HC Deb 12 July 1978 vol 953 cc1587-615

7.15 p.m.

Mr. Tim Renton (Mid-Sussex)

I beg to move amendment no. 7, in page 14, line 10, leave out '£10,000' and insert '£17,000'.

In the closing stages of the Committee proceedings, the Chief Secretary moved a new clause which increased the amount payable as tax-free compensation for loss of office from the £5,000 limit set in 1960 to £10,000. I subsequently moved an amendment to the new clause that the figure of £10,000 should in turn be increased to £17,000.

The Chief Secretary said at the time —he fully agreed with the point—that if full indexation were allowed for, the limit of £5,000 having originally been set in 1960, the figure should be increased to £19,000. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) also moved an amendment, virtually to that effect, suggesting that the figure be increased to £20,000.

My amendment to increase the figure to £17,000, as I said at the time, was not an attempt to index the £5,000 to an appropriate inflation-adjusted figure but specifically to deal with the case of the handful of steel workers, employees of the British Steel Corporation, who are now having to leave the corporation and are receiving as large redundancy payments as £17,000, or even perhaps somewhat higher figures than that. The amendment to increase the figure to £17,000 led to a tied vote in Committee.

I am very well aware that £17,000 is an extremely large sum of money to pay tax-free to any person, but I think that there is a case in this instance for the Government to give special consideration to that very small body of steel workers who, through no fault of their own, are now having to leave plants where they have worked all their lives and who, because they have been there for a very long time, are receiving such high redundancy payments as £17,000.

As I said in Committee, I hold this Labour Government very much to blame for the delay that they have permitted in reaching decisions to close the high-cost plants in parts of Wales, the North of England and Scotland. I think that that delay, which was very largely due to political considerations—many of these high-cost plants were in Labour-held constituencies—has led to a great deal more human misery among the workers in the industry than would otherwise have happened.

Because of the world-wide recession in the steel industry, the British Steel Corporation is now taking the necessary and unpalatable decisions, and these men are being declared redundant and are losing their jobs at a time not only of high recession in the steel industry throughout the world but of very high unemployment in this country. They are therefore finding it very difficult to obtain alternative employment.

This emphasises the folly of political considerations—in this case the political consideration of keeping open high-cost plants—muddying necessary, although painful, industrial decisions. It would have been far better for these men if the redundancy decisions had been taken in 1974 and 1975, when unemployment was less high. But instead the unemployment and redundancy is taking place now within the British Steel Corporation. The work force has been trimmed in the last two years by about 13,000 people. With the closures which are inevitably planned for the months ahead, at Shelton, Bilston and Glengarnoch, there will be further redundancies declared within the BSC.

I realise that the average redundancy payment is very much lower even than the figure of £10,000, which the Chief Secretary has suggested as being that which should now be the upper limit for tax-free redundancy or loss of office payments. I think that the average redundancy payment at East Moors, Ebbw Vale and Hartlepool is around £5,000. None the less, a handful of people are receiving these very high payments of £17,000 and upwards. From what we have already read in the press, it could well be that there will be more people seeking and obtaining even higher redundancy payments in future years in other BSC works.

I was told that one steel worker, when he received his redundancy cheque, looked at it and said "It is as large and fat as my bedspread." There can be no wish in this House, I suggest, when a man has worked for 25 years as a skilled worker in a steel works, and, through no fault of his own, has been declared redundant, that he should find, so to speak, that part of the feathers or padding has been removed from his bedspread, and that when he receives the fat cheque he has to pay a substantial amount of tax on some part of it.

When we got to this point in Standing Committee, the Chief Secretary assured us that, because of top slicing, a married man with two children and no other income in the year in which he received his redundancy payment would be able to receive a redundancy payment as high as £19,000 without having to pay any tax. Since the Chief Secretary told us that, we have all had an opportunity, just as I am sure he has, to look rather more closely at the figure which he gave to us.

It seems to me that there are two very definite snags to the Chief Secretary's argument. I agree with him that, indeed, for a man with no other income and two children, he should be able to receive a payment of £19,000 under section 187 of the Taxes Management Act 1970, and he would pay no tax at all if his employment were terminated in 1978–79 after the £10,000 limit comes into effect. But, as I say, there are two particular snags.

If the man in question has only modest levels of other income—for example, if he puts his redundancy payment on deposit with a building society and then gets interest from the building society on his redundancy payment, or —and perhaps this is the most particularly important point—if he takes another job after being declared redundant, for as little as £40 per week for six months in the year—he could then find himself with an increase in his total tax liabilities which was in excess of the gross amount of that extra earned income.

To put it simply, if a man earns £1,000 gross from his new job, he will pay more than £1,000 in tax on the totality of his redundancy payment plus the tax on his new earned income. I am sure the Chief Secretary will not disagree with that calculation.

That is a very great disincentive to someone who has been declared redundant seeking and taking another job. Yet surely it must be the wish of everyone in this House that such people should be encouraged and given incentives to seek and obtain other employment. They cannot possibly have such incentives if they find that for every additional pound they earn, they will be paying more than £1 in tax.

The other disadvantage to the Chief Secretary's statement is that there will he a severe deduction of pay-as-you-earn from the redundancy payment if the figure stays at the £10,000 which is now in the Bill. I remind the House that if an employee has left and the form P45 has been issued by the time the redundancy payment is made, which is the normal practice, PAYE is deducted not in accordance with the employee's code number but at a basic rate on the excess over the free amount which is being proposed by the Chief Secretary as £10,000.

In the case of an employee receiving £19,000—the Chief Secretary's example—the PAYE deduction would in fact be immediately £2,970, or £3,060 if paid before the Finance Bill 1978 receives the Royal Assent. This deduction would be made regardless of the personal circumstances of the employee and there would be no chance of the employee getting that money back until after the following 5th April.

Therefore, we have the situation in which even in the ideal example stated by the Chief Secretary, there would be a substantial PAYE deduction from these higher redundancy payments. The employee would have to go through the hoop of seeking PAYE repayment, and he is also being put in the business of taking some very complex decisions about how to handle his tax affairs. He has to decide whether to elect for top slicing. He has to decide whether his wife should declare her earned income separately if she has a job. As we all know, these are not simple matters.

The steel worker in this case would be led into the area of taking a whole series of complex tax decisions as to how to minimise the tax burden on himself. I believe we would all agree that he probably is not capable of taking them. He would need very proper and serious professional advice in order to reach the right decision.

It is therefore against that background that I think this problem can simply be dealt with by hoisting up the threshold for tax-free redundancy payments to the £17,000 level that I have suggested. This would remove this handful of retiring steel workers from having to make these very complex decisions. It could not possibly be a matter of great expense for the Government. It is against that background that I urge the House to accept the amendment.

The Chief Secretary to the Treasury (Mr. Joel Barnett)

As the hon. Gentleman said, in Standing Committee we discussed the size of compensation that should be paid tax free. I hope that the House will forgive me if I do not take up his partisan points about who is to blame for the redundancies in the steel industry. I note that the hon. Gentleman's solution to relieve the misery would have been to make the redundancies earlier.

The figure of compensation included in the Bill, as the hon. Gentleman recognised, is a very substantial increase—from £5,000 previously to £10,000 this year. I note that last year the Opposition had an amendment down to increase it from £5,000 to £7,500.

Mr. Lawson

And another amendment to increase it to £10,000.

Mr. Barnett

We have now got £10,000 in the Bill. I wish that the hon. Member would keep quiet for just one moment. He is getting terribly impatient.

Mr. Lawson

No, I am just putting the Chief Secretary right.

Mr. Barnett

We have now got £10,000 in the Bill.

As the hon. Member for Mid-Sussex (Mr. Renton) said, the main purpose behind moving the amendment was to help the steel workers. That was, indeed, the sole purpose of his case for increasing the figure to £17,000, although he recognised, fairly, that the average redundancy payments for steel workers would be very much less than £10,000. Indeed, he referred to the figure of £5,000. I agree with him that the average is very considerably less than £10,000. My understanding is that there will be very few who will receive anything like £17,000. It is, as he said, a very large sum. As he rightly said, we should not begrudge paying this amount of money to people who have been made redundant after working many years in the steel industry and made redundant through no fault of their own.

As an aside, I would say that whilst I would not disagree at all with this, I sometimes feel rather bad on behalf of my own textile workers who have also been made redundant in very large numbers over a very long period of time without getting any kind of compensation at all and certainly nothing in the region of these sums and certainly not large lump sum payments tax free. I feel I have to say that if only to put the matter into some kind of perspective. That is not to say that one in any way begrudges paying substantial redundancy payments by way of compensation to steel workers who have been made redundant in areas where the prospects of obtaining new employment are not good.

In Standing Committee I pointed out that in practice, for the vast majority of those being made redundant, because of what is known as top slicing, for a married steel worker with no other income in the year in which he is made redundant, the actual amount he would be able to receive tax free would be £19,000. The hon. Gentleman did not disagree with that. Indeed, if that is the case—and I shall come in a moment to the newspaper article that appeared to throw some doubt on whether what I had said in Standing Committee was correct—the hon. Gentleman's amendment would mean that that married man would be able to obtain £26,000 wholly free from tax. I am bound to say that this is indeed a very large sum. If the hon. Member for Mid-Sussex said that £10,000 tax free was a very large sum, which it is, then certainly £26,000, including the top slicing, would be a very considerable sum indeed.

7.30 p.m.

Mr. Lawson

The Chief Secretary explained how top slicing relief works. Did I hear him say "if the man concerned has no other earnings in the year or no other income in the year", because that is an important distinction?

Mr. Barnett

I was coming to that point, but I shall deal with it now. I was referring, as I did in Committee, to no earnings other than from the job from which the person concerned has been made redundant. I see the hon. Member for Mid-Sussex nodding.

Mr. Lawson

What about investment?

Mr. Barnett

I shall come to that point. The hon. Member for Mid-Sussex asked what would happen if the money were deposited and the person concerned had some investment income. However, I was about to deal with the central question whether the £19,000 is correct, because some doubt has been thrown upon this by an article in The Sunday Telegraph on 9th July which stated that all of it would be taxable under section 183 of the Taxes Act. I want to assure the House, and all those concerned, that that is simply not true. The Inland Revenue has never contended that there is liability on this basis on payments in cases of genuine redundancy where the payment arises out of that redundancy. This is not something special for steel workers, because it applies across the board. It is regarded as analogous to statutory payments under the Redundancy Payments Act which are specifically exempted from tax.

As I say, there is no difference between the treatment for steel workers and that of any other group of redundant workers. I am happy to be able to give that assurance and to confirm what I said in Committee, that for a married man with no other earnings, other than from the job in which he was made redundant, he would be able to receive £19,000 wholly free from tax.

I hope that the House will consider that that is not an unreasonable sum. In the vast majority of cases it is far in excess of anything which most steel workers will be receiving. The hon. Members for Mid-Sussex and Blaby asked what the situation would be if a person puts the money on deposit or takes another job. If he puts money on deposit, and has other investment income, that would affect the amount of tax. But equally, in many instances—and we should not be one-sided on these matters—there may well be other allowances. I quoted the £19,000 in respect of a married man with no other allowances whatever. He may well have mortgage interest relief, life assurance relief and other reliefs, which would equally be eligible and which would put the figure very much higher than £19,000.

It is seeking to have the best of every conceivable world to allow £19,000 compensation wholly free from tax and at the same time say that if it is invested there will be more tax to pay on the interest. It is true that there is, but I am not sure how one proceeds on this basis. If compensation was given at £26,000, as the amendment would do, one would have the same kind of problem on another level. All that one is doing is raising the level. The main purpose of this compensation is particularly to compensate those workers who are not able to obtain another job. If they do obtain another job, have the £10,000 wholly free from tax, and do not get the whole of the top slice of relief because they get another job, then main I do not think that that is unreasonable.

One is seeking to help the worker who has been made redundant and who has not been able to get another job. But the hon. Member for Mid-Sussex proceeded to make the further point, with which I agree—it was the major reason why we sought to raise the relief from £5,000 to £10,000—about the disincentives which there would otherwise be with regard to a man seeking another job.

Mr. Lawson

It is going round in circles.

Mr. Barnett

Of course, it is a circular argument. The hon. Member for Blaby is quite right. But the only way one can cut it out is by raising the level of compensation so high as not to bother anyone at all. I do not think that the House would want to do that. By the relief we are giving here, at £10,000, we are providing for the vast majority of steel workers, and every other worker, who is being made redundant. With the top slicing relief one is making further provision for the comparatively small number of additional workers who might receive something in excess of £10,000. But to raise it to £17,000, so that with top slicing it would be £26,000, is something which is far in excess of anything which I could recommend to the House, and that is why I am unable to accept the amendment.

Mr. Lawson

We are now having a rather briefer debate on this clause than we had when it was first introduced upstairs. My hon. Friend the Member for Mid-Sussex (Mr. Renton) has made all the important points which require to be made on the raising of the figure from £5,000 to £10,000, as we proposed last year, although it was then voted down, and the consequences in particular for the Shelton steel workers and other steel workers who have large redundancy payments.

It is worth making two observations. First, the Chief Secretary said that very few steel workers ever get redundancy payments remotely in this league. That is a very strange thing, because in Committee the hon. Member for Stoke-on-Trent, Central (Mr. Cant), in whose constituency the Shelton steel works is located, spent a large part of his time fighting for those works to remain open. He was very exercised about this and he is a greater authority on the Shelton steel works than the Chief Secretary. He made the point that a very large number of his constituents were in precisely this position, and would be affected by the failure of the Government to increase the golden handshake, as it has been called—the payment for termination of employment on a tax-free basis higher than £10,000.

The Chief Secretary says that there are problems with regard to £10,000 and that one can get around those problems only by having a figure so high that it does not bother anyone. It is worth recalling that this figure was first fixed at £5,000 in 1960. Merely to maintain the equivalent of 1960 would require £19,000, and not the £17,000 which my hon. Friend has modestly suggested in the amendment. Therefore, it is absolutely absurd to suggest that we are proposing a figure which in real terms is in any way unprecedented. Indeed, in real terms it is lower than the 1960 figure.

It is worth asking ourselves why it is that that figure was allowed to stay for so long at £5,000 and then suddenly this year it pops up to £10,000. We know why, because up to this year the people who were affected by suddenly losing their jobs and their prospects of employment—probably at an age when it was difficult to get a new job—tended to be middle management. Perhaps due to a take-over bid, or a contraction in the industry, middle managers have been very insecure in the difficult economy with which we have been faced for the past few years. They have had a real problem of how to make ends meet. Yet the Government were not in the slightest bit interested in meeting their problems.

However, when one or two powerful trade union leaders knocked on the Treasury door and said "You are closing down the steel works where our lads are employed. They will have compensation payments of over £5,000 and will find themselves taxed on it. This is intolerable.", the Chief Secretary says "Oh well, I shall raise the figure straight away." There could be no more blatant or glaring example of the double standards employed by the present Government in dealing with hardship. They could not care less about hardship for some groups of people. They are not interested. They care only about hardship caused to members of powerful trade unions, but not all trade unions. They are not interested in small trade unions. That is why textile workers in the constituency of the Chief Secretary are not given consideration. But the members of powerful trade unions must get consideration from the Government, and that is what Socialism means. It is the grossest inequality of all.

The Chief Secretary really went round in a circle. In introducing the new clause, the Inland Revenue press release said that the increase from £5,000 to £10,000 will enable the workers who receive redundancy or severance payments to accept other jobs without being discouraged from so doing by the prospect of being faced with substantial tax liabilities in respect of those payments. However, my hon. Friend the Member for Mid-Sussex rightly pointed out that that is exactly what will happen.

I have had it calculated for me that if these men take up new jobs, the position is even worse than my hon. Friend suggested. If a man gets a part-time job earning perhaps £650 simply because he prefers not to be unemployed, the tax that he has to pay will be as much as £3,000. On almost any job that he may take up, the tax will be more than 100 per cent. on what he earns, the most vicious rate of tax. That is the greatest possible deterrent to taking a new job. The objective set out in the Inland Revenue press release is not met for such people as the steel workers whom we are discussing.

The Chief Secretary tried to get away with it by saying that he was concerned chiefly with the man who could not get another job. However, that was not the point originally made by the Inland Revenue and by the Chief Secretary when introducing the new clause.

There is also the point that if a man gets a redundancy payment of this kind, he will want at least to put it on deposit

and will want to get some interest not because he wants to earn money necessarily but because in these inflationary times merely to retain the value of his capital intact he has to get what is characterised as investment income but which, as the Meade report pointed out, is nothing of the sort.

The whole drift of what the Chief Secretary is suggesting is that a man in that position must not save his money, he must not get another job, and he should live off social security. That is the one way in which he will be able to draw the tax benefit which the Chief Secretary intends to confer with this clause.

That again is wholly characteristic of the present Government's approach, and it is an approach which the Opposition reject entirely. As a consequence, I advise my hon. Friend the Member for Mid-Sussex, in the light of the lamentable reply that we have had from the Chief Secretary and in the light of my hon. Friend's unanswered arguments, to press his amendment to a Division.

Question put, That the amendment be made:

The House divided: Ayes 225, Noes 264.

Division No. 262] AYES [7.44 p.m.
Aitken, Jonathan Cockcroft, John Goodlad, Alastair
Alison, Michael Cooke, Robert (Bristol W) Gorst, John
Amery, Rt Hon Julian Cope, John Gow, Ian (Eastbourne)
Atkins, Rt Hon H. (Spe[...]thorne) Cormack, Patrick Gower, Sir Raymond (Barry)
Atkinson, David (B'mouth, East) Corrie, John Gray, Hamish
Awdry, Daniel Costain, A. P. Grieve, Percy
Baker, Kenneth Crouch, David Griffiths, Eldon
Banks, Robert Davies, Rt Hon J. (Knutsford) Hall-Davis, A. G. F
Bell, Ronald Dean, Paul (N Somerset) Hamilton, Archibald (Epsom & Ewell)
Bendall, Vivian Dodsworth, Geoffrey Hamilton, Michael (Salisbury)
Bennett, Dr Reginald (Fareham) Douglas-Hamilton, Lord James Hampson, Dr Keith
Benyon, W. Drayson, Burnaby Hannam, John
Berry, Hon Anthony du Cann, Rt Hon Edward Harrison, Col Sir Harwood (Eye)
Biffen, John Dunlop, John Harvie Anderson, Rt Hon Miss
Biggs-Davison, John Durant, Tony Haselhurst, Alan
Blaker, Peter Eden, Rt Hon Sir John Hastings, Stephen
Body, Richard Edwards, Nicholas (Pembroke) Havers, Rt Hon Sir Michael
Boscawen, Hon Robert Elliott, Sir William Hawkins, Paul
Bottomley, Peter Emery, Peter Hayhoe, Barney
Bowden, A. (Brighton, Kemptown) Eyre, Reginald Hicks, Robert
Braine, Sir Bernard Fairgrieve, Russell Higgins, Terence L.
Brittan, Leon Farr, John Hodgson, Robin
Brocklebank-Fowler, C. Fell, Anthony Holland, Philip
Brooke, Hon Peter Finsberg, Geoffrey Hordern, Peter
Brown, Sir Edward (Bath) Fisher, Sir Nigel Howe, Rt Hon Sir Geoffrey
Bryan, Sir Paul Fletcher, Alex (Edinburgh N) Howell, David (Guildford)
Buchanan-Smith, Alick Fletcher-Cooke, Charles Howell, Ralph (North Norfolk)
Buck, Antony Forman, Nigel Hunt, David (Wirral)
Budgen, Nick Fraser, Rt Hon H. (Stafford & St) Hunt, John (Ravensbourne)
Bulmer, Esmond Galbraith Hon T. G. D. Hurd, Douglas
Burden, F. A. Gardiner, George (Reigate) Hutchison, Michael Clark
Butler, Adam (Bosworth) Gardner, Edward (S Fylde) Irving, Charles (Cheltenham)
Channon, Paul Gilmour, Rt Hon Sir Ian (Chesham) James, David
Churchill, W. S. Gilmour, Sir John (East Fife) Jenkin, Rt Hon P. (Wanst'd & W'df'd)
Clark, Alan (Plymouth, Sutton) Glyn, Dr Alan Jessel, Toby
Clarke, Kenneth (Rushcliffe) Godber, Rt Hon Joseph Jopling, Michael
Joseph, Rt Hon Sir Keith Morris, Michael (Northampton S) Silvester, Fred
Kaberry, Sir Donald Morrison, Charles (Devizes) Sinclair, Sir George
Kellett-Bowman, Mrs Elaine Neave, Airey Skeet, T. H. H.
Kershaw, Anthony Nelson, Anthony Smith, Timothy John (Ashfield)
King, Evelyn (South Dorset) Neubert, Michael Spence, John
King, Tom (Bridgwater) Newton, Tony Spicer, Jim (W Dorset)
Knight, Mrs Jill Normanton, Tom Spicer, Michael (S Worcester)
Knox, David Nott, John Sproat, Iain
Lamont, Norman Onslow, Cranley Stainton, Keith
Latham, Michael (Melton) Oppenheim, Mrs Sally Stanbrook, Ivor
Lawrence, Ivan Osborn, John Stanley, John
Lawson, Nigel Page, Rt Hon R. Graham (Crosby) Steen, Anthony (Wavertree)
Lester, Jim (Beeston) Page, Richard (Workington) Stewart, Ian (Hitchin)
Lewis, Kenneth (Rutland) Pattie, Geoffrey Stokes, John
Loveridge, John Percival, Ian Stradling Thomas, J.
Luce, Richard Pink, R. Bonner Tapsell, Peter
McAdden, Sir Stephen Powell, Rt Hon J. Enoch Taylor, R. (Croydon NW)
McCrindle, Robert Prentice, Rt Hon Reg Taylor, Teddy (Cathcart)
Macfarlane, Neil Price, David (Eastleigh) Tebbit, Norman
MacGregor, John Pym, Rt Hon Francis Thomas, Rt Hon P. (Hendon S)
MacKay, Andrew (Stechford) Raison, Timothy Townsend, Cyril D.
McNair-Wilson, M. (Newbury) Rathbone, Tim Trotter, Neville
McNair-Wilson, P. (New Forest) Rees, Peter (Dover & Deal) Viggers, Peter
Marshall, Michael (Arundel) Renton, Rt Hon Sir D. (Hunts) Wakeham, John
Marten, Neil Renton, Tim (Mid-Sussex) Walder, David (Clitheroe)
Mates, Michael Rhodes James, R. Walker, Rt Hon P. (Worcester)
Mather, Carol Ridley, Hon Nicholas Walker-Smith, Rt Hon Sir Derek
Maude, Angus Ridsdale, Julian Wall, Patrick
Maudling, Rt Hon Reginald Roberts, Wyn (Conway) Walters, Dennis
Maxwell-Hyslop, Robin Rossi, Hugh (Hornsey) Warren, Kenneth
Mayhew, Patrick Host, Peter (SE Derbyshire) Weatherill, Bernard
Meyer, Sir Anthony Sainsbury, Tim Wells, John
Mills, Peter St. John-Stevas, Norman Whitelaw, Rt Hon William
Miscampbell, Norman Scott, Nicholas Winterton, Nicholas
Mitchell, David (Basingstoke) Scott-Hopkins, James Wood, Rt Hon Richard
Moate, Roger Shaw, Giles (Pudsey) Young, Sir G. (Ealing, Acton)
Monro, Hector Shaw, Michael (Scarborough)
Moore, John (Croydon C) Shelton, William (Streatham) TELLERS FOR THE AYES:
More, Jasper (Ludlow) Shepherd, Colin Mr. Spencer Le Marchant and
Morgan, Geraint Shersby, Michael Mr. Peter Morrison.
Morgan-Giles, Rear-Admiral
NOES
Abse, Leo Cowans, Harry Fowler, Gerald (The Wrekin)
Allaun, Frank Crawford, Douglas Fraser, John (Lambeth, N'w'd)
Anderson, Donald Crawshaw, Richard Freeson, Rt Hon Reginald
Archer, Rt Hon Peter Cronin, John Freud, Clement
Armstrong, Ernest Crowther, Stan (Rotherham) Garrett, John (Norwich S)
Ashton, Joe Cryer, Bob Garrett, W. E. (Wallsend)
Atkins, Ronald (Preston N) Cunningham, G. (Islington S) George, Bruce
Atkinson, Norman (H'gey, Tott'ham) Cunningham, Dr J. (Whiten) Ginsburg, David
Bagier, Gordon A. T. Dalyell, Tam Golding, John
Bain, Mrs Margaret Davies, Bryan (Enfield N) Gourlay, Harry
Barnett, Guy (Greenwich) Davies, Rt Hon Denzil Graham, Ted
Barnett, Rt Hon Joel (Heywood) Davies, Ifor (Gower) Grant, John (Islington C)
Bates, Alf Davis, Clinton (Hackney C) Grimond, Rt Hon J.
Bean, R. E. Deakins, Eric Grocott, Bruce
Beith, A. J. Dean, Joseph (Leeds West) Hamilton, W. W. (Central Fife)
Benn, Rt Hon Anthony Wedgwood de Freitas, Rt Hon Sir Geoffrey Hardy, Peter
Bishop, Rt Hon Edward Dell, Rt Hon Edmund Harrison, Rt Hon Walter
Blenkinsop, Arthur Dempsey, James Hart, Rt Hon Judith
Booth, Rt Hon Albert Doig, Peter Hattersley, Rt Hon Roy
Boothroyd, Miss Betty Dormand, J. D. Hayman, Mrs Helena
Bottomley, Rt Hon Arthur Douglas-Mann, Bruce Healey, Rt Hon Denis
Boyden, James (Bish Auck) Duffy, A. E. P. Heffer, Eric S.
Bradley, Tom Dunn, James A. Henderson, Douglas
Bray, Dr Jeremy Dunnett, Jack Hooley, Frank
Brown, Hugh D. (Provan) Dunwoody, Mrs Gwyneth Horam, John
Brown, Robert C. (Newcastle W) Eadie, Alex Howell, Rt Hon Denis (B'ham, Sm H)
Brown, Ronald (Hackney S) Edge, Geoff Huckfield, Les
Buchan, Norman Edwards, Robert (Wolv SE) Hughes, Mark (Durham)
Buchanan, Richard Ellis, Tom (Wrexham) Hughes, Robert (Aberdeen N)
Callaghan, Rt Hon J. (Cardiff SE) English, Michael Hughes, Roy (Newport)
Callaghan, Jim (Middleton & P) Evans, Fred (Caerphilly) Hunter, Adam
Canavan, Dennis Evans, Gwynfor (Carmarthen) Irvine, Rt Hon Sir A. (Edge Hill)
Carmichael, Neil Evans, Ioan (Aberdare) Irving, Rt Hon S. (Dartford)
Cartwright, John Evans, John (Newton) Jackson, Miss Margaret (Lincoln)
Castle, Rt Hon Barbara Ewing, Harry (Stirling) Janner, Greville
Clemitson Ivor Ewing, Mrs Winifred (Moray) Jay, Rt Hon Douglas
Cocks, Rt Hon Michael (Bristol S) Fernyhough, Rt Hon E. Jeger, Mrs Lena
Coleman, Donald Fitch, Alan (Wigan) Jenkins, Hugh (Putney)
Concannon, Rt Hon John Flannery, Martin John Brynmor
Cook, Robin F. (Edin C) Fletcher, Ted (Darlington) Johnson, James (Hull West)
Corbett, Robin Foot. Rt Hon Michael Johnson, Walter (Derby S)
Jones, Alec (Rhondda) Noble, Mike Stallard, A. W.
Jones, Dan (Burnley) Oakes, Gordon Steel, Rt Hon David
Judd, Frank Ogden, Eric Stewart, Rt Hon Donald
Kaufman, Rt Hon Gerald O'Halloran, Michael Stewart, Rt Hon M. (Fulham)
Kerr, Russell Orme, Rt Hon Stanley Stott, Roger
Kilroy-Silk, Robert Ovenden, John Strang, Gavin
Kinnock, Neil Owen, Rt Hon Dr David Summerskill, Hon Dr Shirley
Lambie, David Padley, Walter Swain, Thomas
Lamond, James Palmer, Arthur Taylor, Mrs Ann (Bolton W)
Latham, Arthur (Paddington) Pardoe, John Thomas, Dafydd (Merioneth)
Leadbitter, Ted Park, George Thomas, Jeffrey (Abertillery)
Lee, John Parker, John Thomas, Mike (Newcastle E)
Lestor, Miss John (Elton & Slough) Parry, Robert Thomas, Ron (Bristol NW)
Lever, Rt Hon Harold Pavitt, Laurie Thompson, George
Lewis, Ron (Carlisle) Pendry, Tom Thorne, Stan (Preston South)
Litterick, Tom Perry, Ernest Thorpe, Rt Hon Jeremy (N Devon)
Loyden, Eddie Phipps, Or Colin Tierney, Sydney
Luard, Evan Prescott, John Tilley, John
McCartney, Hugh Price, C. (Lewisham W) Tinn, James
MacCormick, Iain Radice, Giles Tomlinson, John
McDonald, Dr Oonagh Rees, Rt Hon Merlyn (Leeds S) Tomney, Frank
McElhone, Frank Richardson, Miss Jo Torney, Tom
MacFarquhar, Roderick Roberts, Albert (Normanton) Varley, Rt Hon Eric G.
McGuire, Michael (Ince) Roberts, Gwilym (Cannock) Wainwright, Richard (Colne V)
MacKenzie, Rt Hon Gregor Robertson, George (Hamilton) Walker, Harold (Doncaster)
Maclennan, Robert Robinson, Geoffrey Walker, Terry (Kingswood)
McMillan, Tom (Glasgow C) Roderick, Caerwyn Watkins, David
McNamara, Kevin Rodgers, George (Chorley) Watkinson, John
Madden, Max Rodgers, Rt Hon William (Stockton) Watt, Hamish
Magee, Bryan Rooker, J. W. Weetch, Ken
Mahon, Simon Rose, Paul B. Weitzman, David
Mallalieu, J. P. W. Ross, Stephen (Isle of Wight) White, Frank R. (Bury)
Marshall, Dr Edmund (Goole) Ross, Rt Hon W. (Kilmarnock) Whitlock, William
Marshall, Jim (Leicester S) Rowlands, Ted Wigley, Dafydd
Mason, Rt Hon Roy Ryman, John Willey, Rt Hon Frederick
Maynard, Miss Joan Sedgemore, Brian Williams, Rt Hon Alan (Swansea W)
Meacher, Michael Selby, Harry Williams, Alan Lee (Hornch'ch)
Mellish, Rt Hon Robert Sever, John Williams, Sir Thomas (Warrington)
Mikardo, Ian Shaw, Arnold (llford South) Wilson, Gordon (Dundee E)
Millan, Rt Hon Bruce Sheldon, Rt Hon Robert Wilson, Rt Hon Sir Harold (Huyton)
Miller, Dr M. S. (E Kilbride) Short, Mrs Renée (Wolv NE) Wilson, William (Coventry SE)
Mitchell, Austin (Grimsby) Silkin, Rt Hon John (Deptford) Wise, Mrs Audrey
Mitchell, R. C. (Soton, Itchen) Silkin, Rt Hon S. C. (Dulwich) Woof, Robert
Moonman, Eric Silverman, Julius Young, David (Bolton E)
Morris, Rt Hon Charles R. Skinner, Dennis
Morris, Rt Hon J. (Aberavon) Smith, Rt. Hon. John (N Lanarkshire) TELLERS FOR THE NOES:
Moyle, Rt. Hon. Roland Spearing, Nigel Mr. James Hamilton and
Murray, Rt Hon Ronald King Spriggs, Leslie Mr. Thomas Cox.
Newens, Stanley

Question accordingly negatived.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

I beg to move amendment no. 118, in page 14, leave out lines 11 to 20.

Mr. Deputy Speaker

With this we may take the following amendments: No. 122, in page 14, line 17, leave out 'a' and insert 'one quarter of the'

No. 120, in page 14, line 18 leave out 'or refrained from exercising'.

No. 119, in page 14, leave out lines 30 to 32.

Mr. Ridley

These amendments bring the House back to the vexed question of the offending subsection (2) in what was new clause no. 51 and is now clause 21.

This subsection was designed by the Government to deal with what the Chief Secretary has called "a device of rather flagrant tax evasion". I must challenge that view to begin with. This is not a device. The device that the Chief Secretary describes is in schedule 8 of the Taxes Act. Paragraphs 3 and 4 of that schedule set out absolutely clearly the arrangements for the standard capital superannuation benefit and how these are calculated. They apply to all persons who retire early through ill health or old age, and everyone may claim that relief to offset his liability to tax on compensation of that sort—and I mean compensation of that sort and not compensation for loss of office.

Therefore, what the Chief Secretary describes as "a device" is an enshrined part of our law and has been so for a very long time. If he wishes to change it, he should give reasons for changing it and not simply say that it has been a device which people have used for tax avoidance.

8.0 p.m.

The first and the last of these amendments seek to cut out subsection (2). Amendment no. 122 reduces the deduction on behalf of standard capital superannuation benefit relief by one-quarter, which is an arbitrary figure that I have taken in order to reduce the burden imposed by the subsection. I shall not press that amendment. I was fearful that the Chair would not call any of my amendments because they were debated in Committee and I sought a device to put the point in a different way.

Amendment no. 120 seeks to return to the taxpayer the option whether he exercises his right to commute his pension. That is perfectly fair and reasonable, because if someone does not commute a pension, taxing him on the lump sum capital value, as if he had commuted the pension, will result in double taxation because he will later pay tax on the income from the commuted part of his pension. He will be paying tax both on the lump sum that he commutes and on the income that he receives from the rest of that lump sum. That is most unjust, and I therefore commend amendment no. 120.

I consider that the whole subsection is misconceived because it does not deal properly with the problem—if one accepts that there is a problem, which I do not. The Chief Secretary thinks that people should not be allowed to deduct the standard capital superannuation benefit at all and he says that whether or not they commute their pensions, they are not to be allowed this relief.

In Committee, I put to the right hon. Gentleman the point that where people do not have the right to a pension at all, or where they have a pension which is not commutable, the old provisions of the Taxes Act will continue to apply. He replied: With respect to the hon. Gentleman, we may be at cross purposes, though I am not sure."—[Official Report, Standing Committee A, 27th June 1978; c. 1682.] That was as far as his knowledge of the point seemed to go. We were, indeed, at cross purposes and he did not seem to understand that those people might benefit, largely because they do not have a commutable pension.

The Chief Secretary has chosen a very dubious way of achieving what he seeks to do. I do not accept that we should do it in the first place, but if I accepted that excessive tax-free sums have been made available to people, I would then suggest that we should look at the whole matter again because it is not sensible to link the taxation of compensation for loss of office, which is a matter that we may perhaps be able to come to an agreement on, with the totally separate question whether a person commutes his pension.

The only way in which this connection can be justified is by saying that because a man receives two lump-sum payments, one as compensation and one as commutation, at the same moment, that is a nice big sum of money that those in the Inland Revenue should be able to get their mitts on.

I shall listen carefully to what the Chief Secretary has to say. I would prefer the whole subsection to be struck out, and that is the view of those outside who follow our proceedings, and particularly of various experts. If the right hon. Gentleman is not prepared to go that far, as I fear he will not be, we should at least adopt amendment no 120, which will let escape from this net those who have not commuted their pensions.

Mr. Joel Barnett

The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) knows the high regard in which I hold him, but when he accuses me of not understanding this matter, I have to say that he is either being terribly naive, which is the best accusation I can level against him, or that he knows about the abuse. He probably does not know, but the experts to whom he referred certainly know.

Let me explain the matter to the hon. Gentleman and the House so that they clearly understand what sort of abuse I am referring to. Let us take the example of a man—in order to avoid being emotive I shall not take the example of the chairman or director of a public company—who is on a salary of, say, £24,000 a year and is entitled to a pension of £16,000 a year, £4,000 of which is commutable for a lump sum of £36,000 tax-free.

Suppose that man retires after 44 years' service, waives his right to commute, and is awarded an ex gratia payment of £52,800, which will be wholly tax-free after the standard capital superannuation benefit relief. Instead of drawing a pension of £12,000 a year and a tax-free lump sum of £36,000, he will get a pension of £16,000 a year, having not commuted, and a tax-free lump sum of £52,800. In other words, he will get the benefit twice.

I cannot believe that the hon. Member for Cirencester and Tewkesbury really understood that this could happen, but I have no doubt that the experts to whom he referred are well aware of it. That is why they want the subsection deleted. I understand that very well. That is why I recommend to the House that we should do nothing of the sort.

The standard capital superannuation benefit relief was designed to enable payment of broadly the same amount of tax-free sums as could have been received by way of tax-free lump sums under superannuation schemes. In practice, employees are entitled to commute part of their pension or to elect not to commute, in which case they are, by arrangement, awarded a tax-free, lump sum, ex-gratia payment instead. In that way, employees have got the best of both worlds—an unabated pension and unrestricted relief under the standard capital superannuation benefit. I am sure that that cannot be what the hon. Member wishes to see continue. I hope that the House does not want that.

There is not much more for me to say. The hon. Gentleman asked what happened when there was no right to commute. We have looked into this matter and we do not know of any schemes that have no such right. That is quite understandable, because if there were pension schemes that did not include the right to commute there could be no certainty that those in the scheme would be able to get a tax-free, ex-gratia award as well. That is why there are no schemes that do not include the right to commute part of the pension.

The system has been used in a way that was not intended. The subsection removes that abuse and prevents a man getting the benefit twice over. I hope that the hon. Member for Cirencester and Tewkesbury will feel that he should not press this amendment.

The hon. Gentleman says that there is no significance in the fraction of one-quarter in amendment no. 122. He said that it is arbitrary and that he does not propose to press the amendment. I do not propose to dissuade him from that course. He seemed to be seeking the support of his hon. Friends for amendment no. 120. I am bound to tell him that its purpose is not altogether clear. If the intention is to seek to distinguish between what might be called the innocent, who inadvertently fall within the subsection and those who might be called the guilty, who do so as a result of a deliberate act, the amendment seems to have it the wrong way round. The man who would automatically have received a lump sum by refraining from exercising an option not to receive it, and in fact exercises that option, is surely more guilty—I use the word "guilty" only in the context of the debate—than the man who has to exercise an option to receive a lump sum and does not do so.

Therefore, I do not think that amendment no. 120 meets what the hon. Gentleman has in mind. I hope that both he and the House will agree, having heard what I have said, that the subsection should remain part of the clause.

Mr. Lawson

The Chief Secretary has once again attempted to curdle our blood and make our hair stand on end by talking of sinister figures who are trying to introduce dreadful devices. He suggests that they are behind all the monstrous activities that he, single-handedly, is fighting to avoid. The reality is a little different from that.

My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) is right when he says that there are people outside the House who are concerned at the effect of subsection (2). I am sure that one of the bodies that he has in in mind is the National Association of Pension Funds. I have a letter from the association that was written to my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin). I am sure that the Chief Secretary will agree that the National Association of Pension Funds is not a sinister organisation. However, it is extremely concerned at the effect of the section of the clause that we are discussing.

I read an extract from the assocation's letter, which states: We cannot see the logic of allowing a man to have a larger tax-free termination payment and a full non-commutable pension and yet prohibit this if he achieves the same package by waiving his right to commute. We believe that such an anomaly will inevitably be exploited by various devices and in the process will, we fear, lead to distortion in the design of pension scheme rules. The association is in a position to understand these matters rather better than the right hon. Gentleman. It is saying that it is the clause that will lead to devices being written into the terms of pension schemes.

I have another letter, to which I am sure Labour Members will pay great heed, from a nationalised industry pension scheme, namely, the airways pension scheme. The letter was written to the Law Society Gazette. It explains the hardship that is caused in genuine cases as a result of this part of the clause.

In the hope of stopping what the right hon. Gentleman refers to as a device, meaning that something perfectly legal has been done and some individuals have received larger amounts by way of tax-free payment on retirement after many years of service under the standard capital superannuation benefit system, he has introduced a clause which is generous in the first part but which in the second part will hit hard many who are perfectly genuine and have not attempted to introduce any sort of device.

8.15 p.m.

I have in mind those who find themselves redundant. They think that they will receive the tax-free benefit under the standard capital superannuation benefit system that will give them a tax-free benefit reflecting many years of service. As the right hon. Gentleman is well aware, it is the only way in which they can obtain large sums. However, they will be told that because they have a commutable pension in addition, which they do not choose to commute, the amount of tax-free benefit that they can obtain is drastically reduced. Therefore, they will be very much worse off.

It is intolerable that the right hon. Gentleman should take this crude stand and cause many members of pension funds to lose a right that they have long considered to be theirs. They have reason to expect that at the end of the day they will receive the tax-free standard capital superannuation benefit based on their number of years' service. They will suddenly find that that right, which has been in the tax laws for a long time, has been removed through no fault of theirs. They will find that that has happened although they have committed no abuse of the system. That is wholly unjustified.

If a person does not commute the pension, he receives no capital sum. If he receives no additional capital sum, why should his tax position be adjusted as if he had received such a sum? When he receives the pension, which is not commuted, he pays the full income tax on the pension. Where is the tax dodge? There is no dodge for the normal individual, and the right hon. Gentleman knows that.

In his hysteria to discover a tax avoidance device under every stone and under every part of our tax law the right hon. Gentleman is inflicting wanton hardship on members of pension funds, as my hon. Friend the Member for Cirencester and Tewkesbury rightly observed.

There is one matter of regret. I do not normally comment on the selection of amendments for debate, but had amendment no. 167, which appeared in page 2856 of yesterday's Order Paper, been selected, we should wish to divide on it. However, as it has not been selected the only sensible course—I hope that my hon. Friend will take it—is to press amendment no. 118 to a Division.

Mr. J. Enoch Powell (Down, South)

I am sure that the Chief Secretary is seized of the reason for anxiety on the part of many who have studied the clause and who are as anxious as he is to prevent the abuse of the tax system that he has described.

We understand that the scheme which he described, which is a purely collusive scheme to enable a man to receive a larger tax-free benefit by the form in which it is paid, falls within the definition contained in subsection (2). What we do not see is that nothing else but schemes of that sort can fall within the definition. I am not trying to put the right hon. Gentleman under the difficulty of proving a negative, but it is a difficulty that he is under in using the method contained in the subsection to attempt to prevent the form of tax avoidance that he has described.

We can imagine circumstances in which the form of words would cover transactions that did not confer an additional tax-free benefit upon the recipient of the lump sum but that were entered into for good and sufficient reasons by both parties. I shall give an example. It may not be a good one, but it will illustrate what I mean.

Let us suppose that a man had a right to commute part of his pension into a lump sum upon retirement but that he forwent his right to do that for a number of years, on consideration that at the end of that period he would receive a lump sum representing the additional value only, however calculated, of the period for which he had forgone receipt of the lump sum.

I simply offer that as a case which I think would fall within the definition of the clause but which could be perfectly honest and involve no extra, unintended, tax-free benefit. There is an onus upon the Chief Secretary, if he wishes the subsection to be accepted, reasonably to satisfy the House that this form of words could bite only where the benefit thus received was of the nature of the £52,000 in his illustration. I do not think that I am the only one to whom that is not yet clear.

Mr. Joel Barnett

I shall try to deal with the example given by the right hon. Member for Down, South (Mr. Powell). He said correctly that we are dealing with collusive acts. I do not refer to such people as sinister. They properly take advantage of the situation to obtain a full pension and the tax-free compensation. We are seeking to stop that in this subsection.

The right hon. Member for Down, South gave the example of the person who has the right to commute part of his pension and who forgoes that right for a period of years, but not completely. Therefore, the lump sum that the person receives is a smaller figure than in the example that I gave. That would be paid later. There is no extra unintended benefit in this case.

The point that the right hon. Member is missing is that the person in question will still receive the full tax-free benefit that is available to anybody under the terms of the clause. He will still be eligible.

But, without this subsection, in addition to receiving the tax-free ex gratia payment, that person will also be able to receive his full pension, having forgone the right to commute part of it. Such a person will not lose anything. That is my understanding of the situation. The person in the example given by the right hon. Member would not lose anything. He would still receive the full amount of tax-free compensation as anybody else under the terms of the clause. If I am wrong, I shall be happy to look at it again. That is my understanding of the way in which the clause works.

Mr. Ridley

The Chief Secretary attempted to savage me with the charge of naivety. I do not resent that too much but I must savage him first with the charge of being devious.

This provision was introduced in a new clause in Committee. We all thought that there was some relief. Indeed, there is the relief to the extent of £10,000. But for many people this is a large diminution and as much as £30,000 can he brought into tax as a result of the subsection.

My first question is almost one for you, Mr. Deputy Speaker. Is this increase in the tax burden on certain people within the Ways and Means Resolution? I have seen nothing about it. I think that it is without the Ways and Means Resolution. It is wrong for the Government to seek to bring in extra taxation at this time.

The Chief Secretary presented this proposal as an anti-avoidance device. He called it a device, but now he says that it is nothing of the sort. It is a piece of egalitarian taxation. It is designed to penalise heavily those who have been legally and properly receiving large tax-free payments on retirement. That might be a good thing to do, but the Chief Secretary should have presented it to the House as an increase in taxation on those who commute their pensions or do not commute them.

The Chief Secretary agrees, having not understood in Committee, that if a pension is not commutable, the old "device" as he called it, might continue. He says that in that case it does not matter because we know of hardly any pensions which are not commutable. But there are several in existence.

From now on, every tax avoidance expert in the country will be devising non-commutable pension rights in order to get round this proposition. Even I can see that—and I am naive, according to the Chief Secretary.

We are not arguing with the Chief Secretary about the principle. We are asking him to have a look at this with great care. Let him take the proposition away and work out the proper arrangements. It is clear that not only does he not understand it but, more important, he has got it wrong. The Government would be wise to accept the amendment and to spend the next few weeks of their existence

trying to work out fair arrangements which are not easily avoided and which can be the subject of consultation with the pension funds and others who practise in this area.

Unless the Chief Secretary is about to jump to his feet and accept the amendment, I hope that my right hon. and hon. Friends will press it in the Division Lobbies.

Question put, That the amendment be made:—

The House divided: Ayes 229, Noes 274.

Division No.263] AYES [8.26 p.m.
Aitken, Jonathan Finsberg, Geoffrey Knight, Mrs Jill
Alison, Michael Fisher, Sir Nigel Knox, David
Amery, Rt Hon Julian Fletcher, Alex (Edinburgh N) Lamont, Norman
Atkins, Rt Hon H. (Spelthorne) Fletcher-Cooke, Charles Latham, Michael (Melton)
Atkinson, David (B'mouth, East) Fox, Marcus Lawrence, Ivan
Baker, Kenneth Fraser, Rt Hon H. (Stafford & St) Lawson, Nigel
Banks, Robert Galbraith Hon T. G. D. Lester, Jim (Beeston)
Bell, Ronald Gardiner, George (Reigate) Lewis, Kenneth (Rutland)
Bendall, Vivian Gardner, Edward (S Fylde) Lloyd, Ian
Bennett, Dr Reginald (Fareham) Gilmour, Rt Hon Sir Ian (Chesham) Loveridge, John
Benyon, W. Gilmour, Sir John (East Fife) Luce, Richard
Biffen, John Glyn, Dr Alan McAdden, Sir Stephen
Biggs-Davison, John Godber, Rt Hon Joseph McCrindle, Robert
Blaker, Peter Goodhart, Philip Macfarlane, Neil
Body, Richard Goodlad, Alastair MacGregor, John
Boscawen, Hon Robert Gorst, John MacKay, Andrew (Stechford)
Bottomley, Peter Gow, Ian (Eastbourne) McNair-Wilson, M. (Newbury)
Bowden, A. (Brighton, Kemptown) Gower, Sir Raymond (Barry) McNair-Wilson, p. (New Forest)
Braine, Sir Bernard Grant, Anthony (Harrow C) Marshall, Michael (Arundel)
Brittan, Leon Gray, Hamish Marten, Neil
Brocklebank-Fowler, C. Grieve, Percy Mates, Michael
Brooke, Hon Peter Griffiths, Eldon Mather, Carol
Brotherton, Michael Grylls, Michael Maude, Angus
Brown, Sir Edward (Bath) Hall-Davis, A. G. F Maudling, Rt Hon Reginald
Bryan, Sir Paul Hamilton, Archibald (Epsom & Ewell) Maxwell-Hyslop, Robin
Buchanan-Smith, Alick Hamilton, Michael (Salisbury) Mayhew, Patrick
Buck, Antony Hampson, Dr Keith Meyer, Sir Anthony
Budgen, Nick Hannam, John Mills, Peter
Bulmer, Esmond Harrison, Col Sir Harwood (Eye) Miscampbell, Norman
Burden, F. A. Harvie Anderson, Rt Hon Miss Mitchell, David (Basingstoke)
Butler, Adam (Bosworth) Haselhurst, Alan Moate, Roger
Carlisle, Mark Hastings, Stephen Monro, Hector
Channon, Paul Havers, Rt Hon Sir Michael Moore, John (Croydon C)
Churchill, W. S. Hawkins, Paul More, Jasper (Ludlow)
Clark, Alan (Plymouth, Sutton) Hayhoe, Barney Morgan, Geraint
Clarke, Kenneth (Rushcliffe) Hicks, Robert Morris, Michael (Northampton S)
Cockcroft, John Higgins, Terence L. Morrison, Charles (Devizes)
Cooke, Robert (Bristol W) Hodgson, Robin Morrison, Hon Peter (Chester)
Cope,John Holland, Philip Neave, Airey
Cormack, Patrick Hordern, Peter Nelson, Anthony
Corrie, John Howe, Rt Hon Sir Geoffrey Neubert, Michael
Costain, A. P. Howell, Ralph (North Norfolk) Newton, Tony
Crouch, David Hunt, David (Wirral) Normanton, Tom
Davies, Rt Hon J. (Knutsford) Hunt, John (Ravensbourne) Onslow, Cranley
Dean, Paul (N Somerset) Hurd, Douglas Oppenheim, Mrs Sally
Dodsworth, Geoffrey Hutchison, Michael Clark Osborn, John
Douglas-Hamilton, Lord James Irving, Charles (Cheltenham) Page, Rt Hon R. Graham (Crosby)
Drayson, Burnaby James, David Page, Richard (Workington)
du Cann, Rt Hon Edward Jenkin, Rt Hon P. (Wanst'd & W'df'd) Pattie, Geoffrey
Durant, Tony Jessel, Toby Percival, Ian
Eden, Rt Hon Sir John Jopling, Michael Pink, R. Bonner
Edwards, Nicholas (Pembroke) Joseph, Rt Hon Sir Keith Powell, Rt Hon J. Enoch
Elliott, Sir William Kaberry, Sir Donald Prentice, Rt Hon Reg
Emery, Peter Kellett-Bowman, Mrs Elaine Price, David (Eastleigh)
Eyre, Reginald Kershaw, Anthony Pym, Rt Hon Francis
Fairgrieve, Russell Kimball, Marcus Raison, Timothy
Farr, John King, Evelyn (South Dorset) Rathbone, Tim
Fell, Anthony King, Tom (Bridgwater) Rees, Peter (Dover & Deal)
Renton, Rt Hon Sir D. (Hunts) Smith, Timothy John (Ashfield) Vaughan, Dr Gerard
Renton, Tim (Mid-Sussex) Spence, John Viggers, Peter
Rhodes James, R. Spicer, Jim (W Dorset) Wakeham, John
Rhys Williams, Sir Brandon Spicer, Michael (S Worcester) Walder, David (Clitheroe)
Ridley, Hon Nicholas Sproat, Iain Walker, Rt Hon P. (Worcester)
Ridsdale, Julian Stainton, Keith Walker-Smith, Rt Hon Sir Derek
Roberts, Wyn (Conway) Stanbrook, Ivor Wall, Patrick
Rossi, Hugh (Hornsey) Stanley, John Walters, Dennis
Rost, Peter (SE Derbyshire) Steen, Anthony (Wavertree) Warren, Kenneth
St. John-Stevas, Norman Stewart, Ian (Hitchin) Weatherill, Bernard
Scott, Nicholas Stokes, John Wells, John
Scott-Hopkins, James Stradling Thomas, J. Whitelaw, Rt Hon William
Shaw, Giles (Pudsey) Tapsell, Peter Winterton, Nicholas
Shaw, Michael (Scarborough) Taylor, R. (Croydon NW) Wood, Rt Hon Richard
Shelton, William (Streatham) Taylor, Teddy (Cathcart) Young, Sir G. (Ealing, Acton)
Shepherd, Colin Tebbit, Norman
Shersby, Michael Thomas, Rt Hon P. (Hendon S) TELLERS FOR THE AYES:
Silvester, Fred Townsend, Cyril D. Mr. Spencer Le Marchant and
Sinclair, Sir George Trotter, Neville Mr. Anthony Berry
Skeet, T. H. H. van Straubenzee, W. R.
NOES
Abse Leo Douglas-Mann, Bruce Johnson, James (Hull West)
Allaun, Frank Duffy, A. E. P. Johnson, Walter (Derby S)
Anderson, Donald Dunn, James A. Jones, Alec (Rhondda)
Archer, Rt Hon Peter Dunnett, Jack Jones, Dan (Burnley)
Armstrong, Ernest Dunwoody, Mrs Gwyneth Judd, Frank
Ashton, Joe Eadie, Alex Kaufman, Rt Hon Gerald
Atkins, Ronald (Preston N) Edge, Geoff Kerr, Russell
Atkinson, Norman (H'gey, Tott'ham) Edwards, Robert (Wolv SE) Kilroy-Silk, Robert
Bagier, Gordon A. T. Ellis, Tom (Wrexham) Kinnock, Neil
Bain, Mrs Margaret English, Michael Lambie, David
Barrett, Guy (Greenwich) Evans, Fred (Caerphilly) Lamond, James
Barnett, Rt Hon Joel (Heywood) Evans, Gwynfor (Carmarthen) Latham, Arthur (Paddington)
Bates, Alf Evans, Ioan (Aberdare) Leadbitter, Ted
Bean, R. E. Evans, John (Newton) Lestor, Miss Joan (Eton & Slough)
Beith, A. J. Ewing, Harry (Stirling) Lever, Rt Hon Harold
Benn, Rt Hon Anthony Wedgwood Ewing, Mrs Winifred (Moray) Lewis, Ron (Carlisle)
Bishop, Rt Hon Edward Fernyhough, Rt Hon E. Litterick, Tom
Blenkinsop, Arthur Fitch, Alan (Wigan) Loyden, Eddie
Booth, Rt Hon Albert Flannery, Martin Luard, Evan
Boothroyd, Miss Betty Fletcher, Ted (Darlington) Lyons, Edward (Bradford W)
Bottomley, Rt Hon Arthur Foot, Rt Hon Michael McCartney, Hugh
Boyden, James (Bish Auck) Fowler, Gerald (The Wrekin) MacCormick, Iain
Bradley, Tom Fraser, John (Lambeth, N'w'd) McDonald, Dr Oonagh
Bray, Dr Jeremy Freeson, Rt Hon Reginald McElhone, Frank
Brown, Hugh D. (Provan) Freud, Clement MacFarquhar, Roderick
Brown, Robert C. (Newcastle W) Garrett, John (Norwich S) McGuire, Michael (Ince)
Brown, Ronald (Hackney S) Garrett, W. E. (Wallsend) MacKenzie, Rt Hon Gregor
Buchan, Norman George, Bruce Maclennan, Robert
Buchanan, Richard Gilbert, Rt Hon Dr John McMillan, Tom (Glasgow C)
Callaghan, Rt Hon J. (Cardiff SE) Ginsburg, David McNamara, Kevin
Callaghan, Jim (Middleton & P) Golding, John Madden, Max
Caravan, Dennis Gourlay, Harry Magee, Bryan
Carmichael, Neil Grant, John (Islington C) Mahon, Simon
Carter-Jones, Lewis Grimond, Rt Hon J. Mallalieu, J. P. W.
Cartwright, John Grocott, Bruce Marshall, Dr Edmund (Goole)
Castle, Rt Hon Barbara Hamilton, James (Bothwell) Marshall, Jim (Leicester S)
Clemitson, Ivor Hamilton, W. W. (Central Fife) Mason, Rt Hon Roy
Cocks, Rt Hon Michael (Bristol S) Hardy, Peter Maynard, Miss Joan
Concannon, Rt Hon John Harrison. Rt Hon Walter Meacher, Michael
Cook, Robin F. (Edin C) Hart, Rt Hon Judith Mellish, Rt Hon Robert
Corbett, Robin Hattersley, Rt Hon Roy Mikardo, Ian
Cowans, Harry Hayman, Mrs Helene Millan, Rt Hon Bruce
Cox, Thomas (Tooting) Healey, Rt Hon Denis Miller, Dr M. S. (E Kilbride)
Craigen, Jim (Maryhill) Heffer, Eric S. Mitchell, Austin (Grimsby)
Crawford, Douglas Henderson, Douglas Mitchell, R. C. (Soton, Itchen)
Crawshaw, Richard Hooley, Frank Molloy, William
Cronin, John Horam, John Moonman, Eric
Crowther, Stan (Rotherham) Howell, Rt Hon Denis (B'ham, Sm H) Morris, Rt Hon Charles R.
Cryer, Bob Hoyle, Doug (Nelson) Morris, Rt Hon J. (Aberavon)
Cunningham, Dr J. (Whiteh) Huckfield, Les Moyle, Rt. Hon. Roland
Dalyell, Tam Hughes, Mark (Durham) Murray, Rt Hon Ronald King
Davidson, Arthur Hughes, Robert (Aberdeen N) Newens, Stanley
Davies, Rt Hon Denzil Hughes, Roy (Newport) Noble, Mike
Davies, Ifor (Gower) Hunter, Adam Oakes, Gordon
Davis, Clinton (Hackney C) Irvine, Rt Hon Sir A. (Edge Hill) Ogden, Eric
Deakins, Eric Irving, Rt Hon S. (Dartford) O'Halloran, Michael
Dean, Joseph (Leeds West) Jackson, Miss Margaret (Lincoln) Orme, Rt Hon Stanley
de Freitas, Rt Hon Sir Geoffrey Janner, Greville Ovenden, John
Dell, Rt Hon Edmund Jay, Rt Hon Douglas Owen, Rt Hon Dr David
Dempsey, James Jeger, Mrs Lena Padley, Walter
Doig, Peter Jenkins, Hugh (Putney) Palmer, Arthur
Dormand, J. D. John Brynmor Pardoe, John
Park, George Shaw, Arnold (llford South) Tomney, Frank
Parker, John Sheldon, Rt Hon Robert Torney, Tom
Parry, Robert Short, Mrs Renée (Wolv NE) Tuck, Raphael
Pavitt, Laurie Silkin, Rt Hon John (Deptford) Varley, Rt Hon Eric G.
Pendry, Tom Silkin, Rt Hon S. C. (Dulwich) Wainwright, Richard (Colne V)
Perry, Ernest Silverman, Julius Walker, Harold (Doncaster)
Phipps, Dr Colin Skinner, Dennis Walker, Terry (Kingswood)
Prescott, John Smith, Rt. Hon. John (N Lanarkshire) Watkins, David
Price, C. (Lewisham W) Snape, Peter Watkinson, John
Price, William (Rugby) Spearing, Nigel Watt, Hamish
Radice, Giles Spriggs, Leslie Weetch, Ken
Rees, Rt Hon Merlyn (Leeds S) Stallard, A. W. Weitzman, David
Reid, George Steel, Rt Hon David Wellbeloved, James
Richardson, Miss Jo Stewart, Rt Hon Donald White, Frank R. (Bury)
Roberts, Albert (Normanton) Stewart, Rt Hon M. (Fulham) Whitlock, William
Roberts, Gwilym (Cannock) Stott, Roger Wigley, Dafydd
Robertson, George (Hamilton) Strang, Gavin Willey, Rt Hon Frederick
Robinson, Geoffrey Summerskill, Hon Dr Shirley Williams, Rt Hon Alan (Swansea W)
Roderick, Caerwyn Swain, Thomas Williams, Alan Lee (Hornch'ch)
Rodgers, George (Chorley) Taylor, Mrs Ann (Bolton W) Williams, Sir Thomas (Warrington)
Rodgers, Rt Hon William (Stockton) Thomas, Dafydd (Merioneth) Wilson, Gordon (Dundee E)
Rooker, J. W. Thomas, Jeffrey (Abertillery) Wilson, Rt Hon Sir Harold (Huyton)
Rose, Paul B Thomas, Mike (Newcastle E) Wilson, William (Coventry SE)
Ross, Stephen (Isle of Wight) Thomas, Ron (Bristol NW) Wise, Mrs Audrey
Ross, Rt Hon W. (Kilmarnock) Thompson, George Woof, Robert
Rowlands, Ted Thorne, Stan (Preston South) Young, David (Bolton E)
Ryman, John Thorpe, Rt Hon Jeremy (N Devon)
Sandelson, Neville Tierney, Sydney TELLERS FOR THE NOES:
Sedgemore, Brian Tilley, John Mr. Ted Graham and
Selby, Harry Tinn, James Mr. Donald Coleman.
Sever, John Tomlinson, John

Question accordingly negatived.

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