Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

New Clause. — (Exemptions from Estate Duty in Connection with Preservation of Land for Public Benefit.)

Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 28th June 1951.

Alert me about debates like this

(1) Section thirty-one of the Finance Act, 1937, and section thirty-one of the Finance Act, 1949 (which sections exempt from estate duty in certain circumstances land given to the National Trust and maintenance funds given with land so exempted, and are hereafter in this section respectively called "the 1937 section" and "the 1949 section"), shall in the case of property given to the National Trust be extended as follows:

  1. (a) any exemption from estate duty conferred by the 1937 section in relation to an estate or interest in land given by any person to the Trust shall be granted also, and to the like extent, to any objects ordinarily kept at the time of the gift in a building forming part of the land, and given by him with that estate or interest with a view to their preservation or use in the building, and where objects so given are exempted by virtue of this paragraph the 1949 section shall apply as if they formed part of the building;
  2. (b) where a person gives to the Trust any objects ordinarily kept at the time of the gift in a building which is then inalienably vested in the Trust, and he does so with a view to the objects' preservation or use in the building, then (subject to paragraph (d) of this subsection) the 1937 section and the 1949 section shall apply in the case of the objects so given as if the property comprised in the gift had been an estate or interest in land, except that any condition as to the Trust's interest being held by it inalienably for the public benefit shall not apply;
  3. (c) where a person gives property to the Trust as a source of income for the upkeep—
    1. (i) of any land which is at the time of the gift inalienably vested in the Trust; or
    2. (ii) of any objects which are then vested in the Trust and ordinarily kept in a building forming part of any such land, having been given to the Trust with a view to their preservation or use in that building;
    and he gave or joined in giving to the Trust its estate or interest in that land or those objects, as the case may be, then (subject to paragraph (d) of this subsection) the 1937 section shall apply in the case of any of the property so given, whether an estate or interest in land or not, as it applies to an estate or interest in land, except that any condition as to the Trust's interest being held by it inalienably for the public benefit shall not apply;
  4. (d) paragraph (b) and sub-paragraph (ii) of paragraph (c) of this subsection shall not apply in the case of any objects unless the gift of the objects or property in respect of which exemption is claimed by virtue of that paragraph is made by a person who also gave or joined in giving to the Trust its estate or interest in the building in which the objects are ordinarily kept at the time of the said gift.

(2) Where, with a view to the preservation of a house or other building for the public benefit, a person gives or has given an estate or interest in the building to, or to trustees for, a Government department, a local authority or any other body not established or conducted for profit, and the Treasury (whether before or after the time of the gift) direct that the gift should be treated as falling within this subsection, then the 1937 section and the 1949 section, together with the foregoing subsection of this section, shall apply in relation to the building and any grounds given with it and specified in the direction, as if references to the National Trust were references to that department, authority or body or to those trustees, as the case may be, and as if their estate or interest in the building and any such grounds were inalienably vested in them.

In the two next following subsections, any reference to a building includes any grounds specified or to be specified in a direction under this subsection relating to the building.

(3) The Treasury shall not give a direction under the foregoing subsection in the case of any building unless in their opinion—

  1. (a) the building is one for the preservation of which special steps should be taken by reason of its outstanding historic or architectural interest and the cost of preserving it; and
  2. (b) the department, authority or body in question is an appropriate one to he responsible for the building's preservation;
and before giving any such direction the Treasury may require such undertakings to be entered into as they think appropriate for securing the preservation of the building and reasonable access thereto for the public (including undertakings restricting the use or disposal of the building).

(4) Any undertakings entered into as aforesaid may be varied from time to time by agreement between the Treasury and the person bound by the undertakings, and the Treasury may require further undertakings to be entered into as a condition for agreeing to any such variation or consenting to anything for which their consent is required by any undertaking; and the obligations imposed by any such undertaking shall be enforceable for the public benefit by injunction (or, in Scotland, by interdict or by petition under section ninety-one of the Court of Session Act, 1868), and any purported disposition of a building in contravention thereof be void, as if the obligations had been imposed by Act of Parliament.

(5) For the purposes of this section, except in so far as the context otherwise requires.—

  1. (a) the expression "gift" includes devise awl bequest and the expression "give" shall he construed accordingly, and in relation to a devise or bequest any reference to the time of the gift shall he construed as a reference to the time of the testator's death;
  2. (b) the expression "vested" means indefeasibly vested, and a building or land shall be deemed to be inalienably vested in the National Trust if an estate or interest therein is vested in the Trust (whether in possession or not) and has been so dealt with as to be held by the Trust inalienably:
  3. (c) any reference to giving objects shall he construed as a reference to giving the whole or a limited interest in the objects, and any reference to objects being vested in the National Trust shall be construed accordingly;
  4. (d) the expression "National Trust" means the National Trust for Places of Historic Interest or Natural Beauty or, in relation to Scotland, the National Trust for Scotland for Places of Historic Interest or Natural Beauty;
  5. (e) the expression "local authority" means the Common Council of the City of London or a local authority within the meaning of the Local Government Act, 1933, the London Government Act, 1939. or the Local Government (Scotland) Act, 1947.

(6) An object shall not be deemed for the purposes of paragraph (a) of subsection (1) of this section to be given with an estate or interest in land if either is subject to an interest or power of appointment created by the gift of it to which the other is not subject:

Provided that, where the object is given subject to one or more life interests created by the gift of it to which the estate or interest is not subject, but which (if it were so subject) would fall within subsection (2) of the 1937 section, then the said paragraph (a) shall apply in relation to the object as it would apply if the estate or interest had also been given subject to that life interest or those life interests.

(7) Where the property given by any person as a source of income for the upkeep of any land or objects is in the opinion of the Commissioners more than enough to provide (with a reasonable margin) for the upkeep of the land or objects out of the income of the property, so much only as is in their opinion enough for that purpose shall be deemed for the purposes of paragraph (c) of subsection (1) of this section to be given as a source of income for the upkeep of the land or objects, and in determining what is enough for that purpose the Commissioners shall have regard to any other property given by the same or any other person as a source of income for the upkeep of the land or objects or any part thereof (with or without any other land or objects).

(8) This section applies to duty leviable on or with reference to any death occurring after the commencement of this Act but in relation to duty so leviable shall apply to gifts made before as well as after that commencement.—[Mr. Gaitskell.]

Brought up. and read the First time.

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

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

The House will recall that during the Committee stage of the Bill we discussed the present Clause 30, which provides that exemptions from Estate Duty of land, including houses, and maintenance funds given to the National Trust be extended to similar properties given to Government Departments, local authorities and universities and also provides that the contents of houses given in this way should similarly be exempted.

I think it will be agreed that there was a general welcome for this Clause, but a number of hon. Members proposed an extension of the list of objects which were to have the benefit indirectly of the exemption from Estate Duty. I then proposed to the Committee that we should drop the idea of having a specific list of bodies but allow the Treasury to examine whether it was satisfied that this was the best way to secure the preservation of these historic places.

The new Clause carries out this undertaking and hon. Members will see that we have drawn it pretty widely and, instead of the list, we have used the words, Government department, a local authority or any other body not established or conducted for profit. We have, of course, also made it plain that the purpose of these exemptions is simply to preserve these houses for the benefit of the nation by laying down the considerations which the Treasury have to bear in mind when giving exemptions from Estate Duty.

I think the only other point I need mention is that we have taken the opportunity in this new Clause to make one other small change of which I believe the House will approve. It is that we shall no longer make it a condition when exemption from Death Duty is claimed in respect of a house and contents that the claim for exemption must be made at the same time. They must be made by the same person but it need not be at the same time as for the house.

Photo of Mr Henry Strauss Mr Henry Strauss , Norwich South

As the right hon. Gentleman has said, the moving of this new Clause is a sequel to our debate on 12th June and the Chancellor of the Exchequer has fully carried out the promise he then made to the Committee.

I think the new Clause falls under two heads, and I wish to say a word about each. The first concerns the National Trust. Since on the last occasion I was moving an Amendment dealing with the second subject and not with the National Trust, perhaps I may be allowed to say a word as a member of the Executive Committee of the National Trust, and I think the only one who is able to speak here this afternoon. My hon. Friend the Member for Twickenham (Mr. Keeling) is unfortunately away and my other colleague on the Executive Committee of the National Trust, the hon. Member for St. Pancras, North (Mr. Kenneth Robinson), might feel somewhat embarrassed in speaking in this debate.

On behalf of the National Trust, I wish to thank the Chancellor of the Exchequer for this Clause. It increases to a small, but to a useful, extent the benefits already enjoyed by the National Trust. I think that will be welcomed in all quarters of the House. There is nothing in which British creative genius has been shown more than in the best of our country houses and their grounds, and anything which helps to preserve them is to be welcomed. On a recent Bank Holiday I happened to visit Montacute in Somerset and saw what a pleasure that great house and those grounds could give not only to the people of Somerset, but to people from all parts of the country. I wish, therefore, to thank the right hon. Gentleman for the part of the new Clause which concerns the National Trust.

As the right hon. Gentleman stated, the remainder of the new Clause extends the provisions in order to meet an Amendment that I moved in Committee and an Amendment moved by my right hon. Friend the Member for Horsham (Earl Winterton).

The Clause is a little complicated, perhaps necessarily so. Although there may be a general desire to save these valuable properties, there may be points upon which there is difference between the two sides of the House, but, so far as there can be general agreement, it is to be welcomed. I express the hope to the Chancellor that the Treasury will watch sympathetically the working of this Clause and that, in so far as the working reveals the need for further amendment and extension, that amendment and extension will be forthcoming whatever Government are in power.

Photo of Mr Frank Hayman Mr Frank Hayman , Falmouth and Camborne

Reference has been made to the National Trust, and I see in the new Clause that the Chancellor may require an undertaking that whatever is handed to the Trust will be properly looked after. I wish to draw attention to one case where I think the National Trust has been at fault and that is where cliff lands have been handed over and they have allowed agriculture to destroy a great deal of the very distinctive cliff flora. That applies to Cornwall. I hope that the regulations will be so drawn as to secure that the National Trust does fulfil the trust reposed in it.

Photo of Mr Christopher Hollis Mr Christopher Hollis , Devizes

I do not want to cast a shadow over the proceedings, especially on this rare occasion when my hon. and learned Friend the Member for Norwich, South (Mr. H. Strauss) is agreeing with the Government. I certainly join in welcoming the Clause. I remain unrepentant in my opinion that we cannot solve this problem until we do something on the lines of the French system of direct exemption, but here is the proposed new Clause and we want to make the best of it.

I want to be quite clear about what the occupier of a beautiful house should now do if he is to prove himself a good citizen. If he wishes to get off Income Tax, the only way is by turning his house into business premises and managing it on a commercial basis with a view to the realisation of profits. On the other hand, if he wants to get off Death Duties, his only course is to hand his house over to some body which is not established or conducted for profit. He is in the dilemma whether it is the act of a good citizen to use his house so that it will make money or so that it will not make money. The Chancellor distinguishes between people who make profits and those who do not. I must say that it reminds me of the young lady in one of Saki's stories who knew the difference between right and wrong but could never remember which was which. It is very important that these people should know which it is their duty to do.

There is a point not merely of linguistic but of practical importance in the proposed new Clause. In subsection (7), the condition is laid down, quite properly, that we cannot get exemption from Death Duties for an unlimited sum of money handed over with a house but only for a reasonable sum of money that will cover the upkeep of the house. Suppose the occupier hands over the house with what, at the moment, is a reasonable sum of money to keep the house going. Later, owing to inflation or some interference with our domestic economy, that sum of money becomes insufficient.

What can the National Trust do in order to keep up the house? Are the Trust allowed to indulge in any activity which earns enough to keep up the house? The property is inalienable. They cannot get rid of it. They cannot make a profit. How can they keep the house up? I understand—and I hope that the Chancellor will tell me whether I am right or wrong in this—that although the Trust cannot be a profit-making body in the sense that they cannot distribute dividends, they can undertake activities which will help in the upkeep of a house.

I understand that they can make money out of one house and apply it to the upkeep of another house. If that is true, it makes things rather easier. If I am wrong, and the National Trust cannot undertake activities which will bring even sixpence into their coffers, it will be very difficult for them because they have many houses where it is impossible to make much money, even if they were allowed to do so.

This plan of handing property over to the National Trust is admirable, but for reasons such as I have outlined not many occupiers have taken advantage of it. I welcome the proposed new Clause. I realise that there has to be some reservation if we are to deal with the problem in this way. I reserve my own opinion as to the need for dealing with it eventually in a different way. Let us make the best of this plan while we are about it. I should be grateful if the Chancellor would make it clear what activities the Trust would be allowed to indulge in to raise money, if the money handed over in connection with any property proves to be insufficient in the way I have described.

4.15 p.m.

Photo of Sir Isaac Pitman Sir Isaac Pitman , Bath

I should like to raise a drafting point containing a matter of general principle to which I should be glad if the Chancellor of the Exchequer would give his attention at a later stage. It is in subsection (2) of the proposed Clause, where we see the words: not established or conducted for profit. Strictly speaking, every undertaking of that kind must make a profit, particularly if, before that, it has made a deficit. The real issue for the companies and corporations which the Chancellor has in mind is surely the distribution of profits. I should like the right hon. Gentleman to consider this point in connection with this Bill, and certainly in connection with future uses of those words. I know that it is now established, but do not let us establish and continue anything which, in essence, is wrong.

Photo of Mr Tufton Beamish Mr Tufton Beamish , Lewes

There are two formalities which I want to mention in connection with the proposed new Clause, which I welcome and which, generally speaking, achieves the broad objective which the Chancellor of the Exchequer had in mind. I certainly think it covers the point raised by the noble Lord the Member for Horsham (Earl Winterton) during the earlier debate.

I see there is an Amendment on the Order Paper for the deletion of the word "outstanding." The inclusion of this word is in some way a limitation of the broad terms of the Clause and may, in future years, provide the Treasury with an excuse for not carrying out the intentions of the Clause. I should be glad to have an assurance from the Chancellor of the Exchequer that this is not so and that the Clause contains no such loophole. I am sure that his intentions are pure but he could underline them by an assurance on the point which I have raised.

It is not at all clear why trusts, other than the National Trust, get relief from Estate Duty only in respect of houses or other buildings, whereas the National Trust get relief on all property. I may be wrong in thinking that that is the case, but in several places in the proposed Clause the word "building" is used. Unless the word "building" is clearly defined, as it could be by the addition of a paragraph (f) in subsection (5), there may be a grave limitation in the carrying out of a laudable intention.

For example, the Sussex Archaeological Society, in which I am interested, has a number of very historic properties in my constituency, including Lewes Castle and Keep. They also look after the Long Man of Wilmington, a colossal figure carved in the Downs that does everything except vote for me. By no stretch of the imagination could the Long Man of Wilmington be described as a "building." The use of this word appears to be a definite limitation of the proposed Clause.

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

Both the hon. Membet for Devizes (Mr. Hollis) and the hon. Member for Bath (Mr. Pitman) referred to the meaning of the words established or continued for profit. It is really a matter of definition. I am assured that the normal meaning of the words is the carrying on of business for the purpose of distributing profits. I do not think that either hon. Member need have any anxiety as to the body he had in mind being ruled out by the proposed Clause.

As to the point made by the hon. and gallant Member for Lewes (Major Beamish), on the phrase: outstanding historical or architectural interest, I would say that those words were used in connection with the Gowers Committee's Report and we took them into the Clause. It is a good phrase, indicating broadly the kind of property we have in mind.

On the second point he raised, about the National Trust, of course the Trust is concerned with land, apart from buildings, whereas the main purpose of the Gowers Committee's Report was to ensure the preservation of historic houses. That is probably the explanation which the hon. and gallant Member is seeking. [An HON. MEMBER: "Houses and grounds."] Yes, and grounds.

Photo of Mr Tufton Beamish Mr Tufton Beamish , Lewes

Would that definition include the site of an historic building if the building were partly or almost wholly destroyed?

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

I should not like, without taking legal advice, to be quite sure about that, but I would point out that there is nothing to prevent the National Trust from accepting gifts of that kind.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

We approve the Clause and support it with pleasure. We are grateful to the Government for having looked at the matter again and having improved on their first effort. We understand that this does not mean that the Government have now finished with the suggestions in the Gowers Report and that they are under consideration by the Government, as we were told at an earlier stage, and that the Government will see what can be done in that direction. The Clause deals with the limited field of extending something which already exists up to a point.

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

Mr. Gaitskell indicated assent.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I see that the right hon. Gentleman is nodding his head and I think I can take that as an admission of the case. We have reason to be satisfied, particularly if he takes the advice of my hon. and learned Friend the Member for Norwich, South (Mr. H. Strauss), and watches how the Clause operates when it becomes law.

With regard to what was said by my hon. and gallant Friend the Member for Lewes (Major Beamish) about the definition of: …outstanding historic or architectural interest. I take it that that means three different things; not "outstanding historic" but "outstanding" or "historic" or "architectural" interest. I can imagine some things which might be outstanding but not of historic or architectural interest—

Photo of Mr Douglas Clifton Brown Mr Douglas Clifton Brown , Hexham

The right hon. and gallant Gentleman cannot anticipate an Amendment which will be called as soon as the Clause is read a Second time.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I beg your pardon, Mr. Speaker. I certainly did not want to say anything in anticipation. I apologise; I thought from what my hon. and gallant Friend said that the Amendment would not be called. As to the Clause itself, we are grateful to the right hon. Gentleman and have much pleasure in doing our part in putting it on the Statute Book.

Question put, and agreed to.

Clause read a Second time.

Photo of Mr George Mathers Mr George Mathers , West Lothian

I beg to move, as an Amendment to the proposed Clause, in subsection (3, a) to leave out "outstanding."

Perhaps it would be for the convenience of the House to consider at the same time my Amendment in subsection (3, a), after "architectural," to insert "or æsthetic."

I can certainly join other hon. Members in thanking the Chancellor of the Exchequer for the wider terms which are used in the Clause. I am seeking to make them wider still, not in an antiquarian interest but in the interest of live human problems of the present day. The Chancellor received representations earlier that there should be an opportunity for bringing, for example, churches into the terms of the Clause, and that has been done by the reference made to bodies which are not profit making.

The reason which prompts me to bring forward my Amendments is that one of the greatest benefactions practised at the present time in regard at least to the Church of Scotland by members and friends of that Church is to leave houses to it to be used for what can definitely be described as a public purpose, as eventide homes for aged people. It is so that difficulties may not be placed in the way of people who are willing to leave their houses for that purpose that I seek to broaden the terms of the conditions which cover the granting of this exemption.

The Chancellor would be completely safeguarded in this matter by the fact that the powers for dealing with it are entirely in the hands of the Treasury and that he does not need to bind himself closely by using words like: …outstanding historic or architectural interest… There might be buildings of some historic interest but not of outstanding historic interest, and therefore I believe that the word "outstanding" is unduly restrictive from the historic point of view and I seek to delete it; but I seek to give my right hon. Friend another description which would allow consideration to be given to the bequeathing of a house for the purpose, for example, that I have indicated by inserting the term "aesthetic." That would broaden the basis of this provision and would allow a real need to be reasonably met.

The position is safeguarded even beyond what the Treasury can do, because those who have houses left to them to be used for a non-profit making purpose have to take into account whether they can afford to accept the gifts that are offered to them. I know of cases in which the National Trust has found itself unable to accept buildings bequeathed to it because of the expense of their maintenance and because they were not of sufficient historic or architectural interest to cause the Trust to accept the financial responsibility of maintaining them in perpetuity. The same applies to a body like a Church; it cannot afford to take on responsibilities for buildings unless it believes that it can run the buildings for the purpose for which they are intended and maintain them properly.

In accepting the Amendments, the Chancellor would be taking nothing away from his own powers but would be acting reasonably and helpfully to the bodies that I have indicated.

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

As my right hon. Friend the Member for West Lothian (Mr. Mathers) has said, the final decision in these matters must rest with the Treasury, as it does in the Clause. What we are really discussing is the kind of guidance that we should give to the Treasury on this. I believe that we should retain "outstanding." because of its use in connection with the Gowers Report and because I do not want to give the impression to anybody that we can just exempt from Death Duty houses which are really of no very great importance. It is clear that we must restrict ourselves in a matter of this kind to buildings which are of some historic or architectural significance.

I ask my right hon. Friend not to press his first Amendment, but I will accept his second Amendment, as I am anxious to meet him and as I feel that there is something in adding "or aesthetic." I cannot for the moment think of many instances where a house has aesthetic interest but no architectural interest, but I am not an expert in these matters, and it might be so.

Amendment negatived.

Amendment made to the proposed Clause: In subsection (3, a) after "architectural," insert "or aesthetic."—[Mr. Mathers.]

Clause, as amended, added to the Bill.