I beg to move,
That the Betterment Levy (Minerals) (No. 2) Regulations 1967, dated 22nd June 1967, a copy of which was laid before this House on 28th June, be approved.
I am sure these Regulations will be generally welcomed, particularly by the h3n. Member for Crosby (Mr. Graham Page).
The principal Regulations which these Regulations amend provide a wide measure of exemption from levy for mineral development. Broadly speaking, the new Regulations provide that, where the disposition is made by a landowner disposing of minerals, that is liable to levy, but that the development by the mineral undertaker is not so liable. Under the main regulations, the exemption does not apply where the mineral undertaker obtained the land from a connected person—that is, from another member of a group of companies of which the undertaker himself is a member.
Since we approved the principal regulations we have had representations from the Confederation of British Industries on behalf of the mineral undertakers, and they suggested that all transactions between groups of companies should be qualifying dispositions so as to attract exemption from levy. We have met this request, subject to two qualifications. The first qualification is that the companies concerned must all have been members of the same group on 23rd September, 1965—the date of the White Paper—and, secondly, that the member of the group of companies which is the holding company which sells to the operating company must itself have acquired the interest either before the appointed day or as a result of a notifiable chargeable act or event which would have been liable to levy.
We have made these qualifications to prevent the possibility of avoidance of levy. In other words, the safeguard that we provide is that the first company, usually the holding company must have got its interest as a result of the transaction upon which levy has been paid.
I do not blame the right hon. Gentleman for introducing these Regulations briefly to the House and for not trying to arouse the approval of the crowded benches behind him or provoke the crowded benches behind me. This time we do not expect to do that sort of thing.
We are on what I might call the second round of these Land Commission Regulations. The first 30 or so Regulations were rushed out just before the Act became operative. Now the inevitable errors and omissions have resulted from that mad rush, when the right hon. Gentleman was so keen on getting his Bill operative.
These Regulations deal with betterment levy on minerals. This was a subject which had been thoroughly badly handled throughout the passage of this Bill. Section 74, under which these Regulations are made, was one of the latecomers in the Bill. At every stage of the Bill the subject of minerals was debated and the Government had plenty of time to make up their minds, but only at a very late stage did Section 74 come into the Bill, and then everything was left to Regulations. Therefore, when the Bill was rushed on to the Statute Book we had no clue whatever about the right hon. Gentleman's intentions as to betterment levy on minerals.
Then we had the Regulations laid before Parliament only one month before the appointed day, and it is those Regulations which we are now amending. I notice that those Regulations which we are now amending, under a large block type heading "Modification of the Land Commission Act, 1967", bravely tried to set out a substitute for Section 74 of the Act as a sort of mineral levy code stretching over no fewer than seven pages of print. Then they could not get it right.
The Regulations which we are now amending describe the chargeable acts or events in relation to a mining lease—and only a lease, because betterment levy applies to a conveyance of the freehold in minerals—as follows: a lease as being Case B, the assignment of the lease as being Case A, and mineral development as Case C. The Regulations made certain exemptions, and it is to those exemptions which the amending Regulations seek to add.
The original parent Regulations give two exemptions. First, if a developing owner who is a mineral undertaker and was such on 22nd September, 1965, carries out a mineral development on land which he had on 23rd September, 1965, and before next October, gives notice to the Land Commission, he gets exemption from betterment levy.
It is, perhaps, the second exemption with which we are particularly concerned in the present Regulations, the exemption which applies if at any time the developer is an owner of an assessable interest and carries out a mineral development on land which he had acquired by a qualifying disposition or is under contract to acquire that assessable interest, that contract not being made with a connected person.
We have become used to these invented terms under the Land Commission Act and its Statutory Instruments—qualifying disposition, connected person, and so on—but in this connection there is one of the finest jigsaw passages of cross-reference ever devised. For "connected person" one has to go to Schedule 13 paragraph 5 of the Act, and then to sub-paragraph (5,a), where one finds that each member of a group is a connected person. Schedule 13 paragraph 1(b) defines a group as the principal company and its subsidiaries All right hon. and hon. Members no doubt, know the definition of "subsidiary", or, if they do not, they have to go to another Act as old as the Finance Act, 1938 to find out.
Thus, if one member of a group of companies acquired a mining lease from another company in the group, under the Regulations as they were rushed through at the time when the Act became operative, that company would not get exemption. The amending Regulations now before the House would give that exemption, but only in certain circumstances. All this ought to have been covered in the Act. The matters raised in the parent Regulations and these amending Regulations ought to have been thought out before the Bill became law.
I do not know whether I am right in understanding the intention behind the amending regulations. As I understand, the mineral development which is relieved from betterment levy is still material development for all other purposes, for example, for the purpose of compulsory purchase by the Land Commission. If the Land Commission thought that land was suitable for development for mining purposes, that could justify a compulsory purchase order by the Commission.
The most important point on these amending Regulations is that, after all the effort, they do not deal with the one outstanding question. They do not cover the mineral undertaker who owned his land on 23rd September, 1965, and later sold it to a subsidiary. This is how I understand it—though I may be wrong—having read and re-read the Regulations many times. What we are talking about here is the established mineral company, defined as a company which was mining or carrying out mining developments on 23rd September, 1965, a company which was a mineral undertaker on what we have come to know as White Paper day. Such a company acquired its land by a disposition from an associated company. It bought its land from an associated company. Under the Regulations, the associated company must have acquired the land by a qualifying disposition, so we go back one further step.
We have then to find out what would be the qualifying disposition by which the vendor associated company acquired its land. We find that that qualifying disposition must have happened on or after 23rd September, 1965. Therefore, I think that I am right in saying that, if a company held its mining land before White Paper day and then sold it to its associated company afterwards, the associated company would not get the benefit of the exemption. This seems rather peculiar. One would have expected the right hon. Gentleman to wish to protect transactions which happened before White Paper day, before everyone knew his intentions regarding betterment levy, and not those afterwards by which people might try to escape betterment levy.
We are here presented with the second round of Land Commission Regulations amending those which were brought out earlier, but, even now, after three months to think about them, the Government have not got them right.