For three hours, we have been debating provisions which give away £155 million to people with some of the highest incomes in the nation. As we come to clause 87, we debate provisions which give away more money—another £50 million—to people who are very well off.
We are debating what is called development land tax, which was introduced some years ago as a tax on the development value of land. In effect, it is a tax on the increased value of land, usually agricultural land, resulting from planning permission being granted by a local authority.
I hope that the whole Committee will agree that such an increase is a windfall gain—a gratuitous gain. The land has increased in value as a result of planning permission. That increase has been created by the community, and we oppose the abolition of development land tax because the Labour party believes that part of that increase should be returned to the community.
The tax was originally introduced by the then Labour Government in 1976. It accompanied the Community Land Act of the previous year. That Act was repealed by the Conservatives on their return to office.
It can be argued, therefore, that the raison d'etre for development land tax was removed by the abolition of the Community Land Act. However, our case is that the development land tax is justified in its own right. We believe it right that society should insist that part of this windfall gain should be used for the benefit of society and that the money should be recovered through a special tax.
There have always been exemptions from development land tax. When the tax was introduced by the Labour Government, there was an exemption for local authorities and similar bodies. Charities were also exempt; the exemption in that case applied to land which they already owned on 12 September 1974. That ensured that they would not pay tax if the land was developed after that date. It is interesting to reflect—in view of yesterday's debate in Committee about charities and the extension of VAT to newspaper advertisements—that when Labour Members argued yesterday for an exemption from VAT on those advertisements to be given to charities, the Conservatives resisted our pleas. Conservative Members did not take that attitude in 1976 when development land tax was introduced. They then claimed to be friends of charities and pressed the Labour Government to extend the exemption to charities which acquired land after that date, so enabling them to develop it and make a tax-free development gain. In considering this issue, we are entitled to contrast the words of Conservative spokesmen some years ago on the introduction of development land tax and the dogmatic and doctrinaire attitude—they would describe it as fiscal neutrality—which prevailed in the Government's arguments yesterday.
There has always been another exemption from development land tax. That applied to a person building a house for his or her own use. The increase in value in that instance, resulting from the granting of planning permission, has always been exempt from the tax.
Similarly, exemption has always existed for industrialists who develop land for their own use. Under the scheme introduced by the then Labour Government, payment of the tax was deferred until the property developed by the industrialist was eventually sold, if it should ever be sold. No tax arose at the time of development because the Labour Government wished to encourage industrialists to build factories and expand industry.
The Labour Government gave another exemption. From the beginning, the first £10,000 profit made from the increased value of the land as a result of planning permission was exempt. An individual, company or trust could profit to the tune of £10,000 a year as the result of planning permission being given for land which was to be developed, and was not taxed on this profit.
That exemption of £10,000—call it a tax allowance—applied from 1976. When the Conservatives came to power in 1979 they increased that exemption to £50,000, and at the same time they reduced the rate of tax from 80 to 60 per cent. Those changes cost the Revenue £10 million in a full year.
Two years later the Conservatives extended to commercial developments the deferment applying to industrialists. In other words, if a person built an office block in a city, the tax did not apply until the office block was eventually sold by the developer, provided that the developer had been using it for his own purposes. I have not been able to ascertain the cost of that minor change. I accept that it was probably quite small. I mention it only so that we may have a full picture of the way in which the Government have gradually cut the revenue from this tax on windfall gains.
In 1984, the deferment became an exemption for industrialists and commercial developers. In that year, the Conservatives—fresh from the election victory of the year before—decided that, if a property had not been sold within 12 years, deferment would become exemption, and the developer would not be liable for development land tax. We were told that the change cost the Revenue £4 million. In the same Finance Bill, the Government increased the threshold from £50,000 a year to £75,000 a year, at a cost to the Revenue of another £9 million.
Finally, this year, the Chancellor announced that he intended to abolish this tax and that the measure would cost £50 million in a full year to the Revenue.
We have seen a series of changes and slices in this tax. It reminds me very much of the way in which, some years ago, Russian foreign policy was described as "slicing the salami". We are told that the final act of abolition will cost £50 million. The true cost of Conservative policy on development land tax has been at least £73 million in a full year.
I emphasise that this abolition of development land tax does not mean that the person who benefits from the windfall gain resulting from planning permission will not pay any tax on the gain. Of course, that person will still be liable to pay capital gains tax, which is levied at 30 per cent. The figures that I have cited—£50 million for the cost of abolition and £73 million for the total cost of what the Government have done—are net figures after allowing for the offset effect of capital gains tax.
It is important to note that more tax will be paid by the small landowner because of the abolition of development land tax. He will have benefited in the past from an exemption of £10,000 under the Labour Government, which was increased progressively to £50,000 and then to £75,000 under the Conservative Government. The person who was exempt from tax will become in the future liable to pay capital gains tax at 30 per cent. because a similar exemption from capital gains tax amounts to only £5,900. The Government are benefiting not only the people who receive windfall gains resulting from planning permission given by local authorities but the people who make the greatest gains. They are not benefiting the people who make only small gains.
It is important to contrast the effect of the abolition of development land tax on the tax rate, because there will only be a capital gains tax of 30 per cent. on these development gains. I contrast that tax with the taxes that this Government levy on earned income. People pay income tax on their earned income at a rate of 30 per cent. increasing to 60 per cent. This year, the rate of corporation tax is 40 per cent. The tax on the windfall gains which have been wholly unearned and undeserved will only be 30 per cent.
When the Development Land Tax Bill was introduced by the Labour Government, the Conservative party opposed it. Conservative Members were, however, always careful in debates to distance themselves from any suggestion that those unearned profits should not be taxed. Indeed, on Second Reading the spokesman for the Conservative party—he is now a Minister—moved an amendment that accepted
that increases of land values resulting from planning decisions should bear a special tax".
and the Conservative party did not vote against the Second Reading.
In an earlier debate, the Chief Secretary told the Committee that the Economic Secretary would reply to this debate on the Government's behalf. I know that the Economic Secretary took great interest in the introduction of this tax. He told the House during the debate on Development Land Tax Bill that he had some personal experience of increases in development value because of his directorship in a company that had developed a site in London for a hotel with the additional aid of a special grant. He could therefore bring his experience and expertise to the subject—I make no criticism of that—so the Economic Secretary—the hon. Member for Hertfordshire, North (Mr. Stewart)—participated in the Second Reading debate on the Development Land Tax Bill. He told the House that he regretted the fact that there was not a common approach between the Conservative and Labour parties. He accepted that there needed to be a tax on the gains made as a result of planning permission being given. He said:
we accept that planning gains should attract some special tax.
—[Official Report, 15 March 1976; Vol. 907, c. 954, 1035.] I emphasise the words "special tax". Those words were also used by some of the hon. Gentleman's colleagues.
When the Economic Secretary explains the Government's decision to abolish development land tax, will he explain where the "special tax" is? Where is the special tax which the Conservative spokesman when in Opposition, agreed should be levied on these windfall gains resulting from planning permission?
During the debate on the Development Land Tax Bill and elsewhere, Conservative spokesmen argued for what they described as an "infrastructure charge" to be paid by developers. Where is the infrastructure charge to be introduced by the Conservative Government on the abolition of development land tax?
Any fair-minded person reading the debates on the introduction of this tax would have expected a Conservative Government, if they abolished development land tax, to introduce a new tax. Conservatives would regard it as a tax on better lines, but it would nevertheless be a tax on those unearned profits that arise solely as a result of a line drawn on a map by someone in a planning office. In those days, when in opposition, the Conservatives did not dare to contest the need for an additional tax. They only complained about its level and the method by which it would be levied. They said that they thought that a rate of 80 per cent. was too high and argued in the House and in Committee for a rate of 60 per cent. In one sense, it follows that we cannot complain about the reduction to 60 per cent. in 1979. Anyone who looked at the debates could have expected a Conservative Government to reduce the rate from 80 per cent. to 60 per cent., but could not have expected the tax to be completely swept away without being replaced. This tax was described repeatedly by Conservative spokesmen in the House and in Committee as a special tax that was entirely justified.
The Conservative party manifesto in 1983 did not refer to the abolition of development land tax. The Chancellor has boasted of abolishing three taxes. He refers to the abolition of the national insurance surcharge, an abolition that we supported; the abolition of the investment income surcharge, a measure which we strongly opposed; and the abolition of development land tax, which we oppose equally strongly. The abolition of development land tax gives back £50 million in a full year to people who are already well off. It does not fulfil a Conservative party manifesto commitment or election pledge. The Conservative party manifesto in 1983 did not refer to the possibility of the abolition of development land tax. I understand that it was referred to in the guide issued to Conservative candidates in 1983, but they were not encouraged by the Government to expect the abolition of development land tax.
I have not read the guide but I am told that it contains the statement:
The tax remains in place to control the possibility of abuse.
What will happen about those abuses? The 1983 guide for Conservative candidates admitted that there were some abuses. What else does that sentence in the guide mean? What will be done to control the abuses that two years ago Conservative central office admitted were liable to take place if the tax was abolished?
The Labour party will oppose the abolition of the tax not just because it gives £50 million to people whose need is far less than that of many others in our society, but because it goes back on everything that the Conservative party said when in opposition.
I rise, as is the custom in these matters, to declare an interest as a consultant partner in a firm of chartered surveyors which might in the past have earned fees from acting for clients who were contesting tax claims with the development land tax office in Middlesbrough. In a sense, I am declaring a reverse interest because that firm may lose fees it might otherwise have received had my right hon. Friend the Chancellor of the Exchequer not made that welcome and overdue announcement in his Budget speech.
I remember when the Government of which the hon. Member for Birmingham, Hodge Hill (Mr. Davis) was not a member introduced the Community Land Bill in 1975. It was an act of political vindictiveness. At a stroke it froze the supply of land that builders—the largest employers of skilled labour—wanted to enable them to build homes for the first-time buyers over whom that same Government were weeping crocodile tears.
They were not record years for house building in the private sector. They may have been record years for house building in the public sector, but that record did nothing to reduce council house waiting lists.
I remember the introduction of the Development Land Tax Act 1976 by the Government of which the hon. Member for Hodge Hill was a member. They introduced it because the Community Land Act 1975 was seen patently not to work, to do the reverse of what it was designed to do, and to freeze the supply of land. What happened? The supply of land dried up completely. When bank finance became more readily available, the money fell into the hands of secondary and tertiary banks and property speculators who made profits hand over fist and contract against contract. No foundations were dug. No brick was laid. No house was built, and the level of homelessness increased.
The supply of land will increase only through the operation of market forces—supply and demand working in partnership—and if this punitive tax, which last year was 8 per cent. higher than corporation tax and which is now well above the level of that tax, is abolished. Land prices will stabilise and the construction industry will feel that it can buy land at realistic prices and offer properties built on that land at prices that people can afford.
Opposition Members fail to accept that an impost of 60 per cent. has the effect of increasing the cost of land by 60 per cent. It discourages the land owner from bringing that land forward for development. The hon. Member for Hodge Hill said that he looked for a replacement tax to contribute towards infrastructure costs. That tax exists. Capital gains tax will continue to be paid by the private landowner and corporation tax will be paid by the company that sells land. How can he say that a reduction in taxation which will guarantee to increase the supply of land and stimulate the construction industry, and the jobs created thereby, is not a good measure? How can he say that with a corporation tax rate of 35 per cent. there is no replacement taxation? How can he say that a form of taxation whereby development gains cannot be offset against development losses is a good form of taxation? How can he say that a form of taxation that costs the development land tax office in Middlesbrough more to collect than the Exchequer receives is a good form of taxation? It is nonsense.
I look to the construction industry to respond now to my right hon. Friend's welcome announcement in the Budget speech and to buy land, and for landowners to make land available at realistic prices so that builders can employ the skilled labour that a boost to home ownership will require which is waiting for the jobs. That will benefit young married couples on council waiting lists in my constituency and that of the hon. Member for Hodge Hill who want to get on to the ladder of home ownership. A reduction in the 60 per cent. punitive rate of taxation will release more land at realistic prices.
I listened with great interest to the speech of the hon. Member for Mid-Staffordshire (Mr. Heddle). He plainly represents interests connected with land speculation.
I shall not discuss the interests of the hon. Member for Mid-Staffordshire any further, but if the cap fits he should perhaps wear it.
As my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) said, development land tax was introduced by the Labour Government in 1976. It was introduced to offset windfall profits made from the sale or the development of land. Many of us will remember what happened to land prices in the early 1970s. In the south-east of England prices went berserk. There was enormous abuse in the sale and exploitation of land. Ordinary people suffered. For that reason, I oppose the abolition of development land tax.
As my hon. Friend the Member for Birmingham, Hodge Hill pointed out, the profit arises from the land tax at a time when a local authority grants planning permission to a developer of a piece of land or to somebody who wants to sell a piece of land for a particular purpose or use. However, I think that the development land tax legislation introduced by the Labour Government was reasonable. It created exemptions. As a result, organisations such as charities and local authorities which serve community interests were exempt, as were people who built houses for their own use on land that they owned. That to my mind seems perfectly reasonable.
In the years since the last Labour Government introduced the development land tax, the Conservatives have been chipping away at it. I would like to have been a fly on the wall listening to all the lobbying that must have taken place by property speculators and the like of the various Ministers and Departments, pleading to be given an opportunity to make the kind of profits that they had made hitherto.
In 1981, the fairly new Conservative Government extended the exemptions to which I have referred to cover commercial organisations.
If I may pursue the point that my hon. Friend made about lobbying and arm twisting, things are done in a far more genteel fashion in the Conservative party than they are in the Labour party. It is in fact not arm twisting or anything similarly painful, but the dangling of prospects. I suggest to my hon. Friend that, as part of the inquiry into the processes that went on behind closed doors, he should ask how many property companies made substantial donations to the Conservative party.
I am grateful to my hon. Friend because in fact that was implicit in my comments. That is why I said that I would like to have been a fly on the wall listening to the various probing questions. I am sure that all the briefs coming into the various ministerial offices would have suggested that, if there could be a relaxation of the tax, there must be good prospects for the Conservative Government. I would not like to say that that actually happened, but there are doubts in my mind as to how all this took place.
The 1981 change provided an opportunity for the organisations concerned with the development of office blocks to have a relaxation of this form of taxation. In my view, we are discussing here large organisations and rich institutions that invest in office blocks and other real estate. The debate is really about whether we should be giving relief to organisations of that kind or helping the ordinary man in the street. That is the general thrust of what is being said. The clause is yet another measure introduced by the Conservative Government that results in money going from the less well off to the ultra-rich and to the very well off. That has been the philosophy of the Government since they were elected in 1979.
After the change in 1981 came the 1984 change whereby, the Government altered the deferment arrangements of development land tax for industrial and commercial development to complete exemption. Certain conditions had to be met. One was that the property would not be disposed of within a 12-year period. This was another chipping away of the development land tax for the benefit of landowners who, I think one could say, would generally be pretty rich people or institutions.
The Government seem to be intent on encouraging land speculators and land speculation. When the Labour Government were in power, they introduced the development land tax at 80 per cent., but soon after coming to power in 1979 the Conservative Government relaxed the rate to 60 per cent. The original scheme introduced by the Labour Government in 1976 was reasonable in that the first £10 million of profit—this is on a per annum basis—was exempt from development land tax. That was a reasonable legislative measure and, for the life of me, I cannot understand the reason for this change except, as I said earlier, that I believe that there has been some arm twisting and, as we know, the Government are intent on supporting the very rich at the expense of the less well off. These facts can be substantiated. The people and institutions whom we have been discussing are a tiny minority of very well off people.
In 1984, the Conservative Government increased the exemption allowance to £75,000. Now they propose to abolish development land tax. I understand that that will cost the Exchequer about £50 million in 1985–86. If the Minister and some of his hon. Friends would only visit my constituency to see for themselves the social conditions, the appalling housing and the deprivation in the area, I feel almost certain that they would understand why I am so bitterly opposed to the priority of the Government in taking £50 million and giving it to property speculators.
In Committee yesterday, we debated advertisements in newspapers. In a long debate, many hon. Members expressed strong feelings about this form of taxation, which I believe is approximately equivalent to the amount of revenue that would be lost by the complete removal of the development land tax. In the debate, hon. Members said that many ordinary people wish to insert advertisements in newspapers at the time of a family bereavement or on the occasion of a birth or silver wedding. These advertisements are important to many people. As a result of the Government's measure, a tax of 15 per cent. will be imposed. This is just one example of the Government's priorities. They are giving £50 million to landowners and speculators and adding to the cost of advertisements in local newspapers to the detriment of ordinary people.
Many changes have taken place since 1979. Hon. Members who took part in last year's debates on the Finance Bill will realise the insidious way in which the Government have introduced these taxation changes. We heard then of tax relief for stud farm owners, and a form of tax relief for company directors whose children are educated at their companies' expense. The most galling thing is that, when Parliament was debating that legislation last year in the early hours of the morning, the Press Gallery was empty. As my hon. Friend the Member for Workington (Mr. Campbell-Savours) pointed out, it is galling to realise that the general public are often unaware of the extent to which taxation changes are taking place.
This is a question of priorities. As someone has said, Socialism is the choice of priorities. That is why we are so bitterly opposed to the clause. Why did the Government not use the money to avoid petrol costing £2 a gallon? That would have helped those who live in rural areas and those who must use their cars to collect their prescriptions. The increase in the cost of petrol is tough on many people. It is right that we should oppose the abolition of development land tax.
I am delighted that we are debating this matter on the Floor of the House rather than in Committee. I hope that the press will pick the matter up, and that people will realise the extent to which the Government have been taxing the poor and giving money to the rich for almost six years. The net effect is that the rich have become extremely rich and the poor extremely poor. About 18 months ago, "Breadline Britons" reported that nearly 8 million people were living in poverty. The way in which the Government are allowing poverty to continue while at the same time they are feathering the nests of rich property owners and speculators is shameful.
I had not intended to speak, until the hon. Member for Mid-Staffordshire (Mr. Heddle) referred to some figures for which he did not produce statistics. I went to the Library to examine the statistics and they make interesting reading. They show that the Government have no case for introducing this concession. There is no need for it. The hon. Gentleman was right that there are more private sector starts than previously. In 1977, the first year for which the tax existed, 134,810 houses were built in the private sector. In 1978 the figure increased to 157,000, and in 1983 it had reached 167,000. There is always a need to build more houses, but these figures show a successful policy, which is based on raising development land tax. The tax paid does not impede growth in the private sector; indeed, it is supporting the private sector house building programme.
I thank the hon. Gentleman for giving way, and ask him to consider the following fact. The properties built in 1977, 1978 and 1979 were built not on land which was bought between 1977 and 1979, but on land bought by builders up to five years ahead of their building programme. Therefore, his statistics are of little relevance. The hon. Gentleman referred to the welcome increase in starts in 1983. The houses were built on land which was subject to a lower rate of development land tax—it had fallen from 80 per cent. to 60 per cent.—which was introduced by my right hon. and learned Friend the then Chancellor of the Exchequer in his Budget of 1980—not 1979 as the hon. Member for Kingston upon Hull, West (Mr. Randall) said earlier.
As that is the hon. Gentleman's response, perhaps he will examine the position a little further back to see whether his argument continues to hold water. In 1973, there were 215,000 private sector starts. By 1974, the figure had collapsed to 105,000. It then increased to 149,000 and to 154,000. My point is that the policy has not damaged the growth in private house building. Every suggestion that it has is negated by the figures that I have produced today. When the Minister replies, he must prove to the House that there is a need to remove the tax, to ensure that growth can take place where it has not taken place. He cannot prove that, because the statistics show that growth has taken place.
I wish to ensure that people outside the House do not misunderstand the figures. Although there has been a growth in private sector housing development, there has been a collapse in the public sector from 132,000 in 1977 to 47,000 in 1983. The figure is even lower this year. That means that this year the total figure of 214,000 for all dwellings is lower than for any year under the Labour Government. We have won the argument in every respect.
The hon. Gentleman said that the benefit from the reduction in tax would be passed on to the consumer, but that does not happen. That is not how the market works. The benefit is not passed on in the free market. What happens is the same as what happens in the enterprise zones. Although there has been a rates subsidy, its effect has made little difference to the market cost to the manufacturer or tenant in taking a site. Rents have merely increased. The market, not the question whether there is a tax, determines the cost of land. We are merely handing over the £50 million or net £20 million to landowners. The whole exercise is a waste of time. If it could be proved that the abolition of DLT could lead to an abundance of new land coming onto the market, there might be an argument for it. However, it will not do that. Abolition of DLT has no influence on the number of private sector starts.
We can show that. It is clear that if the tax is removed, a substantial number of landowners would put their land on the market. That would increase the supply of land on the market, which would, of necessity, reduce prices. In my professional capacity, I have seen that the phasing effect, which takes place to take account of annual exemptions, has meant that many landowners have released their land in parcels in order to take maximum account of the annual exemptions available. That has delayed the flow of land on to the market.
I only wish that my memory were better. I recall a time during the past four years—my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) may have served with me on that Finance Bill—when we discussed an amendment which dealt with land banks being held by building companies. It appeared that they had a tax problem because they were holding such large tracts of land. There is no shortage of land available to building companies today. Indeed, some companies say that they are carrying too large a pool of land. They want a demand for homes and an expansion of public sector moneys to ensure a construction programme. Building companies say that they have the land, yet the hon. Gentleman seeks to prove that more land will be forthcoming. It may be that the building companies do not need the land, as it is already available.
The hon. Member for Mid-Staffordshire is a free marketeer and is in the estate agent business, land valuation, or whatever. He is in that set and he knows exactly what I mean. He knows that the only determinant of land values is the free market. If we hand over the net £20 million, we will merely give it to people who do not need it. If it could be proved that the provision would reduce the value of housing, we might have to take the clause seriously, but it cannot be proved. When the Minister replies, he must prove that the abolition will lead to more houses being built, and that the consumer will benefit. If he cannot do that, he should withdraw the clause.
My hon. Friend the Member for Workington (Mr. Campbell-Savours) should disregard the siren voices from the Conservative party, because arguments along those lines can always be produced to defend a concession to a vested interest, which this clause essentially is. The fact that they cannot produce better arguments than the ones that we have heard during this debate is a testimony to how tawdry the concession is.
The argument that the concession will increase housing starts is completely fallacious. That depends on interest rates, and the Government's prolonged policy of high interest rates has crucified not only house buyers and those who have mortgages, but house builders. It inhibits them from buying land and building the land banks that they need to ensure continuity. Interest rates will be the real determinant of housing starts, not this concession, which will go straight into the pockets of the developers and the property companies. It will certainly not come back to the consumer.
I cannot emphasise enough what is happening here. The Opposition Front-Bench spokesmen were right to pick this clause on development land tax, and the earlier clause on capital gains tax, for debate on the Floor of the House. There is no need for either concession.
This concession will do nothing to stimulate the economy or the housing market beyond what is determined by interest rates. It will do nothing for economic efficiency, jobs or growth. It is the straightforward concession of a substantial sum of money to the Government's fat friends——
Perhaps I am one of the Government's fattest friends. I am an engineer, not a property developer or a financier. The hon. Gentleman said that there would be no advantage to the consumer. Is it not right that many British institutions hold many acres of land? The trade unions and other bodies invest their pension funds in those institutions. Therefore, if there is a tax advantage to those institutions in the sale or development of their land, the money will accelerate and enhance the pension funds in which trade unions and many other disadvantaged bodies are pleased to place their money. Would they not obtain a better yield? The hon. Gentleman's argument is incorrect.
The hon. Gentleman's intervention takes us completely away from the point, but it demonstrates the paucity of argument for this measure. His was an especially far-fetched argument. If he is advocating that the pension funds should be allowed to buy and sell land more easily so that their money will be, not far-fetched but far-carried and invested overseas—following the huge outflow of investment from Britain—that will stimulate the free market, but it will be of no great advantage to British citizens or to the creation of jobs.
This measure is a straight giveaway of the sort that is normally trundled through Committee at dead of night. My hon. Friends were right to ask that it be debated in the early evening. Regrettably, the press, with their usual inattention to such sordid manoeuvrings, are not here to highlight it. But what is happening deserves to be screamed from the rooftops, because houses will continue to be built, provided that interest rates allow it. This concession to the Government's fat friends is justified by double talk and by devious and largely inaccurate arguments.
The day after the measure was announced by the Chancellor in his Budget statement, The Times carried an article stating that the property industry welcomed it. But the industry did not say, "Thank you, Chancellor, for £50 million," which is what it is about. It said that the tax would consume much of its time. The £50 million would appear to be purely incidental. It is a straightforward benefit about which nothing is said.
Development land tax, which was rightly introduced by the Labour Government in 1976, is part of a long tradition of attempts, some more successful than others, to ensure that the return on the increased value of land, which comes through no effort on the part of the owner, accrues to the agency which causes that increase in value—the community. Is it not right, in principle, that that unearned windfall should accrue to the community? There are always practical difficulties in that, but they can be solved. The principle of development land tax is so glaringly right as to be incontrovertible.
The tradition goes back to the unearned increment of land tax which Lloyd George introduced in 1909. After the "people's Budget" of that year, Trafalgar square was filled with an enormous crowd singing:
The land, the land, 'twas God that gave the land,
The land, the land, the ground on which we stand.
Why should we be beggars with the ballot in our hand?
God gave the land to the people.
That crowd was led by Winston Churchill. They were celebrating the taxing of the unearned increment of land value, which is part of the development land tax introduced by the Labour Government. It is a long-standing principle that the increase accruing as unearned profit to developers and owners should be taxed for the benefit of the community.
The hon. Gentleman is wrong. The 1947 Act removed from landowners the right to do what they wished with their land. They had to obtain permission. Before 1947, a man could do what he wished with his land. The hon. Gentleman is suggesting that the concession whereby those rights may be given back should then be the subject of taxation. It stands logic entirely on its head.
That was not my argument. I was saying that it is right to take back some element of the unearned improvement in land values. The principle has been a long-standing part of fiscal legislation and endeavour, dating back to the "people's Budget" of 1909.
One can argue about planning permission and how it should be pursued, but one cannot argue that people who have done nothing to increase the value of land should benefit from that increase, as they would if development land tax was abolished. It is an unearned profit, and it is right to tax it.
It has been shown that the income can be taxed without inhibiting development. Indeed, my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) produced telling figures in support of that argument. Despite all that the Government have done to increase interest rates, depress the building industry and drive builders into bankruptcy, there is still development, except in public sector housing. It is not true to say that the tax has inhibited development. The increase in value should be taxed because it is a socially produced increase from which the full benefit should not accrue to the landowner. It should accrue to the community.
Labour introduced development land tax, which accompanied the Community Land Act. It was intended as a step towards public ownership of all development land. That would seem to be right in principle. One can argue about the way in which it is operated and about whether one needs to go to the full 100 per cent., but the tax is an attempt to see land values accrue to the community, which in itself, is right. The idea was that there should be public ownership and that the profits should accrue to the community. That was the essence of the argument. It was a tax on the windfall profit.
The exemptions allowed under the Labour Government were adequate to ensure that the system functioned efficiently and fairly. Local authorities, charities and anyone building a house for his own use have always been exempt. If an industrialist developed land for his own use, the tax was deferred until the property was sold, under Labour's scheme. Labour exempted the first £50,000 profit per year by any developer. Therefore, there were sufficient exemptions and allowances to make it a fair system and to embody the principle that I have emphasised is important.
I am glad to see the Liberals here in their serried ranks to back us, as they did in 1909, with the people's Budget. However, their Social Democratic party allies are not here—they were not here yesterday either. The new members of the alliance are not as strong in the defence of Lloyd George's tradition as we are in the rest of the House.
The principle is right and fair and should be maintained. What has been done by the Government is a straightforward, vicious, nasty, sordid and tawdry concession to their fat friends.
I am glad to respond to this debate on development land tax, particularly because, as the hon. Member for Birmingham, Hodge Hill (Mr. Davis) reminded us, I was involved in the legislation when it was originally introduced in 1976.
The hon. Member for Hodge Hill rightly said that the measure does not represent the removal of all tax from transactions which, up to now, have been subject to development land tax. The amount concerned will fall to be taxed not only under income tax but under capital gains tax, or corporation tax for companies. However, I must correct one thing that he said. I understood him to say that a small landowner would be worse off because tax would be payable if there were no DLT whereas, had there been DLT, the amount would have fallen within the exempt amount. That is not correct. The exempt amount may exempt the taxpayer from DLT. However, as with the exempt amount on transactions that give rise to DLT, all the remaining part of any profit or gain is taxable in the ordinary way. Therefore, it will not have the adverse effect that the hon. Gentleman suggested.
Several hon. Members reminded us that DLT was part of the community land scheme arrangements of the previous Labour Government. Under Labour, there was the Central Land Board in 1947, the Land Commission and the betterment levy in 1967, and the Community Land Act and development land tax in 1976. The hon. Member for Great Grimsby (Mr. Mitchell) said that he thought that nationalisation of development land was the direction in which we should go. Not only do I disagree with that in principle as a Conservative, but in practice the consequences of all those proposals have not met the expectations of those who introduced them.
Development land tax has caused many problems, many foreseen by my hon. Friends and me when we were considering the proposals nine years ago in Committee. A tax at a rate of 80 per cent. rising to 100 per cent., backed with powers for local authorities to acquire all development land, was more in tune with the theoretical ideas of Socialist planning than with the practical realities of the construction industry, in development and in bringing forward land for building. That is the way in which things have turned out.
I should like to correct another impression that Labour Members give. It is that development land tax is substantially the province of rich landowners and that the windfall gains of which they speak are such a social evil that they should be taxed at penal rates. In fact, less than half of those who pay the tax are individuals. Most of the tax charges are assessed against companies, statutory undertakers, builders and so on. It is because the groups involved in building and development are most subject to the tax that so many problems have been caused.
I was asked by the hon. Member for Hodge Hill to say why the Government were proposing the abolition of the tax when, nine years ago, in Committee on the Development Land Tax Bill, I and other spokesmen for the Conservative Opposition had accepted that there was a case in principle for the taxation of such gains. The simple answer is that there was a case in principle for the taxation of such gains in the circumstances of the 1970s, with high prospects of inflation and substantial speculative gains at that time. However, not only is there no case for such a tax today because inflation is now much reduced—the inflationary conditions that encouraged speculation no longer apply, and so long as the Government have anything to do with it, they will not return—but there is no case in the foreseeable future for such a tax, which has such an adverse effect on development and construction.
I was asked to give proof. Of course one cannot prove the future, but nine years ago we gave projections of what was likely to happen under the tax. They have proved far more accurate than the claims that were made by Labour Members at that time. I can quote some opinions to justify our belief. Several estate agents such as Savills, Knight Frank and Rutley and Grant and Partners have said that abolition of DLT will increase the supply of residential building land. They have said that it will have an entirely
beneficial effect by releasing sites for development, enabling industrial companies to move to more suitable sites, and helping housebuilders. The House Builders Federation believes that it will encourage landowners to sell land for development. The Incorporated Society of Valuers and Auctioneers says that it will
encourage the building industry and employment".
Those comments are on the positive side. The strongest case for the abolition of DLT is the inhibiting effect that it has had on commercial activity and on building and development in recent years. It is expensive and difficult to administer, not only for the Inland Revenue but for the taxpayer. It has provided a significant impediment to the functioning of the market, and has undoubtedly damaged industry and commerce——
I shall elaborate on what I have said because I am invited to do so by the hon. Gentleman.
I give one of many examples which have been brought to the attention of Ministers by assiduous Members. For example, a major firm in west London employing hundreds of workers and exporting the vast bulk of its products to overseas markets felt unable to move out of its present outmoded premises and into a larger factory because of the threat of development land tax. It did not have the resources to finance the cost of replacement premises. In another case, an export-oriented firm in the Midlands was faced with a choice of staying put or moving to a better site with a reduced work force because of development land tax liability on the disposal of its existing site. These are the restrictions to expansion and limitations to employment that are being removed by the abolition of development land tax.
Lest Labour Members should repeat their charge that this is merely Conservative rhetoric, I point out that representations along these lines have come——
I have given the Committee a number of comments from those who are more expert than I am to judge the impact on building land. Examples could be produced from many constituencies where shortages of development land have made difficulties for house building. This tax goes far wider than house building because it affects commerce and industry. Many hon. Members have been pointing out in the past few years the difficulties that development land tax has created for them. The fact that such examples are put to Ministers by Labour Members should show that the tax that the Labour party introduced is doing the damage that we had the foresight to see at that time.
This is an inefficient tax because it is extremely complicated and at a punitive rate. The cost of collecting this tax is higher than that of any other tax on the statute book. It is more than three times as expensive as capital gains tax to collect, more than twice as expensive as capital transfer tax and seven times as expensive as stamp duty. That is the gross cost against the gross yield. The gross yield of development land tax is, in part, offset against other taxes that would be payable in the normal course of events if development land tax did not apply. The cost against yield tends to be significantly higher than 7 per cent.
Over the nine years in which it has been in operation, the gross yield before the cost of collection and the offset against other taxes that would have been paid has only been, on average, about £40 million a year. The latest year for which we have figures, two years ago, shows that the cost of collecting it gross is £1 to every £13 of tax, so it is extremely inefficient and expensive for the Revenue to administer the tax.
The tax is also burdensome to the taxpayer. One case has come to the notice of the Inland Revenue recently in which the taxpayer, assessed for liability of £1,800, could demonstrate that the incidental costs of dealing with that transaction to the taxpayer were £10,000—more than five times the amount of the cost itself.
We have heard the exorbitant incremental cost of collection as against the net tax yield, after taking into account taxes that would otherwise be paid, but that assumes that that tax is paid in one year. Does my hon. Friend agree that that tax is phased over an eight-year period, so the net benefit to the Revenue is even less than this figure suggests?
Payment is phased over a 10-year period as a result of a Conservative amendment that somewhat alleviated the burden of the tax. However, despite the improvements that we have made since we have been in office, such as the increase in threshold and the improvement in instalments, there are inherent problems in a tax where so much of the liability is deferred. The number of cases in which tax on deferred liability has been collected is still in single figures, although there are probably several hundred, if not thousands, of cases where this is being stored up, and continuing to produce problems for the future. Only one in 10 of the inquiries made about the potential charges of development land tax by the Inland Revenue results in a charge to tax.
However, a great deal of Revenue staff and taxpayers' time is taken up in dealing with the necessary inquiries and investigations. Not surprisingly, this tax has acted as a drag on the market, has discouraged development and caused congestion in the building and property markets.
The circumstances of inflation, speculation in the 1970s and so on have changed the markets. However, there is another important change that has come about recently and made it untenable to continue with this tax. That is the change in the rate of corporation tax. While it was at a rate of 52 per cent. against 60 per cent. for development land tax, the latter charge was higher than that of the corporation charge, but not catastrophically so. Various allowances could not be offset against it, so it was a more demanding tax than corporation tax.
When corporation tax is reduced to 35 per cent., as it will be next year, the gap between the rate of corporation tax and the rate of development land tax will be so wide that there will be a significant difference to the taxpayer according to which he is assessed. Therefore, the exact valuation of how much profit or gain should fall on development land tax and how much on corporation tax will be a more significant factor that taxpayers will have to take into account. That will increase the burden both to the taxpayer and the Revenue and to the problems of valuation, adjustment and so on.
Under current circumstances, all the practical arguments are against keeping this tax on the statute book. It is the most inefficient and expensive tax and it has done increasing damage as years have gone by and more and more cases have become liable, either through deferment of liability or through locking in cases that could otherwise be treated in the normal way in the market. The tax has produced little revenue and done a great deal of harm to development. I am glad that tonight we have the opportunity to remove it for good and all.
The hon. Member for Mid-Staffordshire (Mr. Heddle) said that the 1967 Act did not work, and that the Labour Government had therefore introduced development land tax in 1976. The Economic Secretary also had several omissions in his list of previous attempts to tax development gains. Like the hon. Member for Mid-Staffordshire, he forgot to mention that the 1967 Act, which may or may not have worked, was not the reason for introducing the tax in 1976. The tax that was introduced in 1967 was abolished by the 1970–74 Conservative Government. However, that Government had a change of heart, and this fact was omitted not only by the hon. Member for Mid-Staffordshire, who could be forgiven for forgetting about it because he was not in the House at the time, but, more significantly, by the Economic Secretary. When he read his list of taxation measures on development land, he forgot to mention that in 1973 the Conservative Government re-introduced a tax on development gains.
The hon. Member for Mid-Staffordshire then used the adjective "vindictive". He thought that the introduction of a tax on development gains was vindictive. Is he then describing the Economic Secretary as having been vindictive in 1976 when he said that there should be a special and additional tax on development gains? All those words were used by the present Economic Secretary and many other Conservatives when development land tax was introduced. Is the hon. Member for Mid-Staffordshire accusing his right hon. Friend the present Minister for Overseas Development of having been vindictive? We all know that that would be totally out of character.
Many other Conservative Members also accepted the need for such a tax. I have always observed the convention of not referring to hon. Members unless I have told them that I intend to do so, but I believe that that convention arose due to the possibility of hon. Members being attacked in their absence. As I am not making any attack, I make no apology for referring to words, used by Conservative Members in 1976, with which I fully agree. The hon. Member for Wolverhampton, South-West (Mr. Budgen), with whom I rarely agree, said:
I accept that it is right that there should be an additional tax upon those values which arise from the granting of planning permission
We accept that there should be some level of taxation at a higher level than the rates for capital gains tax generally".—[Official Report, Standing Committee J, 23 March 1976; c. 15–18.]
Another Conservative, the hon. Member for Hove (Mr. Sainsbury), said:
We accept the need for a special rate of tax on the granting of planning permission. Our argument is not whether there should be a tax but what its rate should be."—[Official Report, Standing Committee J, 23 March 1976; c. 33.]
There was no reference to inflation or speculation, but a clear reference—not a vindictive reference—to the community's justification for taxing these windfall gains arising from the granting of planning permission, so I think that the hon. Member for Mid-Staffordshire went a little over the top in his comments today.
The hon. Gentleman may be surprised to hear that a developer in this country, like so many others, went abroad because of this stupid tax and is now building large housing estates in Canada instead of continuing to provide jobs and homes for the people of this country. Does the hon. Gentleman accept that it is not all take for the speculators because many get their fingers severely burnt and suffer great personal financial losses?
It is always difficult to discuss individual cases when they are not identified, but the hon. Gentleman cannot have appreciated the impact of development land tax. It does not apply to developers. It applies to people who own land and sell that land after planning permission has been given. There is a difference between a developer and a landowner. In one of those previous debates the hon. Member for Rutland and Melton (Mr. Latham) referred to the people who would pay the tax as land vendors. There is a great difference between a land vendor and a developer.
The Economic Secretary has said today that development land tax is justified only if there is inflation or speculation. I regard that as merely an excuse. Conservative Members made no reference to inflation or speculation when they supported the introduction of a special tax on these development gains in 1976.
The hon. Member for Mid-Staffordshire also said that a tax of 60 per cent. on these unearned, windfall gains increased the price of land. If that is so, why was that rate suggested by Conservative Members in 1976? The Labour Government introduced a rate of 80 per cent. The Conservatives did not argue about the principle of the tax, although they might have done things a little differently and allowed more exemptions, but they urged that the correct rate was exactly the rate that is now being abolished.
Further, as my hon. Friend the hon. Member for Workington (Mr. Campbell-Savours) has pointed out, the price of land and of houses is determined not by the tax but by the market. Contrary to the claims of the hon. Member for Mid-Staffordshire, development land tax has not been responsible for the increase in house prices.
The hon. Member for Bournemouth, West (Mr. Butterfill) offered a much more sophisticated explanation of the economics of development. He said that, if the tax is removed, landowners will put land on the market, which will reduce the price. But when the rate was reduced from 80 per cent. to 60 per cent. and the exemption was increased from £10,000 per year to £50,000 per year and then to £75,000 per year, no evidence emerged—and the Economic Secretary has produced none today—to suggest that those changes resulted in any extra land coming forward. When the Labour Government introduced the tax at 80 per cent., Conservative Members claimed that if only the rate could be reduced to 60 per cent., land would be put on the market. The rate was reduced to 60 per cent. six years ago, but we are still waiting to see all that land being released for development.
Then the hon. Member for Mid-Staffordshire says that the supply of land will increase only if there is free operation of market forces. I prefer the words used by the hon Member for Wolverhampton, South-West when he pointed out on a previous occasion that the granting of planning permission was a distortion of the free market. It is disappointing that there has been no contribution on this from the Liberals on this issue today. I understand that they were much more forthcoming some years ago. When John Pardoe represented the constituency of Cornwall, North, he pointed out that there was no such thing as a free market in development land and that the supply was limited by definition to what the planning officials were prepared to draw their pencils round. In other words, the supply is artificial. The supply is created by planning decisions, and the value of the land is created by those planning decisions. It is thus right that a proportion of that value should return to the community.
If there were any validity in the argument that a change in the fiscal arrangements would release land for building, why did the report on land for housing produced by the Select Committee on the Environment in the Session 1983–84 fail to mention this point? That three-volume report identified a whole list of obstacles to the release of land for housing, but there was not one reference to the effect of development land tax. There is no valid evidence to suggest that the tax is preventing land from becoming available for house building.
The other argument adduced by the Economic Secretary in his attempt to justify the abolition of development land tax was that the tax was paid not by individuals but by companies. I believe that he is wrong. I have studied the assessments for the calendar year ending 31 December 1983 by status of taxpayer set out in the Inland Revenue statistics for 1984. Those figures show that over a period of four years, disposals of land by individuals and trustees were greater than those made by companies and builders, that the value of the land involved was greater, and that the tax paid by individuals and trustees was more than double that paid by land companies and builders. I think that the Economic Secretary has got his figures wrong. If there is a fault in my research, no doubt he will write to me to explain why his statistics do not match those of the Inland Revenue.
The Economic Secretary also told us that the tax should be abolished because it is expensive to collect. He informed us that collection cost 7 per cent. of revenue, and he also referred to the calculation—it is the same figure put differently—that it cost £1 for every £13 of revenue. Those figures were valid in 1983. In the Finance Act 1984, this Conservative Government increased exemption from £50,000 to £75,000, and when asked to justify it, they told the Committee that it would remove no less than one third of the transactions from liability to tax—the transactions which produced the least revenue. Therefore, I suggest that the Economic Secretary has got his figures wrong. He referred to the figures for 1983, but the position was changed by the Finance Act 1984. He voted for that provision, whereas the Labour party voted against it. The hon. Gentleman was there, but obviously was not listening to the Chief Secretary.
The Economic Secretary was most unfair to the Committee when he referred to two companies—which understandably he did not and could not name—which would not move from their factories because they feared the imposition of development land tax. The hon. Gentleman knows that there are exemptions for companies which use premises for their own manufacturing activity, and that if they were in those premises for 12 years or more, they were not liable for tax.
I do not accuse the Minister of breaking faith as a Treasury Minister in referring to them because he was given the information by his hon. Friends. However, such evidence should be placed before the Committee so that the Opposition can know who these companies are. We need to know much more about those companies and their circumstances before the Minister can reasonably expect the Opposition to accept his argument.
The hon. Gentleman referred to a list of organisations which welcomed the abolition of DLT. I did not write the names down, but I was left with the thought, "They would, wouldn't they?" He said that they claimed that abolition would lead to more land being made available. We do not believe it. That is an excuse to justify the giveaway, just like the excuse to justify the reduction of tax paid by people on the highest incomes. This Government always say that a reduction in the tax paid by people on the highest incomes will lead to more jobs for the unemployed, but after six years we are still waiting for the evidence.
Not only Socialists support the idea of taxing unearned gains from the development value of land; as my hon. Friend the Member for Great Grimsby (Mr. Mitchell) said, this cause has been advocated by Liberals and radicals for years. Past and, I hope, present Liberals believe that this tax should be levied. Only a few years ago, the Conservatives also joined us in a great consensus on this issue, but they have now changed their minds. When the tax was introduced, Conservatives accepted the argument for a special tax on these windfall gains. That was when they were in opposition. Now they are in government, and they are using the opportunity to give away £73 million to wealthy landowners.
|Division No. 202]||[8.3pm|
|Adley, Robert||Browne, John|
|Alexander, Richard||Bruinvels, Peter|
|Arnold, Tom||Buck, Sir Antony|
|Ashby, David||Budgen, Nick|
|Aspinwall, Jack||Bulmer, Esmond|
|Atkins, Robert (South Ribble)||Butterfill, John|
|Atkinson, David (B'm'th E)||Carlisle, John (N Luton)|
|Baker, Nicholas (N Dorset)||Carlisle, Kenneth (Lincoln)|
|Batiste, Spencer||Carlisle, Rt Hon M. (W'ton S)|
|Beaumont-Dark, Anthony||Cash, William|
|Bellingham, Henry||Channon, Rt Hon Paul|
|Bendall, Vivian||Chope, Christopher|
|Best, Keith||Clegg, Sir Walter|
|Biffen, Rt Hon John||Cockeram, Eric|
|Blackburn, John||Colvin, Michael|
|Blaker, Rt Hon Sir Peter||Conway, Derek|
|Boscawen, Hon Robert||Coombs, Simon|
|Bottomley, Peter||Cope, John|
|Bowden, A. (Brighton K'to'n)||Couchman, James|
|Bowden, Gerald (Dulwich)||Critchley, Julian|
|Brandon-Bravo, Martin||Currie, Mrs Edwina|
|Brinton, Tim||Dickens, Geoffrey|
|Brown, M. (Brigg & Cl'thpes)||Dorrell, Stephen|
|Dover, Den||Mather, Carol|
|Dunn, Robert||Maude, Hon Francis|
|Evennett, David||Merchant, Piers|
|Eyre, Sir Reginald||Moore, John|
|Fallon, Michael||Nicholls, Patrick|
|Farr, Sir John||Page, Richard (Herts SW)|
|Favell, Anthony||Parris, Matthew|
|Fenner, Mrs Peggy||Pawsey, James|
|Forman, Nigel||Peacock, Mrs Elizabeth|
|Fox, Marcus||Percival, Rt Hon Sir Ian|
|Franks, Cecil||Powell, William (Corby)|
|Freeman, Roger||Price, Sir David|
|Fry, Peter||Proctor, K. Harvey|
|Gale, Roger||Raffan, Keith|
|Galley, Roy||Rees, Rt Hon Peter (Dover)|
|Gardiner, George (Reigate)||Rhodes James, Robert|
|Gardner, Sir Edward (Fylde)||Rhys Williams, Sir Brandon|
|Garel-Jones, Tristan||Ridsdale, Sir Julian|
|Goodhart, Sir Philip||Roberts, Wyn (Conwy)|
|Goodlad, Alastair||Rost, Peter|
|Gow, Ian||Rowe, Andrew|
|Gower, Sir Raymond||Ryder, Richard|
|Greenway, Harry||Sackville, Hon Thomas|
|Gregory, Conal||Sainsbury, Hon Timothy|
|Griffiths, Peter (Portsm'th N)||Sayeed, Jonathan|
|Hamilton, Hon A. (Epsom)||Shaw, Sir Michael (Scarb')|
|Hamilton, Neil (Tatton)||Shelton, William (Streathan)|
|Hampson, Dr Keith||Shepherd, Richard (Aldridg)|
|Hanley, Jeremy||Silvester, Fred|
|Hargreaves, Kenneth||Sims, Roger|
|Haselhurst, Alan||Smith, Tim (Beaconsfield)|
|Hawkins, Sir Paul (SW N'folk)||Soames, Hon Nicholas|
|Hawksley, Warren||Speller, Tony|
|Hayes, J.||Spencer, Derek|
|Hayhoe, Barney||Spicer, Jim (W Dorset)|
|Heathcoat-Amory, David||Stanbrook, Ivor|
|Heddle, John||Stern, Michael|
|Hickmet, Richard||Stevens, Lewis (Nuneaton)|
|Hicks, Robert||Stewart, Ian (N Hertf'dshire)|
|Hind, Kenneth||Sumberg, David|
|Hogg, Hon Douglas (Gr'th'm)||Taylor, John (Solihull)|
|Holt, Richard||Taylor, Teddy (S'end E)|
|Howarth, Alan (Stratf'd-on-A)||Temple-Morris, Peter|
|Howell, Ralph (N Norfolk)||Terlezki, Stefan|
|Hunt, John (Ravensbourne)||Thompson, Donald (Calder V)|
|Jackson, Robert||Thompson, Patrick (N'ich N)|
|Jessel, Toby||Thornton, Malcolm|
|Johnson Smith, Sir Geoffrey||Thurnham, Peter|
|Jones, Gwilym (Cardiff N)||van Straubenzee, Sir W.|
|Jones, Robert (W Herts)||Viggers, Peter|
|Kellett-Bowman, Mrs Elaine||Waddington, David|
|Key, Robert||Wakeham, Rt Hon John|
|King, Roger (B'ham N 'field)||Walden, George|
|Knight, Gregory (Derby N)||Waller, Gary|
|Knight, Mrs Jill (Edgbaston)||Ward, John|
|Knowles, Michael||Wardle, C. (Bexhill)|
|Knox, David||Watson, John|
|Latham, Michael||Watts, John|
|Lawler, Geoffrey||Wells, Bowen (Hertford)|
|Leigh, Edward (Gainsbor'gh)||Wheeler, John|
|Lennox-Boyd, Hon Mark||Whitfield, John|
|Lester, Jim||Whitney, Raymond|
|Lilley, Peter||Wiggin, Jerry|
|Lloyd, Ian (Havant)||Winterton, Mrs Ann|
|Lloyd, Peter, (Fareham)||Winterton, Nicholas|
|Lyell, Nicholas||Wolfson, Mark|
|Macfarlane, Neil||Yeo, Tim|
|MacKay, Andrew (Berkshire)|
|Maclean, David John||Tellers for the Ayes:|
|Major, John||Mr. Michael Neubert and|
|Maples, John||Mr. Tony Durrant.|
|Alton, David||Hughes, Sean (Knowsley S)|
|Archer, Rt Hon Peter||Hughes, Simon (Southwark)|
|Atkinson, N. (Tottenham)||John, Brynmor|
|Banks, Tony (Newham NW)||Jones, Barry (Alyn & Deeside)|
|Barnett, Guy||Kennedy, Charles|
|Barron, Kevin||Kinnock, Rt Hon Neil|
|Beckett, Mrs Margaret||Kirkwood, Archy|
|Beith, A. J.||Lamond, James|
|Bennett, A. (Dent'n & Red'sh)||Leighton, Ronald|
|Bermingham, Gerald||Lewis, Ron (Carlisle)|
|Bidwell, Sydney||Lewis, Terence (Worsley)|
|Blair, Anthony||Litherland, Robert|
|Bray, Dr Jeremy||McDonald, Dr Oonagh|
|Bruce, Malcolm||McKay, Allen (Penistone)|
|Buchan, Norman||McKelvey, William|
|Caborn, Richard||McNamara, Kevin|
|Callaghan, Jim (Heyw'd & M)||McTaggart, Robert|
|Campbell-Savours, Dale||McWilliam, John|
|Carlile, Alexander (Montg'y)||Madden, Max|
|Clark, Dr David (S Shields)||Marek, Dr John|
|Clay, Robert||Maynard, Miss Joan|
|Cocks, Rt Hon M. (Bristol S.)||Meadowcroft, Michael|
|Cohen, Harry||Milian, Rt Hon Bruce|
|Cook, Frank (Stockton North)||Miller, Dr M. S. (E Kilbride)|
|Cook, Robin F. (Livingston)||Nellist, David|
|Corbett, Robin||Oakes, Rt Hon Gordon|
|Cowans, Harry||O'Brien, William|
|Craigen, J. M.||O'Neill, Martin|
|Dalyell, Tam||Orme, Rt Hon Stanley|
|Davis, Terry (B'ham, H'ge H'l)||Park, George|
|Deakins, Eric||Parry, Robert|
|Dewar, Donald||Patchett, Terry|
|Dixon, Donald||Pavitt, Laurie|
|Dormand, Jack||Pendry, Tom|
|Dubs, Alfred||Penhaligon, David|
|Dunwoody, Hon Mrs G.||Powell, Raymond (Ogmore)|
|Eastham, Ken||Prescott, John|
|Edwards, Bob (W'h'mpt'n SE)||Radice, Giles|
|Evans, John (St. Helens N)||Randall, Stuart|
|Ewing, Harry||Redmond, M.|
|Fisher, Mark||Richardson, Ms Jo|
|Foot, Rt Hon Michael||Short, Ms Clare (Ladywood)|
|Forrester, John||Skinner, Dennis|
|Foster, Derek||Snape, Peter|
|Freeson, Rt Hon Reginald||Spearing, Nigel|
|Garrett, W. E.||Steel, Rt Hon David|
|George, Bruce||Stewart, Rt Hon D. (W Isles)|
|Gilbert, Rt Hon Dr John||Strang, Gavin|
|Godman, Dr Norman||Thomas, Dafydd (Merioneth)|
|Gourlay, Harry||Thompson, J. (Wansbeck)|
|Hamilton, James (M'well N)||Tinn, James|
|Hardy, Peter||Torney, Tom|
|Hart, Rt Hon Dame Judith||Wallace, James|
|Heffer, Eric S.||Wareing, Robert|
|Hogg, N. (C'nauld & Kilsyth)||Wilson, Gordon|
|Howell, Rt Hon D. (S'heath)||Winnick, David|
|Hoyle, Douglas||Tellers for the Noes:|
|Hughes, Robert (Aberdeen N)||Mr. Frank Haynes and|
|Hughes, Roy (Newport East)||Mr. Austin Mitchell.|