§ (1) Where a building or land which is qualifying property for the purposes of subsection (3) of section 84 of the Finance Act 1976 (maintenance funds for historic buildings) forms part of an estate in relation to which an election has effect under section 73 of the Taxes Act (deductions from rents: land managed as one estate)—
- (a) the election shall not cease to have effect by reason only of another part of the estate becoming comprised in, and being managed by the trustees of, a settlement in relation to which the Treasury give a direction under the said section 84; and
- (b) that other part shall be treated as continuing to form part of the estate to which the election relates.
§ (2) Where a person becomes the owner of any such building or land as is mentioned in subsection (1) above which in the immediately preceding ownership formed part of an estate in relation to which an election under the said section 73 had effect, any other part of that estate which continues to be or becomes comprised in a settlement of the kind mentioned in that subsection shall be treated as part of the estate in relation to which an election may be made by him under that section.
§ (3) Where by virtue of this section an election has effect in relation to an estate part of which is comprised in a settlement—
- (a) there may be treated as deductible from the rents arising from that part—
- (i) any payments which are made in respect of the other part of the estate by the trustees of the settlement and which would be so deductible under section 72 of the Taxes Act if that part were also comprised in the settlement; and
- (ii) any payments made in respect of the other part of the estate by its owner to the extent to which they cannot be deducted by him under that section in the chargeable period in which they become due because of an insufficiency of the rents arising in that period from that part; and
- (b) any relief available to the trustees under section 79 of that Act (agricultural relief) in respect of the part of the estate comprised in the settlement shall instead be available to the owner of the other part of the estate.
§ (4) Where by virtue of this section an election has effect in relation to an estate part of which is comprised in a settlement, the election shall not cease to have effect in relation to any of that part by reason of its ceasing to be comprised in that settlement if within thirty days it becomes comprised in another settlement in relation to which the Treasury give a direction under the said section 84.
§ (5) The inclusion by virtue of this section in an estate of property comprised in a settlement shall not be construed as requiring it to be treated as the property of the person who owns the remainder of the estate or as affecting any question as to the person entitled to the income arising from that property.—[Mr. Peter Rees.]
§ Brought up, and read the First time.4.42 pm
§ The Minister of State, Treasury (Mr. Peter Rees)
I beg to move, That the clause be read a Second time.
The clause is tabled in response to an argument advanced in Standing Committee by my hon. Friend the Member for Anglesey (Mr. Best) which we judged to be valid. The clause is designed to perpetuate the advantages of the one-estate election where assets comprising part of the estate are, subject to an election, transferred to a maintenance fund. The concept of the one-estate election derives from the Finance Act 1963. It has been maintained through a number of Administrations.
We are concerned that the imaginative concept of a maintenance fund, which derives from the Finance Act 1976, should be refined and improved so that there will be a take-up and so that our heritage assets will, so far as they can be, be supported and maintained by funds provided by the families that have owned the assets.
§ Mr. John Horam (Gateshead, West)
In Standing Committee we discussed the principle that owners of historic property should not lose existing tax advantages because of the new arrangements that the Government are introducing to deal with maintenance funds, and that they certainly should not lose them inadvertently as a consequence of the Revenue not foreseeing fully the effects of its measures.
There is bipartisan support for the sensible upkeep of heritage properties. I personally support that on aesthetic and economic grounds. The Minister has said that the Government are building on the maintenance fund concept established by the previous Government.
Is the Minister satisfied that owners will not be able to offset their legitimate costs against two sources of income? I understand that the one-estate election allows them to deduct costs from rents. The maintenance fund provisions will allow them to offset the costs against tax-free maintenance funds. I am concerned that it will be possible to claim the same costs against two sets of income.
I am sure that the hon. and learned Gentleman will agree that, even with his grasp of legal matters, this is legislation of extraordinary complexity. We have seen a series of fairly complicated amendments to the innovation of the previous Government. During today's proceedings we shall be considering a large number of further amendments of considerable length to the position that the Government first established when they introduced the Finance (No. 2) Bill.
We are dealing with highly complicated matters that few understand fully. That makes me uneasy. It may make the hon. and learned Gentleman uneasy to see the sprawl of legislation that bears on the heritage. As I examine it I am less convinced that the Government were right—I accept the honourable reasons that prompted them—in going down the path that we are now following. It may have been better to consider the different approach advocated by some of my hon. Friends. That is the approach of having not so much maintenance funds with heritage owners being able to use them in the way that they think fit but a system of grants that would enable us to see more clearly where the money was being spent. Such a system would allow 1522 the Government of the day more of a say in deciding exactly who should receive the money. I shall be grateful for the Minister's thoughts.
We shall have to see how the system proceeds. It seems that there are only three maintenance funds in existence. Presumably, the hon. and learned Gentleman hopes that as a result of these changes many more funds will come into being. If the scheme is to work properly, there will have to be more funds. There must be far more than three funds.
I hope that the Government will take into account the fact that we are becoming rather uneasy about the extent to which there has to be legislation covering the heritage because of the methods that Labour and Conservative Governments have chosen to pursue their objectives. It is absurd that so much of one Finance Bill should be dedicated to one part of the tax structure.
§ Mr. Tam Dalyell (West Lothian)
As one who tabled a number of amendments in Standing Committee, I, too, share much of the unease of my hon. Friend the Member for Gateshead, West (Mr. Horam). I sometimes wonder whether we are going about these matters in the best way, by choosing to emphasise the taxation route.
It must be confessed that the heritage has occupied a considerable chunk of parliamentary time this Session. There were five sittings of two and a half hours duration in Committee on the National Heritage Bill. On the Floor of the House it has been debated for nine hours and 52 minutes and directly and indirectly, give or take three hours, in Standing Committee when considering the Finance Bill. On no occasion was there any filibuster. I think that Ministers will agree that there was no talking for talking's sake on the subject. As my hon. Friend the Member for Gateshead, West said, we are now entering a complicated area which very few people understand. Now the only Government new clauses on the Order Paper today are both concerned with the heritage.
I confess that I have taken a huge chunk of the time devoted to this subject of the heritage. I was asked the other day whether it was the only thing I could speak about. You, Mr. Deputy Speaker, may be forgiven for observing somewhat 1523 ruefully that from your experience of defence and foreign affairs debates I have occupied my fair share of the time of defence Ministers and the Lord Privy Seal in the past six months! However, one can become immersed—possibly too deeply—in the question of the heritage.
I therefore predict that, on this subject, next year and the year after will constitute a fallow time unless there is amending legislation to tidy up the loose ends. I do not think that one can over-egg this pudding. In the circumstances, I am not entirely surprised that new clause 22 has not been selected for discussion. I put it forward on behalf of the National Trust for Scotland with the support of the English National Trust and of Lord Charteris, the chairman of the National Heritage Memorial Fund.
Unless I hear a satisfactory response from the Minister of State in his reply to the debate, I shall be writing to the Treasury to ask it to put on record its attitude to new clause 22. The issue here is that on occasion individuals and trustees of settlements wish to make gifts of property tied up in settlement to organisations such as the national trusts and that the property must first be appointed to a beneficiary who can give it in tax exemption to the trusts. The appointment is taxable, however, so that the gift is eroded by taxation—
§ Mr. Deputy Speaker (Mr. Bernard Weatherill)
Order. May I remind the hon. Gentleman that it is not possible now to speak to new clause 22 which, as he pointed out, has not been selected?
§ Mr. Dalyell
I was making only a passing reference to it, Mr. Deputy Speaker.
In welcoming new clause 1, I give the undertaking that I shall not seek to over-egg the pudding. Unless there is a minor clearing up of anomalies I shall not be returning to heritage issues next year on the Finance Bill. Perhaps there will be a general welcome, not only on the Treasury bench but elsewhere, that, having done so much this year, we do not propose to take up so much of the time of the Finance Bill on this subject in future. I think that my hon. Friend the Member for Gateshead, West was expressing the views of a large number of 1524 people in the House and outside when he said that we do not apologise for what has been done this year, but we shall not go on and on about it.
I have lost no opportunity of saying candidly that in putting forward heritage amendments I was acting as a council member of the National Trust for Scotland. I have had the expert advice of, above all, Mr. Jeremy Benson, who also helped other members. On every occasion that an issue of substance was put forward I asked the lawyers whether they were sure that the proposal benefited the heritage rather than well-off people. On each occasion I was assured that that was the case. I have no doubt that they have been acting in complete good faith and that, to the best of their beliefs, it was the heritage that was being helped. Even so, there could be side effects.
Equally, I pay tribute to the grinding hard work of the Minister's advisers both in the Treasury and in the Office of Arts and Libraries who have not only been extremely patient and have frequently made themselves available but have endeavoured successfully to do an excellent job in a necessarily complicated area. In a sense, if the National Heritage Memorial Fund legislation achieves its general purpose, it will be a memorial in part also to those who worked so hard at it. I pay the advisers the compliment of trusting them to make sure that such proposals as they have accepted from us are limited to the good of the heritage rather than to individuals who may be associated with the heritage.
Bluntly, if the heritage bodies are satisfied they can largely thank the National Trust for Scotland—colleagues will know that I cannot sensibly be charged with Scottish nationalism—because it was it and its director, James Stormonth Darling, who convened the original brains trust conferences and acted as a catalyst for much of the briefing that I and others have openly said we have received.
I am sensitive to a feeling in some quarters that the National Trust for Scotland has an affinity with landowning interests. That may be partly true, but I occupied the place on the council that belonged first to the late Right hon. 1525 Arthur Woodburn and subsequently to the Right hon. Miss Peggy Herbison. That well-known belted earl, Lord Ross of Marnock, who, as Willie Ross, the Member for Kilmarnock, dominated the Left in Scotland for so long and entertained the House of Commons for some 33 years with his basso profundo diatribes against privilege, is now a respected member and deputy chairman of the National Trust for Scotland. The people who run the trust will not consciously be a party to asking for concessions that go beyond the heritage as such. Equally, because the subject is now so complicated it is understandable that Back-Bench Members cannot be quite certain of the effects of their proposals. We therefore rely on Ministers and civil servants to explain whether the cost to the Treasury of our amendments is likely to overlap into areas not concerned directly with the heritage or concerned with it in other capacities.
I therefore underline the comments of my hon. Friend in making no apology for arguing the case for the heritage. There is a formidable problem to be faced. Much of what is to be preserved goes back four centuries or more. In those cases the costs of preservation often rise at an exponential rate. We cannot pretend that either tax concessions or the National Heritage Memorial Fund can do the job adequately. It is arguable, as my hon. Friend explained, whether tax concessions are the proper way to deal with the problem. I shall not be back asking for more tax concessions. If more needs to be done, the correct route is directly through the Historic Buildings Council and other agencies. In the meantime let the heritage bodies be grateful for what has been achieved.
In Standing Committee on the National Heritage Bill and, to a lesser extent, on this Bill the case for archaeology was advanced. I wish to draw the attention of the committee to the latest edition of Rescue News, the journal of archaeologists which carries the headline "Backwards into the 80s". It makes the point that public expenditure of £2.25 million is woefully inadequate for the job that has to be done unless part of the heritage is to be lost for ever.
It is for those reasons that I welcome the setting up of the National Heritage 1526 Memorial Fund. Equally, I welcome such tax reliefs as have been given but ask how much public money is expected to flow from the Government's new clause. Some price tag ought to be put on it, as we frequently said in Committee. Has a price tag been put on the clause? I welcome the clause with all the qualifications that I have thought it right to put before the House.
§ Mr. Peter Rees
I shall respond briefly to the short contributions from the Opposition Benches.
The hon. Member for Gateshead, West (Mr. Horam) raised two points, and I shall endeavour to deal with both. He quite properly wished to be reassured that there could not be a double offset for expenses. Indeed, there could not be an offset for the same set of expenditure against the funds of a maintenance fund and against the property comprised in a one estate election that was not within that maintenance fund. I wish to reassure the hon. Gentleman and the House that it is only legitimate expenditure on the maintenance of the heritage asset, and not in any sense personal expenditure of the current owner of the asset, that can be the subject of relief. I hope that that deals adequately with the first point.
The hon. Gentleman's second point was of wider significance. He said, as did his hon. Friend the Member for West Lothian (Mr. Dalyell), that we had to deal with a large number of complex provisions in the Finance Bill. I would be the first to concede that, because I was largely responsible for commending the provisions to the Committee. To me has fallen the job of commending this new clause and new clause 2 to the House tonight. The hon. Gentleman will be the first to recollect that the provisions on which we are building, which originally introduced the maintenance fund concept in the Finance Bill 1976, and which received bipartisan support, were complex also. I do not apologise for, or make any secret of, the fact that they are matters of high technicality. As the hon. Member for West Lothian rightly pointed out, the Minister of the time has to commend the provisions to the House—not only to reassure himself but to reassure the House that they are right, and that we are establishing an acceptable framework.
1527 The ownership and the devolution of property of whatever sort, both north and south of the border, depends on rules often of great antiquity and great complexity. They are complexities to which the profession to which I belong has contributed over the years. I entirely accept that. They are matters of some difficulty. I accept the general proposition stated by the hon. Member for West Lothian that we do not want to return year after year to the problem. I cannot guarantee that we shall not. It would be arrogant in the extreme to suggest that we have got every line right, but I hope that we have. I would not wish to inflict on the House again a whole range of measures of technicality in that area. I take into account the remarks of the hon. Gentleman. He invokes an echo from me, as I have had the business of comprehending the principles at stake, and also of trying to supervise their translation into a legislative framework.
The hon. Member for Gateshead, West was right to remind us that the problem could be approached in two ways. We could choose the Government grant route for which a case was made in Committee, as it was made on earlier occasions, by the hon. Member for Motherwell and Wishaw (Dr. Bray). It is a perfectly legitimate area of debate. Do we approach the problem by relief through the tax system, or by Government grants, or by a blend of the two? If so, where do we strike a balance?
In the context of the provisions in the Bill and in the new clause, I must point out that, having enshrined in our fiscal legislation the concept of maintenance funds, I am sure—and I hope that I speak for both sides of the House—that we wish to ensure that it is a practical route that people will want to adopt.
The hon. Member for Gateshead, West said that three maintenance funds had been established to date. I do not know whether he derived that information from an answer of mine. I have checked on the position, and I find that only two have been established in four years. That demonstrates that there has not been an immediate rush to take advantage of the reliefs. Therefore, we have asked ourselves "What are the partic 1528 ular difficulties? "We have sought advice from a wide range of quarters. Some of that advice, no doubt, has been tendered to Opposition Members. I hope that that will always be so because we wish to find a bipartisan approach to the problems.
The House having decided in 1976 that a measure of fiscal relief through maintenance funds was an appropriate way to preserve the heritage of Britain, we wish to ensure that the heritage concept is workable, and is sufficiently attractive for people to take advantage of it. It is only in that respect that we have ventured to accept some amendments and to put forward some new clauses in Committee and in the House today.
I understood the point raised about new clause 22, but I should be out of order if I responded directly to the hon. Member for West Lothian. If he wishes to write to me setting out the worries about the new clause, I shall endeavour to deal with them to his satisfaction. I hope that I can, by proxy, accept with gratitude the kind words that he said about the officials who have dealt with this extremely complex subject. Not only have they done their best to instill into my mind the technicalities and broad principles, but I am glad to hear that they have offered their expertise to people inside and outside the House. Broadly speaking, we can get that difficult area right.
Without pre-empting the debate about where the balance precisely should be struck, at least we can say that, if there is to be a maintenance fund route, it is a viable route and one that those concerned will feel anxious to take up and enjoy for the benefit of the country as a whole.
§ Mr. Rees
As I said in Committee, it is difficult to put a precise price tag on this provision. We have to make a whole range of assumptions. As I said earlier, only two maintenance funds have been established, and we have to make assumptions about the number of people who may wish to do so. If the House will make every allowance for that, the best price tag that I can predict is £1.6 million per annum.
1529 I hope that the House will feel able to accept the new clause.
§ Question put and agreed to.
§ Clause read a Second time, and added to the Bill.