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Mr. Hogg: My right hon. Friend makes a serious point and I am familiar with the scheme to which he referred. Will he consider the suggestion that the Inland Revenue should be consulted on the scheme before it is published and should give clear guidance on its implications? All parties should be involved in those early discussions with the Revenue.
Mr. Gummer: I am sure that the Minister can only assent to my right hon. Friend's suggestion, as this matter raises considerable difficulties. The Minister will know that several of my right hon. Friends and I are still fighting a case that ought to have been sorted out about 12 years ago. The hon. Member for Lewes (Mr. Baker) rightly underlined the fact that, philosophically, the concerns of one of Her Majesty's subjects are as important as those of 1 million. I believe that that is a practical as well as a philosophical argument, because if the House is here for anything, it is to defend individuals, especially those who do not happen to be very popular. I am afraid that fur farmers are such individuals. None the less, they have been carrying out what, until now, was a perfectly legal activity which, in almost every other country, is still legitimate.
Mr. Hogg: Including the European Union.
Mr. Gummer: Those countries include our colleagues in the European Union, and many arguments about the Bill derive from that point.
Those people ought not to be denied what they might reasonably expect from compensation, which is why I find it difficult to accept the Lords amendments. The Minister
will have to explain why we cannot know more about the sums involved and the kind of circumstances in which he hopes to act. However, he must make certain things absolutely clear, and, in that regard, I am not sure whether my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg) went far enough in asking for a pre-discussion with the Inland Revenue. I know perfectly well that, if that discussion took place without ministerial direction, the Inland Revenue would say that income losses meant losses of income and, in that case, must attract income tax. That is unacceptable in the circumstances because the losses of income are, by their nature, putative, whereas income is something that one actually gets. I have always thought it unfair to equate those things as plainly as the Inland Revenue does, but it will do that unless the Minister makes the matter clear beforehand. For that to happen, he must make an agreement before he fixes any figures.
Mr. Bercow: There is a compelling moral case for the compensation to be tax free. However, does my right hon. Friend agree that if the compensation or part thereof is in the form of a redundancy payment, it should be automatically tax free up to a certain level? It would be immensely helpful if the Minister made that clear in his winding-up speech.
Mr. Gummer: Under the wording of the amendment, the Inland Revenue would not accept the point made by my hon. Friend the Member for Buckingham (Mr. Bercow). The amendment's wording is not as good as the original wording in the Bill, because it makes it more difficult for the Inland Revenue to take the view that my hon. Friend advocates. Income losses are given at a time when redundancy becomes inevitable as the result of legislation being passed.
Mr. Hogg: Building on that point, does my right hon. Friend agree that when a sum is decided, it is important that there is a clear apportionment of income losses and non-income losses, otherwise there is a serious risk that tax will be raised on non-income losses? If losses were clearly distinguished, there is a good argument for saying that the Inland Revenue should not raise any taxes on non-income losses, although it might have a claim on income losses.
Mr. Gummer: My right hon. and learned Friend is right. I am making this speech because, unless we make the matter clear, the mistakes of previous Labour and Conservative Governments in not making things plain in advance to the Land Settlement Association will be repeated. I am not saying that to be antagonistic, as I understand the Minister's problem. I do not share the position of those who have a particular view on fur farming. I do not have a constituency or other interest in the matter, although I am instinctively on the side of those who feel that they are being bullied or who may, in fact, be bullied. Manifestly, those people have been bullied by those who thought that self-righteousness overcame the rule of law.
We do not come to the matter in happy circumstances. Some people who will not get compensation have already been driven from their jobs by those who thought that they had the right to do that in a free country. I have risen to reiterate the role of a Member of Parliament and defend
people in those circumstances. Will the Minister assure us that he will make clear the distinction that I have drawn? Will he make a clear, public statement about what the Inland Revenue intends to do, and will he seek to lessen, if not stop, any calculation of income tax on compensation?I hope that the Minister will go further and deal with the other part of the problem. In the case of non-income losses, will he assure the House that he will be as generous as possible? One should always be generous when asserting one's right to moral superiority. Those people who will lose their jobs do not agree with the decision that the House of Commons and the House of Lords are about to take. We are doing something extremely difficult and asserting that our moral understanding is superior to theirs, whether that is or is not the case. In those circumstances, if we are not to be thought extremely self-righteous, we need to be particularly generous in compensating those whom we are disadvantaging in this way. The House must recognise the seriousness of the issue.
I hope that, given the number of people concerned, the Minister will conclude that generosity should mark his decisions, and that it should extend to a group not known for their generosity--the Inland Revenue commissioners. Were he to do so, he would avoid many years of altercation on the matter and, given the moral opprobrium that has been placed upon these perfectly legitimate businesses, he would gain a reputation as someone who understood the delicacy of the matter.
Mr. Morley: I am grateful to the hon. Member for Lewes (Mr. Baker) for his support, particularly on the Government's intention to ensure that compensation is fair.
I understand the point made by the right hon. Member for Suffolk, Coastal (Mr. Gummer) on the tax treatment of compensation payments. That will depend on the arrangements set up under the compensation scheme, which will be subject to consultation, but I have asked Ministry officials to ensure that they liaise with the Inland Revenue on the tax consequences when the details of the scheme are being worked out. I hope that that reassures the right hon. Gentleman.
Mr. Gummer: Will the right hon. Gentleman be kind enough to say that when his officials liaise on that matter, they will also liaise on the Land Settlement Association issue, so that it can be cleared up at the same time?
Mr. Morley: The right hon. Gentleman strays beyond the bounds of this narrow debate.
I gently remind the right hon. Gentleman that the previous Administration were responsible for the banning of sow stalls and tethers. There were sound veterinary arguments for that, but also ethical and moral issues concerning the way in which we treat animals. Farmers who switched into those systems received no compensation. In contrast, this Bill does provide compensation.
The hon. Members for North-East Cambridgeshire (Mr. Moss), for Hexham (Mr. Atkinson) and for Basingstoke (Mr. Hunter), and the right hon. Member for Bromley and Chislehurst (Mr. Forth), asked about the details of the scheme. The compensation scheme was much debated on Second Reading and in Committee, when some of the thinking behind the scheme was set
out. However, the right hon. Member for Bromley and Chislehurst takes seriously the scrutiny of measures such as this, as he is entitled to do, so I shall try to answer his questions.This is enabling legislation and it is common for such measures to provide for a compensation scheme. The nature of the compensation scheme will be subject to consultation and it will be approved by negative resolution. That is the normal procedure, as it was under the previous Administration. The consultation procedure will be open and public, and people will be able to make their views known. The fur farmers, the people most directly involved, will be part of that.
6.45 pm
Mr. Forth: I invite the hon. Gentleman to go a little further and undertake, on behalf of the Government, that when the matter returns in the form of a statutory instrument, if it is prayed against the Government will provide time for it to be debated.
Mr. Morley: The right hon. Gentleman is an extremely experienced Member and he knows that I shall follow the long-standing procedures which are laid down by the House.
The calculation of income losses will be on the basis of, for example, loss of trading profits, the overall financial state of the industry and its prospects and the individual condition of each business. Non-income losses will include matters such as buildings, equipment, breeding stock and young stock for slaughter. No compensation should be required for the land as it has alternative uses. Compensation may be required for buildings and equipment that do not have alternative uses. A range of other matters could be included in determining compensation, and they were dealt with on Second Reading and in Committee.
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