Clause 66 - Transfers involving public bodies

Finance Bill – in a Public Bill Committee at 10:30 am on 10th June 2003.

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Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury 10:30 am, 10th June 2003

I beg to move amendment No. 286, in

clause 66, page 45, line 3, leave out 'statute' and insert 'a statutory provision'.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

With this it will be convenient to discuss the following:

Government amendments Nos. 253 to 256.

Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

The clause enacts a relief that applies when interests in land are transferred from one body to another in connection with a statutory reorganisation of functions. In those circumstances, any tax otherwise paid would have to come from public funds. The clause also includes a power for the Treasury by order to exempt other statutory transfers when either the purchaser or vendor is a public body. The amendments concern what in broad terms is meant by ''statutory'' for the purposes of the clause. The clause currently makes various references to ''statute'', ''provision of statute'' or ''enactment'', and amendments Nos. 253, 255, 256 and 286 replace them with the single term ''statutory provision''. Amendment No. 254 deletes a definition of ''statute'', which is not needed when the other amendments are made. The term ''statutory provision'' is defined in clause 121 and is used generally in stamp duty land tax legislation.

These minor amendments are designed to improve the consistency and clarity of the Bill, and I commend them to the Committee on that basis.

Photo of Mark Prisk Mark Prisk Shadow Paymaster General

Given the explanatory notes that have been provided with the amendments and the Chief Secretary's comments, we welcome this attempt to clarify the Bill. We are more than happy to accede to the amendment.

Amendment agreed to.

Amendments made: No. 253, in

clause 66, page 45, line 7, leave out 'provision of statute' and insert 'statutory provision'.

No. 254, in

clause 66, page 45, line 17, leave out subsection (4).

No. 255, in

clause 66, page 46, line 22, leave out 'an enactment' and insert 'a statutory provision'.

No. 256, in

clause 66, page 46, line 23, leave out 'any enactment' and insert 'a statutory provision'.—[Mr. Boateng.]

Question proposed, That the clause, as amended, stand part of the Bill.

Photo of Mark Prisk Mark Prisk Shadow Paymaster General

The clause deals with the transfers involving public bodies. It is a conventional clause that occurs in many Bills, and will exempt obvious public bodies. It is tempting not to consider what is included, but what is not included. Other Committee members may have other examples, but I want to raise the question of Network Rail. It is a private company that does not distribute profits by dividends to shareholders, so is it exempt? Furthermore, will the Chief Secretary tell us whether it is exempt when it is engaged in joint projects with the Strategic Rail Authority for the Department for Transport?

Photo of George Osborne George Osborne Opposition Whip (Commons), Shadow Minister (Treasury)

My hon. Friend puts an excellent argument about Network Rail. He will of course know that the Comptroller and Auditor General has strongly recommended that the Treasury account for the liabilities that it carries for Network Rail. In effect, Network Rail is being backed up and guaranteed by the Government, and is a Government body in all but name.

Photo of Mark Prisk Mark Prisk Shadow Paymaster General

That is exactly the ambiguity of the Government's position. I look forward to the Chief Secretary clearing that particular ambiguity up. It seems to be beyond the ability of the Secretary of State for Transport, or his predecessor.

On the wider issue, there is the question of how the scope and the tax implications of the clause affect PFI and PPP schemes. My concern is that those schemes are not expressly exempted. There are attempts elsewhere, which we have touched on previously, to try to define where and how PFI and PPP should be dealt with—in paragraph 10 of schedule 4, for example. There have also been other problems in clause 48. Subsection (1) states:

''A land transaction entered into on, or in consequence of, or in connection with, a reorganisation effected by or under statute is exempt from charge if the purchaser and vendor are both public bodies.''

The concern is for those parties and potential partners that the Government wish to engage from the private sector into such schemes to improve and reform public services. There is clearly a danger that the clause will not recognise those relationships.

Will the Chief Secretary explain whether it is the Government's intent to ensure that PFI and PPP schemes are exempt, and ensure that all those partners, public and private, that are engaged in those processes are exempt? If that is so, would he explain why it is not expressly stated in the clause?

Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

Existing legislation includes various individual exemptions from stamp duty if interests and land are transferred from one public body to another in connection with a reorganisation of statutory functions. In such circumstances, any duty otherwise paid would have to come from public funds. Treasury Ministers are regularly asked to approve similar exemptions for inclusion in new legislation.

Clause 66 properly replaces that individual approach with a general exemption from stamp duty land tax for transfers between public bodies in connection with statutory reorganisation. That includes transfers under devolved Scottish and Northern Ireland legislation, and the clause lists the types of public bodies to which it applies. The clause also includes a power for the Treasury by order to exempt other statutory transfers if either the purchaser or the vendor meets the definition of a public body.

The clause will automatically exempt from stamp duty land tax many transfers where existing stamp duty exemptions remain in use and many transfers resulting from new legislation without having to make individual provision in primary legislation. As such, it seems entirely sensible and worthy, and I am rather disappointed by the mischievous attempts by Opposition Members to hang various other rather tendentious points on it. I am tempted to respond to them, but I think that I must resist for fear of falling outwith the subject matter of the clause.

The hon. Member for Hertford and Stortford should not press the matter because I do not think that Conservative Members, given the extent to which they have been complicit in the botched privatisation of the railway network—

Photo of Kali Mountford Kali Mountford Labour, Colne Valley

We had to clear up their mess.

Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury 10:45 am, 10th June 2003

My hon. Friend refers to us having to clear up their mess and she is absolutely right. Network Rail is our response to the mess that we inherited from the stewardship, if I can call it that, of the rail network by Conservative Members. Network Rail—I have been pushed to this, Mr. McWilliam—is not a public body. It is a private company limited by guarantee with membership drawn from a wide variety of those connected with and using the rail industry. For a change, those people have the interests of the rail industry at heart, unlike the representatives of the party of the last Administration, who ran down the railway system and botched its privatisation. We take no lessons from—

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

Order. The ''dog that did not bark in the night'' argument is perfectly in order. However, we are going very wide of that.

Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

I must resist the temptation to give way.

I return to the specific question that I was asked about why there was no general exemption for PFI projects. Participants in PFI projects are private sector companies, but we are continuing to consult on the detailed application of the Bill to those projects. I will

ensure that the points made by hon. Members are taken into account during that consultation.

Photo of Michael Jack Michael Jack Conservative, Fylde

I am disappointed that the Chief Secretary did not give way. I shall ask my question in the hope that it will hang in the record, or he will do me the courtesy of giving an answer. He mentioned that there was a definition of a public body. I was simply going to ask where I could find that definition. I ask the question in the light of the terminology that he used about statutory reorganisation.

I would like to put an example to him. Currently, the Horticultural Research Institute—which is a non-departmental public body whose status and position in law has been the subject of question and debate for some considerable time—is negotiating with Warwick university to become a department of that university. That is a sensible proposal, and the Department for Environment, Food and Rural Affairs has indicated that it is content for those discussions to go ahead. Bearing in mind the fact that there are considerable land and property interests in such a move—and that the reorganisation came as a result of a publicly required quinquennial review of the HRI—what happens if the HRI comes to an agreement with Warwick university that it should become a department of that university? In that context, is the university counted as a public body? Is the HRI counted as a public body, and if so, what happens?

Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

It will not surprise hon. Members that I am not going to go down that road. I will not get into the business of defining public bodies.

Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

Indeed, no. I do not intend to do what the right hon. Member for Fylde would never have dreamt of doing when he sat on these Benches, and that is to get into statutory definition on the hoof. That would be most unwise, and I do not intend to go down that route. However, I refer him to the time-honoured approach to these issues, which is not to provide a definition in statute, but to provide a list.

Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

Not at the moment. There is a list, and that is what has been done over the years. The right hon. Gentleman urges that one body or another be put on that list. I hear what he says.

Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

No. Such matters can very often be best dealt with by regulation, and any organisation that is concerned about its status and the impact of the provisions on any transaction would do well to contact officials. They will receive such advice as is appropriate. That is the course that I would commend to the right hon. Gentleman. I can do no more than that.

Photo of Michael Jack Michael Jack Conservative, Fylde

It is amazing that the Chief Secretary to the Treasury has failed to answer a simple question. I asked where I could find the definition of a public body. He says that he is not going to go down that route. Now he tells us that there is a list of public bodies. If he had stood up and said that the list can be found at X, Y or Z, I would have been happy. I would not have expected the Chief Secretary to the Treasury

to indulge in making definitions. I ask merely for a simple answer to a simple question.

Photo of Mr Paul Boateng Mr Paul Boateng Chief Secretary, HM Treasury, The Chief Secretary to the Treasury

I do not want to interrupt the right hon. Gentleman unfairly, but he asked me for a definition. I decline to give him a definition. I referred him to the list, which is to be found in clause 66(5). That is traditionally how such things are done. I decline to give a definition just as he would have done. I hope that the list will satisfy him, but I doubt it.

Photo of Michael Jack Michael Jack Conservative, Fylde

I thank the Chief Secretary, but it took two attempts before he would give me the answer.

Question put and agreed to.

Clause 66, as amended, ordered to stand part of the Bill.