HC Deb 07 July 1927 vol 208 cc1538-47

Section twenty-one of the Finance Act, 1920 (which provides for a deduction from assessable income in respect of children), shall have effect as if for the words "thirty-six pounds" and "twenty-seven pounds," there were substituted, respectively, the words "seventy-two pounds" and "fifty-four pounds.—[Major Hills.]

Brought up, and read the First time.

Major HILLS

I beg to move, "That the Clause be read a Second time."

I now come to the most modest of my proposals. I have had a very unfortunate career so far, but I hope I shall have better fortune for this very modest proposal. It only seeks to double the allowance that was granted under the Act of 1920. When that Act was passed, Income Tax was at 6s. in the pound, and therefore, to take off £36 when the Income Tax is at 6s. in the pound is worth a great deal more than taking it off when it stands at 4s. in the pound. Some increase is due. I do not say that I expect to get the whole of the £72 or the £54, for the first child and subsequent children, but I do say that some increase is due, for the rebate has lost one-third of its original value. I do not think the condition of the world has improved by one-third, and the need of the rebate is greater now than it was in 1920, yet it is worth one-third less. It is a very small amount. I have some figures here. If you take an income of £370 a year, the annual saving in income for the first child is £3 12s.; the saving in income is about one per cent. of the income—and it stays at about that figure up to incomes of £700 a year. Those are all the abatements for children inclusive.

The cost of a child's education is usually reckoned at 10 per cent. of the parents' income, so the existing rebate comes only to one-tenth of the cost of the child's education. Suppose this was doubled, as I suggest, it would only be 2 per cent., and that is one-fifth of the cost of the education of the child. The Financial Secretary has said that it is not the business of taxation to encourage children. I am not quite so sure about that. There are all sorts of ways in which the State encourages children. There is the rebate for children in the 1920 Act, which was a direct encouragement. Children are not brought into the world because their keep and education is too expensive. It is the more provident parents who restrict the birth-rate, and it is the improvident person who does not. The provident parents say, "We cannot support more than one child, and therefore we will be content with one." Here I give the benefit by a lump sum of rebate and I cannot be charged, as I was on the last two Clauses, that I am giving the greatest benefit to the richer person—I do not admit it for a moment. Although the actual cost of the confinement may be a good deal more in the case of a rich man whose wife is confined, than it is in the case of a poor man's wife, yet the cost in the case of the poor man is more in proportion to his income than it is in the case of the richer man, and, therefore, the burden on the poor man is far greater than it is on the richer man. In this case, I cannot be open to that charge, because I simply ask that you should increase the sum which the parent is allowed to deduct in respect of his dependent child, and I suggest that the amount should be increased from £36 to £72 in the case of the first child and from £27 to £54 in the case of the subsequent children.

Mr. McNEILL

For the third time running my hon. and gallant Friend has put me to the great pain of having to refuse him something. As he persists in regarding it as part of the function of taxation to encourage larger families, I must repeat my opinion that that is no concern of the fiscal system of this country. It may be a very important matter for consideration in other connections, but certainly the fiscal system is the very last subject on which birth control or the absence of birth control properly arises. I must say I think my hon. Friends who support these proposals are utterly mistaken in the view which they take and which has prompted this series of proposed new Clauses.

Their idea is that these rebates in taxation are to be justified on the ground that there appears to be a falling-off in the rate of increase of the population. All writers on vital statistics emphatically contradict the view underlying the assumption of my hon. Friends that the falling-off is in that part of the population which most requires financial help in the form of these comparatively small sums. As a matter of fact the decrease in the size of families, whether one welcomes it or deplores it, is found among the wealthy classes. It is not found to any very, very marked extent among the particular class which my hon. and gallant Friend desires to help and which, in a proper way, we all desire legitimately to help. His view in that respect seems to be a mistaken one and at all events, I must repeat that we could not give that help in the particular way which he suggests, namely, by way of deduction for Income Tax purposes. My hon. and gallant Friend came forward with this proposal in the guise of Oliver Twist asking for a little more; but later on he was more like the Fat Boy because he made the flesh of the Treasury creep when he said there was no considerable cost attaching to it. As a matter of fact, the proposed new Clause would cost £4,500,000, a very substantial sum which, in present circumstances, supplies a strong argument against the proposal. If my hon. and gallant Friend persists I must ask the Committee to reject the proposed new Clause on the ground that the cost to the Exchequer is too great and that the principle which he seeks to introduce into our system of taxation seems to be entirely mischievous.

Mr. HAYDAY

I hope the hon. and gallant Gentleman the Member for Ripon (Major Hills) will press this matter to a Division. The right hon. Gentleman who has just spoken seemed to imply that the proposed new Clause was moved with a wrong desire but this is not a question of birth control or of larger families. It is a question of the principle which was originally introduced when these allowances were first made. The allowances embrace a wide range of persons in the country and have no relation specially to the well-to-do or to the middle-class or to the better paid class of artisans. They would all be brought within the ambit of a decision based on the lines of the proposed new Clause. We have learned that the value of the concession is now one-third less than it, was at the time when the allowance was fixed at the present figure. Perhaps the Financial Secretary does not fully realise that there are classes of artisans who come within the taxable income limit and who make their payments Quarterly or half-yearly. It would be to their advantage if these allowances were somewhat increased. Quite apart from the question of an increased population, there is the fact that from 1914 onwards the State encouraged and gave facilities for marriage among those who had been called to the colours. The hardships which ensued to those people when they settled down again and were brought within the Income Tax limit, led to the original allowances being made but we are now 13 years away from the commencement of the War.

It does not follow that things have improved so much that parents have been relieved to any extent of their responsibilities for the maintenance and education of their children. There is a new outlook and if you could eliminate anxiety and worry to some extent from the family circle you would have from the present stock a more virile population and a greater desire for education. I am heartily in support of this proposed new Clause for the same reason that I was in opposition to the first of the new Clauses proposed by the hon. and gallant Member. His first proposal dealt with the more wealthy class—the upper middle class or well-to-do class. This proposal aims at the relief of the better-paid artisan, the poorer middle class and that large element, the small shop-keeping and commercial class, on which the country so largely depends. They have passed through a greater period of anxiety than many others during the years which have followed the making of the original allowance and I earnestly hope that the representative of the Treasury will yet accede to the proposal. Even if it costs £4,500,000 it will have the result, I believe, in the next five years of making the children of the nation grow into more useful citizens because of the increased facilities that will be available for their advancement. I know that the Floor of the House of Commons is the last place in which to barter on matters of finance, but if £4,500,000 be too much to sacrifice, surely the Treasury should make up the deficiency between the value of the original allowance and the value of the present allowance.

Sir JOHN POWER

I feel in a little difficulty about this new Clause. I am in favour of it, but I have been somewhat shaken by the suggestion that it would cost the Exchequer £4,500,000. The right hon. Gentleman said at the end of his speech that this Clause introduces a new principle. Surely that is not so. Surely the State has recognised for a good many years that children are a certain burden and has made reductions in Income Tax an their account.

Mr. McNEILL

I did not intend to say that this Clause introduced a new principle. I was referring rather to the other two which we had already passed.

Sir J. POWER

I hope we may have some compromise on this matter, because, as has been pointed out, the taxation is a serious matter to young people who are starting married life. Children come along and they have to be educated, and it is a big struggle for their parents to give them that education which they would like them to have. The State benefits directly from the better education of the children, and therefore it cannot be said that any concession the Treasury may make in this respect will be an entire waste. it will help a great many people who at present find life very hard. Taxation is very heavy, rates are very heavy, and it is a struggle for parents to give children something like the same education which they have received themselves. That is the case amongst the clerical and the professional classes. The cost of education has gone up in a most extraordinary way, and many parents belonging to the very best type of citizens we possess are faced with the necessity of sending their children to a school where they cannot receive the same good education which they themselves received. Consequently the children of the lesser-paid professional classes are in danger of losing the status which their parents have acquired, probably after a great deal of trouble and hard work. Therefore, if any compromise could be made and a concession given to this particular class it would certainly redound to the credit of the Government, and would be received with great thankfulness by a very large and deserving section of the population.

Lieut. - Commander KENWORTHY

My hon. and gallant Friend and myself are going to carry this Clause to a Division, and I am sure I can appeal to the Labour party to support us, because similar Clauses have been moved by them in previous years, and there is one on the Paper now. After all, the £72 allowance is only for the first child and the £54 for the second. The right hon. Gentleman has said that it is not the business of the State to encourage family-building, but I believe that the whole basis of society is founded on the family as a unit, and if it is the business of the State to encourage a healthy society, the State ought to foster and encourage family life. Family allowances are given for officers in the Army, Navy and Air Force. Even the Admiralty, of all people, who had always discouraged marriage amongst naval officers, three years ago conceded the principle of granting marriage allowances to naval officers. They took them away afterwards, when the axe fell, but the principle was conceded. Therefore, the State does recognise the family, and has encouraged it in that way. The hon. Member for the Don Valley (Mr. T. Williams) quoted the case of Dartmouth. Several times I have raised in the House the fees charged for naval cadets. Is the hon. Member aware that the majority of naval officers, those without means or without large means, are unable to send their sons to Dartmouth to follow in their fathers' footsteps? That is the case with the naval officer, who cannot be regarded as a wealthy man or as a capitalist, but as a public servant; he cannot afford to send his own children to be educated as he was educated. That is the position of the lower middle class, and, as my hon. Friend said, there are great numbers of artisans and clerks and warehousemen within the Income Tax limit who would benefit by this concession.

The right hon. Gentleman has said that it would cost £4,500,000. I accept the figure, but I should be interested to see how that calculation is arrived at. Is that what it cost in 1920, when Income Tax was 6s. in the £ and the allowance was £36 for the first child and £27 for the second? Did it cost anything like that then? Or is the Treasury actuary calculating on the increase in the birth rate which it is said the hon. and gallant Gentleman and I would bring about by this new Clause? Let us see what £4,500,000 is equivalent to. It is something more than the cost of one of our new cruisers. We have on the stocks at the present time eight cruisers, which, when completed, will have cost £24,000,000. We have just launched two battleships, "Nelson" and "Rodney," which, by the time they have finished their trials, will have cost the taxpayers over £7,500,000 each.

The CHAIRMAN

I am afraid the hon. Member cannot pursue those comparisons any further.

Lieut. - Commander KENWORTHY

I was not going any further. I only mention that as a comparison, to ask whether it would not be better to spend a sum which is little more than half the cost of completing the battleship "Nelson" on this concession for the benefit of struggling young parents and others. Surely there can be no hesitation as to what the answer shall be, and I hope every one who has heard this Debate will support us in the Division.

Mr. McNElLL

I would like to say one or two words in reply to the speech of the hon. Member for Wimbledon (Sir J. Power)—perhaps I ought to have mentioned them before, but I omitted to do so—seeing that this Clause is to be carried to a Division. This allowance forms part of a very carefully thought-out scheme of graduation of the Income Tax. The whole system of graduation of Income Tax was changed in 1920, because it was found by experience, and it was supported by the Royal Commission, that the old system under which the rate of Income Tax rose by steps as the figure of income rose gave rise to many anomalies and borderline cases. For example, a man with an income of £150 a year or more was on a different level in matters of taxation from a man with only £149 a year. The whole of this system was gone into in 1920, and there was a personal allowance of £135 for an unmarried person, a personal allowance of £225 for a married couple, an allowance of £60 for a widower who had a female relative to look after his children, and so on. That was all carefully thought out, and, so far as it is possible in such a case to say that it was scientific, it was a scientific system for graduating the incidence of Income Tax. It was recommended by the Royal Commission, and it represented a serious attempt to deal with the question of graduation as a whole, and to apportion the burden of the tax according to the ability of the taxpayers, regard being had both to the amount and nature of their incomes and to their family responsibilities. That was the principle upon which these allowances were founded.

My hon. and gallant Friend now wants to take one of these allowances only, and double it. It is easy, of course, to come to the House and make a very strong and plausible case for a concession of that kind. Anyone can do that, and can stir people's sympathies; but it is really rather a serious responsibility to support something which makes an inroad into the whole system of graduation, and will upset its balance. If this Clause were carried, apart altogether from its immediate effects upon the Exchequer, which,

as I have explained, I think would be very undesirable, it would have the much worse effect of vitiating the balance of the whole system of Income Tax graduation; and my hon. and gallant Friend must, I am sure, appreciate what a very serious matter that would be in regard to the whole system of taxation in this country. I hope very much that he will not think it necessary to divide on this Clause, and that, if he does, my hon. Friends on this side will not support him.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 107; Noes, 152.

Division No. 248.] AYES. [9.9 p.m.
Adamson, W. M. (Staff., Cannock) Hayes, John Henry Rose, Frank H.
Alexander, A. V. (Sheffield, Hillsbro') Henderson, Right Hon. A. (Burnley) Salter, Dr. Alfred
Ammon, Charles George Henderson, T. (Glasgow) Scrymgeour, E.
Attlee, Clement Richard Hills, Major John Walter Scurr, John
Baker, Walter Hirst, G. H. Sexton, James
Barker, G. (Monmouth, Abertillery) Hudson, J. H. (Huddersfield) Shepherd, Arthur Lewis
Barnes, A. Hutchison, Sir Robert (Montrose) Shiels, Dr. Drummond
Batey, Joseph Jenkins, W. (Glamorgan, Neath) Short, Alfred (Wednesbury)
Broad, F. A. Johnston, Thomas (Dundee) Simon, Rt. Hon. Sir John
Brown, Ernest (Leith) Jones, Morgan (Caerphilly) Smith, Ben (Bermondsey, Rotherhithe)
Brown, James (Ayr and Bute) Jones, T. I. Mardy (Pontypridd) Smith, H. B. Lees (Keighley)
Buchanan, G. Kelly, W. T. Snell, Harry
Cluse, W. S. Kennedy, T. Snowden, Rt. Hon. Philip
Compton, Joseph Kirkwood, D. Spoor, Rt. Hon. Benjamin Charles
Connolly, M. Lansbury, George Stephen, Campbell
Cove, W. G. Lawrence, Susan Stewart, J. (St. Rollox)
Cowan, D. M. (Scottish Universities) Lawson, John James Sutton, J. E.
Crawfurd, H. E. Lee, F. Taylor, R. A.
Dalton, Hugh Lindley, F. W. Thurtle, Ernest
Day, Colonel Harry Livingstone, A. M. Tinker, John Joseph
Dennison, R. Lowth, T. Varley, Frank B.
Duncan, C. Lunn, William Watson, W. M. (Dunfermilne)
Edge, Sir William Macdonald, Sir Murdoch (Inverness) Watts-Morgan, Lt.-Col. D. (Rhondda)
Edwards, C. (Monmouth, Bedwellty) MacLaren, Andrew Wellock, Wilfred
England, Colonel A. Maclean, Nell (Glasgow, Govan) Welsh, J. C.
Evans, Capt. Ernest (Welsh Univer.) MacNelli-Weir. L. Whiteley, W.
Gardner, J. P. Maxton, James Williams, David (Swansea, East)
Garro-Jones, Captain G. M. Murnin, H. Williams, Dr. J. H. (Lianelly)
Gillett, George M. Oliver, George Harold Williams, T. (York, Don Valley)
Gosling, Harry Palin, John Henry Wilson, C. H. (Sheffield, Attercliffe)
Graham, D. M. (Lanark, Hamilton) Paling, W. Wilson, R. J. (Jarrow)
Grenfell, D. R. (Glamorgan) Parkinson, John Alien (Wigan) Windsor, Walter
Groves, T. Pethick-Lawrence, F. W. Wright, w.
Grundy, T. W. Potts, John S.
Hall, F. (York, W. R., Normanton) Richardson, R. (Houghton-le-Spring) TELLERS FOR THE AYES.—
Hall, G. H. (Merthyr Tydvil) Ritson, J. Lieut.-Commander Kenworthy and Mr. Hayday.
Hartshorn, Rt. Hon. Vernon Robinson, W. C. (Yorks, W. R., Elland)
NOES.
Alexander, E. E. (Leyton) Brocklebank, C. E. R. Christie, J. A.
Allen, J. Sandeman (L'pool,W- Derby) Brooke, Brigadier-General C. R. I. Clayton, G. C.
Ashley, Lt.-Col. Rt. Hon. Wilfrid W. Broun-Lindsay, Major H. Cobb, Sir Cyril
Atholl, Duchess of Brown, Col. D. C. (N'th'l'd, Hexham) Cohen, Major J. Brunei
Atkinson, C. Buchan, John Conway, Sir W. Martin
Balfour, George (Hampstead) Bull, Rt. Hon. Sir William James Cope, Major William
Balniel, Lord Burman, J. B. Couper, J. B.
Beamish, Rear-Admiral T. P. H. Burton, Colonel H. W. Courtauld, Major J. S.
Beckett, Sir Gervase (Leeds, N.) Butler, Sir Geoffrey Craig, Capt. Rt. Hon. C. C. (Antrim)
Bellairs, Commander Carlyon W. Campbell, E. T. Crooke, J. Smedley (Deritend)
Bennett, A. J. Carver, Major W. H. Cunliffe, Sir Herbert
Bethel, A. Cassels, J, D. Davies, Sir Thomas (Cirencester)
Blundell, F. N. Cautley, Sir Henry S. Davies, Dr. Vernon
Bourne, Captain Robert Croft Chadwick, Sir Robert Burton Dixon, Captain Rt. Hon. Herbert
Bowyer, Capt. G. E. W. Chamberlain, Rt. Hon. N. (Ladywood) Ellis, R. G.
Briggs, J. Harold Chapman, Sir S. Elveden, Viscount
Briscoe, Richard George Charteris, Brigadier-General J. Erskine, Lord (Somerset, Weston-s.-M.)
Fanshawe, Captain G. D. James, Lieut.-Colonel Hon. Cuthbert Salmon, Major I.
Fielden, E. B. Jones, G. W. H. (Stoke Newington) Samuel, Samuel (W'dsworth, Putney)
Finburgh, S. Kidd, J. (Linlithgow) Sandeman, N. Stewart
Ford, Sir P. J. Kindersley, Major Guy M. Savery, S. S.
Foster, Sir Harry S. King, Commodore Henry Douglas Shepperson, E. W.
Fraser, Captain Ian Lamb, J. Q. Slaney, Major P. Kenyon
Gadie, Lieut.-Col. Anthony Looker, Herbert William Smith, R. W. (Aberd'n & Kinc'dine.'C.)
Galbraith, J. f. W. Lumley, L. R. Smithers, Waldron
Ganzonl, Sir John MacAndrew, Major Charles Glen Steel, Major Samuel Strang
Gates, Percy Macdonald, Capt. P. D. (I. of W.) Storry-Deans, R.
Gibbs, Col. Rt. Hon. George Abraham MacDonald, R. (Glasgow, Cathcart) Streatfeild, Captain S. R.
Goff, Sir Park McNeill, Rt. Hon. Ronald John Sueter, Rear-Admiral Murray Fraser
Grace, John Malone, Major P. B. Thom, Lt.-Col. J. G. (Dumbarton)
Graham, Fergus (Cumberland, N.) Meller, R. J. Thomson, F. C. (Aberdeen, South)
Greene, W. P. Crawford Merriman, F. B. Tinne, J. A.
Grotrian, H. Brent Meyer, Sir Frank Tryon, Rt. Hon. George Clement
Hacking, Captain Douglas H. Mitchell, S. (Lanark, Lanark) Vaughan-Morgan. Col. K. P.
Hall, Lieut.-Col. Sir F. (Dulwich) Mitchell, W. Foot (Saffron Walden) Ward, Lt.-Col. A. L. (Kingston-on-Hull)
Hannon, Patrick Joseph Henry Moore, Lieut.-Colonel T. C. R. (Ayr) Watson, Rt. Hon. W. (Carlisle)
Harrison, G. J. C. Moore, Sir Newton J. Watts, Dr. T.
Harvey, G. (Lambeth, Kennington) Morrison, H. (Wilts, Salisbury) Wells, S. R.
Hawke, John Anthony Newman, sir R. H. S. D. L. (Exeter) Williams, A. M. (Cornwall, Northern)
Henderson, Lt.-Col. Sir V. L. (Bootle) Oman, Sir Charles William C. Williams, Com. C. (Devon, Torquay)
Heneage, Lieut.-Col. Arthur P. Ormsby-Gore, Rt. Hon. William Williams, Herbert G. (Reading)
Hennessy, Major Sir G. R. J. Percy, Lord Eustace (Hastings) Wilson, R. R. (Stafford, Lichfield)
Herbert, Dennis (Hertford, Watford) Perkins, Colonel E. K. Windsor-Clive, Lieut.-Colonel George
Hogg, Rt. Hon. Sir D. (St. Marylebone) Perring, Sir William George Wise, Sir Fredric
Hopkins, J. W. W. Power, Sir John Cecil Withers, John James
Horlick, Lieut.-Colonel J. N. Price, Major C. W. M. Womersley, W. J.
Hudson, R. S. (Cumberl'nd, Whiteh'n) Radford, E. A. Yerburgh, Major Robert D. T.
Hume-Williams, Sir W. Ellis Rawson, Sir Cooper Young, Rt. Hon. Sir Hilton (Norwich)
Hurd, Percy A. Reid, D. D. (County Down)
Inskip, Sir Thomas Walker H. Remer, J. R. TELLERS FOR THE NOES.—
Jackson, Sir H. (Wandsworth, Cen'l) Roberts, E. H. G. (Flint) Captain Margesson 2nd Mr. Penny.
Jacob, A. E. Rye, F. G.