HC Deb 11 July 1938 vol 338 cc1043-62

If any person who is assessable to Income Tax proves to the satisfaction of the Commissioners of Inland Revenue that during the year of assessment he had a relative living with him who had been denied, wholly or in part, unemployment allowance under Part II of the Unemployment Act, 1934, or public assistance, on the ground that the relative was being maintained wholly or partly by

him, he shall, in respect of his assessment, be entitled to a deduction equal to the amount deemed to have been paid by him towards such maintenance.—[Mr. G. Griffiths.]

Brought up, and read the First time.

9.9 P.m.

Mr. George Griffiths

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

I am pleased that the Chancellor is back and I am sure that he will feel comfortable after his dinner. I am delighted with the way in which the right hon. Gentleman has given way on certain things, but we were disappointed that the Government did not give way on the new Clause just moved by the right hon. Member for Keighley (Mr. Lees-Smith). If the Chancellor had heard my right hon. Friend's explanation I am sure that he would not have allowed his second lieutenant to say "No." I have been looking at the concessions which the Chancellor has made on the Finance Bill. The hon. Gentleman the Member for Rusholme (Mr. Radford) pleaded about the tax on oil and the Chancellor said he would consider it.

Sir J. Simon

indicated dissent.

Mr. Griffiths

The Chancellor will agree that when the hon. Member for Oxford University (Mr. A. Herbert) raised the question of the Entertainments Duty he agreed there was something in the hon. Member's case. I asked the hon. Member to support my new Clause with a speech but he told me that it took him a fortnight to get up his speech on the Entertainments Duty. The Chancellor said that he thought there was something in the lion. Member's case and that he was prepared next year to consider the tax because it affected three classes of people, the shareholders in the theatres, the managers of the theatres and the theatregoers. I hope that the Chancellor will look at my new Clause and see whom it affects. I was very pleased that he agreed to a deduction in respect of apprentices over 16. That was a very good concession and my friends on these benches congratulate the right hon. Gentleman upon it.

I hope that I shall be able to congratulate the Chancellor on being able to accept my new Clause. It is not put down to wring out of the Treasury £8,500,000, which the Financial Secretary said would be the cost of the last new Clause which we discussed. I would like the Chancellor to tell us how much loss my new Clause would cause the Budget. It is not, however, the total mount that bothers me so much as the amount involved to the individual. The Chancellor early this evening granted relief to the land tax payers on condition that they produced a certificate. Our people who are asking for the relief for which my new Clause provides are prepared to produce certificates to show they have had so much knocked off their unemployment assistance because they are earning so much money. My Clause is quite understandable. I have worked out a scale, perhaps not as scientifically as the right hon. Member for Keighley. He worked his out on a doctor; I shall work mine out on a miner and a schoolteacher. Before I come to that, however, I would remind the House that some weeks a go the hon. Member for Ebbw Vale (Mr. Bevan) asked the Ministry of Labour how many people who are receiving unemployment assistance allowances have had any deductions made because of income coming into the homes, and was told by the Parliamentary Secretary to the Ministry that out of 580,000 families 120,000 were receiving reduced payments because somebody was bringing money into the home.

I want to take the case of a young man, a miner who is working full time at a pit—though there are not many working full time to-day—and is earning £3 a week, or £156 a year. He lives at home with his father and mother. He is allowed to count 16s. for his own maintenance. It does not matter what it costs to keep him, he is only allowed to count 16s. for his maintenance. After that one-half of his income goes to himself for clothes, for football matches, for pictures and, if you like, for taking his young lady to a dance. The other half goes to help to maintain the home. I have worked it out in this way: The man earns £3 a week, is allowed 16s. and he contributes to his father and mother 26s. a week. His father and mother are on a scale of 24s. allowance—not 26s., because there is some income coming into the home. Instead of getting 24s. from the Treasury the father and mother get 2S., and the son contributes 22S. a week. Therefore, he saves the Treasury £56 4s. in the year.

In the assessment of his income to Income Tax he gets a. deduction of one-fifth of the £156, which is £31 knocked off. He gets an exemption of £100 to begin with and this £31, a total exemption of £131. He is therefore taxed on £25, and the amount of the tax he pays is £2 1s. 8d. He has saved the Government £56 4s., because they have not paid his father his 24s. a week, and still the Government say, "We are going to tax him," although they have already taxed him in the household at the rate of 36.5 per cent. of his income. Then some Members talk about the Super-tax. This man has got a tax of 36½ per cent. and on top of that tax is taxed at 1s. 8d. in the £on the £25. Surely to Heaven the Financial Secretary will not harden his heart against a case like that.

Then take the case of a school teacher. If he is the son of a miner or a docker or a factory worker his father has had to burn the candle at both ends to let him go to college so that he can become a school teacher. In the family they have had to scrap and scrape to get a bit of money together, and if they have not raised sufficient money in that way they have had to borrow from the county council—the West Riding County Council, the London County Council or the Lancashire County Council—up to a total of £60. That sum is a loan and not a grant. There used to be grants before 1931, but it is now exceptional for any one to get a grant to go to college, and the father has to sign an undertaking to pay off the loan at so much a year, perhaps £10 a year. The young man does not start to earn a penny until he is about 22 or 23 years of age. In London the starting salary is ordinarily £192, and in the West Riding it is £180; but I want to stop in the West Riding, because these cases do not occur so much in London as in the distressed and semi-distressed areas.

We will suppose that on leaving college he starts in the West Riding on a salary of £180 a year, which is just about £3 10s. a week. He, too, is living at home, and perhaps cycling or going by train eight or 10 miles to his school. From that £3 10s. he is allowed 16s. for his keep, which leaves 54s. Out of that this young man contributes to his father and mother 27s. a week, but his father and mother are entitled only to 26s. or 24s., and so there is not a penny piece coming from the Unemployment Assistance Board. He has saved the Treasury £70 4s. When they come to assess his income for Income Tax he is allowed a deduction of one-fifth, which comes to£36 8s., gets the other deduction of £100, and has to pay tax on £45 12s. at is. 8d. in the£. That means that he pays £3 15s. 8d. in Income Tax, though he has saved the State £70 4s. Surely to Heaven the Chancellor of the Exchequer is not going to say "No," in face of a statement like that. Will he please say what the amount would be if these people who are saving the State so much had the actual amount that they paid. It is not a question of asking for an exemption of but the exact amount that they have paid to maintain their parents. I beg to move this new Clause, and I have the faith to believe that the Chancellor, now that he has heard my case, is prepared to get up and say "I will accept it."

9.25 p.m.

Mr. T. Smith

I beg to second the Motion. I want the Chancellor to appreciate what is behind this Clause. The examples given by the hon. Member for Hemsworth (Mr. G. Griffiths) were very telling and very true. The House must remember that Part II of the Insurance Act now lays down regulations which base the allowance upon a household Income Tax. In practice that stabilises poverty in the household, because the more money there comes in from a wage earner, the less there is paid for one who happens to be unemployed. I am not going to give detailed examples, but I am going to tell what the men themselves say about it. I know a man in a fairly decent job, a man getting on in years, earning a wage which makes him liable to Income Tax, and because he happens to be earning a fairly decent wage, his son who is out of work can get nothing from the Unemployment Assistance Board. He says, "I don't mind keeping the lad until he can get a job, but the mere fact that I have to keep him keeps the household in a more or less poverty-stricken state. But after all, when I have kept him I am faced with having to pay Income Tax. I am penalised twice, and it is all I can do to scrape the Income Tax together."

That is a case from the angle of a father, but it comes with double strength from the other angle, namely, when the father is out of work and the son is working. We often hear from hon. Members opposite that it is wrong to take away the incentive to work. But what happens when a man is employed on piece-work? The more he earns the less his father gets from the Unemployment Assistance Board until, when he gets beyond a certain figure, the father gets nothing. He has to keep the father whether he likes it or not, he is assessed for Income Tax as a single man, he is debarred from saving what he would like to do against the time when he will get married. The effect in some cases is not only to cause dissention within the household, but to drive the young man away from home. And the very moment the young man goes away from home rather than see his parents suffer when he is doing the right thing, the Unemployment Assistance Board says, "This lad has no right to leave home. He has left home in order to dodge his responsibilities." What we are asking in this new Clause is that he shall have a definite sum allowed him, the amount stated in the Clause. I hope that whoever replies will face up to the idea behind this Clause. I hope it will not be said that it is financially impossible to accept it. I hope we shall be told that if it cannot be accepted in its present form it will be recognised that there is an evil here that has to be met. If the Government will do that they will do something which will be felt outside by the unfortunate people who are affected.

9.29 p.m.

Mr. Graham White

The hon. Member for Hemsworth (Mr. G. Griffiths) with his accustomed vigour and sincerity used such a wealth of detail that I am absolved from giving further illustrations. He rested his case upon the position of a schoolmaster and a miner, but all Members who represent industrial constituencies are familiar with this case. They know that it covers the vast number of manual workers who are sufficiently unfortunate to have in their houses unemployed people, and who come under the regime of the means test. We have always been sympathetic to such a Clause as this, in point of fact we have a new Clause down on the Paper to the same effect, though I frankly admit that this Clause is better drawn. We are all familiar with the concessions made to parents who have children at school. There does not seem to be any reason in logic why this concession should not also be made. The equity of it is in some measure recognised by the Board of Inland Revenue, because in recent years, perhaps as a result of the efforts made in this House, the Board of Inland Revenue have stretched the rule so far as they can in order to give relief in these cases. Nevertheless, here is a grievance under the means test. There are cases in which the rules are not sufficiently elastic to cover it. The hon. Gentleman who has just spoken referred to the fact that the means test, aggravated by this provision, leads to the breaking up of homes. Within the last few weeks only I have come across cases of that kind. I am sure this Clause commends itself to the sympathy of Members in all quarters of the House. There may be difficulties, but they are there to be overcome.

9.33 P.m.

Mr. R. J. Taylor

I want to support this new Clause The means test would still remain if it were accepted, and I know of nothing among the workers that is giving greater dissatisfaction and causing more irritation in families at what is considered to be a gross injustice than the means test. This would only be an alleviation, but it does seem to me that we shall have to wait until we on this side get a Government before we can get the means test abolished. It would be well for the Chancellor to remember that these cases are not confined to the distressed areas. In areas where there has been an improvement in trade, but where there is still a high percentage of unemployment, as the wages have increased the dependency of the unemployed man has been aggravated by that very increase which one of the members of his family has succeeded in obtaining.

I therefore ask hon. Members on the other side to remember, when they talk about the increased wages which the workers have been getting, that the correct method of calculation of those wages is to take into consideration the unemployed people who are living in the same room as the worker, and to add to the wages which the workers receive that which is received from the Unemployment Assistance Board, and to divide that sum by the number of people in the home. That will give the real income in that home. I would emphasise that where there is a single man whose father is receiving unemployment assistance, if that single man is receiving 64s. per week, he is maintaining his father and mother.

A further reason for my rising in this Debate is that a young man came to see me this week-end. He has suffered from miners' nystagmus. Seven years ago he was examined by the medical referee and certified clear of that ailment. He worked for some time after that, as a miner, but he lost that job and he has been trying repeatedly since then to get back into the pit. Although he was certified clear, he is asked at every colliery where he goes whether he has had miners' nystagmus, and when he says that he has had it at some time in his life the companies will not start him again. The result is that he is on unemployment assistance. He has a brother who is working and who has to keep him. That is an illustration of the incidence of miners' nystagrnus. In all justice and fairness, the Chancellor of the Exchequer might grant this one concession to a very deserving class of people who are pulling their weight and giving their best for their country. It seems hard also, after the man has had those deductions from his 64s. a week, to the extent of 24s. to keep his father and mother, that the Income Tax authorities should come along at the end of the year, and that he should have to pay Income Tax on the figure to which the hon. Member for Hemsworth (Mr. G. Griffiths) referred. For those reasons I support the proposed new Clause.

9.39 P.m.

Sir Robert Aske:

I hope that the Chancellor of the Exchequer will accept this new Clause. I think no representative of an industrial constituency would not give his sincere support to it, particularly in the case of constituencies where there is a very large number of people still unemployed, particularly unskilled labour. Instances have been given of the harsh way in which this principle operates at the present time, and illustrations have been given of its operation as between parents and children. I would remind the right hon. Gentleman that the operation of Part II of the Unemployment Act has extended the net far more widely than between parents and children, I know a great number of single men who are living with unemployed married brothers or sisters. In such a case the single man is in employment and may be earning good wages, but he has to contribute very substantially towards the maintenance of his brother or sister.

The operation of Part II of the Unemployment Act creates what is virtually a statutory charge on income. Wherever there is such a charge there ought to be no assessment to Income Tax in regard to the amount of that charge. The hon. Member who moved the proposed new Clause explained that notwithstanding that the person concerned was out of work, he has to contribute a substantial sum, and that this operates in a large number of cases to cause serious sacrifices of his own income in order that he might live with his relatives; or else it forces him to leave what he regards as his home and to live somewhere else. On the northeast coast, where family sentiment is strong, we regard anything that tends to break up homes as definitely bad. This proposal is a thoroughly just one and it has the great merit that it would cost the Exchequer very little. I hope the right hon. Gentleman can meet it.

9.42 p.m.

Mr. James Griffiths

The case has been so well put from all sides of the House that I would not detain the House for a moment were it not that a concrete case has recently been brought to my notice bringing out very clearly the kind of imposition which is put on the young people of this country. I will content myself very largely with reading the bare facts of this case, as sent to me by a constituent. It is the case of a young miner of 25 years of age, skilled, and working in a rather dangerous anthracite colliery. I know what will happen to him in the next 10 years. I know what will be his fate, and the fate of a large number of young men employed in these collieries. One of these days he will get silicosis and he will then go on until the end comes.

He is getting very good wages. In the year which ended in the end of October, 1937, he earned £115 I2S. As a result, he received a demand for Income Tax of £2 17S. 6d. He lives at home with his father, mother, brothers and sister. That is a family. His father is unemployed and has had a nil determination. I hope hon. Members on the other side fully realise what is meant by that phrase. The father has been to the Employment Exchange and has received a paper stating that he has a nil determination, which means that although he is unemployed and the State cannot find him work, his value to this great British Empire is nil. There is another brother who is unemployed and whose determination is also nil. He receives no unemployment allowance. There are two other brothers, one of whom is working and whose income is below the Income Tax level. Therefore, he does not come into it. There is a sister who has been and still is under medical observation because they suspect that she has T.B. The son's wages are used to give his unemployed father and brother a nil determination. This young man of 25, a skilled miner, in the fullness of his strength, stays at home because he has a high sense of family responsibility, and wishes to help his father and brother and his sister who is ill; and for that he suffers a double taxation. The State taxes him to maintain his father and his brother—because that is what the means test amounts to, and it is a tax infinitely more bitter than any that the Surtax payer has to pay. He has to keep his father and brother, because the State, under the Unemployment Assistance Act and the regulations which have been passed by this House, says that that is his responsibility; and then, at the end of the six months, he gets this paper. It is adding insult to injury. He says: I paid up in the end under threat of court proceedings. That is the story, and I leave it there. In most industrial areas this is becoming the greatest social problem of our age. Young men have every inducement to leave home, and no inducement to stay at home. In view of all the dangers that beset us, let me utter this word of warning to hon. Members in all parts of the House. If this is the way you treat your young men now, you may call upon them in vain one of these days. The Chancellor could very well make such a concession in his £1,000,000,000 Budget. Unless this small measure of elementary justice is done, I shall be ashamed of this House and of this country.

9.48 p.m.

Mr. Croom-Johnson

I do not think it is a bad thing that somebody should rise from the party which I represent in the House in order to say a word or two about this proposed new Clause. I do so the more readily because, unlike most—indeed, all—of those who have already spoken upon it, I do not represent a great industrial constituency, though in the rural areas we have our problems, and we have patches, sometimes not inconsiderable patches, of industrial population to whom these things matter extremely. A feeling is perhaps occasionally expressed that it is very easy for Members to ask my right hon. Friend the Chancellor to make concessions when the concessions are likely to be particularly advantageous to the constituencies which they happen to represent, but that will not be the case as regards my own part of the country. We have our cases, but they are nothing like as numerous, and probably nothing like as serious, as some of those which have been so movingly referred to by hon. Members opposite.

I do not profess, having to attend to the problems of my own people, to have that intimate knowledge of the conditions of the unemployed household which so many Members in other parts of the House possess, but, with every desire to be of assistance to my right hon. Friend the Chancellor, I am bound to say, after having listened to the way in which this Clause was put, and to the evidence which has been produced in regard to it, I was satisfied quite early in the Debate that a case had been made out, first of all, for investigation with regard to this matter. I have had some slight experience, in the course of my daily work, of dealing with Income Tax allowances and matters of that sort, and I think that my hon. and learned Friend the Member for East Newcastle (Sir R. Aske) was right when he reminded us that usually under the Income Tax Acts charges upon income are taken into account for the purpose of seeing what the real assessable income for Income Tax purposes ought to be. While I confess that from the technical point of view I see some difficulties in regard to the actual way in which this Clause could be worked out, that seems to me to be no reason at all for saying that the principle behind the Clause is a bad principle. It seems to me that if it is right in dealing with the national money to treat one side of the account in such-andsuch a way, it must be right, on the other side of the account, to treat money which is paid out as being a charge upon income.

Therefore, speaking from a rather different angle from those who have already spoken on the Clause, I suggest to my right hon. Friend the Chancellor that, if it is impossible, as it may be—I do not know—to let us have the Clause now, there is clearly a case for consideration, a case for examination, and a case on some of the examples that have been placed before us, for saying that both sides of the account ought to be dealt with in the same way. As far as I have been able to follow the discussion, it does not seem to me to be in consonance with our ordinary ideas of justice to say that a proportion of the single man's income should be treated as though it had been transferred of necessity into the pockets of his unemployed relatives in the household, and at the same time, from the point of view of the Income Tax Acts, to say that, when it comes to Income Tax, that money must be treated as being in the pocket of the man who earned it. The result is of course that it looks to be what lawyers call an "omitted case" from the situation under the Income Tax Acts.

I see some difficulties of administration in regard to it, because I think hon. Members have assumed all through that you are dealing with a case in which the money which has been credited, so to speak, as the income of the unemployed father has remained credited week by week throughout the year. But whatever the charge there has been throughout the year, whether it has been for the whole 52 weeks, for 26 weeks, or for 13 weeks, the principle should be the same. One other thing that makes me think the question of administration has been rather overlooked is the word "deemed" in the last line of the Clause. But we do not want so much to discuss that this afternoon from the strictly legal or technical point of view; we want to discuss it first from the human point of view, then from the point of view which is implicit in the Clause; that is, the ordinary justice of treating each thing on the same side from the same point of view, not treating the individual's earnings for one moment as being transferred by him from his pocket to that of his unemployed father, and then, when you want to raise a little more money for taxation, treating it as though it is still in his pocket and he has not got an unemployed father at all.

It is for these reasons, perhaps somewhat hastily expressed, that I hope my right hon. Friend will be able to say that he can offer some hope of putting right this particular matter, although it may be that the Clause will have to be altered or some arrangement made for putting the regulations under the Clause in such a form as to see that we do not go too far the other way. Nobody knows what it is going to cost. I think that, having regard to the human problem which is really behind this Clause, the House ought to be a little courageous. It is very easy, of course, to ask the House to be courageous, because the Chancellor has the responsibility for footing the Bill. But the House might say, "Here is something which looks like being an act of justice; we ought to take our courage in our hands and ask the Chancellor to deal with it, without being too particular about the sum that it is going to cost."

10.0 p.m.

Mr. Godfrey Nicholson

I am certain it would be easy for an able and experienced lawyer like my right hon. Friend the Chancellor to give many technical reasons why the Clause cannot be accepted. But he is renowned not only as a lawyer but for wide human sympathies, and I hope he realises the degree of bitterness that a small pinprick like this causes in industrial areas. It is a commonplace that the means test has caused great dissatisfaction. We on this side believe the means test is a necessity and we defend it, but I cannot see any way in which one can defend this form of double taxation. It seems to me that my hon. Friend the Member for Newcastle, East (Sir R. Aske) put his finger on the spot when he spoke of the obligation to support parents and other dependent relatives as a statutory charge. Technically, of course, the obligation to support parents is not a statutory charge, but it is in actual fact.

I should like to compare the cases of this sort of obligation with the case of a married man. A man has no obligation to marry, but if he does marry he is allowed a deduction from Income Tax in order to keep his wife; whereas a young single man cannot get away from his obligation to support his parents. Members who represent industrial areas realise the great harm a pinprick like this causes. I am certain that the Chancellor does not need any persuading on the human side; I am certain he does not on the financial side, because the sum involved is not great; I am certain he does not on the side of equity; but I fear he may on the legal side. I want him to understand the strong feeling on this matter that exists on this side of the House.

10.4 p.m.

Sir J. Simon

I have listened to this discussion with a great deal of attention and sympathy. From all quarters of the House speeches have been made on this subject which have raised a very strong and natural feeling of sympathy. The point was put by the hon. Member for Hemsworth (Mr. G. Griffiths) with his usual humour and force, and he was supported by hon. Members on that side; and it was put with considerable strength on this side by my hon. Friend the Member for Newcastle, East (Sir R. Aske), my hon. and learned Friend the Member for Bridgwater (Mr. Croom-Johnson) and my hon. Friend the Member for Farnham (Mr. G. Nicholson). I should like to do what they ask, but it is not nearly so easy as it looks at first sight. It is not easy to find a form of words which would be suitable, because we are on the Report stage and we cannot say that we will do it at some later stage.

First of all I would make this observation, that we are dealing here with the subject of family obligations arising through unemployment. That is the general nature of the problem. But that sort of thing is a thing that happens in many homes and not only in homes where the means test is in operation. Many a son and daughter who is finding a way of maintaining parents, and it may be on very modest means, does not come within the Unemployment Act and therefore is outside the proposal, and all of us who, I hope, try to be good sons, think it a good thing that one should strive within the limits of one's power to help the old person that needs it. But there is this to be said about the particular case that is put by the hon. Gentleman opposite. It is true, I think, as has been stated by an hon. gentleman behind me, that in a sense this is a double tax, at any rate the amount of the assumed contribution is fixed by law and regulation, which makes it perhaps not quite the same case as the case which undoubtedly arises all over the country where sons and daughters help their old people.

Another consideration to be borne in mind is that we really do something which is very analogous to this already in our Income Tax laws in another case. I do not think the hon. Member mentioned that in Section 22 of the Finance Act, 1920, we already make a provision that if the claimant proves that he maintains at his own expense a dependent relative incapacitated by old age or infirmity, provided the amount is within certain limits, relief is allowed. Therefore, we do already allow in our Income Tax code for that sort of thing. But, of course, the case dealt with by this Amendment is not the case where the provision is made by reason of old age or incapacity, but by reason of unemployment, and that is really the point that has been so forcibly made.

What I am prepared to do is a little risky, it is almost from hand to mouth putting a new Clause into the Finance Bill on the Report stage. But of course it will satisfy a number of people and therefore I am taking some risk in doing it now. If I am not using the words which, on reflection, ought to be used, I hope I shall not be blamed if I try to put it straight, but I do not like to say on a matter of this sort on the Report stage that I am very sympathetic and will think about it next year, if it is possible to do something now. There are two considerations to be adhered to. One is that what is involved here in any individual case is quite a small amount, so that I think the point that I am going to make as a safeguard will have very little practical application, if any. It is that the allowance must not exceed in any year £25. If it did it would run counter to the terms of the provision already made for the person incapacitated by old age or infirmity. But I do not think we need boggle over that.

The other provision is this, that there must not be any duplication of relief. No one is intended by this method to get relief twice over. He must not get a duplication of the concession and the existing dependent relative allowance in respect of the same person. That, I think, is the intention of all of us and it certainly is mine, and I am prepared to move the necessary form of words. I am prepared, if the House agrees, to do it now and move an Amendment provided it is clearly understood that this is purely a concession for the means test cases, and will not be urged as a ground for further concessions under which the Chancellor of the Exchequer would lose revenue all the way round. I think when we have got the Unemployment Act and the Regulations of the Unemployment Assistance Board which quantify as it were the amount which is to be deemed to be paid away for the maintenance of the dependent, whoever it may be—I think that makes a special case, and therefore I am prepared if this is in order and if the hon. Gentleman the Member for Hemsworth (Mr. G. Griffiths) will withdraw his own Clause—I am told the proper way is not to ask for that Clause to be withdrawn, but to alter the Clause as we can do, I suppose, when it has been read a Second time. The Clause will be altered after the Clause is read a Second time, on the Question, "That the Clause be added to the Bill."

Mr. Pethick-Lawrence

Would it be out of order for the right hon. Gentleman to read us his Clause in the amended form and then the technical way of including in the Bill might be left until afterwards?

Sir J. Simon

What I desire to do if it can be done within the rules of order and the House will approve is to get a new Clause on these lines: If any person proves that during any year of ssessment he has a relative living with him (a)Who in that year has been denied wholly or in part unemployment allowance under Part II of the Unemployment Act, 1934, or public assistance on the ground that the relative was being maintained wholly or in part by him and (b) in respect of whom he is entitled to no deductions for that year under Section 22 of the Finance Act, 1920. That is the deduction for old age and infirmity— he shall be entitled to a deduction from the amount of tax with which he is chargeable in that year equal to the tax at the standard rate on the amount deemed to be paid by him, such sum not to exceed £25. I believe that puts the point correctly. At any rate, the House can see my intention and if that is added to the Bill I shall be glad to give instructions for it to be applied benevolently. I think I ought to add this simple point, because I do not want to leave anything omitted from the statement now. I believe that at present, under the regulations of the Unemployment Assistance Board, where it is claimed that Income Tax paid by a wage earning member of the applicant's household should be deducted from the amount of wages taken into account, the amount so paid is allowed as a special expense just as I believe it is in the case of Health Insurance and other payments of that class. Of course this will be affected if there is no tax to be paid in respect of the amount which is agreed to have been provided by the relative. That is the proposal I make to the House and I hope that will be able to meet what is suggested.

Mr. Speaker

The right hon. Gentleman suggested that the hon. Member should withdraw this Clause, but it will not be in order to withdraw the Clause and produce another without having given notice of a new Clause. I suggest to the right hon. Gentleman that he move his Amendment in the following form, that is to say, after the Clause has been read a Second time, to withdraw all the words after "person," in order to insert the alternative words. That is the proper way, and should be the form of the Amendment rather than withdraw the Clause and bring in another one.

10.16 p.m.

Mr. Pethick-Lawrence

I am quite sure that the whole House on every side is much indebted to the Chancellor of the Exchequer, not only for his courtesy in making a concession but in making it in rather difficult circumstances and in so short a time. Without in the slightest degree wishing to query, or quibble about, any point, I think that we are all agreed about the substance of what we want to do. I want to be quite clear that what the Chancellor of the Exchequer proposes will conform with the intentions of all of us. The Chancellor of the Exchequer in the Amendment which he is proposing to substitute for the Clause presently before us says: any person… who has a relative living with him, and that the maximum amount is to be £25. I understand that if any one relative is supported in this way the amount will be taken as £25 of income.

Sir J. Simon

Not more than £25.

Mr. Pethick-Lawrence

Not more than £25, but I am not quite sure whether that includes cases where a person supports two such relatives. I take it that it will mean £25 on account of each relative. I was not sure from the wording whether the maximum of £25 is to apply to each relative. I am sure that the Chancellor of the Exchequer intends that but I am not sure that it would have that effect.

Sir J. Simon

I think it is very natural that that question should be raised. I have only been able to read the words and I apologise to you, Mr. Speaker, that you have not been provided with a copy.

10.19 p.m.

Sir J. Simon

I beg to move, in line I, to leave out from the word "person," to the end of the proposed Clause, and to add instead thereof: proves that during any year of assessment he has a relative living with him

  1. (a) who in that year has been denied wholly or in part unemployment allowance under Part II of the Unemployment Act, 1934, or public assistance, on the ground that the relative was being maintained wholly or partly by him; and
  2. (b) in respect of whom he is entitled to no reduction for that year under Section 22 of the Finance Act, 1920,
he shall be entitled to a deduction from the amount of tax with which he is chargeable for that year equal to tax at the standard rate on the amount deemed to have been paid by him in that year towards such maintenance but not exceeding tax on twenty-five pounds. In reply to the right hon. Gentleman opposite I appreciate his points because my draft speaks of "a relative," and you may have cases, and, indeed, probably the hardest cases, where a single man at work may be maintaining not "a relative" but more than one. The answer is that, in construing Acts of Parliament, the singular may include the plural. If there be two relatives they will be included. The limit of £25 is, of course, a maximum for each. I do not feel any doubt about that myself.

Sir Irving Albery

I understood my right hon. Friend to say, "living with him," and I want to know whether that also meets the case of a man living with his parents? Does it cover in both ways?

Sir J. Simon

Of course, this only arises where, as the hon. Gentleman opposite said, a home is maintained. It is a very unfortunate thing if the home is broken up because that is the way of

avoiding the son's liability. It is better to keep the home together.

10.22 p.m.

Mr. G. Griffiths

I should like to thank the Chancellor of the Exchequer. I was satisfied that when the case was put and the Chancellor of the Exchequer had heard it, he would be prepared to give us a remedy. I want to thank him for what he has done.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.