Clause 214 - Health service bodies

Finance Bill – in a Public Bill Committee at 4:45 pm on 26th June 2012.

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

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Education)

The clause will not detain us too long. We are hop, skip and jumping over anti-avoidance measures that we all support. The clause is a simple  re-enactment of the existing provisions to exempt parts of the NHS from paying stamp duty on certain fixtures and repeals obsolete provisions in that area. It is a measure that is likely to have nil Exchequer impact and is a housekeeping exercise that we have no objection to.

Photo of John Pugh John Pugh Liberal Democrat, Southport

I will detain the Committee just a little bit longer. The clause exempts NHS bodies from stamp duty when they purchase land and buildings, which is a good thing, and to some extent updates the legislation to take into account the reconfiguration of the health service that is being debated elsewhere, as the hon. Member for Easington will undoubtedly recall. However, the biggest property holder in the NHS is not mentioned in the legislation at all: NHS Property Services Ltd, which is registered with Companies House and is a residuary body for PCT buildings when they are passed on, some of which are freehold, some PFI and some held under a complex arrangement known as LIFT—local improvement finance trust.

Some such properties will be leased back and rented back to NHS bodies, and some will be surplus to requirements and disposed of, because some are quite unattractive financial arrangements—particularly those held under PFI conditions or the LIFT arrangements. It is not a small portfolio: it represents anything between £4 billion and £6 billion of public assets. I do not foresee a major problem with the body buying property and therefore incurring stamp duty, as by and large it will be trying to dispose of property, although some will be incapable of being disposed of in any rational way.

Having looked at the terms that apply to that body, it does not seem to me obvious that it would be prevented from purchasing property if that was a move within a wider property management game, so I would welcome clarification from the Minister as to whether NHS Property Services, with its huge property portfolio of NHS assets, can sell anything within its portfolio. Can the Minister confirm that, if it does, it will incur stamp duty because it is a limited company and is not exempted? I would welcome some clarification on this perhaps forgotten aspect of the legislation.

Photo of David Gauke David Gauke The Exchequer Secretary

The clause is a technical measure, as we have heard, which updates an existing stamp duty land tax relief for property acquisitions by certain bodies involved in the provision of NHS services. It repeals the existing relief and an obsolete equivalent relief under the old stamp duty regime.

Since SDLT was introduced in 2003, it has included a relief for property acquisitions by NHS trusts, primary care trusts and equivalent bodies in the devolved Administrations. The relief was enacted in health service legislation and not within the Finance Act 2003, and has undergone successive amendments, first to include NHS foundation trusts, and later to take account of changes to the NHS legislation underlying the various bodies. Unfortunately, the accumulation of amendments has caused defects in the legislation, which we have been advised to rectify as soon as possible.

Within the clause, we are taking the opportunity to consolidate SDLT legislation by placing the relief with the main body of SDLT legislation in the Finance Act 2003. The relief will in future apply to NHS foundation  trusts, local health boards and NHS trusts in Wales, and to health and social services trusts in Northern Ireland. It will also apply to NHS trusts and primary care trusts in England until those bodies are abolished under provisions of the new Health and Social Care Act 2012, and then to the new NHS Commissioning Board and clinical commissioning groups.

Committee members will have noted that no Scottish bodies appear on the list. Health provision in Scotland is now undertaken by health boards and special health boards, which acquire title to land in the name of the Scottish Ministers. The transactions are therefore exempt from SDLT under the Crown application provisions.

The relief continues to apply only to public sector bodies engaged in the commissioning and provision of NHS services. We do not expect the clause to have any significant Exchequer or other impact. The clause will have effect for transactions where the effective date for SDLT purposes is on or after the date of Royal Assent to the Finance Bill. The effective date is normally the date on which a sale contract is completed.

On the point raised by my hon. Friend the Member for Southport, NHS Property Services is not included within the relief because it was not included in the previous relief. The measure is designed to re-enact an existing relief, not to broaden its scope. Consequently, bodies that fell outside the previous relief are not brought in. As I said, it does not have an Exchequer impact.

Photo of John Pugh John Pugh Liberal Democrat, Southport

It is fairly evident that it would not be included in the previous set of organisations with freedom from taxation, simply because the organisation did not exist as such. It is relatively recent. However, such is the size of its property portfolio—we are talking about billions of pounds—that it is not inconceivable that at some future date, it will be both a buyer and a seller of property. Is it fair for me to infer that it is perfectly possible for that organisation, which will inherit the NHS assets, to incur stamp duty?

Photo of David Gauke David Gauke The Exchequer Secretary

I take on board my hon. Friend’s point about NHS Property Services. Obviously, we will keep the matter under review. The broad principle behind the clause is that it applies to those bodies that previously fell within the provisions, or whose predecessor organisations did. I appreciate his point that NHS Property Services does not quite fall within that category, but I hope that he will take this as some reassurance. We keep such matters under review.

The clause’s intention is essentially to re-enact the SDLT relief for NHS bodies in a simplified and more robust form and provide for forthcoming changes in the pattern of NHS service provision. I commend the clause to the Committee.

Question put and agreed to.

Clause 214 accordingly ordered to stand part of the Bill.