Robert Neill
Main Page: Robert Neill (Conservative - Bromley and Chislehurst)(12 years, 11 months ago)
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The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)
I beg to move, That the clause be read a Second time.
Mr Speaker
With this it will be convenient to discuss the following:
Government new schedule 2—‘Transfers and transfer schemes: tax provisions.
Government new clause 20—Authority may be required to carry on commercial activities through a taxable body.
Amendment 351, in clause 158, page 138, line 45, at end insert—
‘London Housing and Regeneration Board
“333ZDA London Housing and Regeneration Board
(1) The Authority must establish a London Housing and Regeneration Board within six months of the Localism Act 2011 being passed.
(2) The London Housing and Regeneration Board is to consist of such numbers (being not less than six) as the Authority may from time to time appoint.
(3) The Authority must appoint one of the members as the person with the function of chairing the London Housing and Regeneration Board.
(4) In appointing a person to be a member, the Authority—
(a) must have regard to the desirability of appointing a person who has experience of, and shown some capacity in, a matter relevant to the exercise of the functions set out in this Chapter,
(b) must be satisfied that the person will have no financial or other interest likely to affect prejudicially the exercise of the person’s functions as a member, and
(c) must ensure that at least 50 per cent. of the number of members on the Board are appointed representatives of London boroughs.
(5) In exercising its housing and regeneration functions and powers subsequent to the enactment of this Chapter the Authority must consult and obtain agreement from the London Housing and Regeneration Board.”’.
Government amendments 205 to 210 and 212.
Amendment 352, in clause 168, page 148, line 7, at end insert—
‘(e) a majority of those London borough councils whose borough contains any part of the designated development area agree to the designation.’.
Government amendments 213 to 215, 218 to 220, 223, 253 to 255 and 265.
Robert Neill
We are dealing with part 7 of the Bill, which relates to governance in Greater London, and part 3, which relates largely to business rate matters and, I am delighted to say, has not proven controversial. I hope that part 7 will not detain us terribly long either, as a good degree of consensus was achieved in Committee and there are just one or two matters that it is necessary to debate further.
I will start with new clause 21, the lead provision in the group, and the majority of associated matters. With the exception of only two topics that I will come to in a moment, the rest of the group comprises a large number of technical amendments relating to two tax issues. Although the new clause is the first new clause listed on the amendment paper, it is not really the natural starting point, so perhaps I will be forgiven if I leapfrog over it to new clause 20, which will amend the Greater London Authority Act 1999 and require the Greater London authority to undertake certain specified activities for a commercial purpose through a taxable body. It relates to the transfer of a large number of functions of the Housing Corporation in London to the Mayor, to the movement of the London Development Agency into the GLA’s main body, and to the establishment of mayoral development corporations in London. All of those potentially involve commercial activity, so we have to get the tax treatment right.
Mr Speaker
Order. It might be helpful if I interrupt to make the point to the House that, although that is indeed the lead new clause, the order in which representatives on the Treasury Bench deal with matters is entirely a matter for them. Members can come in on such matters within the grouping as they think fit.
Robert Neill
I am grateful, Mr Speaker.
I will encapsulate the technicalities as swiftly as I can, but it suffices to say that these amendments are necessary to ensure that those commercial activities that are undertaken by the GLA are done so within a taxable environment. As a local authority, it would normally have tax-exempt status, but some of those activities are not of a local authority nature but more of a commercial nature and so have to be properly taxable. There is a long-established tax principle in that regard to ensure a level playing field between the public and private sectors in relation to commercial activities. That is particularly important in this case because the GLA will inherit, as a consequence of our devolution measures, a significant portfolio of land interests, some of which operate on a commercial basis and are subject to corporation tax and capital gains tax. It is not a new state of affairs. Section 157 of the 1999 Act made like provision in relation to the activities of Transport for London. That is the background to what we are doing.
In a nutshell, the list of specified commercial activities, which will be set out in a detailed order, will be worked up by Her Majesty’s Revenue and Customs and the GLA during the passage of the Bill, but essentially the activities of the London Development Agency and Homes and Communities Agency will be transferred to the Mayor. That is how new clause 20 kicks off the whole proposition.
New clause 21 introduces new schedule 2, which will neutralise certain tax consequences—the other side of the coin—that might otherwise arise from the transfer of various property, rights and liabilities from the Office for Tenants and Social Landlords, the Homes and Communities Agency and the London Development Agency to other public bodies. There is a measure to enable the Treasury to make similar tax provisions for future mayoral development corporations. As we know, one is proposed, and we will come to that in a moment, but the provision will technically permit others to be set up and, therefore, embrace properly, within a legal framework, all those related activities.
Essentially, every Government new clause and amendment with which we are concerned relates to that process. The Opposition have tabled a couple of amendments, which I can deal with conveniently either now or in due course once they have been spoken to, but suffice it to say that the only Government amendments that do not form part of the tax treatment provisions are amendments 212 and 213. They relate to the mayoral development corporation, which is proposed for establishment, and I hope that we can find some common ground, because in Committee there was a discussion and Members generally accepted as desirable both the idea that the Mayor of London should have the power to establish a mayoral development corporation, and the current Mayor’s intention to establish such a corporation broadly relating to the Olympic park in east London.
The provision is more widely cast than that, for good reasons, and it will permit the establishment of other mayoral development corporations. None is envisaged by the current Mayor and I am not conscious of any envisaged by potential Mayors, either, but it would be on the books for the future.
The question that arose, and which the Government seek to address with the proposed changes, was what are the appropriate means of holding the Mayor to account for mayoral development corporation proposals. If a future Mayor—I am sure that it would not be the current Mayor—were to come up with a proposal for a mayoral development corporation which was thought objectionable, by what means would a control or brake be put on that process?
Mr Stewart Jackson (Peterborough) (Con)
Does my hon. Friend agree that the anecdotal evidence from the Thames Gateway is that the level of accountability and the funding streams were often indistinct, that there was an insufficient level of democratic accountability through boroughs outside London, London boroughs and the mayoralty, and that the proposed changes before us seek to rectify that situation?
Robert Neill
My hon. Friend is absolutely right. There is a history to the incremental growth of the London Thames Gateway Development Corporation, which did not prove satisfactory, and as he knows the Government are looking at the matter in a different context.
We seek to introduce proper accountability to the London mayoral development corporation. There was a debate about whether it would be appropriate to give the boroughs a veto, and that possibility has foreshadowed an Opposition amendment. The Government have reflected on the matter, and we take the view that it probably is appropriate and sensible to include a check and balance in the system, but we conclude that, because the Mayor of London is a strategic authority and charged with the economic development policy and oversight for London, the check and balance should not be through any one London borough or group of London boroughs, as they have their own important role, are in any event the statutory consultees on these matters and would have the opportunity to put their views forward anyway.
It is more appropriate if the check and balance mirrors other checks and balances in the GLA’s governance scheme, so that the London assembly, which is democratically elected and represents all Londoners, is able to veto a proposal for a mayoral development corporation by a two-thirds qualified majority vote.
Gavin Barwell (Croydon Central) (Con)
I am grateful to the Government for accepting the approach that I outlined in Committee in response to an amendment moved by the right hon. Member for Greenwich and Woolwich (Mr Raynsford). Will my hon. Friend confirm that, because of the two-thirds majority to which he refers and the GLA’s electoral system, one merit of the proposal is that it will effectively ensure the need for cross-party consensus behind any MDC designation?
Robert Neill
My hon. Friend is entirely right, and I am grateful to him for raising the suggestion in Committee, because it fits neatly with an established pattern of working in the GLA. As he rightly observes, the proposal will require any Mayor to achieve a measure of cross-party consensus. The system is established in relation to the Mayor’s budget and the various strategies that he is entitled to bring forward, and it is logical to include such an important issue in the same regime. Not only is there an electoral system in the GLA which requires cross-party consensus for a two-thirds majority, but the assembly is seized of certain powers not unlike our powers in this place to call for people and papers, so it can summon people and, therefore, carry out robust scrutiny.
Importantly, the assembly is also elected on a basis that includes constituency representatives and those elected through a list system, so any London borough that might be affected or concerned by a proposed mayoral development corporation has its constituency assembly representative at City hall who is able to stand up, ask questions and challenge on their behalf. I hope that that meets the Opposition’s point, and that their amendment will not be necessary.
Barbara Keeley (Worsley and Eccles South) (Lab)
I doubt it, because having representatives from borough councils on the assembly is not a strong enough measure; they may not comprise the majority. There is still the view in London borough councils, which we will hear more of when we come to our amendments, that they should have a veto. The designation of a mayoral development corporation in an area is a very powerful measure. I heard the Minister say that he did not believe the current Mayor had any extra MDCs in mind, but he could do, and the power is cast quite widely.
Robert Neill
I am disappointed in the hon. Lady’s response, because I thought that we had got a good deal of the way down the track to meet what were sensible concerns. There is a difference between recognising that the establishment of a mayoral development corporation is part of the outworking of London-wide policy, in which the Mayor will have to have regard to the strategic economic and developmental interests of the whole city, which may be different from the individual interests of a single local authority, and recognising that the assembly is the body that this House has already charged with holding the Mayor to account for the way in which he exercises those powers.
There is a difficulty with giving a veto to an individual London borough, because the borough’s interests are very properly not required to be strategic in the same way as those of the Mayor and of the assembly. Often they are, in fairness, and I do not mean to diminish the importance of the London boroughs. As the hon. Lady knows, I spent 16 years as a London borough councillor before spending eight years on the London assembly. That may indicate precocious sadness on my part, but that is a different matter. Both bodies fulfil very important functions, but they are different functions, and, if we are rightly going to put a check and balance on the Mayor’s exercise of his strategic role, we must do so through the assembly—the elected strategic check and balance. The boroughs have an important role in this because the Mayor is required to consult them, among other bodies, and they therefore have a powerful tool in being able to raise their concerns and to lobby their borough elected representative on the assembly to ensure that their case and their voice is heard.
Simon Hughes (Bermondsey and Old Southwark) (LD)
Our colleagues on the London assembly are supportive of the Government’s amendments and new clauses, as are my London colleagues and other colleagues in this place. Let me seek clarification on one thing; I hope that I might catch the Speaker’s eye later to speak on the substance of it. If the Mayor were to set up development corporations in London, would there be any changes in the planning processes in those areas that took democratic control away from the elected councillors? That was controversial under the old urban development corporations set up by the Conservative Government when Lord Heseltine was the relevant Secretary of State.
Robert Neill
Yes, the corporations could act in that way. They do not have to, because we have not been as specific as was the case in the past with the old-style development corporations as to exactly what they have to include. The likelihood, it is fair to say, is that they would, because part of the objective of a development corporation generally is to bring the development function and the planning function for a particular area together to speed up development. In practice—I hope that this will reassure my right hon. Friend—the east London MDC that was proposed for the Olympic park area has been involved an iterative process, with a degree of discussion between the Mayor and the five London boroughs affected. There has been some negotiation, which is probably a mature thing to have in the current circumstances. The upshot is that we now have a proposal to which the Mayor and the London boroughs are satisfied they can sign up. The boroughs accept that they cede some planning power for a period, but now do so by agreement with the Mayor. I think the same process can be achieved in other cases.
Mr Stewart Jackson
Setting aside the sui generis nature of London governance, does my hon. Friend agree that the level of direct accountability of these Government proposals is greater than that which existed hitherto in, for instance, West Northamptonshire Development Corporation, North Northants Development Company and most of, if not all of, the housing market renewal areas? This is indeed an improvement in terms of direct accountability for regeneration policy.
Robert Neill
My hon. Friend is absolutely right, for two reasons. First, the power to set up the corporation is devolved, and a directly elected regional figure, in the shape of the Mayor, takes that decision. Secondly, there is the veto, which did not exist in relation to the other, earlier-style development corporations. There is therefore a significantly enhanced degree of accountability.
Simon Hughes
I heard what the Minister said about the discussions that have been going on in east London between the Mayor and the local authorities. If, for example, the current Mayor or any future Mayor had the further idea that there should be mayoral development corporations south of the river, would that, of necessity, require him to have the agreement of the local authority or authorities in question if they had a different view, given that there could be a conflict? Co-operation is fine, but a difference of view that means that the local authority’s views are disregarded is not so fine.
Robert Neill
In theory, a Mayor could seek to disregard a local authority’s views, but in practice we reckon that the new clause makes that unachievable. There are two reasons for that. First, the Mayor will have to consult the local authorities, which will have registered their objection. As with any public law decision, he has to behave in a way that is rational and reasonable within the terms of the Associated Provincial Picture Houses v. Wednesbury Corporation case. Secondly, because of the electoral arrangements in London, the local authority would be well placed to ensure that a blocking majority was created in the assembly to prevent the policy from going through. There is a theoretical possibility that the Mayor would be able to create the sort of rogue corporation that one might be concerned about, but in reality it is pretty much inconceivable.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
The Minister knows that it is not just a theoretical possibility. The Bill states very clearly that if the Mayor applies to the Secretary of State for a mayoral development corporation and has gone through the processes of consultation, if that proposal then comes before the Secretary of State, he must, under the terms of the Bill, create that mayoral development corporation. When I put these points to the Minister in earlier debates in this Chamber on Second Reading and in Committee, I said the real danger was that a Mayor who had considerable support in the assembly, as can happen following an election, would be in a strong position to railroad through his proposal against the opposition of the local borough. That remains the case, and I hope that the Minister will accept that.
Robert Neill
I am sorry, but the right hon. Gentleman has been consistently wrong on this point. If he will forgive my saying so, I know that he is offended when somebody comes up with an idea in London governance which is not his own. With respect to him, as he has considerable experience in this field, his solution to the risk, which I do accept, that a Mayor might seek to set up a rogue or an unacceptable development corporation was, in effect, to give the Secretary of State the veto—in other words, instead of saying, as the Bill does, that the Secretary of State “must” approve the proposal, that he “may” approve a policy, and that the veto would rest with a Minister. That was a highly centralising means of resolving the problem. Instead, the Government have trusted the elected representatives of London and said that the assembly, through qualified majority voting, may exercise the veto. That is much more consistent with the localist thrust of the Bill, and I would have thought it was closer to what the right hon. Gentleman, who after all introduced devolution in London, would himself wish to see.
Andrea Leadsom
As my hon. Friend knows, West Northamptonshire Development Corporation has been hated by local residents for the simple reason that it was forced on them to try to implement a central Government housing policy that has not been successful and that we hope to eliminate within the next couple of years.
Robert Neill
I am grateful to my hon. Friend for sharing her experience of that body, which is a matter of great concern to her and to others. We have endeavoured to learn from past experience and past failings in the way in which we construct our arrangement, and we have therefore put a democratic veto into our proposals.
Mr Raynsford
I want to correct the Minister’s assertion that I was wrong in my interpretation of the Bill. I repeat the point that was put to him by the right hon. Member for Bermondsey and Old Southwark (Simon Hughes): if the Mayor decides to proceed with a proposal for a mayoral development corporation, the Secretary of State has to give effect to it if it is not blocked by the assembly. We have had debates about the proper mechanisms for blocking such a proposal. However, as the Minister must concede because it is in the Bill, if those mechanisms do not work, the Secretary of State has no discretion and has to give effect to the Mayor’s requirement to bring into effect such a development corporation irrespective of whether the individual borough is opposed to it. Will he now please concede that I was not wrong on that point, because that is what the Bill says?
Robert Neill
I will give the right hon. Gentleman this: he is right on textual analysis but remains wrong on policy, because his solution is a centralist one that would give the Secretary of State a veto. The whole point of what we are doing, in improving the Bill from its original state, is that we do not allow the Secretary of State to veto a decision taken by elected representatives in London; rather, we allow the assembly, which is the established body for keeping the Mayor of London in check, to exercise the veto. In policy terms, that is preferable.
I am disappointed that the Opposition object to this. As I recall only too well, in 1999 they made great play of having devolved power to London by establishing the Greater London authority. I now accept that that was the right thing to do. We are following the logic of that by enabling Londoners to take the decision as to what is the best shape and size of an important regeneration tool for London. They do that with the Mayor making the proposal and the assembly having the ability, if necessary, to veto it, and the boroughs being able to be consulted and to exercise influence through their elected members of the assembly. I am sorry that the Opposition seem to want to start a bit of a war where none need exist, because there is consensus among all parties in the assembly that it is desirable to go down this route.
Barbara Keeley
I think I am right in reporting the Minister as saying that a principle of the Localism Bill is to trust local representatives. I hope that Ministers will bear that in mind as they take the Bill through its final stages in the House, because I want to question them about why that does not carry through to the imposition of shadow mayors, although I know that that is outside the scope of this debate. If we are to be true to the principle of trusting elected representatives, which the Minister has just stated, we must not impose on them.
Various people have intervened in this debate. It would help if we moved on to considering the amendments fairly soon, because we will be able to take the arguments in the round if we do that.
Mr Speaker
Order. That is in the hands of the Chair. At this stage, the hon. Gentleman will continue his remarks.
Robert Neill
I am grateful, Mr Speaker. I am anxious to deal with as many of the issues raised by hon. Members as possible, because this debate is time-limited, and for good reason. I hope that I have dealt, in large measure, with why it is appropriate to adopt the Government amendments, and why that is preferable to placing a veto in the hands of the boroughs, which would create a potential conflict of interest, or the earlier Opposition proposition of leaving a veto with central Government, which would be entirely contrary to the spirit of the Bill.
I will cover one final topic before I finish, if I may. Another proposal in the group, which I anticipate will be put, is amendment 351, tabled by the hon. Member for Lewisham East (Heidi Alexander), the next-door neighbour of part of my constituency. The amendment relates to the London housing and regeneration board. It is important that the Bill transfers housing powers and responsibilities from central Government agencies, in the form of the Homes and Communities Agency, to the Mayor. That has been welcomed across the piece politically in London. It is envisaged that the London housing board will be the vehicle within which that work is carried out.
As I read it, and I will happily be corrected if I am wrong, the amendment would prescribe in statute a requirement that the GLA should have a London housing and regeneration board. I cannot go that far because although it is no doubt a sensible thing to have, certainly at the moment, and is something that works well enough with the involvement of the Mayor’s office and the boroughs, we do not think it is consistent with the spirit of localism for us to prescribe, in one particular area, the manner in which the GLA should carry out its activities. Interestingly, that again seems to be a little bit of potential centralism creeping in through the back door. I would prefer to give the Mayor and the boroughs flexibility in determining how to take those issues forward.
I hope that I have dealt with all the topics in what has perhaps been a livelier debate than might have been anticipated when we started to talk about tax clauses, which I note have not featured in the controversy at all, perhaps not surprisingly.
Heidi Alexander (Lewisham East) (Lab)
I am grateful for the opportunity to speak to the two amendments in my name, although it feels rather strange to be doing so when we have already had much of the debate. I will speak to amendment 351, which relates to the establishment of a London housing and regeneration board, and seeks to guarantee that at least 50% of the membership of such a board would be made up of representatives from the local authority. I will also speak to amendment 352, which we have already debated at some length, and which relates to the process that has to be gone through to establish a mayoral development corporation. Under the amendment, the agreement of any council that is affected would be required before an MDC could be established. I am conscious that there is much to debate this afternoon, so I will limit my remarks.
I will move on to why I tabled the amendments. I should say at the outset that the amendments have been promoted and supported by London Councils, which, as hon. Members know, is the cross-party organisation that represents London boroughs. We can debate the localist merits of the Bill as a whole, but the provisions on London are distinctly regionalist. Whereas in other parts of the country there is the abolition of regional spatial strategies, we still have the London plan. The Bill proposes the winding up of the London Development Agency and the London part of the Homes and Communities Agency, with their powers being transferred to the London Mayor. Due to the Government’s understandable desire to ensure that the regeneration legacy of the Olympics takes effect, there are proposals in the Bill to enable the Mayor to set up a mayoral development corporation. However, as drafted, the Bill suggests that there could be an MDC anywhere in London, and not just at the Olympics site. My amendments would act as a brake on the concentrating powers that the Bill puts into the hands of the Mayor of London. They would give councils and councillors a voice, and they would give people in London the same say as people elsewhere in the country.
Amendment 352 would make it a requirement that a local authority in a proposed MDC area must agree to its establishment. If more that one local authority is affected, all must agree. The Bill as drafted gives complete power to the Mayor and the Secretary of State. Under Government amendment 213, the support of two thirds of the assembly will be needed for a proposal to move forward. That is not a sufficient assurance. There could be a situation in London in which local people are completely against the setting up of an MDC, councillors and the local authority in the area are completely against the setting up of an MDC, and the GLA constituency member is completely against the setting up of an MDC, and yet if the Mayor wants it to happen, it will happen. I ask hon. Members, what is localist about that?
We had some fun in Committee. On Second Reading, my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) talked about the prospect of a new Mayor of London—perhaps Ken Livingstone in a year’s time—choosing to establish a mayoral development corporation in Bromley. I will not repeat those comments.
Barbara Keeley
I want to speak briefly in support of the amendments so ably presented by my hon. Friend the Member for Lewisham East (Heidi Alexander). There was much consensus on this part of the Bill, unlike on others. There was much consultation with the Mayor, the Greater London assembly and London councils. To me, this part of the Bill shows the value of early and thorough consultation. Perhaps there is a lesson for us there.
As my hon. Friend has argued, the powers of a mayoral development corporation would be great. The power of the Mayor to establish new mayoral development corporations anywhere across the Greater London area is cast widely, as we discussed extensively in Committee. Amendment 352 quite rightly seeks to ensure that where a Mayor seeks to establish a further mayoral development corporation, the majority of the borough councils affected by such a designation would have to agree to it. The Opposition do not believe that this would create any form of impasse. However, it is important that a borough council with only a small representation in the assembly—one that could therefore in no way seek to achieve a two-thirds majority through its assembly representation—should be able to come to agreement with either one or all the other boroughs if another development corporation was designated. We agree with my hon. Friend’s amendment 352 and will support it in a Division.
Robert Neill
This has been an interesting and worthwhile debate, although I accept that there has been an element of déjà vu for some of us. I say that as someone who served on the old Greater London council and who found its abolition quite painless, partly because at the same time I was serving on the fire authority, the waste regulation authority, the waste disposal authority and the borough council. My hon. Friend the Member for Peterborough (Mr Jackson) is quite right that we created a somewhat convoluted architecture thereafter, which is why it is right to restore as much decision making as we can to London. That is why I am grateful for his support for the general thrust of where we are going.
I understand the point that the hon. Member for Lewisham East (Heidi Alexander) made about the importance of employment and housing. She is absolutely right about that. I also accept the need to take all the agencies in London along with any such proposal, but I cannot accept her proposition that we cannot trust London’s politicians to come to a mature decision on the best way forward.
A powerful point about the history of London was made by my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) and my hon. Friend the Member for Croydon Central (Gavin Barwell), and it was also reinforced by my hon. Friend the Member for Peterborough. They all have long experience in London government. Their point was that there are some details that can be looked at, but it is important to recognise that the relationship between the Mayor and the assembly has matured, even in the short time that the assembly has been in existence. Indeed, the relationship between the Mayor and the boroughs has matured regardless of party, under Mayors of both principal parties, as it happens. We should not underestimate the brokerage and leverage role that exists in the system, in addition to a purely legalistic role.
If I may be permitted to mention one bit of history, something that we learned from the previous GLC is that it was not simply the disagreements of Ken Livingstone with the Government of the day that undermined the GLC. Rather, the GLC was undermined by the tension between the two tiers and the risk, on occasion, of impasse —impasse that arose regardless of the party controlling the GLC and the London boroughs at the time. That is my concern. Giving boroughs an absolute veto in the way suggested by amendment 352 risks recreating the tensions of the old GLC days, rather than sticking with the more collaborative working that we currently have.
The proposal put forward by my hon. Friend the Member for Croydon Central, to which my right hon. Friend the Member for Bermondsey and Old Southwark also referred, is a sensible one. We can consider the details and discuss them sensibly to find a way to take it forward. We have learned from the rather remote model of operation of the earlier development corporations, and we want to embed that learning in how we go forward in future.
Even at this late stage, I hope that the Opposition will think about the necessity of pressing their amendment 352 to a vote. However, if they really insist, I would ask the House to reject it.
Question put and agreed to.
New clause 21 accordingly read a Second time, and added to the Bill.
New Schedule 2
‘Transfers and transfer schemes: tax provisions
Part 1
Transfer under paragraph 60 of Schedule16
1 (1) For the purposes of any enactment about income tax or corporation tax, the Office and the HCA are to be treated as the same person.
(2) In particular, the transfer effected by paragraph 60 of Schedule 16 is to be disregarded for those purposes.
(3) Accordingly, that transfer is not to be regarded for the purposes of Part 8 of the Corporation Tax Act 2009 (gains and losses from intangible fixed assets) as involving any realisation of an asset by the Office or acquisition of an asset by the HCA.
(4) In this paragraph—
“enactment” includes an enactment contained in an instrument made under an Act,
“the HCA” means the Homes and Communities Agency, and
“the Office” means the Office for Tenants and Social Landlords.
Part 2
Certain transfers under scheme under section161 or162
Interpretation of Part 2 of Schedule
2 In this Part of this Schedule—
“CTA 2009” means the Corporation Tax Act 2009,
“public body” means—
(a) a person which is a public body for the purposes of section 66 of the Finance Act 2003 (stamp duty land tax: transfers involving public bodies), or
(b) a person prescribed for the purposes of this Part of this Schedule by order made by the Treasury,
“relevant transfer” means—
(a) a transfer, in accordance with a transfer scheme under section161, to a taxable public body of property, rights or liabilities of the Homes and Communities Agency, or
(b) a transfer, in accordance with a transfer scheme under section162, to a taxable public body,
“taxable public body” means a public body which is within the charge to corporation tax,
“transferee”, in relation to a transfer in accordance with a transfer scheme under section161 or162, means the person to whom the transfer is made, and
“transferor”—
(a) means the Homes and Communities Agency in relation to a transfer, in accordance with a transfer scheme under section161, of property, rights or liabilities of that Agency, and
(b) means the London Development Agency in relation to a transfer in accordance with a transfer scheme under section162.
Computation of profits and losses in respect of transfer of a trade
3 (1) This paragraph applies where a taxable public body (“the predecessor”) is carrying on a trade or part of a trade and, as a result of a transfer scheme under section 161 or 162—
(a) the predecessor ceases to carry on that trade or part of a trade, and
(b) another taxable public body (“the successor”) begins to carry on that trade or part.
(2) For the purposes of calculating, in relation to the time when the scheme comes into force and subsequent times, the relevant trading profits or losses of the predecessor and the successor—
(a) the trade or part is to be treated as having been a separate trade at the time of its commencement and as having been carried on by the successor at all times since its commencement as a separate trade, and
(b) the trade carried on by the successor after the time when the scheme comes into force is to be treated as the same trade as that which the successor is treated, by virtue of paragraph (a), as having carried on as a separate trade before that time.
(3) If a trade or part of a trade is to be treated under this paragraph as a separate trade, such apportionments of receipts, expenses, assets and liabilities are to be made for the purposes of computing relevant trading profits or losses as may be just and reasonable.
(4) This paragraph is subject to the other provisions of this Part of this Schedule.
(5) In this paragraph “relevant trading profits or losses” means profits or losses under Part 3 of CTA 2009 in respect of the trade or part of a trade in question.
Transfers of trading stock
4 (1) This paragraph applies if—
(a) under a relevant transfer, trading stock of the transferor is transferred to the transferee,
(b) immediately after the transfer takes effect, the stock is to be treated as trading stock of the transferee, and
(c) paragraph 3 does not apply in relation to the transfer.
(2) Sub-paragraphs (3) and (4) have effect in calculating for any corporation tax purpose both—
(a) the profits of the trade in relation to which the stock is trading stock immediately before the transfer takes effect (“the transferor’s trade”), and
(b) the profits of the trade in relation to which it is to be treated as trading stock (“the transferee’s trade”).
(3) The stock is to be treated as having been—
(a) disposed of by the transferor in the course of the transferor’s trade,
(b) acquired by the transferee in the course of the transferee’s trade, and
(c) subject to that, disposed of and acquired when the transfer takes effect.
(4) The stock is to be valued as if the disposal and acquisition had been for a consideration which in relation to the transferor would have resulted in neither a profit nor a loss being brought into account in respect of the disposal in the accounting period of the transferor which ends with, or is current at, the time when the transfer takes effect.
(5) In this paragraph “trading stock” has the meaning given by section 163 of CTA 2009.
Continuity in relation to loan relationships
5 (1) For the purposes of the application of Part 5 of CTA 2009 (loan relationships) in relation to a relevant transfer of rights and liabilities under a loan relationship to which immediately before the transfer takes effect the transferor is a party for the purposes of a trade it carries on, the transferee and the transferor are to be treated as if at the time of the transfer they were members of the same group.
(2) For the purposes of the application of Part 5 of CTA 2009 in relation to a transfer that—
(a) is to a public body,
(b) is in accordance with a transfer scheme under section 161 or 162, and
(c) is of rights and liabilities under a loan relationship to which immediately before the transfer takes effect the HCA or LDA is a party otherwise than for the purposes of a trade it carries on,
the HCA or LDA, and the person to whom the transfer is made, are to be treated as if at the time of the transfer they were members of the same group.
(3) In this paragraph any reference to being members of the same group is to be read in accordance with section 170 of the Taxation of Chargeable Gains Act 1992.
(4) In this paragraph—
“the HCA” means the Homes and Communities Agency, and
“the LDA” means the London Development Agency.
Chargeable gains: disposal on transfer to be treated as no gain/no loss disposal
6 (1) For the purposes of the Taxation of Chargeable Gains Act 1992, a disposal constituted by a transfer within sub-paragraph (2) is to be treated in relation to the transferor and transferee as made for a consideration such that no gain or loss accrues to the transferor.
(2) A transfer is within this sub-paragraph if—
(a) it is a transfer in accordance with a transfer scheme under section 161 of property, rights or liabilities of the Homes and Communities Agency and the transferee is a public body, or
(b) it is in accordance with a transfer scheme under section 162 and the transferee is a public body.
(3) In section 288(3A) of the Taxation of Chargeable Gains Act 1992 (meaning of the “no gain/no loss provisions”) at the end insert—
“(m) paragraph 6(1) of Schedule [Transfers and transfer schemes: tax provisions] to the Localism Act 2011.”
Stamp duty
7 Stamp duty is not chargeable on a transfer scheme under section162 if the transferee is a public body.
Modifications of transfer schemes
8 (1) This paragraph applies if—
(a) a company delivers a company tax return,
(b) subsequently an agreement is made modifying a transfer scheme under section 161 or 162, and
(c) as a result of that, the return is incorrect.
(2) The return may be amended under paragraph 15 of Schedule 18 to the Finance Act 1998 so as to remedy the error, ignoring any time limit which would otherwise prevent that happening.
(3) An amendment may not be made in reliance on sub-paragraph (2) more than 12 months after the end of the accounting period of the company during which the agreement is made.
(4) Sub-paragraphs (5) and (6) apply if the company does not amend the return so as to remedy the error before the end of that 12 month period.
(5) A discovery assessment or a discovery determination may be made in relation to the error, ignoring any time limit which would otherwise prevent that happening.
(6) Such an assessment or determination may not be made in reliance on sub-paragraph (5) more than 24 months after the end of the accounting period mentioned in sub-paragraph (3).
(7) Expressions used in this paragraph and in Schedule 18 to the Finance Act 1998 have in this paragraph the meaning they have in that Schedule.’.
Part 3
Transfers under scheme under section171(1) or (4) or187(1)
9 (1) In this paragraph “transfer scheme” means a transfer scheme under section 171(1) or (4) or 187(1).
(2) The Treasury may by regulations make provision for varying the way in which a relevant tax has effect from time to time in relation to—
(a) any property, rights or liabilities transferred in accordance with a transfer scheme, or
(b) anything done for the purposes of, or in relation to, or in consequence of, the transfer of any property, rights or liabilities in accordance with a transfer scheme.
(3) The provision that may be made under sub-paragraph (2)(a) includes, in particular, provision for—
(a) a tax provision not to apply, or to apply with modifications, in relation to any property, rights or liabilities transferred;
(b) any property, rights or liabilities transferred to be treated in a specified way for the purposes of a tax provision;
(c) the Secretary of State or Mayor of London to be required or permitted, with the consent of the Treasury, to determine, or to specify the method for determining, anything which needs to be determined for the purposes of any tax provision so far as relating to any property, rights or liabilities transferred.
(4) The provision that may be made under sub-paragraph (2)(b) includes, in particular, provision for—
(a) a tax provision not to apply, or to apply with modifications, in relation to anything done for the purposes of, or in relation to, or in consequence of, the transfer;
(b) anything done for the purposes of, or in relation to, or in consequence of, the transfer to have or not to have a specified consequence or to be treated in a specified way;
(c) the Secretary of State or Mayor of London to be required or permitted, with the consent of the Treasury, to determine, or to specify the method for determining, anything which needs to be determined for the purposes of any tax provision so far as relating to anything done for the purposes of, in relation to, or in consequence of, the transfer.
(5) In this paragraph—
“relevant tax” means corporation tax, income tax, capital gains tax, stamp duty, stamp duty land tax or stamp duty reserve tax, and
“tax provision” means a provision of an enactment about a relevant tax.
(6) In sub-paragraph (5) “enactment” includes an enactment contained in an instrument made under an Act.’.—(Robert Neill.)
Brought up, read the First and Second time, and added to the Bill.
New Clause 20
Authority may be required to carry on commercial activities through a taxable body
‘(1) The Greater London Authority Act 1999 is amended as follows.
(2) After section 34 insert—
“34A Restriction on exercise of certain powers except through a taxable body
(1) The Authority may carry on specified activities for a commercial purpose only if it does so—
(a) through a company that is a subsidiary of the Authority, or
(b) in pursuance of an authorisation under section 38(1), through—
(i) a body that is specified in section 38(2) and is within the charge to corporation tax, or
(ii) a company that is a subsidiary of a body specified in section 38(2).
(2) Subsection (3) applies if—
(a) the Authority carries on a specified activity for a commercial purpose otherwise than as permitted by subsection (1), and
(b) the activity is actually carried on by a body (whether the Authority or another) that, disregarding this section, is in respect of the carrying-on of the activity exempt from corporation tax and income tax.
(3) The body mentioned in subsection (2)(b) is to be treated in respect of the carrying-on of the activity as not being a local authority for the purposes of—
(a) section 984 of the Corporation Tax Act 2010 (exemption of local authorities from corporation tax),
(b) section 838 of the Income Tax Act 2007 (exemption of local authorities from income tax), and
(c) section 271 of the Taxation of Chargeable Gains Act 1992 (exemption of local authorities from capital gains tax).
(4) In this section—
“company” means—
(a) a company within the meaning given by section 1(1) of the Companies Act 2006, or
(b) a society registered or deemed to be registered under the Co-operative and Community Benefit Societies and Credit Unions Act 1965 or the Industrial and Provident Societies Act (Northern Ireland) 1969, and
“specified activity” means an activity specified in an order made by the Secretary of State with the consent of the Treasury.”
(3) In section 420(8) (orders subject to annulment) after the entry for section 25 insert—
“section 34A;”.’.—(Robert Neill.)
Brought up, read the First and Second time, and added to the Bill.
Clause 161
Transfer of property of Homes and Communities Agency etc
Amendments made: 205, page 143, line 31, at end insert—
‘(ba) a company that is a subsidiary of the Greater London Authority,’.
Amendment 206, page 143, line 38, at end insert—
‘“company” means—
(a) a company within the meaning given by section 1(1) of the Companies Act 2006, or
(b) a society registered or deemed to be registered under the Co-operative and Community Benefit Societies and Credit Unions Act 1965 or the Industrial and Provident Societies Act (Northern Ireland) 1969;’.
Amendment 207, page 143, line 42, at end insert—
‘“subsidiary” has the meaning given by section 1159 of the Companies Act 2006.’.—(Robert Neill.)
Clause 162
Abolition of London Development Agency and transfer of its property etc
Amendments made: 208, page 144, line 8, at end insert—
‘(ba) a company that is a subsidiary of the Greater London Authority,’.
Amendment 209, page 144, line 17, at end insert—
‘“company” means—
(a) a company within the meaning given by section 1(1) of the Companies Act 2006, or
(b) a society registered or deemed to be registered under the Co-operative and Community Benefit Societies and Credit Unions Act 1965 or the Industrial and Provident Societies Act (Northern Ireland) 1969;’.
Amendment 210, page 144, line 21, at end insert—
‘“subsidiary” has the meaning given by section 1159 of the Companies Act 2006.’.—(Robert Neill.)
Clause 168
Designation of Mayoral development areas
Amendments made: 212, page 148, line 1, leave out from ‘has’ to end of line.
(e) the Mayor has laid before the London Assembly, in accordance with standing orders of the Greater London Authority, a document stating that the Mayor is proposing to designate the area, and
(f) the consideration period for the document has expired without the London Assembly having rejected the proposal.’.—(Robert Neill.)
Amendment proposed: 352, page 148, line 7, at end insert—
‘(e) a majority of those London borough councils whose borough contains any part of the designated development area agree to the designation.’.—(Heidi Alexander.)
Question put, That the amendment be made.
The House proceeded to a Division.