asked the Secretary of State for the Environment if he will now make a statement on the future of the attendance allowance system for local authority members.

I have nothing to add yet to the reply given to my hon. Friend on 5th May. I shall make a statement as soon as possible.

Does my hon. Friend accept that the attendance allowance system has caused bitter resentment, because it allows some people who have not lost a penny piece through their local government service to claim substantial sums, whilst others who have to lose time from work are left substantially out of pocket? In those circumstances, will my hon. Friend persuade my right hon. Friend to publish the report of the joint working party with local government, which considered the problem? That report has been suppressed for the past year. Alternatively, will my hon. Friend set up an independent inquiry to look into the whole matter?

I very much agree with what my hon. Friend said at the start of his supplementary question. The allowance system has thrown up many injustices and anomalies. For that reason my hon. Friend's suggestion of an independent inquiry will need to be examined.

My hon. Friend referred to the review that my predecessor undertook. It was not written with an eye to publication, but any further review would almost certainly include the evidence acquired as a consequence of that inquiry.

I have a great deal of sympathy with what my hon. Friend said, because undoubtedly some councillors—chairmen of committees, leaders, and so on—are doing a first-class, virtually full-time job for very little reward, while there are others for whom the allowance is possibly more than they need.

Will my hon. Friend have consultations with my right hon. Friend the Secretary of State for Social Services to ensure that a mayoral allowance for the performance of a mayor's civic duties is not regarded as income for calculating eligibility for unemployment allowance or social security benefits?

My hon. Friend has referred to one of the grave anomalies that have cropped up. I could quote the example of the chairman of an important committee of a council who is similarly affected by the kind of problem that my hon. Friend raised. All these points are complex and difficult. That is why I welcome the suggestion made by my hon. Friend the Member for Woolwich, East (Mr. Cartwright).

The Minister referred to an investigation initiated by his predecessor. Can he not tell the House at least what conclusions were reached, if he is not prepared to publish the report?

I said earlier that the investigation was not conducted with the intention of publishing its results. It may be right for the evidence gathered as a result of that review to be used as part of a general review that we are now undertaking and that we shall later report to the House, or to make those facts and figures available to the sort of independent inquiry that has been suggested.

asked the Secretary of State for the Environment when he next expects to meet members of the local authority associations.

On 2nd July.

Why did the right hon. Gentleman see only representatives from Socialist-controlled authorities at Transport House on 13th June about the possible overspending of about £400 million in the current financial year? What sanctions does the right hon. Gentleman propose against a local authority such as Haringey, which, it is reported, is likely to defy Government policy?

As to the first part of the hon. Gentleman's question, I made very clear the Government's general concern about the potential overspend when I met the consultative council, which consists of representatives of all the local authorities, regardless of political party. I met my own local government councillors because they happened in any event to be attending a conference in London that week, and I wished to have the opportunity of meeting them and talking to them. They are a thoroughly reasonable and responsible group of local government leaders.

While the hon. Gentleman's last point is a problem, I wish to wait until we have received the result of the further exercises and the financial returns on 16th July.

How does my right hon. Friend hope to get over the very difficult problem in relation to the rate support grant, whereby thrifty authorities such as Staffordshire County Council and Stoke District Council will be discriminated against in this context?

I am aware of the great difficulties in dealing with problems of overspend. Should the overspend be confirmed, the problem as my hon. Friend puts it is that of treating fairly and justly different authorities. But the nature of the relationship between central and local government is such that it is extremely difficult, without changing the whole nature of that relationship, to do other than to accord rather rough justice.

Will the Secretary of State explain what he means by saying that certain local authorities are his? Did he not meet the authorities as Secretary of State? Are not all local authorities his clear responsibility? Surely he should not discriminate between one group and another. If some authorities defy the Government's request for economies and get away with it, does he agree that it will be difficult for other authorities to comply?

I am not sure whether the hon. Gentleman, in his slightly prolonged introduction to his supplementary question, was extending a careful invitation to me to address the Conservative Party local government representatives. If he was, I shall consider the matter with care. I shall not dismiss the idea. [Interruption.] I shall tell him why. It is because the evidence that I have of overspend is not confined to authorities under Labour control; it is a widespread tendency that is to be observed in councils throughout the land.

The hon. Gentleman's second question concerned some councils that may defy the Government. I am aware that some councils—this comes as no surprise to anyone who knows anything about local circumstances—have greater difficulties than others.

Is my right hon. Friend aware that many of his hon. Friends are concerned about the cuts in local authority expenditure? We believe that they will hit those least able to look after themselves or help themselves. As an ex-member of a local authority, I was never quite clear what sort of statistical indicator the Government use to determine whether there has been an increase in real terms. Many of us who have sat on local authorities have found that there has been no increase in real terms. Those who have suggested to the working people that we represent that the party is over should realise that the pubs have not even opened for the party to begin.

As regards my hon. Friend's last point, I cannot be asked to comment on particular choices of words. I accept that statistical indicators are extremely important. One of the things that have struck me as an incoming Secretary of State for the Environment is, in a sense, the relative paucity of information that comes to central Government from local government. In the circular that I addressed to all authorities I carefully made the point that in our view there was almost certainly an element of genuine uncertainty in the figures which, with the best endeavours, CIPFA and the Department of the Environment had jointly obtained, and which were presented to the consultative council in May.

I understand the local authorities concern, and their difficulties, but I must correct my hon. Friend on one matter. My circular does not ask local authorities to make cuts; it asks them to live up to the figures that they themselves agreed were right and appropriate in December 1975.

My hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) asked a serious question, which deserved a serious answer. In view of the existing overspending and the increasing signs of further public expenditure cuts, will the right hon. Gentleman now consider giving further advice to local authorities about which services they must curtail?

I am interested to note the hon. Gentleman's approach to the problem of the relationship between national Government and local government in this difficult matter. I hope that in the context of the Layfield Report the whole House will be thinking very hard about what the right relationship should be, but I am not prepared at present to add anything to the circular that I have issued. I am not prepared to say anything before I have received the results of the additional information for which I have asked.

asked the Secretary of State for the Environment whether he will publish the results of the survey he has commissioned into the effects of the Rent Act 1974 in London.

The results should be available by the end of the year. The form and timing of their publication will be decided then.

Do the Government accept that there is urgent need for action? Will the hon. Gentleman do slightly better than saying that we have to wait for at least another six months or nine months after the two years since the Rent Act came into force?

As the hon. Gentleman knows, we have instituted a fuller review of the Rent Act. However, there is no need for urgent action. The view that the Act has caused the drying up of rented accommodation is not borne out by the evidence that we have received.

Does the hon. Gentleman agree that in central London the effect of the Act is sharply to reduce the number of furnished lettings available? Does he further agree that the Government should be encouraging the schemes put forward by some of us for short-term teases, and the proposal of the Westminster City Council for short-term council leases? The casual and complacent attitude of the Government, which suggests that there is no problem, is not acceptable.

I did not say that there was not a problem, but I remind the House of the great reduction that has taken place in homelessness as a result of evictions, and in the number of people facing eviction from their dwellings. That has to be balanced against—[Interruption.] The evidence from voluntary bodies is that there has been a great reduction in stress and a great reduction in the numbers concerned. We are giving every attention to this problem.

asked the Secretary of State for the Environment what are the most recent house building figures both in the public and private sectors.

House building figures for the period January to April 1976 show that in the public sector starts were up by 23 per cent. on the same period of 1975 and completions by 11 per cent. On the same comparison in the private sector, starts and completions were up by 22 per cent. and 6 per cent., respectively. This is encouraging progress and indicates that the improvement we achieved last year is being maintained.

Does my right hon. Friend agree that the figures are a far cry from the halcyon days in 1968, when we built the record total of 413,000 houses? Does he further agree that the £175 million planned reduction for the current financial year, according to the White Paper, is now showing the first signs of its effect in terms of the reduced number of houses being built? Is it not ironical that this is happening in a week in which the IMF bosses and the United States bankers are prevailing upon the Chancellor of the Exchequer to spend even less money this year, next year and the year after, which will result in even fewer houses being built for the homeless when we have bricklayers on the dole?

Although in numerical terms we are a long way from what my hon. Friend described as the halcyon days of 1968, when I think we achieved the record post-war target for new house building, the figures show a situation far distant from the abysmal state of the housing programme that was reached in the last year of the Conservative Government. I do not under-estimate the importance of new house building in any sense, but in the 1970s, as opposed to the 1960s, we should consider the total provision for housing, including, for example, a proper emphasis on renovating and improving houses just as much as the building of new houses.

Will the right hon. Gentleman now give the figures that he did not give a moment ago? Does he agree that public sector housing starts between February and April of this year fell by 12 per cent. compared with the previous three months?

I do not think that that is right. Further, if it is right, too much importance should not be attached to it. As one who has spent a very long time dealing with statistics in different Departments, I learned a long time ago that one must look sensibly and realistically at trends. The more significant fact is that over the period concerned, compared with the same period last year, there is this very obvious and welcome improvement.

My right hon. Friend gave the latest figures in comparison with the position a year ago. Will he publish in the Official Report a comparison of the latest figures with those which were available when the present Government took office in March 1974? Further, will he comment on the fact that the Conservative Party housing policies seem to threaten a very disastrous slow-down in house building and perhaps even in house improvement?

I shall certainly do my best to oblige my hon. Friend by making available the information for which he asks in the first part of his question.

On the second part, during the period that preceded the recent local authority elections, there was a very conspicuous absentee item from the Opposition Front Bench propaganda, in that its Members had virtually nothing to say about the necessity for improving the number of houses available.

In view of the fact that there are 200,000 construction workers unemployed, will the Secretary of State say what stress he has placed upon house improvements, and whether this year he expects the number of house improvement grants to be one-third or one-quarter of what they were in 1973?

In that year, as the right hon. Gentleman will well recall, there was an enormous number of improvement grants, some of which, I think we would all agree, were necessary and valuable, but a great many of which, certainly in a period of public expenditure restraint, were very difficult to justify. We therefore very properly took measures to cut back on the lavish provision that was made not against any test of need but for people who wanted second homes and all kinds of things at that time.

I think that the present level of improvements is not entirely satisfactory, and if I can find ways of helping this within the general context of the house building programme I shall be pleased to do so.

How can the Secretary of State possibly justify cut-backs in housing construction, in the light of yearly statements at Labour Party jamborees about how Labour would really get to grips with Britain's housing problem?

My hon. Friend asks me how I can justify cut-backs in housing expenditure. Oddly enough, I have not had to make any justification of cut-backs in housing expenditure, first, because they have not been proposed and, secondly, because they have not taken place.

With regard to the very selective figures that the Secretary of State chose to give the House a moment ago, is he not aware that his own Department, in its Press release, while stating that monthly figures are variable, said that special attention should be paid to quarterly figures, and that those quarterly figures show a 12 per cent. decline in public sector starts?

Why is the right hon. Gentleman so complacent about those figures? Does he not agree that the alibi given by his right hon. Friend the Minister for Housing and Construction—that this was due to Tory authorities coming into power—does not hold water, because this decline started three months before those elections?

The hon. Gentleman is getting a little over-excited about this. I find it very difficult to accept the allegation that my figures were selective. I was asked about the present state of play in recent house building. I gave the House the detailed figures for starts and completions for the first four months of this year. I am not sure what else I am expected to do. If hon. Gentlemen on the Opposition Benches want to put down more pertinent and relevant Questions, which may help their propaganda, they must do the necessary work to enable them to achieve this result. I do not accept the hon. Gentleman's criticisms. I have no reason to believe that any short-term decline has set in in relation to the trends of house building which I have already reported to the House.

asked the Secretary of State for the Environment if he will report on his conversations with the South Yorkshire County Council concerning the proposed motorway (M67) through the Peak District National Park.

My right hon. Friend has had no such specific conversations. When I met the county council in early April, the possibility of improving communications between Manchester and Sheffield was one of a number of subjects discussed. No conclusions were reached.

I am very glad that no conclusions were reached, and also not entirely surprised, since there are sharp differences of opinion on the county council. Does my hon. Friend agree that he would not particularly want to enjoy the political notoriety of being the first Minister of Transport in 30 years to drive a motorway through a national park?

I assure my hon. Friend that I am seized of the political, environmental and economic considerations that surround this decision. I further assure him that no decision has yet been taken on the question whether a new road is needed at all, let alone the route, if it were to be decided to have a road.

Will my hon. Friend bear in mind that many people think that the present road system between Sheffield and Manchester is too dangerous for traffic to use? Will he therefore give further thought to the construction of a motorway between Sheffield and Manchester? When the road is being planned, will he make certain that there is a service station somewhere along it, so that people will be encouraged to drive to it and then go on planned routes around the moors, in order to see the beautiful countryside?

My hon. Friend's comments bear out those of my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) that there is considerable controversy attaching to this route. I am aware that some sections of it are particularly difficult, such as those around Stocksbridge and Deepcar, which I visited in April. As my hon. Friends will appreciate, however, it is not sensible to consider separately certain elements of the route before arriving at a final view about the overall question.

asked the Secretary of State for the Environment how many local authorities with responsibility for public sector housing have announced rent increases that exceed the maximum indicated by the Government's guidance on rent charges.

Our guideline for this year sets no maximum, but recommends an increase of 60p a week averaged across the country. I understand that, so far, 122 local authorities in England have decided on increases exceeding 60p a week and 190 on increases of 60p or less, and that 55 have not yet decided.

Is my hon. Friend aware that many recently-elected Conservative authorities have indicated that it is their intention to impose substantial rent increases on council house tenants? Does this not make a mockery of the Government's anti-inflation strategy? Does my hon. Friend accept that there is general appreciation that by Government intervention the rate of interest charged to owner-occupiers has been controlled, and reduced in some cases? Will he extend this same protection to council house tenants?

We are, indeed, keeping under strict review the amount of rent increases, but I remind my hon. Friend that this Government restored to local authorities the right to fix their own rents and would be very reluctant to interfere with that.

Does the Minister agree that these increases are indiscriminate when compared with those that would apply under the Housing Finance Act?

We have great faith in local authorities, who know their own circumstances, and it is for them to make the decisions.

Is my hon. Friend aware that some local authorities intend to save most of their alleged overspending by cutting the rate contribution to the housing revenue account? Is he further aware that this will place the whole burden of sacrifice on one section of the community? Will he give some guidance to local authorities to prevent their acting in this manner?

Guidance has been given by my right hon. Friend. However, if my hon. Friend has any instances in mind and reports them to me, we shall consider them carefully.

asked the Secretary of State for the Environment what study he has made of the accident saving which could be achieved by lowering the speed limit of heavy goods vehicles on motorways and dual carriageways to 50 m.p.h.

The speed of heavy goods vehicles on motorways is limited to 60 m.p.h. and their accident rate per mile travelled on those roads is less than half the rate on other roads. I have no evidence to suggest that there would be significant advantage in limiting their speed still further. On all other roads, including dual carriageways, they are already limited to 40 m.p.h.

I believe that my hon. Friend is right. However, any hon. Member who drives on motorways will find his answer quite incredible. Will he discuss with the police forces methods of ensuring that speed limits come somewhere near being maintained? Does my hon. Friend accept that the relevant statistic is that a higher proportion of these heavy motor vehicles are involved in accidents compared with the ratio of heavy motor vehicles to other vehicles driven on motorways?

All that I can say is that the accident record of heavy goods vehicles is better than that of most other groups of vehicles, whether they are driven on motorways or on other types of road. I shall examine my hon. Friend's suggestion that I should have discussions with authorities about enforcement. However, my hon. Friend will have observed that the police are being equipped with a series of observation posts every three or four miles on all our main motorways, and I have no doubt that these will have an effect in the direction which my hon. Friend desires.

Widening the question slightly but, I hope, still remaining in order, may I ask the Minister to say whether he is concerned about the absence of flashing signals when drivers change lanes on motorways, especially the drivers of heavy vehicles, who hitherto have had a good reputation in this respect? Are many accidents caused by the failure to give proper flashing signals? My impression is that the frequency with which motorists give signals before changing lanes has declined recently.

I am not aware that there is any major problem of people failing to give signals when changing lanes on motorways. Certainly it is not reflected in correspondence that I have received. The accident rate for all types of vehicles per mile travelled is much lower on motorways than on any other type of road. Motorways are much the safest roads on which to travel.

Does my hon. Friend realise that it is no use our passing laws unless effective measures are taken for their enforcement? Is he aware that when I travel on the M1 to my constituency there is always the risk of a by-election in Watford because lorries pass me at more than 60 m.p.h. and cars at about 110 m.p.h., and the police are sadly absent? What can the Government do about it?

I shall pass on my hon. Friend's comments to my right hon. Friend the Home Secretary, who is responsible, through the police forces, for the enforcement of the law. I take my hon. Friend's point that a certain number of citizens do not obey speed limits. I am afraid that that will always be the case.

asked the Secretary of State for the Environment whether any proposals have been put to his Department regarding the closure of the main line to the West Country via Westbury and Exeter St. Davids.

No, Sir.

Will the Minister take this opportunity to refute categorically once and for all the rumours about the possibility of closing this major link to the West Country? Is he aware that such a closure would not only greatly damage transport to the West Country but would severely affect many important businesses in Wiltshire and acutely inconvenience very many people for whom this service is not a luxury but a necessity?

No one can give an unconditional guarantee lasting for eternity with respect to any stretch of railway line. However, my original answer should reassure the hon. Gentleman's constituents about the very important considerations that he has put before the House.

asked the Secretary of State for the Environment whether he is satisfied with the arrangements for the making of tree preservation orders; and, if not, what steps he is proposing to take.

Where a direction of provisional confirmation has been made under Section 61 of the Town and Country Planning Act 1971 there are sometimes difficulties in ensuring that a decision is properly made before the direction lapses. I am currently investigating possible means of overcoming this problem and will write to the hon. Member.

That is not a very satisfactory situation. The position has been getting steadily worse for some time. Is the Minister aware that if the Secretary of State does not confirm an order within six months, when there is an objection, the trees can be felled? There have been two or three incidents in my constituency where orders have lapsed because of the failure of the Minister to deal with them, and the trees have been felled. What action does he propose to take to do something about this, instead of continuing to investigate it?

If the hon. Gentleman had listened to my original reply, I think that he would have found that it was more satisfactory than the situation about which he is rightly concerned. I have announced that, because I think that it is unsatisfactory, I am looking into it and intend to take action to meet the very point about which he has expressed concern. The difficulty is that, within the six-month period, we find that many local authorities and many objectors who have to be written to drag their feet in letting us have their replies and, as a result, the six-month period lapses. I agree that that is unsatisfactory, and I intend to deal with it.

May I take this opportunity to draw attention to the large number of trees planted in the past two years which are unfortunately dying or are already dead? I think that the Minister's Department might be able to do something about this in drawing the attention of local authorities to the subsequent cultivation that these trees require—quite apart from publicising the vandalism that goes on—by means of television and the other media.

I am glad to say that more and more attention is being given to these matters, especially as a result of National Tree Week and the activities of the Tree Council, which receives full support from the Government and co-operates with us. What is more, right hon. and hon. Members on both sides of the House support this work. But I shall bear in mind what the hon. Gentleman said and see whether we can give any further information.

asked the Secretary of State for the Environment what financial support he is providing for the implementation of the redevelopment plan for London's Dockland, which has now been agreed by the joint committee of the five participating London boroughs and the Greater London Council; and if he will make a statement.

The Docklands Joint Committee has published its draft strategic plan for the redevelopment of the area as a basis for public consultation. It does not expect to take a final decision on it until next month.

I shall be making a statement about the strategic plan and its financial implications as soon as possible after it has been agreed by the Docklands Joint Committee.

How much longer will this go on? Is it not about time that the Government injected a sense of urgency into the redevelopment of London's decaying dockland? Will the Secretary of State explain what is the point of the Greater London Council and the inner London authorities seeking housing land in the outer London boroughs when they have 5,500 acres available for redevelopment on their doorsteps? Will the Minister also specifically say what is the Government''s position about the extension of the Underground railway system into Dockland? This seems to be an essential prerequisite for the viable redevelopment of Dockland, which should be got under way as urgently as possible.

As a member of a party which, when in government, presided over the dereliction of Dockland for three years while carrying out the abortive Travers Morgan studies, the hon. Gentleman has a great nerve to accuse us of being dilatory. The Docklands Joint Committee has only recently published its report. It is out for consultation, and all those interested have been asked to comment so that they can go firm on it by the middle of July. We shall respond to it as soon as it is before us.

Dealing with the one matter of substance about which the hon. Gentleman asked me, which was the transport strategy in Dockland's development, especially the Fleet and River lines, obviously I cannot respond in advance of my general consideration of the whole Dockland strategy.

Whatever painful economies have to be made in local authority expenditure, does my right hon. Friend agree that it would be a false economy to leave this valuable land unused for very much longer?

I wholly agree. There is here a major opportunity to contribute not only to the problems facing the hard-pressed boroughs which surround London's East End but to the solution of the general problems of the whole of our capital city. I am very anxious that we shall be able, in conjunction with the GLC and the local authorities, to proceed in our efforts to revitalise the area.

Are the Government making central funds available for the revitalisation of this vast area of central London? If a grant is to be made, will it be done on the basis of the present joint committee, or is the Government's mind still open on the question whether a development corporation would be a more suitable instrument?

I must tell the hon. Member that my mind is not open on a development corporation, if by this he means the kind of body that has been established to develop the various new towns surrounding our capital. I am not in favour of this, nor are the people in the area concerned. Dockland is part of the local authority areas concerned, and there is an intimate connection between these areas and their local authorities. I think it would be advisable for me to guard my response for the time being on the financial point.

Does my right hon. Friend not agree that the purpose of this question is that the hon. Member for Ravensbourne (Mr. Hunt) would prefer the working peasants to live in council houses in Dockland, and not occupy land in Bromley?

I am not sure what particular interest the hon. Member for Ravensbourne (Mr. Hunt) has, and it would be unwise for me to speculate on his motives, but his Question has given me the opportunity to make a statement of an interim character on Dockland, and I am grateful for that.

asked the Secretary of State for the Environment what negotiations have taken place nationally and within the Common Market with a view to introducing standard heights for car bumpers; and whether he will make a statement.

Proposals for international standards for car bumpers, including their height, are being considered this week by the United Nations Economic Commission for Europe. Several European Community member States are taking part in this work. The Department is in touch with the Society of Motor Manufacturers and Traders Ltd. about the British contribution to these discussions.

I thank the Minister for appearing to take a slight step forward in this matter. Will he not accept that although international agreement is vital in the ultimate, it is not helped by our being at sixes and sevens in this country? In the absence of international agreement, we should now decide what standard heights we are to have in this country.

I disagree. I do not think that it is in anybody's interests to set a national standard which might have to be changed very shortly if we get an international agreement. That would be counter-productive. We need international agreement on a safe bumper height.

asked the Secretary of State for the Environment whether he has discussed the Layfield Report with the Consultative Council on Local Government Finance; and, if so, what broad conclusions were reached.

Not yet. The council will be having a discussion on the report at its next meeting in early July.

I recognise that the Secretary of State believes that a full and considered response to Layfield depends on the many submissions that he has asked people to make to him. However, will he say whether the Government are now in a position to give their views on certain matters within Layfield ahead of the consultation period, because it is essential that these matters should move ahead with all possible speed?

No, we are not ready to do that. There are certain matters in Layfield of a very specific nature on which more progress could be made in advance of coming to a conclusion on the big central question that Layfield poses.

Does the right hon. Gentleman share the view expressed by the Home Secretary to the effect that in any democratic system expenditure by Government agencies should not exceed 60 per cent. of public expenditure? If he does, does he not also agree that this implies a permanent limitation on local authority expenditure? Will he bear that in mind in any discussions he has on local government finance?

I do not subscribe to the doctrine of a particular percentage of public expenditure posing a threat to democracy.

But that is what the Home Secretary says.

That may be my right hon. Friend's view, and he is entitled to express it. I am equally entitled to express a different view. The Government view is that we should stick within the targets that we have agreed in the latest public expenditure White Paper.

asked the Secretary of State for the Environment what advice he has given under the Water Charges Act 1976 to local authorities over charges for the emptying of cesspits and septic tanks.

Local authorities have been asked to ensure that services that ought to be self-financing do not run at a loss. Many have thought it right to review their charges for emptying cesspools. I have received about 100 letters, mainly through hon. Members, complaining about the increases.

My Department has recently issued a consultation document on the water industry. The problem of sewage disposal from properties not connected to main sewerage is one of the issues on which views have been invited.

Will the Minister consider allowing regional water authorities to make a charge for the removal of sewage from properties that is based only on the rateable value and regardless of whether the property is served by main drainage, septic tank, or cesspool?

There is some confusion here. Responsibility for emptying cesspits rests with local authorities. Responsibility for the disposal of the matter emptied from the cesspits rests with the regional water authorities. Some interesting views are being put forward on this matter, one of which is that perhaps all the responsibility should be taken over by the regional water authorities, which should empty the cesspits, dispose of the matter, and charge householders in the normal way. We want to hear the views of local authorities before commenting, but I must say that I am continually amazed by local authorities wanting to hang on to their responsibilities in this respect.

The regional water authorities were set up by the Conservative Party to supply water. Will the Minister relieve customers of charges for water supplies if the authorities are unable to supply water for long periods?

I do not think that that problem will arise.

Will the Minister discuss with the Secretary of State for Scotland the possibility of introducing the more equitable system into Scotland that already prevails in England and Wales?

The Secretary of State for Scotland has been asking my advice on water reorganisation. I have told him to avoid like the plague the mechanism that the Conservative Party introduced when in Government.

asked the Secretary of State for the Environment if he can now make a statement on the British Railways Board's accounts for 1975.

I have nothing to add to the answer that I gave to the hon. Member for Carshalton (Mr. Forman) on 26th May.

Does the Minister agree that when the taxpayer picks up the tab for £324 million he is entitled to see that costs and overheads are cut to a minimum and that waste is eliminated? What action is the Minister taking to encourage that?

British Rail management is very well aware of the financial disciplines facing it. It is fighting a continuing battle to keep overheads down to the minimum practicable.

Last week in Hull there was a public meeting organised by Transport 2000, and anxiety was expressed about the possible closure of the Hull to Scarborough line. How often does the Minister meet the Chairman of British Rail about a Beeching-type examination of the national network? In the event of this happening, is the Minister prepared to meet a delegation of Hull and East Yorkshire MPs on the matter?

I am always happy to meet delegations on this or any other matter. I have had no discussions with the present or future Chairman of British Rail about any Beeching-type of examination; nor do I propose to have one.

The accounts of British Rail totally fail to give any information that would enable Parliament to make a correct judgment of the loss incurred on the various services. Will the Minister accept that we need this information before any more subsidies can be granted?

I am sure that the hon. Member knows that the attempt to allocate revenue or cost was tried under the Cooper Brothers formula and proved so complex that it was abandoned because it had only limited practical value.

Will my hon. Friend encourage British Rail to try to reduce the deficit by carrying freight traffic? Will he take up with British Rail its decision to end the carriage of livestock on 1st July which, although it causes a light ripple of laughter in the House, is worth about £2 million? Is he aware that many people such as pigeon fanciers will be denied a service that is very much appreciated and that uses trains that are running anyway? Should not we interfere with British Rail's decision, because it will cost the taxpayer another £2 million?

Representing as I do a strong pigeon-fancying area in the Black Country, I do not treat the decision by British Rail in this respect with any frivolity. I understand that it is being looked at, however, by the Central Council of the Transport Users' Consultative Committees. I am not sure whether its decision has yet been published, so I had better be careful about what I say at this stage. I know that it is fully aware of the many representations that have been received by myself and British Rail direct from many members of the public and hon. Members on both sides of the House.

Is the Minister aware that British Rail has published an order that it will not carry unaccompanied dogs after 1st July? Dog breeders in the north-east of Scotland say that this will mean the destruction of hundreds of pups and bitches within a few weeks of the decision being implemented. As British Rail intends to carry unaccompanied dogs for research purposes, the decision appears all the more objectionable. What action will the Minister take?

As I am sure the hon. Member appreciates, it is not for me to interfere in the day-to-day running of British Rail, but I do not seek to hide behind that on this occasion. The problem has arisen because British Rail, as a result of actions outside its control, has been faced with the decision by the House requiring that the carriage of livestock is undertaken with due regard to the humane treatment of that livestock. That is the situation that has produced the difficulty with which hon. Members have been faced in discussions with their constituents.

Has the Minister received any evidence from British Rail that it is doing anything about reducing its unauthorised freight deficit?

Yes.

asked the Secretary of State for the Environment if he is satisfied that he, or adjacent local authorities, possess adequate planning powers to control offshore developments which can have a noticeable effect on the relevant local environment; and if he will make a statement on recent proposals involving the parking of oil rigs in estuaries and other territorial waters.

I refer the hon. Member to the answer which I gave to the hon. Member for Isle of Wight (Mr. Ross) on 8th June.

There is a degree of muddle about the powers possessed by the Government and local authorities in territorial waters, in different stretches of those waters, and at different distances from the shore. Is the Minister aware that this muddle can be exploited for commercial ends by, for instance, people like those who wanted to park an oil rig in the Solent? Will he look at the Coast Protection Act 1949 to see whether there is any possibility of an amendment to enable it to take account of environmental issues?

I do not think that that Act is involved in this matter. My understanding of the situation is that the mooring of an oil rig between the three-mile limit and the mean high-tide mark is a matter for the Crown Estate Commissioners, who are entitled to take environmental factors into account, and the local planning authority concerned can contact them about that. The local planning authority can also exercise planning powers where the mooring of a rig involves construction over land. Anything on the shore, therefore, very often falls within the purview of a local planning authority. I am not at the moment aware of the muddle that the hon. Member refers to. I recognise that this is a new kind of situation. If the hon. Member has any evidence from his constituency or elsewhere I shall be glad to consider it.

Is the Minister aware that the parking of oil rigs in need of service or repair in the River Tyne would be most welcome, and might help to relieve the worst unemployment we have known in the North-East since the 1930s?

I shall bear that in mind.

asked the Secretary of State for the Environment what recent discussions he has had with the Building Societies Association.

Regular contacts continue with the Building Societies Association. These have been built up over a number of years and enable discussion to take place over the full range of issues affecting the housing market.

Have any discussions taken place recently about the effect of abolishing or cutting back tax relief on mortgages for more expensive properties? Does the Secretary of State not agree that the log jam that would be likely to result from such a move would only lead to increased prices for the less expensive properties?

This matter has not been under current discussion, but if moves were made in any way to alter the tax arrangements affecting mortgages for the purchase of houses we would have consultations with the building societies.

Is the Secretary of State aware of the new and growing practice by many building societies of red-lining or blue-zoning the old inner city areas within which they refuse mortgages on all houses, even if they are not to be demolished? As local authorities, in contrast, provide mortgages for such houses, and particularly since the present £100 million scheme with the building societies is proving a deep disappointment, will my right hon. Friend require building societies to provide to the local authorities 10 per cent. of their advances for this purpose?

I am interested in both the questions that my hon. Friend puts. He follows these matters very closely. I shall be glad to hear any evidence on the question whether there is in practice a red-lining of the inner cities. That is a most important point, because we wish to get the maximum co-operation from the building societies in two respects—first, to increase their lending on older properties, and, second, to increase their lending to people with average or below-average incomes.

On my hon. Friend's second question, there is an encouraging trend in the figures for the first quarter of this year, which show that 26 per cent., by number, of new mortgages went to people whose income was below that of the average manual wage.

Is the Secretary of State aware of the considerable problems caused in certain areas, of which my constituency is an example, by the restrictions placed on the amount of money available for local authority mortgages? Following his talks with the Building Societies Association, what information has he about the extent to which the building societies have been able to fill the gap left by those restrictions?

There was general agreement about the £100 million that the building societies were trying to make available in addition to their other lending in order to take up the reduction in local authority lending enforced by the previous year's Public Expenditure Survey Committee, but the hon. Member must think carefully if he is urging me, on behalf of his constituents, to increase public spending and the public sector borrowing requirement—because that is the implication of his question.

Is my right hon. Friend aware that if tax relief on mortgage interest were restricted to the basic rate there would be a saving of £80 million a year? Does he recollect that last year we were told that the relief would not be cut back in the Budget, because of a Department of the Environment reason relating to the building industry? Has the Department of the Environment this year opposed the restriction of that relief to income tax at the basic rate?

If there were to be a change in this area, of course it would require conversations with my right hon. Friend the Chancellor, and it would have to conform to the timing of whatever measures were put forward at the time of the next Finance Bill. Our consideration of the timetable is related much more to the housing finance review.

Will the right hon. Gentleman confirm, in relation to one of his earlier answers, that he has no power to direct building societies to lend to any individuals or to any sector of the housing market?

I am not certain what my powers are in this respect, but now that the hon. Gentleman has put that question I shall inquire further. I think that by far the best way of proceeding, however, is by co-operation and good will between the Government and the building societies.

Has it occurred to my right hon. Friend that, if Opposition Members in the third row below the Gangway got their way and we had a £ Scots and a £ sterling, building societies would be faced with mind-boggling problems of disentanglement and extreme cases of difficulty when an English customer was based in Edinburgh or a Scottish customer in London, or elsewhere in England?

I agree with my hon. Friend that there are so many areas in which the Scottish, English and Welsh economies are interwoven that their separation would be so enormously complex and difficult as to be self-defeating, in terms of the objectives of those who advocate such a course.

Is my right hon. Friend aware that there is positive evidence that discrimination is being exercised by building societies against certain areas? Is it not time that the Government took some control of building societies, in order to ensure that money is channelled to places where it is most needed?

I agree that it is terribly important to get as much building society money as possible into inner city areas, but we should have a basis of fact before we start drawing conclusions. If my hon. Friend has any additional information, I hope that he will send it to me.

Is the right hon. Gentleman aware that the £ Scots with the basis of a healthy Scottish balance of payments—and our nation is now self-supporting in terms of oil—will be very much healthier than the English pound when we gain independence?

That question does not deserve a reply.

I beg to move, That the clause be read a Second time.

With this clause we may also take New Clause 9 (Reduced rate of tax for pension funds).

We had a long debate yesterday on the situation of charities affected by the Bill. Not surprisingly, we have come across similar problems in dealing with pension funds. New Clauses 6 and 9 relate to the position of pension funds and their treatment in respect of development land tax.

New Clause 6 seeks to bring the position of the pension funds more closely into line with that of charities purely as regard to the holding of land prior to 12th September 1974, the date of the White Paper dealing with land. New Clause 9 seeks to introduce a preferential rate of 10 per cent. for realised development value in relation to pension funds.

In Committee we moved amendments seeking to exempt pension funds entirely from development land tax. Had we been successful, we would not have brought forward a new clause in this form. But if we cannot exempt pension funds from this tax we wish to draw attention to the damage which will be done if they have to suffer tax at the rate of 66⅔ per cent. or 80 per cent. or an even higher rate. We suggest that a very much lower rate should be applicable to pension funds because of their special circumstances.

Superficially, in some ways pension funds are similar to charities and many of the same arguments apply, but I must point out that there are some fundamental differences. The Minister of State, when replying to the debate on charities last night, said that not all charities were likely to invest in property or to possess property which for various reasons might in due course become subject to development land tax. That is true. Many do not invest funds in that way at all. They collect income from donations or subscriptions and distribute it, and they do not necessarily have any investments of their own. Therefore, they need to invest in property does not arise.

In the case of pension funds we are dealing with an entirely different type of body whose function is to gather together the savings of a large part of the community and channel them into investment in various forms. One of the main areas in which these bodies have sought to invest their funds over recent years has been property and land. Therefore, they will be very much affected by the provisions of the Development Land Tax Bill.

Before we go any further, it would be right to draw attention to some of the statistics of the pension fund movement. It is impossible to obtain up-to-date figures because the preparation of the totals is usually several years out of date. During our proceedings in Committee, the Minister drew attention to figures produced by the Government Actuary which reflected the situation in 1971. Even then 49 per cent. of employed people in this country were beneficiaries of pension funds, and it was suggested that since that time the proporion was likely to have risen. With that I would certainly agree.

In 1974, when it was a question of whether pension funds were to be taxed for the purposes of the development gains tax legislation then under consideration in the 1974 Finance Bill, some figures of an informal hut, no doubt, accurate kind were prepared by the National Association of Pension Funds. They have been quoted at earlier stages of this Bill. However, they bear repeating again because they are dramatic. At that time—nearly two years ago—the National Association of Pension Funds had over 60,000 separate pension schemes in operation. They embraced more than 12 million members, of whom, I am glad to say, I am one. Those 12 million members do not include dependants such as I have in the Gallery this afternoon. I suspect that many working peopde, both in this House and outside, also expect to benefit from their pensions in the fullness of time. The 12 million members of the pension funds represent a substantially greater figure of potential beneficiaries, and this figure is a high proportion of our total population.

Of those 12 million members, some 2 million were estimated two years ago to be already in receipt of their pensions. Thus the pension fund movement, which did not get off to a very rapid start but built up quickly in the 1950s and 1960s, and particularly latterly, has already reached the position where it is supporting a considerable number of our fellow citizens in their retirement.

could my hon. Friend clarify one thing? I was not quite clear about the 12 million people who are part of the pension fund movement. Is he saying that over and above that number there are perhaps another 12 million people, including wives or children, who may benefit from the pension funds?

I am grateful for my hon. Friend's intervention, because if there is any doubt on this matter it should certainly be cleared up. The 12 million I quoted are the actual members of the funds. As I was saying, if all those who belong to pension funds have wives, families or other dependants, we are indeed talking about a much larger figure. We might even double it if we assume that each retirement pensioner who benefits from a pension fund has at least one dependant who relies upon that same source of income. It is a considerable proportion of the working and retired population whose pensions have been invested in pension funds and are still being invested, week by week, month by month and year by year. The number of participants in the pension funds is growing.

It is impossible to quote up-to-date figures. My attempt to do so for the purposes of this debate has met the recurring problem of the difficulty of gathering statistics, except those which are considerably in arrear. This is one of the problems which the Government face as they are not able to quote figures later than those produced by the Government Actuary in 1971.

When we turn from the number of beneficiaries to the amount of money being invested, it will be seen that the sums are also dramatically large. Again, quoting figures from 1974, my information is that at that time there was approximately £24,000 million in the pension funds. Half of this money was in respect of self-administered funds relating to particular companies, and a similar figure was in insured funds operated by insurance companies and on a contracted basis for the benefit of companies which did not wish to run a specific project for themselves. At that date it was estimated that the amount which had been invested in property was of the order of £4,000 million. Those sums represent not only a substantial proportion of the wealth of the community at large but a very significant amount of the funds available for investment in industry, property and so on.

I have alluded briefly to the growth of the pension funds, and I should like to say a further word about this. It has been one of the interesting developments of recent years that more and more companies have decided that they wished to improve the retirement prospects of their employees. That is a desirable change for both social and financial reasons. It is true to say that the energy of the private sector in developing pension funds for its employees has been a notable factor in prompting successive Governments to introduce improved earnings-related schemes for those who are not beneficiaries of private sector pension schemes.

It is fair to say that the initiative was taken by the private sector and that this has had an advantage not only for all those who work and who save for their retirement in the industries or companies concerned but for the community at large as a result of the effect which this movement has had on the attitude of Governments towards their responsibility for retirement pensioners.

To levy development land tax on the assets held by pension funds in their property portfolio would breach a traditional exemption in very much the same way as we were discussing last night in the case of charities. In this respect, the tax position of pension funds is similar. Of course there are technical exceptions, as has been pointed out. If charities or pension funds were to engage in trading, they would be subject to taxation on their trading activities. However, in no other sense have pension funds been subject to taxation. We are dealing again with a major breach of principle as, I am afraid, we were faced with in the case of charities.

Pension funds do not date back to the days of Henry VIII as charities do, simply because in those days they did not exist. I rather think that King Henry VIII had other ways of dealing with those of his dependants whose work was done. Sometimes his methods were rather sharp.

I appreciate that his ways were sometimes rather sharp, but usually not with pensioners. There were many almshouses in existence then and that was an effective way of dealing with pensioners. Those who run them, of course, are now prejudiced in their activities by the Government's action on charities.

My hon. Friend's interventions are always helpful to me. He has assisted me in making the point that there is little difference between pension funds and charities in this context. I have no doubt that almshouses provided by private charities would have been suitable homes not only for the pensioners of Henry VIII but for any of his other courtiers who wished to shed their dependants. However, in terms of history, charities are not such a good precedent for pension funds, because they did not come into existence until modern times.

Ever since the early 1920s, when pension funds became a material factor in our lives, they have been exempt from these taxes. It is an unfortunate break with tradition if we now enact legislation to impose this new tax, and at such high rates, on the assets of pension funds. I suppose that they have been exempt in the past partly because they are praiseworthy bodies helping large sections of the community, just like charities, but partly because the income generated from their resources is taxed in the hands of the recipients. With the increased rate of tax now biting on so many pensioners with even the most modest of other incomes, this is a matter which the Government will no doubt recognise.

It is only two years since a Labour Government decided not to impose development gains tax on pension funds. The original proposals in the Finance Bill 1974 suggested that development gains tax should apply to the assets of pension funds, but strong representations were made and the Government, with good sense and perhaps reasonable generosity, eventually decided that pension funds should not suffer the tax.

It is sometimes said that the development gains tax is a Tory tax. Of course, it is based in many respects on the statements of Lord Barber in September 1973, but it was brought forward by a Labour Government and any changes made between the original proposal and enactment reflect the thinking of the Labour Government of the time. They felt, I am sure rightly, that pension funds should not bear that tax. Yet development land tax is now being introduced to replace development gains tax, and it seems only right that it should inherit that exemption a pension funds.

No doubt another reason for this exemption of pension funds is the recognition by Governments of the need for pension funds to be able to protect their incomes against the ravages of inflation. Whether it is 30 per cent., as last year, 15 per cent., as this year, or whatever it may be next year, such figures are very hard to attain. Under Governments of all complexions there have been periods of dividend control that have limited the amount of income from investment in equities and ordinary shares.

There has always been a difficulty in achieving a yield from Government securities and gilt-edged stocks anywhere comparable with the rate of inflation. There has been a negative yield for a considerable period now when rates of inflation have been very high. Therefore, among other things, the pension funds have looked to their investment in property for one of the sources of income to support the retirement pensioners.

Would not my hon. Friend agree that part of the purpose is to guard against inflation, which is another factor to be taken into account?

Certainly it is to guard against inflation. Although the pension funds have a very good record in the rate of benefits which they have been able to pay, this has been made much more difficult in the last year or two and many funds have had to be topped up by contributions from the companies for which they are operating in order to maintain the flow of income.

That is particularly so, is it not, with the large clearing banks? I think that in one instance a pension fund has had to be topped up by as much as £18 million or £19 million.

My hon. Friend is absoslutely right. This illustrates the difficulties of pension funds in keeping pace with their income expectations at a time of inflation. The reason that pension funds have invested a considerable proportion of their investable funds in property is that over the years, despite periods of rent control and recession, taking one year with another over a considerable period, the rents of industrial and commercial property have more or less kept pace with inflation and have sometimes even gone ahead of it. It is the expectation of rising income from rentals that has led pension funds wisely to put much of their money into the property market.

In doing so, they have also brought great benefit to British industry and commerce. Those who build factories, offices and shops are often reviled because of the windfall profits that may be made—that is what the Bill is supposed to be all about—but those who provide long-term investment funds to create that sort of property are not making windfall gains. If they are taxed on the basis of long-term investments, their investments will produce a lower yield or they will have a lower total volume of funds available to produce an income in future.

Many of the larger companies believe not only that their pension funds are of value to their own employees but that they are important for the provision of capital for the infrastructure of Brtish industry and commerce by their investment in property of this kind. After all, they have a primary duty to look after the interests of their pension fund beneficiaries. I have here a letter, addressed to my right hon. Friend the Member for Crosby (Mr. Page) from the manager of the pension fund of one of the largest companies in the country. He shows this concern very well:

"The effect of this new tax will be that the substantial investment in property by pension funds will not make as large a contribution as expected to the provision of retirement benefits to employees, and, inevitably, this short-fall will need to be made good not only by the companies providing these retirement benefits but, in the long run, by the employees who enjoy them."

The employees who enjoy them are of all kinds—male and female, manual and non-manual. In Committee, the Minister of State quoted figures based on the Government Actuary's totals for 1971 suggesting that there were imbalances between manual and non-manual, between male and female and so on.

But that is in the nature of employment. The continuity of job over a long period, such as is suitable for contributors to pension funds, is greater in non-manual trades. Because of the facts of life, in spite of recent legislation, men hold jobs of this kind for longer periods than women. So these discrepancies are not surprising. They merely reflect the present pattern of employment.

But it is important that we should not in this way reduce the available investment funds for industry. The Chairman of the Investment Protection Committee of the National Association of Pension Funds, writing to the Minister last December following the passing of the Community Land Act when proposals for the development land tax were made, put it in these words:

"The imposition of this tax on pension fund trustees will result in a progressive depreciation of the property assets they hold. The trustees will have their long term commitments to pay retirement benefits to the 12 million or so work-people; but as a result of this legislation, a significant proportion of their assets will have been depreciated in value. The money needed to make up for this depreciation can only come from the revenue of British industry. The consequence will be, at least, reduced resources available for reinvestment in the employing industry, with all that entails for the trustees and everyone else, and, at worst, increases in the costs of goods and services (more per ton of steel, more per unit of electricity, more per therm of gas, etc.) thus further fuelling inflation."

Those are serious worries about the effects of imposing development land tax on pension funds.

The Government have adduced reasons for imposing such a tax on pension funds. One seems to be that somehow investment in property or a factory is bad, but investment in the company that conducts the industry inside the factory is good. There is a remarkable statement on record about that matter made by the then Under-Secretary of State for the Environment. He said:

"It is far better that investment takes place in manufacturing industry and not in speculative ventures as it has done in the past. If the Bill goes some way towards redirecting pension funds into manufacturing industry, it will have a spin-off which will benefit the country".—[Official Report, 12th November 1975; Vol. 899, c. 1468.]

That, perhaps, is the key to Socialist thinking on this matter. The Opposition believe that if it becomes impossible to build factories and offices, it will be impossible for companies to operate within them.

The Government's second reason is that pension funds do not benefit everyone. But neither—although I say so with some trepidation—does the Letchworth Garden City Corporation, although that does a great deal of good for many of my constituents. I am delighted that it is included among the exempt bodies in the Bill.

All kinds of local authorities, charities and pension funds bestow benefits on the community in a collective sense, although those benefits may not be available in equal amounts or in an equal way to the community as a whole. However, they all contribute—this is their common virtue—to large numbers of people. Whether those people are classified by the locality in which they live or in the industry in which they work does not seem to me to be a material difference.

It was pointed out that a charity for the benefit of railwaymen would gain exemption for the purposes of White Paper day land but that a pension fund for the benefit of railwaymen would not gain such an exemption. Yet a pension fund is much more likely to distribute benefits broadly across all railwaymen and the charity is more likely to be selective. The logic of the Government's thinking is upside down.

Early in our consideration the Minister of State said that charities were somewhere between local authorities and pension funds. He tried to imply that there was some kind of descending order of virtue in the various bodies that served the community. Local authorities have complete exemption. Charities benefit from some minor concessions in the Bill. But pension funds are very much the "tail-end Charlies" in the race. Unless we are able to do something for them in this sense, they will suffer grievous injury in the years ahead from the application of the development land tax.

4.15 p.m.

Separate problems are represented in the two new clauses. The first relates to land held by pension funds in 1974. In spite of a recent well-publicised case in Sussex, it is not normal for pension funds to enter into highly speculative situations. Pension funds on the whole have become a major source of finance for development on a continuing basis, including residential and other kinds of development. The expected improvement in value to which they looked through eventual development was part of the arithmetic of their original investment. They could not have anticipated the details of this legislation. Nor could they have anticipated that the Government would have been so insensitive as to impose development land tax on them. Therefore, many of the acquisitions that they made before that date could not have occurred in anticipation of the imposition of this tax.

I stress that it is more important in the longer run that pension funds—as we have argued for charities—should either be subject to no tax on their development or to a low rate, such as the 10 per cent. that we suggested. They look towards the maintenance and improvement of their income in the longer term by means of redevelopment in due course.

I should like to quote some remarks in this context which were made by the Chairman of the Land Sub-Committee of the National Association. He writes:

"In the market as it was prior to the White Paper Day the prices paid by the Pension Funds generally reflected the prospect of such enhancement in income flow, and this was part of the background which induced the Pension Funds to invest. Except for the 10 per cent. tolerances, the present provisions of the Bill will mean that in order to obtain this enhanced flow of income on redevelopment the Funds will have to provide (as well as the building costs) an additional payment to meet the DLT which will arise on the commencement of the development."

Yesterday the Minister said that if the charities were to suffer the tax, that was just one of those unfortunate facts about the future that they must take into account. I suspect that he might say the same about pension funds. But that is rather like saying to a condemned man, "You may have to change your thinking about the future, as you will not have time for lunch."

The Minister said that this was a longer-term problem because the tax would not take effect until the pension funds redeveloped their properties. But this is also an immediate problem in a real sense. At the end of the day, such properties will have a lower value on the market and a lower value as investments. That means that there will be a need to amortise their value over the life of the investment out of the income that they generate in the meantime. Therefore, from now on their income will be reduced by the need to write off at least a part of the cost in the coming years. Therefore, this is not only a long-term problem. It is a problem the effects of which will begin to be felt fairly soon.

The pension funds have become a much more important part of the scene in recent years as a result of the growing need to provide retirement pensions. But their importance has been accelerated by company tax legislation and the demise or the weakening of the position of the property companies. I cite the well-publicised case of Artagen Properties Limited, for which one of the insurance companies made a bid. It is predicted that many of the property companies might end up in the hands of insurance companies. However, insurance companies, like pension funds, are now becoming the main means of channelling private savings into investment in the private sector. That is taking place on a growing scale.

I am delighted that the hon. Member for Liverpool, Walton (Mr. Heffer) has come into the Chamber. The hon. Gentleman missed most of these words of wisdom, but I promise that if he listens attentively he will be convinced of the importance of exempting pension funds from development land tax.

Why are pension funds to be burdened in this way? They were exempted, after due consideration and careful thought by a Labour Government, from development gains tax.

Yesterday, I felt a little sorry for the Minister of State in the debate on charities, because I thought that he was defending the indefensible. It seemed to me that sometimes he was doing so against his own personal judgment.

If my hon. Friend reads the Minister's speech, he will see that the hon. Gentleman did not even bother to defend the indefensible.

I was trying to be a little more courteous than my hon. and learned Friend, but the point is not lost.

I suspect that today, like most reasonable people, the Minister will again be with us in spirit. These proposals can only have come about because the whole of the Bill lies under the evil shadow of the community land scheme.

Development land tax is not a genuine tax in the way that we understood taxes in the past on capital and gains. It is a transitional levy. I believe that the Government intend to make as few exceptions and exemptions as possible in case they impede the progress of the community land scheme. But the Government should think again, because by failing to respect the claims of pension funds they are again showing that they are influenced more by doctrine than by reason. To bring pension funds within the scope of this tax is not only socially retrograde but will be financially harmful to millions of beneficiaries of pension funds. Economically over the coming years it will be a far-reaching constraint on the supply of funds available for new factories, offices and shops and all the other properties in which future generations will need to work and go about the business of their daily lives.

I hope that these new clauses will commend themselves to the House.

Looking at the Government Benches is rather like looking at a desert with two palm trees. I confess that the hon. Member for Liverpool, Walton (Mr. Heffer) is a very bulky palm tree and gives plenty of shade, but I wish that more of his hon. Friends would come in to listen to the debate, because this matter affects many of their constituents just as much as it affects many of mine.

North Fylde is a retirement area. We have not only retired civil servants—because we have a big civil service establishment there—but many people who rely on pension funds for their pensions. There is a growing difference between these two categories of pensioners. The civil servants now have inflation-proofed pension funds, as we have in the House. That is very different from the situation of others who rely on industrial pension funds.

I must declare an interest. As well as having a pension from the House—I hope—I shall also have a self-employed pension. Therefore, I may be directly involved.

I dare say that the Minister will say, as he said yesterday, that the objective of this legislation, as of the Community Land Act, is to return to the community the betterment value when land is sold. That was his main reason for opposing the exceptions or the deferment for charities, about which we were arguing yesterday.

The hon. Gentleman will no doubt say that if we give this concession to pension funds, we shall be denying to the community the benefit of the betterment that the community has created. The community does not work very hard to create this particular benefit. It merely draws lines on maps. It does no more to develop the land in that way than anybody else does.

The Minister for Planning and Local Government told us that the Bill and the Community Land Act were based on the community making great profits from the sale of land. I think that at one time the right hon. Gentleman said that for every £1 million for which the State bought land, if could expect to get £4 million when the land was sold. Those poor souls who voted for the Labour Government in the hope of getting cheaper land will be very disappointed, because the land will be the same price as if this scheme had not been introduced. The Government have based their plans for what they are to get out of development land tax and the profits that will flow from the sale of land on the days when land and property prices were leaping ahead.

If the Minister argues, as he did yesterday, that it is unfair to exempt pension funds because the community will not get the benefit, we are entitled to argue, on the same lines as we did regarding charities, that many millions of people will benefit if the new clause is accepted. It would be of some comfort to them to know in these days of great inflation that there was a provision in the Bill to enable them to get better pensions.

It is fair to say that millions of people will benefit. Those employed by the State have no need to worry about these matters, but those employed by industry have a great deal to worry about.

In addition, the more effective the pensions given by pension funds, the less pressure there will be on the State and on public spending to make up the difference. Any move in these inflationary days that will make it more difficult for the pension funds to pay these pensions is to be deplored.

It is common knowledge that many firms are having great difficulty in topping up their pension funds to keep pace with inflation. In some instances they expect that in a few years, if inflation continues at its present rate, they will be paying as much for pensions as for the salaries and wages of their employees. That cannot go on.

I suggest that a good argument has been made for these new clauses. We are talking not about a tiny group but about a very wide range of people, including many trade unionists, who are looking to the House to do something that will not reduce but increase the value of their pensions.

I congratulate my hon. Friend the Member for Hitchin (Mr. Stewart) on moving the new clause so clearly and with such modesty. I fully support him.

I congratulate my hon. Friend the Member for Hitchin (Mr. Stewart) on introducing these new clauses. I apologise for not having been present when he began his remarks. I was still in the Library and was caught unexpectedly by the speed with which we started today.

I am reminded by my hon. Friend the Member for North Fylde (Mr. Clegg) that this is yet another matter in which one should declare an interest. I am the possessor of a self-employed deferred annuity and a potential beneficiary from a pension fund. The number of occasions on which we have to declare an interest under the different headings in this legislation is an indication of the large numbers of people who, much to their surprise, may find themselves adversely affected by this measure.

I have been reflecting on what the Minister of State is likely to say in his usual charming way in reply to the debate. I suspect that he will say, as he did yesterday when we discussed charities, that there is a gulf between us. My belief in the likelihood of the hon. Gentleman saying that was reinformed when I looked at what he said in Committee. He said probably exactly what he will say today:

"We had a long and interesting debate on these amendments. I do not want to pursue the arguments again. There is a gulf between us."

Like the Minister, I do not wish to repeat the arguments, even if I am still left a little puzzled about the nature of the gulf between us. But, looking further forward, I find that the hon. Gentleman made the following mysterious statement, presumably about the gulf:

"We have the local authorities at one end, pension funds possibly at the other, and Churches falling in the middle."—[Official Report, Standing Committee J, 29th April 1976; c. 730–3.]

I do not know whether they were collapsing for want of funds in the middle of the gulf but I am interested in the words "possibly at the other". I do not know whether the Minister was still a little undecided, at least at that time, whether on reflection he could relocate pension funds at a more favourable end of this gulf, spectrum or whatever it was to which he was referring.

The Minister and some of my hon. and right hon. Friends may be aware that I am not entirely in sympathy with the suggestion that we should have entire relief for pension funds from the provisions of this tax. There is always a risk in creating specially privileged classes of developer, and I expect that I might carry my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) with me on this aspect of the matter.

4.30 p.m.

We have to recognise, however, that with charities we have a situation that is not as satisfactory as we would have liked as a result of last night's proceedings—and charities have exemption in respect of land that they held as at 12th September 1974. As my hon. Friend the Member for Hitchin has pointed out, there is very little difference between the activities of pension funds and those of charities in the sense that pension funds are devoting their funds to a particular aspect of the much more widely-ranging activities that are carried out by charities. One could well have sheltered accommodation—as such provision would be called nowadays, rather than "almshouses"—provided by a charitable fund, and there is such provision by charities. This is almost directly equivalent to the provision for the pensioner which is made by pension funds.

There must, therefore, be a very strong case for arguing that pension funds should have at least the same exemptions from the provisions of this tax as charities have, because, if not, we have created a privileged class the other way round. It is my impression—and I am sure that my hon. Friends will correct me if I am wrong—that whereas against that background I might find that New Clause 9 goes perhaps too far, New Clause 6 seems to be entirely logical in its wording in giving pension funds this exemption in respect of land which they held on 12th September 1974. The Minister argued, as far as he was able to do so—and I shall try to be as charitable as I can about his arguments in the debate on New Clause 1—that we must be particularly concerned with anything which could have an adverse effect on industry. May I quote his words during yesterday's proceedings? He said,

"We do not want anyone to suggest that we might have impeded industrial development by our proposals."—[Official Report, 22nd June 1976; Vol. 913, c. 1456.]

It was interesting phraseology. He was saying that it does not matter if we actually impede industrial development by these proposals but that if one suggests that that might have been done it becomes very unfortunate. But, being charitable, let us assume that in the excitement of the moment it was merely the words that were wrong and that the Minister wanted to ensure that industry was in no way impeded by his proposals. I take it by his nod that I am correct in that interpretation. Has he, therefore, reflected that to the extent that the assets of pension funds are reduced by the the imposition of DLT on their property holdings, they will have less income with which to meet their responsibilities and liabilities to pay pensions to their beneficiaries, and that as a direct result of this, many companies will have to make further transfers from their cash resources to their own pension funds to enable those pension funds to continue to meet their liabilities?

The proposals for taxing pension funds will directly affect the cash flow of British industry adversely. One of my hon. Friends has referred to the number of occasions on which substantial industrial concerns have had to make very substantial transfers to their pension funds to enable them to meet their obligations and to continue to pay pensions. I know that the Minister has very little sympathy for retailing, but his hon. Friend beside him, the hon. Member for Edmonton (Mr. Graham), might be expected to have more sympathy with retailing even though he has not yet been able to show it in the Lobby. There was a recent example of the best known retailer in this country making a very substantial transfer to its pension fund to enable it to meet its obligations.

I would ask the Minister, therefore, to consider that aspect of the proposals. Not only have we the aspect of the equity of the matter as between charities and pension funds on land holdings at 12th September 1974, but we have also to reflect on the adverse effect of the Minister's proposals on the cash resources of British industry and commerce because of the obligation which companies might have to meet for their pension funds as a result of this legislation.

My final point is one on which I need not enlarge because it has been so ably covered by my hon. Friend the Member for Hitchin. In my own constituency, and I am sure in the constituency of everyone in the House at this time, there are many people who, although they are unaware of it, are deriving their pension from the skilled property management shown by pension funds of which they are beneficiaries. I wonder whether the Minister could say why it was that in all the frequent references by his party to their proposals in respect of the Community Land Act on this proposed form of taxation, which were always laudatory, they did not draw the attention of beneficiaries of pension funds to the adverse effects of their taxation proposals. Could it be that we ought to look again at the Trade Descriptions Act to see whether the disadvantages and reduced benefits from some of these proposals should be referred to, even if in only small print?

I should be very interested to hear from the Minister of any statement or reference in any publication emanating from his party which drew the attention of pensioners to the adverse effect on their pensions that could result from DLT. I wait with interest to see whether the Minister will receive advice from above or below the Gangway, or from the Box, on this point. I should be very happy to give way to any hon. Member who could give me some information on this point, but I am afraid there is none forthcoming. Again we have an example of legislation presented as being in the interests of the community but which, when we look at how it affects individuals in our constituencies, is seen to have an adverse effect. To me, that alone is sufficient reason to support my hon Friend in this clause.

I, too, must declare an interest as being a future beneficiary—I hope some way ahead—of a pension fund.

I am rather amazed that throughout the whole debate we have had on the Government side of the House only the Minister and the Whip present—although recently we have been honoured—and still are, admittedly—by the presence of the hon. Member for Liverpool, Walton (Mr. Heller), the hon. Member for Luton, East (Mr. Clemitson) and the hon. Member for Liverpool, Garston (Mr. Loyden). When we talk about pension funds, which affect the old more than anyone else, and as the Labour Party always, quite rightly and understandably, makes a great play for the old and wishes to give them every possible support, it is amazing that throughout a debate such as this we should have only three Labour Back Benchers and two Labour Members on the Government Front Bench. It is quite extraordinary.

Is it not even more surprising that the Scottish National Party, which bases its advertising on the terrible plight of the old in Scotland at the hands of the English being deprived of the oil revenues, should not worry whether they get good pensions?

I am grateful to my hon. and learned Friend. One notices also that Liberal Members are apparently totally uninterested, for they have not been present during the whole debate. I am most surprised about the numbers on the Government Benches, because Labour Members of all people will talk about pensioners, and there are so few Labour Members present. Admittedly, those who are present make up in quality for the quantity that we are lacking.

The point has been well put by my hon. Friend the Member for Hitchin (Mr. Stewart) that there are a substantial number of people who stand to benefit from pension funds. When I intervened in my hon. Friend's admirable speech, he pointed out that there were 12 million people who would directly benefit. But, of course, they will have at least one and possibly two dependants who will, therefore, indirectly benefit. Therefore, however one looks at it, the future of pension funds in Britain is very important, indeed. Many people will be affected.

I would contend that the Government do not really like pension funds—exactly as I contended last night concerning charities. The Government prefer the State to do what a charity does, or what a pension fund might do for an individual or a family. That is why the arguments which have been so cogently and so well put, in Committee and certainly in the House today, fall on stony ground. At the bottom of their hearts, Labour Members do not really mind whether pension funds continue to exist.

My hon. Friend has said that the Government do not appear to be interested in pension funds. Perhaps they are not aware that the coal miners have very large pension funds, most of which are in property.

I am certainly aware of that. Many trade unions have large pension funds invested in a multitude of different things, including property. I gather that some are buying old master paintings nowadays.

I return to the main point. If the pension funds industry is in a healthy condition, that will inevitably save the Government money. The argument that will come from the Minister—we have heard it previously and no doubt we shall hear it again—is that Whitehall is better at taking out the money and distributing it. But that costs money and will, therefore, increase the public sector borrowing requirement. It is much better that the private sector should be coping with those who stand to benefit from pension funds rather than the public sector.

4.45 p.m.

Having listened to the Minister quite carefully last night, and yesterday afternoon, I have a suspicion that he is not really proud of this Bill but is a little ashamed of it. I have that suspicion because I am sure that there will be no doubt towards the end of this debate that those of us who have argued in favour of pension funds being either partially or totally exempt have won the argument, as we did with charities. To a certain extent I think that the Minister would agree.

The reason why I say that the Minister is ashamed of the Bill is that he knows in his heart of hearts that if he made one small breach in the dam, or two or three small breaches, certain exceptions which should be made for genuine and good reasons, the principles on which he bases the Bill would come flying down and there would be no need for the Bill at all. Perhaps on this new clause the Minister will see that there is a point in making an exception. He is not very proud of the Bill. Although we shall not expect him to demolish all the arguments that he has been deploying in Committee, or to abolish the Bill, we expect him—because we think that we are winning the argument—to make an exception in this case for pension funds.

As I have said, not least the Labour Party, in terms of getting votes, plays for the older vote. So let us have a decision that will substantiate that policy and not just total unwillingness to accept the new clause.

I must start by declaring an interest as a potential beneficiary under a self-employed person's pension scheme. The House may well reflect that for all of us there is a deep desire to combine the right personal balance between risk and security in life. In some parts of our life we want the excitement and the uncertainty of risk and endeavour. We want the excitement of knowing that perhaps at the next General Election we shall be thrown out, or that perhaps after the end of a particular building contract we may find that we have to look for another job.

There is no excitement in that.

There may be some excitement if it is compensated for by high wages in the short term. I suspect that there are many people who are high wage earners—for instance, bricklayers in a period of boom—who would say to themselves "I do not want a steady job. I would rather be an entrepreneur and make a lot of money sometimes and on other occasions run the risk of being unemployed."

Perhaps I may advise my hon. Friend. I get absolutely no pleasure from any concept of thinking that my seat is at risk, and I prefer to make high wages all the time.

By his very presence in the House my hon. and learned Friend demonstrates that he does not live by the precepts that he puts forward. He left a steady job to take the risks of coming here. All of us take risks here.

The other side of the coin is that we wish to have security. We are not alone in wishing to have security in our old age. It is a deep feeling that every human being has. The fact is that when the Government try to attack the security that all of us want in our old age, they will find that, as a compensation, each individual will be less prepared to take risks during his working life. He will be less and less prepared to be an entrepreneur, a high-wage earner—perhaps a high-wage earner at the tax Bar—or a high-wage earner in any other of the various activities in which those of us who take risks have to work.

Are not those two facets, risk on the one hand and security on the other, exemplified by the two contenders for the leadership of the Liberal Party?

I do not wish to comment on the characters of those two contenders. However, there is this extraordinary paradox of wanting both risks and security. If we attack the security of 12 million of our fellow citizens and say to them "We are going to take away the hope that you had of a modest competence in your old age", they will be more and more disinclined to take risks in their work. They will come more and more to the State and say "Prop up our unprofitable job", or "Prop up our particular factory or industry", and they will be less and less prepared to come out and fight vigorously for a high-wage, high-profit, high-risk economy.

The Government's proposal cuts into the security of 12 million of our fellow citizens. As I look at the almost vacant Benches on the Government side of the Chamber, I reflect that the 12 million potential beneficiaries of those who join the 60,000 pension schemes under the National Association of Pension Funds, together with their dependants, are a greater number than all those who join the Trades Union Congress. Only 10 million people are associated directly or indirectly with the TUC. The National Association of Pension Funds did not join in the corporate State meetings that occurred at various Government places. They did not talk about the unacceptable face of capitalism. They did not talk about being unprepared to accept any cuts in Government expenditure. All they asked was to be allowed to go on providing for the security of their fellow citizens.

Our plea is not a plea for the nabobs of the City, or for the CBI, or the gaffers. It is a plea for the ordinary working people who are prepared to work to provide for their families for perhaps 40 years. They want only the dignity and security of providing for their own old age. Such potential beneficiaries will be attacked by the development land tax.

Let us examine the way in which the average pension fund is invested. In broad terms it is invested in three ways: one-third in equities, one-third in gilts, and one-third in property. Equities have become less and less valuable because of price control, dividend restraint and the vigorous attack on private enterprise and the concept of private wealth that has been the centrepiece of the present Government's extraordinary relationship with the TUC. That part of pension funds has taken a bit of a knock.

The one-third invested in property has already taken a knock from the attitude not just of this but of the last Government. The one-third in gilts is probably the only part likely to enjoy an increased revenue in the next few years as the Government try in a non-inflationary way to fund their horrifying £12 billion borrowing requirement.

There is a reduction both in the asset value of pension funds and in their incomes. Their liabilities are becoming infinitely greater because they are related to the going rate of inflation and they are under an obligation to pay pensions related to the going rate of inflation or to the going wages at the time of payment. They are trying to fund increased liabilities with reduced income.

Last year the rate of inflation was about 26 per cent. This year we must anticipate that it will be between 9 per cent. and 12 per cent. It might be more, but I am trying to argue in the most charitable way and to put the case most favourable to the Government. Let us say that the rate of inflation will be 10 per cent. this year. On the average equity, a pension fund has a return of about 4 per cent. on its shares. How on earth with a return of 4 per cent. can it hope to fund liabilities that went up by 26 per cent. last year and will go up by 10 or 12 per cent. this year?

Pension funds will either have to turn to the employers—who are caught in the vicious spiral of inflation, the Price Code and other forms of Government interference and might not be able to assist—or they will have to bite into their capital reserves. Unless pension funds are treated in a special manner, many of those who wish to retire with the security and dignity of having provided for their own old age will become no more than pensioners of the State, which so many hon. Members appear to want.

They will be dependent not upon their own activity but on political action. By the 1980s they will be visiting the surgeries of Government Members. They will not be saying that they are relying on their own pensions but that their future security is in the hands of politicians. They will have to depend on the pressure that they can put on politicians for a modicum of comfort in their old age.

We are talking about the independence of private wealth and when one-third of the pension funds of 12 million of our citizens is being attacked, the Tory Party, which is preoccupied with independence and freedom, should be in the forefront of the battle.

I have to declare an interest, if it is an interest. I pay £3·16p a year in order to obtain a pension for my widow under an Act passed in the days of George III when the Scots were interested in their families' welfare. I note again that Members of the Scottish National Party are absent from the debate.

My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) put forward the real and human arguments in favour of the new clause. But there is a more realistic argument based on the ordinary practical facts of the matter which the Government constantly overlook. If one removes from pension funds part of their money, they will either not be able to discharge their obligations or they will have to obtain the money from some other source, such as Government subsidies.

The Government's unrealism is particularly irritating. The Government attempted, through the mouth of a delightful but completely unbelieving Minister, to argue on the basis of some principle. I have re-read the speech to which I listened in Committee. It is rare in our profession to be able to re-read one's own speeches and discover how ineffective and bad they were. In this case I am sure that if the Minister re-reads the argument with which he attempted to convince his jury, he will see that it is fallacious in almost every sentence.

5.0 p.m.

The hon. Gentleman's principal argument—that what the community gives it should get back—is a nebulous concept. If it has any validity, the obverse of the coin is that what the individual creates he should be allowed to keep. But the Government's philosophy is the reverse. If the individual improves his property, he is rated higher and he must pay more tax for his effrontery; but if the community gives him planning permission to do it, it should have a benefit from that as well. The philosophy is one of "Heads I win, tails you lose."

The Minister said in Committee:

"The argument is that pension funds are good … I do not seek to dissent at all from that assertion."

That is a major triumph of condescension. He went on to say:

"However, one should get this matter into perspective. Pension funds are not the only bodies that serve the community."

However, they happen to be one of the exempt bodies which serve the community, and the fundamental argument is that they should remain exempt and not have part of their present income removed for a spurious theory.

The Minister added:

"62 per cent. of male workers and only 28 per cent. of female workers were members of pension schemes. … It is in the nature of things no doubt."—[Official Report, Standing Committee J, 28th April 1976; c. 696–97.]

I do not know in the nature of what it is that more than twice as many men do what women do, but I think that that was just said as a pause for breath. The hon. Gentleman seemed to think that it was unfair that more men were members of pension schemes, without relating the matter to the number employed or the fact that women were covered by their husbands' pension schemes.

The Minister went on to say that the purpose was to restore to the community most of the benefits arising from betterment following planning permission. That is the supreme fallacy. We have a sort of biblical concept that the Lord gives and the Lord shall take away, that when an official in the planning office gives someone permission to put up a public lavatory, a sweet shop, or a bungalow at the bottom of his garden, that affects everybody else and is all to be taken away.

I read the Minister's speech right through again and underlined it all. He was compelled to advance the wettest, most non-committal argument possible, and he clearly did not believe in it.

The hon. and learned Gentleman should read his own speech in Hansard tomorrow.

I am glad that the hon. Gentleman is listening so carefully.

I always listen carefully to the hon. and learned Gentleman.

I am obliged to the hon. Gentleman.

The Minister advanced the spurious principle that what the community gives it must take away. The practical fact is that it means removing a large part of the funds from which pensions are now paid. The Government have no answer to those who ask what will take their place or what will happen on the retirement of the 12 million people who depend on them. What is so appalling—I except the Minister from this criticism—is that they do not care either.

I am grateful to the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) for reading my speeches and underlining the words. I try not to read my own speeches, and I shall try not to read what I said in Committee, but there will inevitably be a certain amount of repetition in this debate, as there was last night when we debated charities.

I begin by returning to the figures that I gave to the Committee, not to prove any point but to make clear that many people were not members of occupational pension schemes. Some hon. Members have implied that we are here concerned with the vast majority of people, all of whom are in such schemes, and that the Government were depriving all of them of benefits by charging pension funds to development land tax.

I said in Committee that in 1971, 49 per cent. of people were members of occupational pension schemes. The figure may now have gone over the 50 per cent. mark. We are concerned with half the employed population, which is a substantial number of people.

Does the Minister appreciate that in the local authority, which is his criterion for the community, more than half the people use less than half the services, so the same criterion applies?

I do not dispute that, but let us look at the breakdown of employed people. Sixty-one per cent. are non-manual workers and 35 per cent. are manual workers. We are concerned with a smaller number of manual workers who are members of occupational pension schemes. I am making the point that not everyone is a member of such a scheme. We are not seeking to impose an enormous burden on the vast majority of the people by introducing this taxing provision.

The hon. Member for Hitchin (Mr. Stewart) suggested that considerable damage would be done to pension funds. We are concerned only with taxing the betterment profit made by a pension fund. The fund will be exempt from capital gains tax on any investment that it makes. Hon. Members talk about investment. Betterment profit is not an investment, according to the normal meaning of the word. When one invests money, one receives a return from the investment. We are concerned with a betterment profit arising from the grant of planning permission. Normal investment in property and shares will still be completely exempt from capital gains tax, and pension funds can switch from one asset to the other, free of that tax. The funds have great advantages in respect of income tax, and they will continue even when the Bill becomes law.

The hon. Gentleman rightly said that if a pension fund engages in trade it is taxable at present. If the managers of a pension fund believe that they can profit on a piece of land by buying and selling it almost immediately, my understanding of fiscal legislation is that the profit is taxable. We are not breaching a substantial principle. The principle is that where the fund makes a trading profit, possibly a fortuitous trading profit, the tax is already levied.

We are concerned simply with the other kind of case manifested in the hon. Gentleman's example of the land in Sussex, where a fund buys land at current use value, possibly in the hope and expectation that planning permission will be granted, and then disposes of it at a considerably increased price. We are not concerned with the normal investment of a pension fund, because often that investment will be in property with high base values, where there is little likelihood of a betterment profit. Most cases caught by this legislation will be invested in green-field sites.

Not only green-field sites but development in towns will be affected by the Bill. The hon. Gentleman said last night, and has again suggested, that the gains in question will be speculative, windfall gains. That is a capricious view of the way in which local authorities make their decisions, suggesting some form of a lottery.

They are windfall gains, because they arise as a result of somebody else's action in granting planning permission. A pension fund would pay tax on the betterment profit in most cases where it had invested in land with a low value and then planning permission had been granted.

That is the sort of situation with which we are concerned. I suggest to Opposition Members that there is a good case for saying that such windfall profit, whether it is made by a pension fund, a property company or an individual, arises not from anything done by the investor but from a purely extraneous act by the local authority.

In his concept of fairness, does the Minister agree that it would be a good idea if the Treasury were to make up the loss that a pension fund makes on an investment on the basis that it has been made a windfall loss?

No doubt the hon. and learned Gentleman will be present at a later stage when we discuss losses in relation to development gains tax. No doubt he will be able to deploy his arguments in those discussions.

The hon. Member for Hove (Mr. Sainsbury) felt that there would be some discrimination if we gave this relief to pension funds. He felt that there might be some discrimination between the pension fund that owns land and sells land and pays no tax, and other bodies—for example, property development companies which seek to develop and which would have to pay tax.

I did not use the two-tier market argument in relation to charities, as I did not think it was the best one to deploy, but here we can use it. If we give this exemption to pension funds that are in the property business—some of them are in it in a big way—we are discriminating between the pension fund that will pay no tax and the normal property company that will have to pay tax at 80 per cent. That is the discrimination. Surely that is a distortion of the property market that Opposition Members would not wish to see.

Does the Minister recall that it was because of that effect that I said that New Clause 9 was not entirely supportable, and that New Clause 6 seemed to meet the point that I was making, and that the Minister has outlined to the House—namely, that charities and pension funds often carry out much the same operation?

I am glad that the hon. Gentleman goes some way towards agreeing with me and crossing the gulf that at an earlier stage he did not think existed. At least he has admitted that it is a fair point. By accepting New Clause 9 we should be creating a two-tier property market that would discriminate against property companies in favour of pension funds. Surely Conservative Members would not favour that situation. It does not seem to be favoured by the hon. Member for Hove.

Does the Minister appreciate that his argument can be used against an exemption for pension funds from income tax and capital gains tax, when earlier he gave an undertaking that those taxes would remain exempt as regards pension funds?

That argument may well be used, but, as I have said, pension funds will not be charged income tax or capital gains tax. If we were considering these matters from scratch and considering them academically, that argument could be used in relation to those two taxes. As regards development land tax, I believe that I have put forward a strong argument, although it does not seem to have been recognised as such by Opposition Members, apart from the hon. Member for Hove.

New Clause 6 seeks to give the same kind of relief to pension funds as is given to charities—namely, exemption for land owned on 12th September 1974. As I tried to argue in Committee, there is a difference between a charity and a pension fund. I accept that there is little difference between the Church of England, as a charity, when it purchases shares as an investment, and the ICI pension fund, which purchases shares or land as investments.

However, charities, especially the Churches, hold what might be called operational land and not investment land. That is why we gave the exemption to charities. Charities have to dispose of operational land and find other land on which to work. That does not apply to pension funds, whose investments in land are purely investments and are not for operational purposes. That is why the exemption was given to charities in relation to land held on 12th September 1974. The Churches would have been especially affected if we had not brought forward that exemption. Otherwise, in terms of investment in land, there is not much difference between one and the other.

5.15 p.m.

To argue that the charity exemption should now be given to pension funds is to misunderstand the purpose of the exemption, which was mainly intended to benefit the Churches and religious organisations, which may have to move from one part of the community to another as the population moves.

Is it not right that the pension fund of the clergy will benefit because of the exemption that has been given to charities and to Churches? If that is so, what is the distinction between, for instance, the clergies' pensions and the miners' pensions?

I make it clear that in principle there is no distinction, in terms of the investment of funds in investment property. However, charities, especially Churches, have other land, which is not investment land but operational land, on which they have to operate. I do not want to labour this point as I have tried to explain it before, but the exemption is to benefit those organisations which otherwise would have been adversely affected.

We are concerned with the intention of benefiting the whole community. The hon. Member for Hove poured some scathing words on the contrast that I made between local authorities, charities and pension funds. I said that local authorities were at one end of the scale, that charities were possibly in the middle, and that pension funds were at the other end. In referring to pension funds, I had in mind occupational pension funds.

There is a private contract between the private pension funds and the private individual. It is not a public matter, although many members of the public benefit from pension funds. The occupational pension funds arrangement is an entirely private matter. Local authorities do not benefit in the same way, as their main concern is the benefit of the public and the community. I tried to argue that in between there are charities, which can benefit private persons but have to meet the test of public interest and public purposes. That is why I drew the distinction between authorities, charities and pension funds.

We are concerned with giving the primary benefit of gains arising from planning to the community and not to the private interest, namely, the pension fund. I can give one example that applies to my constituency, or to any other constituency, where the local authority wishes to purchase land for building a school. Under present law, if that land has betterment value the local authority has to pay 100 per cent. If this legislation is passed, the local authority will pay much less than that, because of net of tax provisions. I hasten to inform hon. Members that we have had more representations from the NUM than from any other pension fund on this matter, it being very local and voluble in its representations because it holds so much land in its pension fund. We have resisted those representations. I hope that hon. Members will give us some credit for doing that, as yesterday they were scathing about our domination, so they allege, by the unions.

If the NUM pension fund owns a piece of land and is able to dispose of it without paying any development land tax the local authority suffers by having to pay much more for the land. Therefore, one has a conflict between the interests of the local authority and the interests of the pension fund. Very often the investments that are made by a pension fund have no bearing upon the interests of the local community. A pension fund may invest in land merely in the hope of making a betterment profit. We think that that is unfair. We think that primary benefit should go to the local authority. We are concerned with only a small number of pension fund investments that produce windfall gains. Normally the capital gains that they make from their investments are completely free from tax.

The first new clause tries to equate the position of charities and pension funds, but they are not comparable in terms of the exemption. The other new clause seeks to create a two-tier market and to introduce discrimination against people whose business it is to develop property. For those reasons I ask the House to reject the new clause.

By virtue of 60,000 pension schemes, there is the provision of a very extensive welfare service to 12 million people, plus their dependants, and some 2 million are already receiving pensions under those schemes. As the Minister said, 49 per cent. of the employed people come under such schemes.

It is recognised in the Bill that many authorities which provide this kind of welfare service or social service are exempt entirely from this tax. Such bodies as district councils, county councils, parish councils, community councils, even police authorities, fire service committees, some housing associations, development boards, and the New Town Commission, are all providing public services and are allowed to be let off this tax entirely. But are they providing such a very different welfare and social service from the 60,000 pension schemes which provide these benefits of pensions to their 12 million members?

Under the Bill some sort of relief is recognised for the BBC and the IBA, the Atomic Energy Authority and the regional water authorities. Are they more deserving than these pension schemes? Yet not a tittle of relief is given in the Bill for the provision of pension schemes. Pension funds benefit the public, as my hon. Friends have said already in their arguments, not only by providing pensions but by providing for a source of very valuable and useful investment to industry and commerce.

Do the Government wish to deter these funds, and to move that money, as was suggested in earlier debates, from pension schemes and pension funds into industrial investment? Surely the trustees of a pension fund know what is the best form of investment in the interests of their beneficiaries. Indeed, investment in property has been shown by the trustees of the many pension funds to be particu-