HL Deb 07 December 1967 vol 287 cc780-3

3.15 p.m.

LORD WISE

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

[The Question was as follows:

To ask Her Majesty's Government whether, in view of the present financial emergency, steps will be taken to abolish the selective employment tax as it relates to old age pensioners and farmers, and so cut down the cost of collection and repayment, and release a number of civil servants for productive industry of greater national importance.]

LORD BESWICK

My Lords, the Selective Employment Payments Act 1966 makes provision for the refund of the tax to farmers in respect of their agricultural employees, and to employers of nursing or domestic assistants in private households which include persons over 70 years of age. It would not be feasible to relieve these employers from paying the tax, because this would over-complicate the National Insurance system.

LORD WISE

My Lords, may I put one or two supplementary questions to the Minister? I shall make them as short as possible. The first is: how many officials are now employed in checking and repaying selective employment tax to old age pensioners, and what was the cost involved for the first year of this non-productive occupation? The second one is: can any information be given by the Minister as to the number of old age pensioners who have had to dispense with some domestic help through being unable to afford the heavy National Health Insurance contribution and selective employment tax? The third one is: do the Government realise that when payment for this stamp has been made, the standard of living of old age pensioners has been lowered?

LORD BESWICK

My Lords, the cost and number of persons employed remains the same as at the time my noble friend last asked the question—In the case of the social security officers dealing with refund of taxes to households where there are pensioners over 70, the number is 61. In the case of repayment of tax to farmers the number is slightly higher, but it remains the same as the figure which was given to my noble friend earlier this year. I will confirm it to him later on.

LORD CONESFORD

My Lords, is the Home Civil Service under the present Government the greatest of our growth industries?

THE EARL OF DUNDEE

My Lords, is it really the case that it is simpler and more convenient first to make people nay tax and then give it back to them than not to charge it at all?

LORD BESWICK

My Lords, strange as it may seem, that is the case. I agree that to me it seems a crazy system, but when a statement was made by my right honourable friend some time ago we had the figures looked out and found that in fact the selective employment tax is among the most economic of all taxes. The cost of collecting it is about 1 per cent., whereas for other taxes the cost can go up to 2 per cent.

THE EARL OF DUNDEE

Yes, my Lords, but is the cost of collecting greater than the cost of not charging it at all?

LORD BESWICK

My Lords, not charging it means that there would have to be two categories, and if this category were to be exempted it would be necessary to have two different stamps, and to police the scheme to make certain that people using the lower rate stamp were entitled to it. The opinion of the professional people employed on this work is that it is cheaper to do it in this way than the other way.

LORD CARRINGTON

My Lords, will the noble Lord take note that we on this side think that this tax is not only damaging but absurd, and when we return to office we shall get rid of it.

LORD SALTOUN

My Lords, may I ask the Government this question? When an old age pensioner has to pay the tax, it depends on the letter with which his name begins at what period it is repaid to him in lump. Therefore an old age pensioner who pays the tax is out of pocket for three months or six months before he gets a refund. Would it not be better to arrange matters so that he has the money in hand before he has to pay it, as it were? Could you not delay for six months, or do something to let him have the money so that he is not out of pocket before there is repayment?

LORD BESWICK

My Lords, I know that this is one of the problems involved, but I am afraid it still remains the fact that, if exceptions are to be made in the method of collecting National Insurance contributions, it would send up the cost considerably.

THE DUKE OF ATHOLL

My Lords, with the present bank rate, how much is this worth to the Government per week?

LORD WISE

My Lords, unfortunately the Minister has not replied very fully to the questions, but I will ask him just one more. Are there any circumstances in which claims for repayment by old age pensioners have been withheld or unpaid?

LORD BESWICK

My Lords, obviously I cannot answer that question without notice.

LORD CRAWSHAW

My Lords, may I press the question put by the noble Earl, Lord Dundee, and ask the noble Lord whether he is aware that for every civil servant spending time sending off forms there are many more people spending time receiving and answering forms; and whether he would agree that the selective employment tax is one of the many form filling afflictions imposed upon farmers which automatically increase the overhead costs of their production?

LORD BESWICK

My Lords, there is no doubt an element of cost to the farmers, but the fact still remains that if we are to have social services, and if we are to have defence, we must have revenue.

LORD CARRINGTON

But why this tax?

LORD BESWICK

As I indicated earlier—and I now have the actual figure—the cost of collecting this tax is approximately 1 per cent., whereas in the case of other taxes it is up to 2.03 per cent.

LORD MITCHISON

My Lords, may I ask my noble friend not to be beastly to the Scottish computer which attends punctually to my requirements under both these heads. If it were turned on to produce something else, I do not know what it would produce.

LORD ERROLL OF HALE

My Lords, the noble Lord was kind enough to tell us the cost of collecting the tax. Would he also tell us the cost of refunding the tax?

LORD BESWICK

My Lords, does the noble Lord mean the cost of administration?

LORD ERROLL OF HALE

My Lords, I wish the noble Lord would listen to my question. I said that the noble Lord was kind enough to tell us the cost of collecting the tax. I am now asking whether he can tell us the cost of refunding the tax.

LORD BESWICK

My Lords, the cost of administration is £80,000 in the case of one tax and £1½ million in the case of the other tax.

LORD SANDYS

My Lords, is the noble Lord aware that the powerful arguments deployed in yesterday's debate in regard to the total abolition of this selective employment tax in Scotland are equally applicable in all cases to the selective employment tax in England and Wales? Would the noble Lord promise the House that he will read yesterday's debate in connection with the answers he has made to-day?

LORD BESWICK

My Lords, anything the noble Lord says is considered. It would have been equally useful if when the noble Lord who leads the Opposition gave a pledge to abolish this tax, he had also indicated the alternative methods of taxation that he would use.