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Mr. Tipping: The debate has been stimulating and enthusiastic. We have been taken down paths that perhaps we should not have trodden, we have been to faraway fields, and at times the debate almost became a picnic. We have tested your tolerance, Sir Geoffrey.

Across the Committee, there has been a recognition of the need for a balance between protecting the habitat and allowing public access. That is a great challenge. I have set out my position in the Access to the Countryside Bill, which is before the House. It deals with many of the points made in the Chamber--for example, the notion that access should be allowed only at certain times of the year,

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the notion of restriction orders, and the notion that access not only is a right, but entails responsibilities. I am particularly interested in the point raised by the right hon. Member for Lagan Valley (Sir J. Molyneaux) about owner liability. I am currently addressing that issue, with a view to including it in a subsequent version of the legislation.

The Minister called me an opportunist--he was very nice about it--and I confess to that charge. The amendment was intended to provoke debate and discussion. One or two hon. Members said that their interventions would be short, but if their walks are as long as their short interventions, I shall never accompany them.

I have taken the opportunity to raise issues such as public access to environmentally sensitive areas, countryside access schemes, the countryside stewardship scheme and conditional exemption from inheritance tax. I praised the Financial Secretary earlier in the debate for always listening and taking an interest in such matters. I believe that we shall continue to tread this path. I am conscious that changes have been made, but much more remains to be done.

The hon. Member for Macclesfield (Mr. Winterton) referred to issues of cost, and he will recall that I identified sources of funding. For example, I mentioned the arable area payments scheme, in which the hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) is also interested. Landowners and farmers receive substantial sums from that source and the hon. Gentleman has advocated capping that expenditure.

There is general agreement within the Committee that we must balance the people's right to access the countryside against the need to enhance and protect the countryside and lift the landscape. It is a complicated area, and I am delighted that we have had such a stimulating debate. I am glad that the Minister has re-examined the matter, and I shall continue to press him on those issues. Progress has been made, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Milburn: I beg to move amendment No. 7, in page 81, line 46, at end add--

'(7) This section shall only apply to land which has been acquired for bona fide reasons and shall not apply to land which has been acquired as part of a scheme or arrangement of which the main purpose, or one of the main purposes, is the obtaining of a tax advantage.'.

The amendment has one simple, but significant, purpose: to protect the taxpayer and the Inland Revenue from any possibility of abuse as a result of the proposal in clause 92 to extend inheritance tax relief to land in habitat schemes. The Opposition support the principle behind the habitat scheme: promoting nature conservation is clearly a laudable objective, particularly as it applies to sites of special environmental significance. We would like to see the common agricultural policy reformed in such a way that it focuses resources still further on those positive environmental objectives.

We are equally concerned about protecting family farms. Those family businesses provide a key focus for stability and continuity in rural communities--they are often the backbone of our countryside. It is clearly an important Government objective to try to avoid the break-up of working farms of that sort. The extension of agricultural property relief under the IHT rules in the 1992

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Budget from 50 per cent. to 100 per cent. was presented as a means of doing just that. Nowadays, exemption from inheritance tax can be gained after only two years of owner occupation of a working farm. Two years ago, provision for 100 per cent. relief was also extended to tenanted farms. According to the Budget press release of 26 November 1996, the Government's--

Mr. Clifton-Brown: There is a slight inaccuracy in what the hon. Gentleman has just said. The exemption for tenanted farms was only that granted in the recent tenancy legislation for farm business tenancies, not for all tenanted farms.

9.15 pm

Mr. Milburn: That is right. It is 100 per cent. relief after seven years rather than two for owner-occupied farms.

According to the press release of 26 November, the Government's new intention, which is enshrined in clause 92, is to extend relief from inheritance tax to land managed under the terms of the habitat scheme. The release tells us that the Revenue has received legal advice that as the law stands such land would not qualify for such relief. Perhaps the Minister will explain how that situation arose. He alluded to representations that have been made by landowners. I hope that he will tell us how many representations were made. He might allude as well to the legal advice that he has received that has necessitated the clause that is before us.

I hope also that the Minister will indicate the costs of extending relief in the way that is set out in the clause. That is important for two reasons. First, those with land covered by the habitat scheme are already receiving a public benefit. Expenditure on the scheme is projected to rise to almost £2 million by the end of the decade. Extending the IHT relief to land in habitat schemes represents a double benefit at public expense so it is doubly important that the taxpayers' interests are properly protected from abuse.

Secondly, as there is now a substantial body of evidence to suggest that agriculture property relief is being systematically abused for tax avoidance purposes, our amendment aims to prevent such abuse so that the extension of APR is available only to those who have a genuine desire to farm and to protect the countryside. It would prevent the unscrupulous from hiding behind a laudable environmental objective purely for the purpose of erecting a convenient tax shelter.

Such abuse has become all too common. The Financial Times of 14 May 1994 contained an article entitled

"Tax farming: an old crop is revived".

It outlined how tax avoidance under IHT rules could not be simpler for those who could afford it. It is an interesting article. It referred to the current market for land and the fact that there were only a few farms available for sale at that time, partly because of the influx of British and foreign buyers. It reads:

"British buyers now include the rich, eager to take advantage of the new inheritance tax rules. 'Sell a house in the English home counties', says Christopher Wilson of buying agent Wilson and Wilson, 'and put the proceeds into a farm with vacant possession. Work it for two years, perhaps by contracting out, and IHT will vanish.' His firm and accountants Grant Thornton have formed a 'city landowners service' to handle that sort of work."

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In other words, those who are wealthy enough can enjoy a 40 per cent. tax windfall simply by parking some cash in farmland for two years.

The article went on to suggest that the changes in IHT rules are distorting the market for farming land. There is some evidence to suggest that the very people who the IHT rules were designed to protect--small working family farmers--are losing out as wealthy buyers from home and abroad buy up land for tax avoidance purposes.

I do not regularly surf the Internet, but thankfully we on the Opposition Benches have one or two advisers who do, and they came across an interesting article--if that is the right word for it--just two days ago, from Strutt and Parker. It says:

"Since the beginning of 1996, Strutt and Parker have sold and purchased in excess of £100 million worth of farms and estates throughout the United Kingdom."

The article talks about the upturn in the market for land and farms. It goes on to say:

"However, 1996 saw the re-emergence of a substantial amount of non-farming money which purchasers were looking to invest in farmland. Many of these investors were tax driven, taking advantage of rollover relief and reinvestment relief. Others were looking to acquire agricultural property for Inheritance Tax purposes."

Indeed, the article says that, such are the distortions in the market, towards the end of 1992 there was a lack of farms available for sale.

The Sunday Times of 3 September 1995, commenting on the 1995 inheritance tax relief rules, quotes Mr. Adrian Baird, the Country Landowners Association chief tax adviser, as saying:

"we are worried that exploitation of the legislation for tax avoidance, particularly by outside people buying into land, will bring it into disrepute."

The article, which is entitled "Rich landowners to reap millions in tax changes" goes on to say that the paper has surveyed many of the country's biggest landowners and has looked at the way in which they plan to benefit from the new rules.

"Some,"--

it says

"are interested,"--

purely

"because it allows the perfectly legitimate avoidance of inheritance tax, others because it offers ways of giving tenant farmers shorter leases."

Indeed, the article quotes several examples. The Marquess of Normanby's 60,000-acre estate in Yorkshire is one such example. James Jackson, the Duke of Northumberland's agent, is quoted as saying that he was considering "one or two wheezes" relating to the new legislation on the Duke's 90,000-acre estate.

The reality is that it is possible to drive a coach and horses through the existing inheritance tax rules. Of course there should be proper protection for people who are genuinely in the business of farming, but the current loopholes in the inheritance tax rules make it all too often little more than a tax shelter for the very wealthiest, at the public's expense.

Inheritance tax, particularly agricultural property relief, is like manna from Heaven for the tax planning industry. I took the opportunity today to look at Tolly's Taxfinder,

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the Bible on these matters, and I came across the following passage on page 23 of the 1993-94 tax planning guide, volume I, which says that the remarkable new regime introduced by the Finance Act 1992

"is potentially there also for the benefit of others, since it provides the opportunity almost to 'buy' freedom from inheritance tax by purchasing an appropriate category of property and owning it for two years. It is even possible,"--

it says

"to do so through the purchase of a USM portfolio, which would require no participation in the business or the need to farm."

It is precisely such loopholes that make tax avoidance so easy, and which are now being extended in clause 92. Indeed, extending them without proper safeguards, as the Bill as drafted does, removes the inconvenience of even having to farm the land to make the gain. Instead, the land can just be sat on for two years before 100 per cent. inheritance tax relief comes into effect.

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