say that they do not take part in the local community in the same way as established residents. I do not see that the desecration of local communities and the countryside is right simply to provide additional houses for commuters who work in London as opposed to people who work in local industry.

National issues are also at stake. There is all-party support for the Government's excellent policy for rejuvenating the inner cities. However, that policy will not succeed if developers can build on green field sites in Berkshire and elsewhere instead of utilising inner city sites. I fear that by encouraging developers to move to green field sites, they will not take up the opportunies that the Government are creating by providing land through the register in the inner cities.

The taxpayers' money and the efforts of the Government—efforts which hon. Members in all parts of the House applaud—to rejuvenate the nation's inner cities will fail or, at best, succeed less than fully, if ample provision is made for houses to be built on green field sites. I assure the Minister, being myself a sometime builder and developer, that developers prefer to build on green field sites than in inner cities, if they have the choice.

Another important issue is the north-south divide. As an hon. Member who first represented a constituency in the great city of Birmingham and who now represents a seat in the south-east, I perhaps see this more vividly than most.

We should be encouraging development, employment prospects and industry to set up in those regions of the country where there is genuine unemployment. In my area there is not genuine unemployment. We have an extremely low level of unemployment and I submit that the majority of those who are unemployed in my constituency choose to be out of work, are unemployable or are playing the black economy to the absolute full. That is not true of the midlands and many parts of the north.

We in the Bracknell district council area have encouraged national and multinational firms to come to Bracknell and we have exclusively reserved our remaining few industrial sites for their future expansion, which has been greatly appreciated. At the same time, we have encouraged those starting up in business to proceed by way of small industrial units. In other words, we have encouraged industry extensively. But now the time has come to say that there are other parts of the country that need industry more than we do, areas whose employment prospects are grim by comparison with ours.

That was never more clearly illustrated than by the fact that more than 80 of my hon. Friends signed an early-day motion on the subject that I recently sponsored. It objects to excessive development in the south-east and encourages employment in the regions.

New issues have arisen since I last raised the subject on the Adjournment. Bracknell district council has unanimously passed a resolution condemning massive development and the Government's policy in that respect, and I remind the Minister that that council consists of 40 Conservative councillors with no opposition. In addition, each of the parish councils, where the councillors are either Independent or Conservative, have equally forcefully condemned Conservative Government and previous Labour Government policies of excessive development in the area.

Companies in Bracknell—many of them large multinationals with names that will be familiar to you, Mr. Deputy Speaker—have all agreed through their trade and commercial organisations that they do not want further development. They say to me, "If we need a highly skilled, high-tech scientist to come to Bracknell, we know that he can find a house, because there are plenty of houses available to purchase. If we want a semi-skilled man to move from the regions to Bracknell, we know that houses are available to rent from the local authority. So there is no shortage of housing to affect our future prosperity as a company. When, however, we are fighting hard to find the right type of highly qualified people to work for us, we must offer an attractive environment, and that means an attractive new town with countryside around it. If you build on that countryside, as the Ministry wants, we shall face great difficulty in persuading people to join our company."

At the latest election on 2 May, Berkshire bucked the trend, unlike the rest of the country. There had been a hung county council. At the election, substantial Conservative gains were made and the Conservatives took control of Berkshire. I know that my hon. Friend the Under-Secretary of State will agree that that was the exception to the rule on the rather sad evening of 2 May. The reasons for that result were twofold. First, we had known about the hung council and the Lib-Lab pact which had led to a 27 per cent. rate increase—an experience that some of the other county councils will face during the next few months. My electors in Berkshire objected to that. Secondly, there is a majority of eight at shire hall because five Conservative seats were gained in and around Bracknell. The Conservatives who stood as candidates in the wards stood on a staunchly anti-mass development ticket and each signed a declaration that they would do everything legally possible to fight that development at county and national levels. They hit the right note with the electors.

Berkshire, which was the sole light for the Government on the evening of 2 May, would not have shone so brightly if the Conservatives had not won those five crucial seats that gave us our majority. We won those seats only because of our staunchly anti-development stand. Every group in the constituency—the Tory-controlled Bracknell district council, the Tory and Independent parish councils and all my electors—totally oppose that development.

My hon. Friend the Under-Secretary of State must realise that there are not only environmental reasons why the Government must change their decision, or only economic or regional effects that should cause the Government to change their policy of mass development in central Berkshire. There are also good electoral reasons. If we believe in a democracy and elected representatives and if, after winning the county election on this firm ticket, we are stabbed in the back by the Ministry and the Government, I am not sure how we could go again to Berkshire electors with confidence to advise them that a Conservative Government believe in conservation of the environment, in listening to people of individual areas, in employment in the regions and in inner city rejuvenation.

I make a strong plea to my hon. Friend, who I know is immensely sympathetic, to ask our right hon. Friend the Secretary of State and the Cabinet carefully to reconsider that out-of-date and misconceived policy initiated by the late Anthony Crosland and proceeded with by successive Secretaries of State of both political parties. It is time to rethink and time to change. We are making a grave mistake by proceeding in that way.

10.15 pm

The Parliamentary Under-Secretary of State for the Environment
(Mr. Neil Macfarlane)

I am grateful to my hon. Friend the Member for Berkshire, East (Mr. MacKay) for raising the subject of the extent of the problems of housing and development in Berkshire. It is a subject that has taken a great deal of his interest and time since he returned to the House as Member for Berkshire, East. His constituents should be grateful for his endeavours on their behalf. He regularly raises the issue on the Adjournment and at Question Time, and frequently comes to the Department to discuss the matter with my right hon. Friend and myself. He is diligent on his constituents' behalf, which is why I welcome tonight's debate. His constituents will be grateful for the clear and forceful way in which he has put the matter once again.

The issue is of local interest and anxiety. I have been taking a great interest in the matter and have met delegations led by my hon. Friend and other hon. Members who represent constituencies not far from Berkshire, East. They are equally interested.

I am conscious that the pressures for development and conservation in the area must be balanced in the interest of prosperity. I shall ensure that I remain fully conversant with the area and its problems as a basis for discharging in due course my responsibilities in respect of development planning.

I understand that there is widespread local feeling that new housing developments should be contained. For the moment, however, the matter rests largely with the county council as the structure planning authority for the area. Last year, the county council published proposals for a replacement structure plan for the county as a whole to replace the existing structure plans for the west, central and east Berkshire areas. Recently, the county council published a stage 2 consultation document upon which it invited comment before 3 May.

It is now for the county council to decide what proposals to include in the replacement plan. Only when the replacement plan has been submitted to him will the matter come before my right hon. Friend the Secretary of State.

I shall give way to my hon. Friend, and I hope that he will convey to those involved the congratulations of many Conservative Members on the excellent results of 2 May. There are lessons for everyone to be learnt from those results. They show the importance that constituents and ratepayers attach to local plans.

I shall be delighted to convey my hon. Friend's congratulations. I know that they will be greatly appreciated by my friends and colleagues who have been elected to shire hall.

On the point about the revision of the structure plans which are being considered by the county council, I believe that the county council would like greatly to reduce the numbers in line with public feelings. At the public meetings, it has been made clear, as I illustrated in my speech and in other conversations with my hon. Friend, that the development is not wanted. If the county council put up good reasons, as I think that I have tonight, to reduce dramatically the number of houses that the Ministry wants, will it be permitted to do that and, if the case is a good one, will it be favourably construed by my right hon. Friend the Secretary of State.

If I may speak for myself and for my right hon. Friend, I hope that all those points will be taken into consideration. We would have to take account of those requests, and clearly we would do so. I cannot give any assurances to my hon. Friend this evening, as he will understand, because we still await a completion of the documentation. I hope that it will be possible for the county council to push ahead with its proposals as quickly as possible and to present them to my Department for comment. Only when that process is brought to a conclusion will the present uncertainty at the rate of development not only in north Bracknell but in central Berkshire as a whole be brought to an end.

Given that that is the stage reached in revising the structure plans, it is not for me to comment definitively now, as my hon. Friend will understand. However, I am well seized of the anxieties that he has represented and of those of the 10 organisations that he brought to the Department. I thought that the case was presented in a balanced and coherent manner.

There is concern that the rural character of the area contributes to its economic buoyancy and to the readiness of employment generating activities to locate there. As a matter of general principle, and without in any way seeking to prejudge the issues and arguments relevant to the matter that my hon. Friend has raised, it is important that we should maintain the economic buoyancy of areas that are among the most thriving in the country. I endorse what he said, and I understand his arguments fully.

In maintaining it, planning authorities and, indeed, my right hon. Friend, will be faced with some hard choices, as they often are at national and local Government levels, in seeking to balance the need for development with the need to preserve the many good features of the areas concerned.

My hon. Friend has mentioned his doubts about the ability of the local infrastructure to keep up with substantial residential development. That most important fact was brought to my attention by other hon. Members who accompanied my hon. Friend when they came to the Department of the Environment, as was the pace and rate of development of the big cities and small towns in the outlying areas. Those who know the county well understand that. That is a matter of fact and judgment which I have no doubt the county council will seek to establish in the process of producing the replacement structure plan.

My hon. Friend referred also to the capacity of outstanding planning permissions to accommodate a considerable proportion of extra residential development which builders may seek to promote as they respond to local demand. Again, at present it is for the county council to form the best judgment that it can of the extent to which such consents can cater for the residential growth which it concludes is necessary in the area. It is for the county council to assess as best it can all the different matters such as population trends, household growth, employment, economic activity and so on, as well as the need to safeguard the quality of life in coming to a conclusion as to the proper provision for housing which should be made.

As I hope my hon. Friend will understand, time does not allow me to develop or to research as thoroughly as I should have liked many points that he raised in his speech. He knows that he can rest assured that we shall do everything that we can to ensure that his constituents can have faith in the workings of local and central Government.

Question put and agreed to.

Adjourned accordingly at twenty-three minutes past Ten o'clock.