Baroness Hanham, Eric Pickles and the landowners’ tax avoidance amendment
In the Guardian earlier this month, she says:
The localism bill is a massive transfer of power from Whitehall to local councils and local communities. To the people who care about their local area, know its strengths and weaknesses and have a stake in its future, the bill will free communities to find local solutions to local problems.
This means giving local people a real say in how their community’s views are represented and policies implemented. The community right to buy will give residents the opportunity to save or take over treasured local assets such as shops, pubs and post offices. Local groups who have a bright idea for how a service could be run better – whether it’s meals on wheels, or homelessness support – will be able to put their proposals for running these to the council through the community right to challenge.
This praise in the newspaper may seem odd, though, when you hear Baronness Hanham has submitted a major amendment to that very same bill, which is sponsored by her own government Department.
Even more strangely, the amendment is directly concerned with restricting the community right to buy provisions.
I’ll come to the amendment, but first the back story.
The phrase “community right to buy” does not in fact exist anywhere in the localism bill. It’s just a government sales pitch. What the localism bill actually does, in Clauses 76 to 96, is to offer ‘community interest groups’ the opportunity to prepare a bid, via the fairly tortuous process of the compilation of a ‘list of assets of community value’. It does not set out any requirement for that asset of community value actually to be sold, however large the community value of doing so might be.
The right to bid is offered through the creation of a ‘moratorium’, whereby if an owner of an asset featuring on the list of assets of community value (put together by the local authority) wants to ‘dispose’ of that asset, s/he must give ‘communty interest groups’ the opportunity to put together a bid for it. At the moment, the time period for the moratorium is not specified, and as it stands this will be announced through regulation at a later date.
So it’s not a right to buy, but it is a right to bid. Which is something.
For Baroness Hanham, however, this is a bit much. The main substance of her amendment is to add a range of exceptions to the requirement set out Clause 63, Para 1, which reads:
A person who is an owner of the land included in a local authority’s list of assets of community value must not enter into a relevant disposal of the land unless each of conditions A to C is met [these conditions relate to the moratorium on disposal during which community groups can register as potential bidders]
Hanham’s key proposed exception to this process is:
(a) if the disposal is by way of gift (including a gift to trustees of any trusts by way of settlement upon the trusts).
The amendment carries on for another 7 clauses of exemptions, as a belt and braces exercise in jargon, but the key purpose of the amendment is clear from the word ‘gift’
The purpose of the amendment is to stop the proposed moratorium getting in the way of a key tax avoidance strategy used by landowners.
Tax avoidance is complicated, of course. That’s how tax avoidance specialists make a living, but the key strategy Hanham defends through this amendment boils down to landowners’ practice of transferring their land ownership to family members 7 years or more before they die, thus avoiding inheritance tax.
How can I be so sure, you may ask, that this is Baroness Hanham’s purpose? Well, because the key landowners’ lobby organisation, the 35,000 strong has kindly told us what they’re up to.
In an article in April 2011’s Country Life magazine, the President of the 35,000 strong Country Land and Business Association told his readers:
The proposals [as set out above] may also cause difficulties with tax planning and passing on assets to the next generation.
To date the CLA has lobbied for Part 4 Clauses 71-88 relating to Assets of Community Value in the draft Localism Bill to be removed altogether. However, it may be that we eventually have to accept some compromise by which the right exists, but in a considerably restricted form.
The President was invited to a breakfast meeting with the Secretary of State for Communities and Local Government, Eric Pickles MP, and raised the issue with him. This meeting was subsequently followed up with a letter setting out the CLA position.
Eric Pickles, remember, is the minister who told local authorities looking for more money to run services that they’ll get a cup of tea, but not much else. Meanwhile, the President of the landowner lobby gets a full English breakfast and, by the looks of the amendment, the very willing ear of Pickles’ representative in the Lords.
In the end, then, it looks like Baroness Hanham is quietly doing the government’s own bidding through this amendment, and that her Guardian article praisng the (non-existent) ‘community right to buy’ is not only factually wrong, not just brazenly hypocritical at a personal level, but also a part of the government’s wider strategy of lying to the public in the hope they won’t find out.
Baroness Hanham’s amendment will probably be put on 10th October at the next report stage day, though it might slip to the next sitting (12th). I hope that Ed Miliband in his team , with their renewed commitment to taking on vested interests, will ensure that Labour Lords are out in numbers, showing the Tories up for what they really are – duplicitous, conniving bastards interested solely in defending the status quo while spinning the community empowerment yarn.