| Previous Section | Index | Home Page |
7.15 pm
Indeed, as my hon. Friend the Member for Boston and Skegness (Mr. Simmonds) mentioned, the British Retail Consortium has conducted a comprehensive survey. It was released today, and I have a copy here. The survey found evidence that contradicts what the Chief Secretary has said. It covered 125 retailers, 10,000 outlets and 7,584 leases. Its figures paint a picture that is wholly different from the one presented in the Budget. Instead of the much vaunted claim by the Government that 60 per cent. of leases will be exempt, the truth is that 71 per cent. of those surveyed will have to pay. That is the complete opposite of what the Chancellor and the Chief Secretary claimed.
Will the Chief Secretary tell the House what the basis for his claim was? How many properties and leases were used in the sample? Was it really just a few hundred—including, I am told, lock-up garages? Will the Revenue now publish its data and end the speculation that the Chancellor's Budget statement on this matter has been—to use the common parlance—sexed up?
The Government's proposals in clause 56 and schedule 5 for taxing leases fail to create a system that is either modern, effective or efficient. Instead, new distortions in the leasehold market will be created. Businesses could have to pay £200 million or more in tax, over and above tax-avoidance measures, and vital market sectors—such as retail, the licensed trade and tourism—will be badly affected. That is why Opposition Members reject clause 56 and schedule 5, and why, with your permission, Mr. Speaker, we intend to press amendments Nos. 9 and 10 to a vote.
Throughout the outside consultation and the Committee stage of the Bill independent experts have all advised against implementing legislation about which so many unanswered questions remain. What is the true cost of compliance? What will be the impact on private companies participating in private finance initiative and public-private partnership schemes? How will complicated transactions such as sale and leasebacks be treated? Who will be able to apply for the new subsale relief, and who will not? Why has the Treasury chosen a discount rate that bears no relation to the property market? To date, not one of those questions—and there are many others—has been answered satisfactorily. Some of them have not been answered at all.
I understand that the other place has endorsed the view that the legislation is incomplete. In its 10 June report, the House of Lords Select Committee on Economic Affairs stated that
- "we have heard the strength of the essentially unanimous views of our private sector witnesses urging that the tax would not be in a fit state to introduce on 1 December 2003 . . . We recommend that the Government should review early in the Autumn of 2003 whether the tax can be got right in time."
In his Budget speech, the Chancellor recognised the need to get the legislation right and offered to delay implementation until 1 December 2003. Yet it is clear that the proposals are incomplete, and that some sections of them are incoherent. Amendment No. 11 has the support of the leading organisations in business and property. They include the Confederation of British Industry, the Royal Institution of Chartered Surveyors, the Law Society of Scotland, the British Retail Consortium, the Association of Licensed Multiple Retailers, and the British Property Federation. The intent of the amendment is to ensure, whatever our reservations about the underlying principles, that the legislation that is enacted is workable, fair and acceptable to the majority of those whom it affects. After all, bad law leads only to greater tax avoidance.
Because we consider amendment No. 11 to be a constructive proposal, we gave the Chancellor early notice. My right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), the shadow Chancellor, wrote to him last week. Yesterday, the Chief Secretary replied. In his letter, he rejected our amendment on the ground of fairness—that old word again—and because it would lead to a loss of yield of around £250 million. There we have it—the rush to push the Bill through is all about the growing hole in the Chancellor's Budget. The Government are beginning to realise that they will need every penny because they are wasting money, and that they will need to spend more and more if they are ever to have a hope of fulfilling their manifesto commitments.
Mr. Djanogly: The proposed tax increase seems to sit rather oddly with what the Chancellor said in his Budget speech:
- "I will freeze stamp duty on homes and business property purchases." —[Official Report, 9 April 2003; Vol. 403, c. 279.]
Mr. Prisk: What an appropriate quote. Most Members increasingly realise that what the Chancellor says and what he does are often entirely contradictory. The worry for many now is that with this Government one must always read the small print.
The Chief Secretary made an admission in his letter: that despite what he said earlier, the Bill was not perfect. He admitted that it was so bad that it will need refining, not just over the next few weeks or months but, inevitably, over the next couple of years. What an appalling admission. Does the Chief Secretary not realise what a message that sends out: that he and his colleagues are perfectly happy to rush through a new tax that is so ill considered it will take years to correct? If the Government's wish truly is to tackle tax avoidance, what possible logic can there be for pushing through a Bill that will take years to correct? What possible confidence can we, or taxpayers, have in the Government, or in what I can only describe as their dodgy duty?
Given that, and given the lamentable and short reply that the Chief Secretary gave to our amendments, I have grave concerns about the way in which he is
approaching the matter. I hope that he will be more positive at the end of the debate. We have many reservations about the Bill, but amendment No. 11 is offered as a genuine way to help to improve the law. I hope that he will reconsider and accept our offer, but if he does not we will—with your permission, Mr. Speaker—be determined to press this matter to a vote.
Mr. Laws: It pains me to start off this collection of clauses and amendments by welcoming one of the elements with which the Chief Secretary has already dealt—new clause 10, the successor to new clause 6. We are pleased that the Government have listened to our representations, and to those of others such as the National Housing Federation, on the issue. The Chief Secretary will be aware that we originally tabled amendments Nos. 195 to 197 and 201, which emerged initially in new clause 6 and then in new clause 10.
The proposal is important because it affects many social housing tenants who would have been adversely impacted by the situation as it was in the original Bill, under which many of them would have faced the uncertainty of a system in which they would have to get their tenancies stamped before they were effective in law. That archaic, unfair and impractical requirement would have caused uncertainty and a great deal of cost.
The Chief Secretary will know that, by custom and practice—and in Inland Revenue guidance—it has been the responsibility of individual social housing tenants whose rent exceeded particular annual thresholds to ensure that their tenancy agreements had been properly stamped. For a period, this seemed to be a rule or regulation that was not heeded, but it became clear over the last couple of years—as a consequence of a number of cases that came to court—that it was vital that this stamping occurred. Without it, there could be legal uncertainties that would affect the social housing tenants and the landlords.
The payment of stamp duty under the previous circumstances gave the document a legal standing in a court; without it, a judge could refuse to accept the contract as evidence of the tenancy. The Finance Bill initially formalised the previous situation, which had been uncertain under the law—and certainly under the practice—by essentially making the individual tenants legally liable.
After considerable negotiation between the National Housing Federation and the Inland Revenue, the federation secured a form of words to ensure that new social housing tenancies were effectively exempt from stamp duty. That is extremely welcome. However, many thousands of tenancy agreements held by social housing tenants and landlords remain unstamped. The concern was that without some exemption or backdating, those individuals would be unprotected in law and their court cases might be thrown out in a court case brought by either of the two parties.
The National Housing Federation was lobbying the Treasury directly, and we are pleased that Treasury officials listened. The federation also made representations to us, leading to our amendments. We welcome very much the fact that the Government engaged in a dialogue that led not only to the clarification of the new social tenancies, but to the putting in place of an exemption that went back not to the 1995 cut-off—as was initially suggested in our amendments—but to 1990, which is extremely helpful.
The Chief Secretary will be aware that the concern arising from new clause 6 was that it might not cover those tenancies managed by RSLs where the tenancy had been transferred to the RSL from a local authority. Unfortunately, we were unable to deal with new clause 6 in substance during the Committee, but we are grateful that—in private conversation and correspondence—the Paymaster General was willing to confirm that it was the intention of the Government to make sure that the tenancies in question were also exempt.
There was a question mark among those on the borders of the Committee—we did not have time to debate the issue in Committee—as to whether new clause 6 offered protection to such tenancies, as envisaged by the Government. The National Housing Federation is again to be commended for detecting the possibility that new clause 6 would not implement in full the Government's intention to exempt such tenancies. We are extremely grateful that the Government have listened to representations, initially by proposing the measures in the original Finance Bill but also by tabling new clause 6 and then new clause 10. The Chief Secretary will want to put it on record today that new clause 10 will provide certainty for RSLs by clearly providing for the fact that the relief will be available both to tenancies granted by RSLs, and to tenancies transferred to RSLs from local authority providers.
We welcome that element of the new clauses and amendments, but we share the concerns outlined by the Conservative spokesman, the hon. Member for Hertford and Stortford (Mr. Prisk). We welcome the fact that, in Committee, the Government listened to some of the other representations and produced their own proposals to meet matters such as the concerns in respect of trading down.
However, in spite of the fact that the Government have consulted on this specific matter for perhaps a year, it is clear that the consultation has not been substantial enough and we are left wondering whether the Government's new process—of having a pre-Budget in which serious consultative measures are supposedly brought forward and then implemented in the Budget itself—has really worked in respect of stamp duty land tax. It still seems that we are in for a period of great uncertainty until later this year, when the Government may introduce further proposals on this part of the Finance Bill. As the hon. Member for Hertford and Stortford (Mr. Prisk) touched on, we have the prospect, as the Chief Secretary has himself confirmed, of a further period of uncertainty while the Government contemplate further changes.
| Next Section
| Index | Home Page |