Orders of the Day — New Clause. — (Recovery of Grants on Disposal of Property within Three Years.)

– in the House of Commons at 12:00 am on 1st June 1962.

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(1) If, during the period of three years beginning with the day on which a grant is made under this Act to a person towards the repair or maintenance or upkeep of any property, that person disposes of the interest, or any part thereof, held by him in the property on that day by way of sale or exchange or lease for a term of not less than twenty-one years, the local authority may recover from that person, in any court of competent jurisdiction, the amount of the grant, or such part thereof as to them seems fit.

(2) If, in the case of property towards the repair or maintenance or upkeep of which a grant is made under this Act, a person becomes entitled by way of gift from the grantee, whether directly or indirectly (but otherwise than by will), to a part of the interest held by the grantee in the property on the day on which the grant is made, a disposal by the donee in any manner mentioned in the foregoing subsection of the interest so acquired by him in the property, or any part of that interest, shall be treated, for the purposes of that subsection, as a disposal by the grantee of a part of the interest so held by him, and, if, in the case of any such property, a person becomes entitled by way of such a gift to the whole of the interest held by the grantee therein on the day aforesaid, the foregoing subsection shall have effect as if the grant had been made to the donee instead of to the grantee and that interest had then been held by the donee.

(3) Subsection (1) of this section shall not be taken as conferring on a local authority a right to recover, in the event of proceedings thereunder being brought in relation to disposals of several parts of an interest in property, amounts in the aggregate exceeding the amount of the grant.—[Mr. Channon.]

Brought up, and read the First time.

Photo of Mr Paul Channon Mr Paul Channon , Southend West

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

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

It would be convenient also with the new Clause to discuss the Amendment in the name of the hon. and learned Member for Kettering (Mr. Mitchison), in Clause 1, page 2, line 3, at end insert: (3) It shall be a condition of any contribution made by grant under this section in relation to a building, which is or consists mainly of a dwelling house, that if within three years of any payment by way of such contribution the building is sold, there shall be paid by the vendor to the local authority who made the contribution a sum equal to the amount of the said payment or to the amount of such enhancement of the sale price as the District Valuer may certify to have resulted from the said payment, whichever amount is the less:Provided that no more than one payment shall be required under this subsection in respect of any one payment by a local authority.(4) A contribution to which the last foregoing subsection applies and payment by way of such a contribution or under the said subsection to a local authority shall be registered in the register of local land charges by the proper officer of the local authority in such manner as may be prescribed by rules made for the purposes of this section under subsection (6) of section fifteen of the Land Charges Act, 1925.

Photo of Mr Paul Channon Mr Paul Channon , Southend West

I am obliged, Mr. Deputy-Speaker.

The new Clause is the result mainly of an undertaking which I gave to the hon. and learned Member for Kettering, (Mr. Mitchison) in Committee. I should like to say how grateful we were to the hon. and learned Member, who told me that he was unable to be here this morning, for his careful and keen attention to the Bill at that stage.

The House will, I think, agree that this is probably the most important Amendment to the Bill to be discussed today. Its purpose is to enable local authorities to recover, should they think fit, the whole or part of any grant which they have made towards the upkeep of the building should the property change hands by way of sale, exchange or lease for twenty-one years or more.

It is obviously improper for anyone to make personal profits from these public funds. The new Clause will, I hope, avoid that danger. The person who has received the grant is the person who must repay it if he disposes of the property within a three-year limit unless he does so by gift, in which case the person receiving the property by gift takes the place of the grantee. I hope that the House will agree that it would be wrong to recover from a person who received the property by bequest under a will.

It seems to me that these provisions will be adequate to stop any improper profit-taking speculating. Again, however, this is a permissive power, because there will be cases when it would be unreasonable to recover these grants. There may, for example, have been additional expenditure incurred at the specific request of the local authority. In addition, the local authority might be given discretion not to exercise this power if it would cause undue hardship. I have included subsection (3) in the Clause to prevent a local authority being able to continue to recover these grants if there is more than one sale or disposal of property within the three-year period, since obviously that would be unfair.

The Amendment of the hon. and learned Member for Kettering is subject to various difficulties which my new Clause would avoid. It would be extremely difficult to work out, as the hon. and learned Member would like to do, the enhancement value of the property. I should not envy the task of the district valuer which the hon. and learned Member has sought to impose. It may well be that the element of enhancement was extremely small, and there might be many other reasons why the value of the property had risen. For example, the price of land in the neighbourhood might be an important factor. Therefore, hon. Members will probably agree that it would be extremely difficult to work out the exact enhancement value. It would be fairer and certainly much simpler to recover the amount of the original grant.

The hon. and learned Member's Amendment would be simple to evade. It refers only to sale. Therefore, all sorts of evasions could be worked out, possibly by gift to a relation or by a release in consideration of a premium. As hon. Members who served on the Standing Committee will remember, the hon. and learned Member, in his usual courteous way, threatened that he would jeopardise the whole progress of the Bill unless I met him satisfactorily upon the principle of enhancement. I think and hope that I have been able to show that my new Clause closes more loopholes than his Amendment would do.

We all want to stop any improper making of money through these grants. There will, I hope, be few cases when the new Clause will be needed. To make sure that there will be no sharp practice and in the hope that the House will agree that the Clause will be effective in stopping any such practice, I commend it to the House.

Photo of Mr Jasper More Mr Jasper More , Ludlow

I am glad to give my support to the new Clause, which has been so excellently explained by my hon. Friend the Member for Southend, West (Mr. Channon). A Clause of this kind is essential if we are to secure the public support that we need for legislation of this nature and the feeling that local authorities, if they make these contribution's, can recover in cases when recovery is justified.

When, in Committee a short time ago, we were discussing an Amendment relating to gardens, the right hon. Member for South Shields (Mr. Ede) emphasised how important it was that legislation of this type should not be a kind of charity towards the owners of large and expensive country houses. There are cases very different from examples of that kind which weigh upon some of us. May I mention one which is topical? I remind the House that two days ago we had from the right hon. Gentleman the Minister of Housing and Local Government the historic statement that there was to be a new town in Dawley. That designated area includes part of my constituency, and it may give rise to certain curious and unfamiliar problems, of which I will give one. We have there a famous and historic building which was built by Sir Robert Brooke, Speaker of the House in 1554. For reasons which I need not go into, that building is now in a very poor state, and the present owner is not, and has not been, in a position to do anything to restore it.

The position could arise that for the public interest, and particularly if this new development takes place around it, extensive expenditure would be needed. It is a rather curious situation, and the new Clause is relevant to consideration of it. Expenditure might be made on a private building against the wishes of the owner, or not on the owner's application. That is the kind of situation with which we might be faced here. I should like the Parliamentary Secretary to say a few words about the position which would arise if a local authority felt it necessary to spend money when that expenditure had not been requested by the owner of the property.

I think that in principle the new Clause is one which we should all support, because I am certain that in the vast majority of cases it is what public opinion would expect to see the House insist on in legislation of this kind.

1.15 p.m.

Photo of Mr Edward Gardner Mr Edward Gardner , Billericay

I support the new Clause and congratulate my hon. Friend the Member for Southend, West (Mr. Channon) on the clarity which it manages to achieve. I believe that it is necessary to make certain about the purposes of the Bill, beyond peradventure, and I should like to add to the remarks made by the right hon. Member for South Shields (Mr. Ede) in Committee that the purpose of the Bill is not to provide a new "Poor Law" for people who live in large houses. I believe that the operation of the new Clause will remove all doubt on the issue and emphasise public spirit which is behind the Bill.

I agree with what my hon. Friend the Member for Southend, West said about the practical difficulties of the Amendment in the name of the hon. and learned Member for Kettering (Mr. Mitchison). I agree that the district valuer would be faced with an insuperable task in deciding what would be the enhancement of the sale price of a property which has attracted a grant, and I do not see how he could possibly identify the effect of the grant in raising the sale price from all the other influences which inevitably would have the same effect.

Because I believe that confusion and uncertainty would follow the hon. and learned Member's Amendment, and because I believe that in my hon. Friend's new Clause there is certainty. I support the new Clause.

Photo of Sir Ronald Bell Sir Ronald Bell , Buckinghamshire South

I also support the intention of my hon. Friend the Member for Southend, West (Mr. Channon) in moving the new Clause. This was perhaps an oversight in the original Bill—the kind of oversight which Standing Committees never fail to find out and, in so doing, perform a useful function.

I have one or two doubts about the way in which it is to be done. I see the objections to the Amendment of the hon. and learned Member for Kettering (Mr. Mitchison), but I also see some opposite objections to the new Clause. Most of the houses with which we are dealing are large buildings, expensive to live in and to repair, and in most parts of the country, not very marketable.

Let us look at the position which will arise when a person who has a house of this kind receives a grant of money which is spent on the repair or maintenance of the house and then has occasion to sell it within three years of receiving the grant. Let us assume that he receives £10,000. It is possible, and in most parts of the country very likely, that the resale value of the house will be enhanced not by £10,000 but by very much less, perhaps £4,000.

What is the owner's position? He sells the house, and the local authority, which may have quite a diffierent view about this, says to him, "Two years ago you had £10,000 from us, every penny of which you spent on repairing and improving the fabric of the house. Now you have sold the house for £15,000 and you must pay us back £10,000, or something very close to that." He replies, "That is outrageous. Without your grant I should have sold the house for only £4,000 less". The local authority says, "We do not think so."

The trouble is that under the new Clause nothing can be done about that. It is absolutely in the discretion of the local authority. I appreciate that we shall he dealing with a public body which has shown a sense of public responsibility in making the original grant for the repair of the building, but even public bodies can occasionally be at any rate wrong. Generally, in our legal arrangements we make provision for their opinion to be challenged when the property of the individual is at stake.

I am, therefore, a little worried by this lacuna in the new Clause, although I do not see what can be done. The hon. and learned Member's Amendment in some degree meets that problem, because he brings in the district valuer, who has to estimate the degree of enhancement. I see the difficulties, which my hon. Friend explained, for the district valuer in estimating the enhancement of an historic building by physical repairs which have been carried out. But district valuers almost always have a fairly difficult task to do. They are the long stops in our system of compulsory purchase, and their decisions are by no means always accepted. Quite often one challenges them in the Lands Tribunal or elsewhere.

But they are very skilled, and they are never far wrong, unless a point of law is involved as to the basis upon which they should go. I think that I shall carry with me the Parliamentary Secretary, because like myself he has had experience of this branch of the law, if I say that when we have a major readjustment of a value arrived at by the district valuer it is on a point of law about the basis upon which the valuation should have been made, and once we have a decision on the point of law, it is very rarely necessary to continue the dispute on the actual figure. That is almost always, or very often, then settled by agreement between the parties in the normal case.

The district valuer would be a very useful safeguard here. He would not give perfect justice, but I think that it would be enough, and I do not think it necessary to allow the usual appeal from the district valuer to the Lands Tribunal. In a case like this, one could take a reasonably broad view. But I am unhappy about there being no provision at all and about leaving it to the ipse dixit of the local authority.

My second problem is in the much less usual but certainly real case in which the value of the property is substantially enhanced in the market by the money which has been spent on it. In the Clause we are dealing solely with cases in which the property is sold within three years of the grant. That is not quite the same as within three years of the purchase of the property by the owner, but it happens to be very much the same thing. Suppose that the property is sold within three years of its having been bought by the owner. Quite soon after buying it, he receives a grant under the Bill which increases the value of the property. He sells the property within three years of having bought it, and by this time the Finance Act, 1962, is in force.

What will be the position about capital gains? He has not held the property for three years and he has sold it at a profit. We are putting a provision in the new Clause that he must repay perhaps the whole amount of the grant to the local authority. Have we thought of the necessity for tying up these two provisions? It would be serious if he had to pay back £10,000 to the local authority and had also to pay Income Tax and perhaps Surtax on £10,000 to my right hon. and learned Friend the Chancellor of the Exchequer. That is not an objective which we have in mind.

These two problems cannot be solved in a brief debate this afternoon, but they are both substantial—substantial in magnitude, if they are sound. If they are sound in argument, then their magnitude is substantial and they will have to be looked into.

A much smaller point is that, similarly, the discretion of the local authority is unlimited where there is a sale of part of the property. This is the first problem again. That was in the mind of my hon. Friend in drafting the new Clause. Having it in mind he has added subsection (3), which provides that they cannot get back more than they gain. Obviously, in putting in that subsection, he has in mind the possibility that a local authority would ask for more than a fair share of the loan or advance when only a part of the property is alienated.

That is the first point again, but another aspect of it, and it could be rather serious if a unitary grant were given for the building of a garden. I am not sure whether or not, under the drafting of the Clause, that would take place. We have had little time to consider the drafting. But if there were a unitary grant for the building of a garden, and a part of the garden were then sold, a local authority might feel rather bruised and injured, and might demand back an unfair proportion of the advance it had made. Here again, I cannot see what would be the practical answer under the provisions of the Clause.

I have not suggested any solution to the difficulties, but I hope that my hon. Friend and the Parliamentary Secretary will consider the points that have been made between now and the further proceedings of the Bill in another place, to see whether those difficulties can be met.

Photo of Dr Alan Glyn Dr Alan Glyn , Wandsworth Clapham

The proposed new Clause and the Amendment reflect the genuine worry which the Committee has that the Bill might be regarded as being of benefit to a certain class of the community. They attempt to overcome any possibility of property "spivs" and developers getting hold of property of historic value and making an unwarranted profit out of it at the expense of the public and the ratepayers.

Of the two, I prefer the new Clause. The Amendment has the great disadvantage of attempting to assess the increased value accruing to a property by virtue of the grant. During our discussion the difficulties attendant upon the assessment of such a value have been emphasised. Much as I respect the power and sagacity of district valuers, I regard it as almost impossible to estimate how much a property has increased in value, especially in these times of rapidly rising land values. It is difficult to say whether the £10,000 worth of expenditure on the roof has increased the value of a house by £7,000, £8,000 or any other figure. It would be placing a very unreasonable burden upon the district valuer to ask him to assess the increased value. Further, the Amendment refers only to sales, whereas the Clause includes leases, and contains more general powers of enforcement.

My hon. Friend has excluded gifts and undue hardship, but one of the difficulties which arise is caused by the fact that the Clause provides no method of judging the amount which should be recovered. There is a permissive right of the local authority to recover a certain sum, but it is difficult to determine exactly what that sum should be. It is true that the owner, who benefits from the grant, knows when he goes into the business that there is a possibility of his being required, later on, to pay back a proportion of that grant, so that the position is not as unfair as it would seem, prima facie, from the Amendment, but there is a difficulty in assessing the amount which should be repaid. Further, the Clause provides no machinery for appeal.

A grant made by a local authority has to have my right hon. Friend's approval, but as I understand the Clause it contains no provision for my right hon. Friend's Department saying, "We think that a reasonable sum to be recovered from the borrower or the beneficiary would be £x and not £y." I put this point to my hon. Friend because the matter is not entirely in the hands of local authorities. They have to obtain the grant from my right hon. Friend, ab initio, and it is therefore not unreasonable that they should consult him when there is any question or doubt about the reasonableness of a local authority's demand for repayment.

Subject to these points, however, I have no hesitation in supporting the new Clause. It makes the Bill much fairer in its operation, and removes any doubt from the minds of the public that the Bill may be used for improper purposes by developers and other persons who are interested not in the property but merely in securing some financial advantage at the expense of the ratepayers.

Photo of Mr James MacColl Mr James MacColl , Widnes

The hon. Member for Southend, West (Mr. Channon) has mentioned that my hon. and learned Friend the Member for Kettering (Mr. Mitchison) has unfortunately been called away and has not been able to be here this morning. That is why my contemptible self has been occupying this position on the Opposition Front Bench. But I have been very carefully briefed—as anybody who knows my hon. and learned Friend can well believe—about what I am to say on the subject before us. My hon. and learned Friend naturally feels that his Amendment is a good one. I do not share the doubts expressed about the burden that would be placed upon the district valuer. I agree with the hon. Member for Buckinghamshire, South (Mr. Ronald Bell) that if their noses are put to the quarry district valuers will solve the problem. But my hon. and learned Friend would not want to be obstructive for a moment. He recognises that the substantial point has been met.

It is not a question of thinking in terms of stately homes, and large grants of £10,000 or £20,000. The sort of property that is likely to receive a grant from a local authority is small property, and in most cases the grant will be small. It is often just that small property which will be the more marketable. I do not think that we need worry about Castle Howard being sold to somebody at an enormous profit. To have to live in Castle Howard is not outdoor relief but indoor relief. It is almost a condition of a large grant that the person concerned should live in the place and keep it going. The problem with which we are here concerned is that of the small house which requires the removal of dry rot, re-pointing or repair of some kind. When the work has been done to such a property it is often transformed into a very attractive building, which someone may well like to live in.

In those cases it is highly desirable that there should be some means of getting back public money, even if it has been taken in good faith. At the time of receiving the grant the person concerned may not realise that he may later want to sell, or what a good price he will get. Somebody may come along who wants the house very much, and he may offer an unexpectedly high price. The person who received the grant may find himself getting a useful nest egg, which he did not expect to receive at the time he received the grant.

We must not think entirely of speculators and "spivs." My hon. and learned Friend and I feel that the new Clause is a reasonable compromise to meet the points made in Committee, and we have no hesitation in supporting it.

1.30 p.m.

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Norwich South

I am sure that no one wants to forget that the purpose of the Bill is to encourage local authorities to make grants and to encourage owners to apply for them. Therefore, we should bear in mind at every stage that this Measure should simplify and not complicate the law. I believe that there was a feeling at one stage—certainly as far as I was concerned—that it might not be necessary, because many of the loans will be small, as the hon. Member for Widnes (Mr. MacColl) said, to have this power at all. However, there is no doubt that there was a very strong feeling on both sides—the case was very forcibly put by the hon. and learned Member for Kettering (Mr. Mitchison)—that there ought to be some safeguard against the abuse by an owner of the powers in the Bill. That is really the object of this Clause.

The proposal in the Clause put forward by the hon. and learned Member for Kettering certainly formed a basis on which we were able to have discussions. I think that the new Clause put forward by my hon. Friend the Member for Southend, West (Mr. Channon) is adequate to meet the wishes expressed on both sides of the House on this matter.

My hon. Friend the Member for Ludlow (Mr. More) asked what the position would be if the work were done without the consent of the owner. I do not think that that could possible apply under the Bill. As my hon. Friend will appreciate, there has to be a grant or a loan, which, of course, need not be accepted if it is not wanted. What I think may happen—and this may be the matter which most concerns my hon. Friend the Member for Ludlow—is that the owner may be pressed to undertake the work by the local authority because it wants in the interests of local amenity to see the work of restoration carried out. The local authority may encourage the owner to do work which, in a sense, does not contribute to the economic planning of the property. We should not, therefore, in those circumstances want to see the local authority recovering the whole grant.

I feel that the provision which enables the local authority to recover, if it thinks fit—this is simply an enabling power—in whole or in part will enable us to ensure that money is recovered only when there is really a feeling that something has been taken from the public and when an unreasonable profit has been made on a sale within a period of three years.

Photo of Dr Alan Glyn Dr Alan Glyn , Wandsworth Clapham

My hon. Friend said if it were, more or less, pressed on the owner. As I see it, this provision to recover being permissive, the owner could perfectly well say to the local authority, "If you force me to do this you must bind yourself not to recover more than £x in so many years".

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Norwich South

I have no doubt that these things could be dealt with by agreement. I think that my hon. Friend the Member for Clapham (Dr. Alan Glyn) is right, that if the local authority were exercising great pressure the owner could ask for an undertaking that it would not use the powers under the Act.

This is a matter where, I think, we all ought to join with the right hon. Member for South Shields (Mr. Ede) in saying that we trust the local authorities. It is a matter entirely within their competence. They will know the people with whom they are dealing and the purposes for which they have made the grant. I believe that they can be left to deal fairly with the people in their own areas. This is a very different case from the other in which they were asked to exercise judgment on matters not wholly within their competence, and they would welcome outside assistance. I think that it would be wrong to fetter their discretion and judgment.

My hon. Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) raised, as he always does, some interesting legal points out of his vast experience of these matters. I do not share—at any rate, not wholly—his views about valuation. I think that it would really have been a great difficulty and discouragement to owners if we had had provisions calling for a valuation by the district valuer before and after grants were made. Valuation, I would say, is an art and not a science. My hon. Friend has a great deal of experience of the Lands Tribunal. I, too, have had a little experience of it in my time. I always had the feeling that the valuers were very sound on a point of law, but that in the last resort the lawyers did the valuation. However, that is as it may be.

My hon. Friend raised a very interesting point on the subject of the capital gains tax. Here I would say that I am sure that we are all anxious not to give the impression that the Bill, if it becomes law, will be a complicated Measure and that people who apply for grants should have any reason to fear that the local authorities will deal with them in any way harshly or unfairly. I undertake to consider carefully the points made in the course of the debate.

Photo of Mr James Ede Mr James Ede , South Shields

I regard the debate on this new Clause as being held in the realm of unreality. I heard the figure of £10,000 mentioned as being the amount of a grant likely to be made under the Bill when it becomes an Act. Quite frankly, I do not expect that any grant of that amount will be made. I think that when figures of that kind come into the calculation it ought to be understood that it is a matter for the Historic Buildings Council, which has very expert advice at its disposal.

Speaking as one who has been a member of the Council from its inception, I can say that we have on several occasions been perturbed regarding what might happen, but so far there has not been a single case where a building for which a grant has been made has been sold by the owner subsequent to the grant being made. It has sometimes happened that in the course of the negotiations with the Historic Buildings Council a person has appeared who is willing to buy the building before the grant is mentioned. On some of those occasions a grant has been made to the purchaser, but in no case has a grant been made and then a sale effected.

Quite frankly, the Act of 1953 makes no provision with regard to what is to happen in these circumstances. As far as I know, the Historic Buildings Council has no power to recover any grant which it has made. We have on occasion regarded that as a weakness in our position, and I think it is a good thing that something should be put into the Bill to meet the circumstances that might arise in the case of a local authority loan. However, I should be surprised if many loans for more than £800 or £900 are made under the provisions of the Bill. To talk in terms of £10,000, with the possibility that £4,000 has been added to the value of the house, is outside the realm of reality in regard to the Bill.

In as much as I understand my hon. Friend the Member for Widnes (Mr. MacColl) to say that my hon. and learned Friend the Member for Kettering (Mr. Mitchison) is satisfied with the new Clause now before the House, I have much pleasure in supporting it and welcoming it on the understanding that while one cannot control what happens under Clause 1 (1, a) of the Bill, because as I understand it if a local authority is so minded as to make a grant of £10,000 under that Clause it can do so—

Photo of Mr James MacColl Mr James MacColl , Widnes

Subject to loan sanction.

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Norwich South

Not necessarily subject to loan sanction. The local authority would need loan sanction if it needed to borrow the money but if it did it out of revenue it would be all right.

Photo of Mr James Ede Mr James Ede , South Shields

The hon. Gentleman and I have had plenty of local government experience in Surrey, and there are plenty of ways of avoiding loan sanction. One could, for instance, mortgage the sewage plant, and the Ministry would have no power to deal with one. There are plenty of ways round that.

I hope that the Ministry of Housing and Local Government, if approached under Clause 1 (1, b) for sanction to anything in the neighbourhood of £10,000, unless it be a grant by a substantial county or county borough council, would say that the appropriate thing to do would be to refer the matter to the Historic Buildings Council.

Photo of Sir Ronald Bell Sir Ronald Bell , Buckinghamshire South

I ask leave to speak again to answer what has been said by the right hon. Member for South Shields (Mr. Ede) because it was my figure of £10,000 to which he referred. I took £10,000 only as a convenient round figure. I might easily have taken £1,000. The magnitude of the sum was quite irrelevant to what I was saying.

The point I was making was amply borne out by what the Parliamentary Secretary said. It was that a loan or grant in this case might not be represented in 100 per cent. enhancement of the sale price. When he answered the debate, the Parliamentary Secretary said that there would be cases where a local authority proposed to give a grant or loan to carry out some work which was mainly of interest to the amenity of the neighbourhood and it would not be represented in the selling price of the property.

The fact that I mentioned £10,000 was that in speaking one seizes on a figure. I doubt, however, whether this is totally unrealistic, because in the Bill we are legislating for county councils as well as for smaller bodies. Although I appreciate that the L.C.C. is not included in the Bill, all the other big county councils are included. When dealing with Lancashire County Council, for instance, a grant of £10,000 would not be out of the way if it thought that it had a property in the county which was sufficiently good.

We are dealing with properties which mainly are already on the Section 30 lists and which are characteristically, although not always, substantial properties. The right hon. Member knows this better than anyone, because he has had so much to do with them. I think that the point cannot be brushed aside quite so lightly as he tried to do it. With respect to my hon. Friend the Parliamentary Secretary, I am not quite persuaded by his request that we should treat this matter lightly and broadly. I do not see the answer to the argument I put forward.

My hon. Friend said, "Let us trust local authorities. They will not ask for the money back unless that is reasonable". I wonder whether that is so. I am not accusing them of being unreasonable, but they will approach this matter by looking at the Statute. They may very well feel that they have a public duty laid upon them to recover the money if the property is sold within three years. They might approach the matter by analogy to the procedure on another grant with which they are familiar, the improvement grant. In that case they have a discretion and they can mitigate.

I think that I am right in saying, but I expect that the hon. Member for Widnes (Mr. McColl) is more up to date in his knowledge about it, that prima facie a local authority recovers the appropriate proportion of an improvement grant when the property is sold within less than a period of years specified in the Act and it mitigates when it thinks that there are special circumstances.

1.15 p.m.

Photo of Sir Ronald Bell Sir Ronald Bell , Buckinghamshire South

My hon. Friend the Member for Southend, West (Mr. Channon) has been dealing with a Bill which refers to "special reasons", but in this case we are not concerned with the motoring world.

I believe this to be the current practice of local authorities in the kind of grant with which they are primarily concerned, the improvement grant. I am very much afraid that unless they are given strong guidance they will approach this question in the same way and ask for the money back unless they feel that there are special reasons against that.

I repeat the request I made and I hope my hon. Friend the Parliamentary Secretary will look into this matter again, because it is a substantial point and we may be a little surprised by what happens. It could perhaps be dealt with by circular or in some other way, but I should prefer, if it can be done in another place, to put some guidance into the Bill. I think that could be done simply by the use of some such phrase as, "in special circumstances if they think fit". Something of that kind would show that local authorities have not a prima facie public duty to call the money back because there had been a sale.

There was a phrase used by the Parliamentary Secretary which, I think, confirmed the possible importance of what I said about the Finance Bill, 1962. He mentioned that there were a number of cases in which a purchaser—he meant a recent purchaser—was given a grant from the Historical Buildings Council. Here there will be a number of cases in which a purchaser buys because he has had informal discussions with local authorities. They say, "This is a building we have had our eye on for some time. It is getting into a very bad state. If you buy it we shall almost certainly be prepared to give a grant." So there will be the giving of a grant following very closely on the purchase in some cases.

If the sale is within three years of the giving of the grant, it may well be within three years of the purchase of the property. The question of the capital gains tax and repayment of grant will need to be brought into harmony. I think that both points I made in my speech have some substance and ought to be looked at seriously between now and the next stage of the Bill.

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Norwich South

My hon. Friend will bear in mind that I gave him assurances on those points.

Photo of Sir Ronald Bell Sir Ronald Bell , Buckinghamshire South

With respect, my hon. Friend gave assurance on the second, but not on the first point. I should like to have it.

Question put and agreed to.

Clause added to the Bill.