HC Deb 01 July 1948 vol 452 cc2442-68

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Hannan.]

7.1 p.m.

Sir David Robertson (Streatham)

On, 8th June, 1948, I asked the Chancellor of the Exchequer: The number of claims made and outstanding for under-payment of Income Tax by the Inland Revenue Department against ex-Service men in respect of their wives' earnings in industry during the war, and the total amount of taxation arrears involved. The Chancellor of the Exchequer replied: I regret that this information is not available. I should, however, say that in such cases the Inland Revenue do not ask for immediate payment of the arrear. They arrange as a rule for its collection by increased P.A.Y.E. deductions spread over a later year or years. I asked the Chancellor if the information would be available if I put down a Question the following week. The Chancellor replied: No, Sir. It would be much too expensive to collect all this information, and it would disrupt the very important and useful work now being done in the collection of taxes I asked a second supplementary question: Are not these claims entirely due to the negligence of Service Departments and of the Inland Revenue, and is it not most unfair to burden these men who have difficulty in meeting their current liabilities? The Chancellor of the Exchequer replied: No, Sir, it is certainly not due to negligence either by the Inland Revenue or the Service Departments."—[OFFICIAL REPORT, 8th June, 1948; Vol. 451, C. 1875–6.] The Chancellor's replies revealed three matters of considerable importance. The first is that information which is rightly the due of this House is refused to it. The second is that P.A.Y.E. is being used to compel employers to deduct tax on war Service earnings from current civilian earnings. The third is his denial of negligence by the Service Departments and the Inland Revenue Department.

On Monday I wrote to the Chancellor informing him that I intended to ask the following questions tonight, because I am anxious to give him another chance to deal with this very important matter. The first question is: The total number of claims for arrears of Income Tax on joint incomes made against ex-Service men? The second question is: The estimated number of similar claims which remain to be made? I have deliberately omitted asking in these two questions for the amount of money involved, so that it will make it easier for the Claims Department to give an answer. The third question is: Are these claims made against ex-Service men irrespective of the rank they held? I expect answers to those questions from the Financial Secretary tonight. They are important, and they affect all hon. Members. They affect every constituency in Great Britain, because there must be very many men and women who are affected by this pursuit of them for ancient arrears.

The case which prompted my Question is that of a constituent of mine who was mobilised as a private soldier in the Territorial Army on the outbreak of war in 1939 and went through the various stages—corporal, sergeant, officer cadet, second lieutenant, and so on—and served at home at various stations and overseas for the invasion of Normandy, right through to the Rhine and Berlin, and was released in May, 1946. In 1942 he married—I imagine when he became commissioned—and in every year of his commissioned service he filled in the appropriate form showing his income and recording the fact that he was married and giving the name of his wife's employer. She was employed by the Ministry of War Transport, and she continued in that employment.

Every year the tax assessor at the War Office, who, I presume, is a representative of the Inland Revenue Department, deducted, or instructed the Army agents to deduct, from the soldier's pay the proper amount of tax which he was due to pay. In the form which the soldier filled in there was a reference to the amount of his wife's earnings. Of course, the soldier was not able to say what these were. His wife had a basic salary which was subject to increase and also subject to war bonuses and to overtime, and he honestly stated that he did not know what it was. He gave the name and address of his wife's employers—the Ministry of War Transport, Berkeley Square The wife paid her Income Tax. The tax assessor in that Department, who, I presume, was a representative of the Inland Revenue Department, fixed the amount of tax to be deducted from her pay. These were two citizens rendering the highest service in their power to the State, and they paid the amount of tax which they believed to be their due each year as it became due, and both of them were under the control of the Government.

When the husband was released in May, 1946, his wife immediately left the service of the Ministry of Transport. They set up home in my constituency where they had lived before war broke out, and, like good citizens, they are raising a family. Already they have one child, and I hope they will have many more. In March of this year my constituent received a demand for £88, being arrears of tax from the year 1943 in respect of their joint income as husband and wife, which for the first time was being amalgamated. To a little man of modest means—an income of probably £300 or £400 a year; I do not exactly know how much—£88 is a burden which must be intolerable in these days. All of us find it difficult enough to meet the savage taxation we have to pay and the high cost of living. I well recollect that at the end of the 1914–18 war I was in a very similar situation to this. I was a young soldier and I had two children and I had to come back and start life afresh. It was not easy.

The second case which has come to my notice is again of a fellow who went through the ranks and rose to commissioned rank. He is a single man. One day his employers came to him, over two years after he had been demobilised—he was also a 1939 soldier who went through to the end—and they told him they had received a communication from the Inland Revenue Department to code him at the lowest P.A.Y.E. code, which meant that he had to pay the highest rate of tax at 9s. in the £ and had no allowances at all. That was the first intimation this man had.

P.A.Y.E. was brought in to avoid the burden of only one year's arrears on the people of this country—not five years or seven years as in the case of these soldiers—and to ensure that the Revenue did not suffer loss, but it is now being used as a debt collecting instrument to hound and harass these ex-Service men and their wives in this fashion. I say that that is quite illegal, and, if necessary, I shall do all I can to have this tested in the courts unless the Government take the action which I believe they will take as a result of this Debate.

What are the actual facts so far as the Inland Revenue is concerned? I have a great regard for that Department of State, as I am sure we all have. I am the son of a civil servant, and in no circumstances would I throw stones at civil servants, because we all owe them a tremendous amount. They are hard-working men of character who, in the old days, did not get very much pay, and they are magnificent citizens, but they were burdened with an impossible job in attempting to assess the incomes of men and women in the Services on top of all their other burdens. With men situated all over the world, in the Eighth Army, Burma, in the Normandy invasion, it must have been extremely difficult for accurate returns to be made. But to come along now, two or three years after the end of the war, as is happening, and to raise claims going back five years, and to use P.A.Y.E. as an instrument of collection, savours of the worst that a usurer could do, and much worse than the law permits a usurer to do.

There is another important aspect which I must not omit from my brief remarks. I estimate that there were not fewer than 1,500,000 wives of ex-Service men in employment during the war. I have every reason to believe that that figure is accurate. The combined earnings of husband and wife would bring the majority of the men, irrespective of rank, within the clutches of the Claims Department. The disparity that used to exist between the income of the officer and of the other ranks is not nearly so much as it was. I anticipate that other ranks are being completely ignored in creating these claims for five, six, and seven years' arrears against the contributions. I hope they have been ignored. I have not the slightest objection to their being forgotten provided exactly the same policy is being followed for all ranks. In view of the small disparity in pay, and in view of the fact that an overwhelming proportion of the officers in the recent war were men who came up from the ranks, surely it would be wrong if the Government were simply putting a fence round a majority of the men and saying that these officers, these ex-corporals and ex-privates, and their working wives have to be subjected to this infernal persecution—because that is what it amounts to, to come along five, six and seven years after the tax should have been assessed and paid.

The fact that the wife I referred to was a Government servant does not make this case any better than the majority, because all the working wives were subject to P.A.Y.E. from some date onwards, also the husband—the soldier, sailor or airman—was under the control of the Government and was paid by the Government. The wife's income, whatever she did, was subject to control by the Government, and when the Chancellor said in reply to me that there was no negligence on the part of the Service Departments or of the Inland Revenue, and I am able to give the House an example which I am certain is one of thousands, it is ludicrous to say that there was no negligence. There was a complete breakdown, and I say that these claims should be written off as a war loss, because that is what they are. If the other ranks are not being taxed, then the ignoring of them is treating them as equivalent to a war debt. I say to the Government, let them rise to this. If they hesitate because some of the victims have paid, and I know they have, the difficulty can be overcome by repaying them.

The Government have a chance to act generously towards the men and women who deserve the best treatment we can give them. If they do so, the Government will be applauded not only by all hon. Members in this House but by all the people outside this House who, I am perfectly certain, are heartily behind the appeal I am making now, and which I know other hon. Members support. If, however, the Government fail to do that, they will be condemned by all decent citizens.

7.15 p.m.

Mr. Granville Sharp (Spen Valley)

I am grateful to the hon. Member for Streatham (Sir D. Robertson) for raising this matter tonight, because I am sure that most Members of Parliament have had complaints from their constituents of the way in which they have been treated in this matter. I will only mention one case.

A young man was demobilised from the R.A.F. in June, 1946, after five years' service. At that time he was a single man. So far as he knew—and he had taken steps to ascertain that this was done—Income Tax deductions had been made from his pay while he was in the R.A.F. He was demobilised. He had been a warrant officer and had been able to save a little money. He decided to get married. He set up house and, in due course, got employment, but at a lower wage than the pay which he had been getting in the R.A.F. At present he earns about £6 a week and he thought everything was cleared until December, 1947, when he got a statement from the Departmental Claims Branch, Liverpool, telling him that he had underpaid Income Tax whilst in the R.A.F. to the extent of £88, and that it was proposed to deduct this amount in the usual way through P.A.Y.E.

In view of the fact that, with other deductions, including Income Tax deductions, he was even then only normally getting about £5 10s. a week, that did not make his future prospects look very bright. It certainly did not enable him to think that he could keep up a decent standard of living, not only for himself but also for his wife and, possibly, enable him, later on, to rear a family. He wrote to the R.A.F. and asked why it was that these deductions had not been made in the proper way, and on 3rd April, 1948, he received a reply from the Air Ministry which included the following paragraph: As firm liabilities were not reported by the Chief Inspector of Taxes, Departmental Claims Branch, Liverpool, for the years 1944–47, your respective accountant officers deducted tax based on provisional liabilities only. It appeared that during the year 1944–45, whereas he should have had tax deducted to the extent of £37, only £17 was deducted, and whilst, during 1945–46 he should have paid £110, only £43 was deducted, and there was also a slight underpayment made during 1946–47. Who was to blame? The Air Ministry say it was the Department of the right hon. Gentleman. It may be; I do not know. He may say it was the fault of the Air Ministry, but they have it between them and they should decide it between them. The Service man himself was not to blame.

Of course, I cannot agree with the hon. Member for Streatham that it is illegal to come on such Service men for such tax liabilities. I think it would be correct to say that the officials of my right hon. Friend's Department would not be doing their job properly if they decided not to make such claims without some instructions from his Department. What I want him to do tonight is to say that he will issue instructions to all his officers, who have power to deal with such cases, telling them "Be generous in your treatment. Be willing to write them off. Never mind the effect on the Revenue because these men have served their country for a long number of years. We"—that is, the right hon. Gentleman's Department or those who were in charge before him—"have been at fault for not seeing to it that those demands were made at the proper time when the amount could have been paid." These amounts which are now being asked for from such ex-Service men cannot be paid without severe hardship. I ask my right hon. Friend to say tonight that he will consider very favourably the claims for these payments to be discharged.

7.21 p.m.

Mr. Blackburn (Birmingham, King's Norton)

I would like to appeal to my right hon. Friend, who is himself an ex-Service man, to consider what has been said tonight. If I might perhaps introduce a note of levity I would say that, in my view, with the sole exception of the Senior Counsel to the Commissioners of Inland Revenue, the greatest authority on the subject of Income Tax in this country is Mr. Nathaniel Gubbins. I believe there is more sense in what Mr. Nathaniel Gubbins writes on Sundays about Income Tax than in many learned tomes on the subject. However that may be in relation to the broad run of our Income Tax affairs, the case of the ex-Service man is entirely different.

There is a very strong—indeed, an overwhelming—case for the view that the rate of Income Tax today is far too high in relation to the ordinary individual who is earning his living. But we are dealing with a different case, an even more overwhelming case, that of the ex-Service man, and, in particular, the ex-Service man whose income has been aggregated with that of his wife because she has responded to the appeals of the Government in time of war to be patriotic and to give her own effort to the community.

I want to go still further and to say that we are dealing with ex-Service men who, on the whole, would have been making more money in all probability if war had not occurred. I remember what was once said by my hon. Friend the junior Member for Oldham (Mr. Hale) What happened with him occurred in my case also. He, a solicitor, joined up when the war began and was paid, as I was paid, 3s. per week. That was what I received as a private soldier for the first four months of the war. The son of an hon. Gentleman opposite was with me at the time. I think he received a little more because he was not married. Before joining up we had been receiving a very substantial sum. I hope my right hon. Friend will bear with me in this argument, which I believe to be relevant. On the whole, those who joined up when war began suffered an enormous financial loss as a result of doing so. That financial loss was never recouped. I agree that at the end of the war Army pay was reasonably generous, having regard to all the allowances, but those people were never recouped for their original loss in joining up. That is a factor which my right hon. Friend, who himself suffered in the same way, ought to bear in mind in relation to this problem.

I want to turn now to a slightly different subject, which I know the hon. Member for Streatham (Sir D. Robertson) has in mind. With deserters we have already indicated that if they come forward we are prepared to be generous to them. A large number of the Members of this House—over Zoo already—believe that all deserters ought now to be pardoned. Can it be seriously suggested that we ought not to be generous with Income Tax to those who consistently fought for us during the war while, on the other hand, we are going to be generous in relation to the penalty on those who forbore from fighting when they were members of the Armed Forces of the Crown?

I put to my right hon. Friend with great sincerity my opinion that the best thing he can do tonight is to say that he will reconsider this matter. I do not think any hon. Gentleman on either Front Bench is more sincerely regarded than he is and, if he says he will re-examine this matter, I am sure that his decision will carry great conviction. This is an overwhelming case. We are thinking here of men and women who are comparatively young. The hon. Member for Streatham raised the case of the man with, I think, one child—and we hope that he will have more. He must have if this country is to carry on. Surely we can be generous to somebody of that kind who has tried to give all for the benefit of the country. That is the characteristic of a great form of civilisation—that it is capable of being generous in emergency cases of this kind. I do not want to burden the House by any further observations except to say that on many occasions—and, I believe, on this one—magnanimity is the truest sign of genius. I hope that my right hon. Friend will show it tonight.

7.27 p.m.

The Financial Secretary to the Treasury (Mr. Glenvil Hall)

May I first of all answer the three questions put to me by the hon. Member for Streatham (Sir D. Robertson)? I think they are much the same as the questions he put to my right hon. and learned Friend some days ago. I am afraid the answers must be the same as those then given by my right hon. and learned Friend. The information which the hon. Member seeks in answer to his first two questions is not available. It would be very difficult to obtain it. It would mean a long search in every tax office and, even then, we do not think we should be absolutely certain that we had arrived at the full and accurate figure. We keep no record of cases in which ex-Service men owe tax, whether or not it is attributable to the earnings of their wives from going out to work during the war.

Sir D. Robertson

Is not the claims department of the Inland Revenue at Llandudno the Department from which all these claims emanate?

Mr. Glenvil Hall

No. We are rather used to thinking of Llandudno as the centre. That is because we happen to be Members of Parliament and the Departmental Claims Branch has been functioning from there. It will, however, shortly be moved; part of it has already gone to Cardiff.

On the hon. Member's last question, whether these claims are made against ex-Service men irrespective of the rank they held, the answer is, "Yes, most certainly." The rank is immaterial. It is the liability of the ex-Service man, not his rank, which is taken into consideration. We have never assumed that, because a man is of a certain rank, we should take no notice of him, or that, because another man is perhaps of a higher rank, we should harry and harass him—which was the phrase used by the hon. Gentleman.

The trouble really arises from the fact that Income Tax has to be based on total emoluments for the year and that, until the year is over, it is impossible to know the total of an individual's income and that of his wife. If it is below a certain level, a graduated rate of tax is charged upon it. Moreover, the allowances to which an individual will be entitled are often not known for certain until the end of the year—for example, the earned income allowance, within certain limits, is based on the total emoluments he receives. With a very large number of people, whose salaries or wages are fixed, it may be known, for example, that they will have no children during the year to complicate the calculation; but, apart from those cases, of which unfortunately there are few, it is impossible to say definitely and beyond any doubt until the year is up what the assessment of any individual will be.

That has been at the root of the trouble with which we are dealing. As my hon. Friend the Member for King's Norton (Mr. Blackburn) said, a large number of men went into the Forces and suffered a grievous loss in income. Unfortunately we cannot take that into account when considering what should be done in cases of the type which have been put forward with such force and sympathy this evening. We have to use a different yardstick. We have to anchor ourselves first to the law and then temper the law with as much common sense and sympathy as is open to us. We must remember that it is not only ex-Service men, but everyone, who is up against the simple fact that, when tax is being deducted, it is provisional until the year ends and an accurate assessment can be made. Only then can one see whether a person still owes a certain amount or whether, as sometimes happens, he or she has overpaid and a refund is due. We discussed this matter on the Finance Bill. In all cases where arrears are due to a person who has overpaid, they are paid; but the House recently agreed to a Clause in the Finance Bill under which an individual who has underpaid under P.A.Y.E.—which is a fairly accurate but not entirely accurate system of deduction—may be absolved from paying the small arrears due. In that sense we are doing what the hon. Member for Streatham wishes us to do. From information that comes to me, I am happy to think that the number of cases is not so great as he would have us believe.

In regard to Forces pay, the procedure followed was that the allowances which would be due jointly to a man and his wife were taken from the Service pay, that is they were set off against it. The great majority of married other ranks, apart from sergeants and warrant officers, found that there was no Income Tax due from them. But difficulties arose where the wife went to work. Sometimes it was very difficult to know within an appreciable time whether the wife had, or had not, gone to work. Of course, the husband knew, but the Inland Revenue and the Service Departments very often did not, and only later did the facts come to light. Then the Service Departments and the Inland Revenue Department realised that the wife had been to work and that the allowances which were being made and the tax which was being charged was not enough, and arrears piled up. That happened in a large number of cases.

Lieut.-Colonel Lipton (Brixton)

How many years afterwards was it discovered? What was the length of the time lag?

Mr. Glenvil Hall

The period varied. The difficulty during the war was one which we have had in other directions. Thousands of men went into the Forces, some were single men who, during their career in the Forces, got married; others were already married and, when they joined up, the wife did not go to work, but did so later. There were all sorts of permutations. The Services had to contend with all the changes and then the Inland Revenue Department had to catch up on all the changes. That happened not in one or two instances, but in thousands of cases. At that time, as now, the Inland Revenue Department was extremely under-staffed. Every change took time to reach the stage at which the man or his wife had the proper deductions made from pay. As a result, arrears were built up. I do not think anyone is to blame for it. It may be that, here and there, a mistake was made in a tax office and that something was allowed to go through which should not have gone through; then it had to be rectified. There is always the human factor and the chance of error. In the vast majority of cases, arrears are due to nothing more than the fact that there was a vast number of people to deal with, that changes were occurring continually and that, because of the shortage of staff, certain individuals got behind in payments. Inevitably there was delay

So far as I know, there are no cases where claims going back for seven years are now being made. As a matter of fact, under the law, unless there has been fraud—when one can pursue an individual in respect of something a long way back—I do not think a claim can be made for more than six years back. My information is that, in the majority of cases, the claims do not go back anything like so far as has been suggested.

Mr. Blackburn

I am speaking without reference to authority, but while I think it may be true that one cannot claim after six years has elapsed, I think that deductions can be made after six years have elapsed. It would be a very important statement if the Financial Secretary were to say tonight that there is no intention from now on of deducting under P.A.Y.E. for any Income Tax claim which arose six years after the time it should have been deducted.

Mr. Glenvil Hall

My information is that one cannot go back more than six years.

Mr. Blackburn

But one can deduct?

Mr. Glenvil Hall

My information is that that includes deduction. It would be mere playing with words on my part to make a statement that we could not do so and then to ride off knowing full well that we could deduct. When I used the phrase, I used it in the full sense, and it is my information that six years is the limit and that, for claims arising after that, one can neither deduct nor claim repayment of tax unless there has been fraud on the part of the individual concerned. Then, I believe, there is no time limit for the claims.

Part of the trouble has arisen owing to the introduction of P.A.Y.E., which did not apply to Service pay until 1947–48. If it had been introduced earlier, some of these difficulties would not have arisen. It was not applied to the Services during the war for obvious reasons, but it has now been applied. That being so, it is possible that some of these men who were grossly in arrears are finding, in the clearing up which is now going on, that they owe what to them are considerable sums. In the case which he brought to our notice, the hon. Member for Streatham said that the individual concerned owed £88. That is not my information. My information is that the amount owing is £54 but I will not quarrel with the hon. Member about the amount.

Sir D. Roberston

I can assure the right hon. Gentleman that the figure I gave is correct, and that £88 is the sum claimed by the Inland Revenue for 1943 onwards. The Government have appropriated this man's post-war gratuity against the claim but the amount of the claim was the figure I gave. There were no inaccuracies in my speech.

Mr. Glenvil Hall

Of course I accept what the hon. Member says, but I have here a note of the case. The Inland Revenue gave it to me on the assumption that the hon. Member would raise this case, as indeed he has done.

Sir D. Robertson

I sent the right hon. Gentleman the papers before I raised the question.

Mr. Glenvil Hall

I accept what the hon. Gentleman says, but the figure I have here is £54. I think that what the hon. Member says is true, and that the Inland Revenue has taken over the postwar credit for 1945–46 which, as the House knows, they are doing in certain selected cases in order to help the individuals concerned. Whether they should do that or not is another matter upon which I believe the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) holds strong views.

In the case of individuals who should have paid tax just after or when it was due, and who find that the amount has piled up and that it is now very large, the Inland Revenue has tried to temper the wind to the shorn lamb by taking in part payment any post-war credit due for 1945–46. I wish to tell the hon. Member and the House that, whether the amount in this case is £54 or £88, only a few pounds of the amount will be taken this year. By that I mean a few pounds, I do not mean £10 or £20. In all the cases that have been brought to my notice, the Inland Revenue have spread the payments over a very long period indeed. They cannot go down the years indefinitely, because no one knows whether, among some of these individuals, we might find a Nuffield or someone else who will presently make considerable sums—

Mr. Blackburn

May I ask my right hon. Friend a question which I have raised privately with him before in relation to a much larger sum of tens of thousands of pounds. Has anyone got discretion in these cases to relieve the person concerned from the obligation to pay? As I understood my right hon. Friend previously, he has no discretion of this matter, that the Commissioners of Inland Revenue is the only authority and that it has an absolute duty to exact the sum. Is that the case or has my right hon. Friend discretion in this matter to see that these people are excused payment if he feels that they should be? I hope that he has and if he has I hope that he will exercise that discretion.

Mr. Glenvil Hall

Legally the amount that is due should be paid, but the Inland Revenue has the authority to temper payment to the circumstances of the individual concerned. For example, as sometimes happens, an ex-Service man may die and his widow may find that the arrears of tax which he would have had to pay had he lived are due from the estate, that she will have to find the money, and that she cannot do so. Cases of that kind which go to the Inland Revenue are treated with the utmost sympathy.

Sometimes, when it is obvious that the money cannot be recovered, the outstanding sum is written off. But, where individuals such as ex-officers—who appear to be the people whom most hon. Members have most in mind—come back into civil life and it is obvious that they have received more income than they have been charged for, they should, like every other citizen, pay their tax due under the law. In such cases, the Inland Revenue quite definitely do not wipe out the amount owing and it would be wrong of them to do so. They do, however, take into account the circumstances at the moment of the individual concerned, and they see to it that the extra imposition upon him in order to clear off the arrears is not such as will cripple him financially and reduce his income below a certain level.

In the case which the hon. Member has mentioned tonight, although the man still owes £54, I can assure the hon. Member that, unless his circumstances change very much for the better, it will take him many years to pay off the arrears. During this year, as I have said, the amount asked of him will be only a few pounds.

Sir D. Robertson

I very much doubt whether the important point which was raised by the hon. Member for King's Norton (Mr. Blackburn) has been replied to adequately. As I know the law on this matter, Section 28 of the Income Tax Act, 1918, gives the Inland Revenue power to go back for six years if they themselves decide to do so. There is no compulsion on the Board of Inland Revenue to go back for six years or any shorter time. The House must realise that these claims are being deliberately embarked upon in large numbers. It is not good enough for the right hon. Gentleman to say to me that the figure I have in mind is all wrong. I have never stated any figure, nor has he. That I suggest is the material factor, and it will not do for the right hon. Gentleman to try to lead this House into the belief that the Inland Revenue or its Government masters are treating this matter—

Mr. Speaker

That is a speech not a question, and the hon. Gentleman has already made one speech.

Sir D. Robertson

Then, Mr. Speaker, at a later stage, by your leave and by leave of the House, I will ask leave to speak again. So many inaccuracies have been made in the right hon. Gentleman's speech that this matter cannot stand where it now is.

Mr. Glenvil Hall

I am sorry if the hon. Member thinks that I am trying to mislead the House. That is the last thing I desire to do. I could, of course, retort that the hon. Member's speech was full of the grossest inaccuracies, but I will not do that.

Sir D. Robertson

The right hon. Gentleman cannot do it.

Mr. Glenvil Hall

To be frank, I do not want to try. We are all trying to do justice, if we can, to ex-Service men who through no fault of their own find themselves heavily in arrears with Income Tax payments. I wish to deal with that in the most sympathetic way open to me. The facts are that these claims exist. They are not, I think, so numerous as the hon. Member would lead this House to believe; but, even if they are, the principle is just the same. It is obvious that, to some of these people, a tax arrear is an onerous burden. I assure the House that the Inland Revenue does try to spread the burden over as long a period as possible. What I cannot do is to say to the House that the Inland Revenue will wipe the slate clean in all these cases.

Mr. Blackburn

Has the Inland Revenue power to wipe the slate clean?

Mr. Glenvil Hall

I think not. That would be straining too much the powers it has. What it can do, and what I have indicated that it does do, is to wipe the slate clean in certain cases which should be treated as special cases. But it has no right to, and could not under the law, wipe the slate clean of all the arrears that may be outstanding from all ex-Service men, whoever they may be.

Mr. Speaker

To wipe the slate clean would involve legislation and is therefore out of order on the adjournment.

Mr. Blackburn

On a point of Order. I was not trying to raise any point affecting legislation. I was merely trying to suggest that in certain circumstances the Crown might exercise its prerogative, which does not affect legislation, and might not accept payment. I was anxious to avoid raising any matter affecting legislation.

Mr. Speaker

I was not reflecting on anything the hon. Member raised. I merely thought that it might be for the convenience of the House to remind them that "wiping the slate clean" generally would mean legislation, and was therefore out of Order.

Mr. Glenvil Hall

I do not think that there is any more I can say. Even if I wind up with this final statement, I shall, I am afraid, repeat what I have already indicated to the House. The Inland Revenue and my right hon. and learned Friend do desire to treat these cases with the utmost sympathy. It is, however, impossible for my right hon. and learned Friend not to ask through the Inland Revenue for payment where it is felt that that payment is not such as to be unfair to the individual concerned. Where cases are brought to the attention of local inspectors of taxes, or to that of the collector, the staff are empowered to treat them with the utmost sympathy. Where payment is asked for, it is, in some cases, spread over an extremely long period.

Sir D. Robertson

How long?

Mr. Glenvil Hall

It depends on the case. Where it is quite obvious that payment will never be made, and here I am repeating myself as I am afraid I must, where it is quite obvious that it is impossible to pursue the claim, then the claim is dropped. But where it is felt that the circumstances of the individual, either now or presently, may improve, the claim is kept alive in the expectation that presently that individual will pay what all of us have to pay, that is, our proper taxes under the law. We dislike it, but nevertheless we have to do it. Therefore, I am sorry, but I cannot give the full promise which the hon. Gentleman opposite obviously wants. I feel that we have done our best in difficult circumstances.

Mr. Blackburn

May I ask one question of my right hon. Friend? I think it wilt clarify the position. Is he prepared himself to consider any case which is submitted to him by an hon. Member of this House so that that case may then be sent to the Commissioners of Inland Revenue with some kind of recommendation?

Mr. Glenvil Hall

Yes, I can say, and I think most hon. Members are aware of it, that cases do come to me almost daily. I go through them very carefully. I consult the tax office concerned and, once I have the facts, I go through them with the utmost sympathy. We do spread the amount due over a very long period; sometimes, where it seems the best course, the claim is completely wiped out.

Mr. Swingler (Stafford)

Arising from the question put by the hon. Member for Streatham (Sir D. Robertson) may I ask this question? Could my right hon. Friend say quite definitely if it is a fact that the Commissioners are absolutely bound to press these claims for arrears, unless there are exceptional circumstances, or is it a fact that the Commissioners have the legal entitlement to forget about these claims? I am still not clear whether the Commissioners could disregard these arrears according to the powers given to them.

Mr. Glenvil Hall

No, they ought to be reported. Hon. Members who follow the accounts printed yearly and the deliberations of the Public Accounts Committee will see that, where claims are dropped, either for bankruptcy or because the person has died or some other reason—and there are a variety of reasons why claims are not pursued—these matters have to be reported to the House, and agreed to by the House as part of its normal financial procedure year by year.

7.55 p.m.

Lieut.-Commander Gurney Braithwaite (Holderness)

I am glad, as I think other hon. Members will be, that this evening we have reached the Adjournment at an hour which enables us to have a rather fuller discussion than is customary. The House should be grateful to the hon. Member for Streatham (Sir D. Robertson) for having raised this important topic and to the Financial Secretary for the helpful tone in which he has replied to the points put to him. This is an entirely non-party matter. It is a question of administration or, as the Financial Secretary has made clear, of the lack of it. The trouble is in the machinery for the collection of taxes.

The cases I was going to submit to the right hon Gentleman outrun in terms of longevity those raised by the hon. Member for Streatham and the hon. Member for Spen Valley (Mr. Sharp). There were cases for 1939–40 and 1940–41 where there were no such complications as marriage, or the birth of children, or the wife going out to work, but where a man, demobilised in 1945, received, in December, 1946, claims for those two financial years, 1939–40 and 1940–41 amounting to £85. It is remarkable how the amounts are similar. I was going to ask the right hon. Gentleman whether, what I believe is legally described in civil liabilities as the Statute of Limitations operated in these cases. From what he has said, I understand it does. These claims must therefore fall and so there is one question satisfactorily disposed of.

Mr. Glenvil Hall

I do not know the details of the cases referred to by the hon. and gallant Member but he knows as well as I do, and if he does not the hon. Member for King's Norton (Mr. Blackburn) who is a lawyer, will inform him, that it is possible to keep claims alive by making application. It is possible that some application was made in an intermediate year, which means that the period of six years under the Statute of Limitations has not yet run out.

Lieut.-Commander Braithwaite

That may or may not be so, but no application was made to the individual. What passed between the Treasury and the Naval Paymaster—for these are naval cases—I do not know, but the first the individual knew of it was in the month of December, 1946. As the right hon. Gentleman knows I put some questions to him on this matter, and I followed them up with a question to the Parliamentary Secretary to the Admiralty, where it seemed to me that the fault might lie, and that there might have been delay in the making up of the man's liabilities by the Naval Paymaster. The Financial Secretary will have noticed that the reply which I received last week from the Admiralty was that the average delay in transferring accounts from the Navy to the Board of Inland Revenue was two months. Therefore, I think one is reasonably entitled to ask what has happened since 1939–40 and 1940–41 and since October, 1945, to cause this long delay in the claim being made from the Departmental Claims Branch, which in this case is situated at Cardiff.

The right hon. Gentleman has stated that it is due to pressure of work and shortage of staff, and so on. That the House will understand and appreciate. But the fact remains, as was stated by the hon. Member for Streatham, that it is no fault of the men concerned that this delay has taken place. Therefore, for the shorn lambs, as the Financial Secretary described them, the shearing is none the less unpleasant because it has been delayed all this time. In fact, it is a far more painful procedure than if the lamb had been less severely shorn at regular periods of time. Nor, with great respect to the right hon. Gentleman, is it any comfort to the man to be told that these payments are to be spread over a long time ahead. That is a most gloomy and dismal outlook for anybody to regard. To be told, "As a result of your war service you are £85 or £88 in arrears, but we are going to be merciful and ten years may elapse before you clear off this liability," would weigh very heavily upon my spirit.

The right hon. Gentleman included in his speech a reference to post-war credits. I do not think that the views I hold about post-war credits are unreasonable. I was in the House of Commons when Sir Kingsley Wood introduced the post-war credit system and many of us thought that it would result in a nest-egg for the Service man when he came home. It was largely on that basis that the post-war credits proposals were accepted. Even then, some of us raised the question whether the post-war credits might not be used as a set-off against Income Tax liability. Sir Kingsley Wood denied that that was his intention.

I know that one Parliament cannot bind another and that new Governments can make entirely fresh arrangements, but that would be a complete breach of the whole spirit of the post-war credits system. A man may have come home hoping to find some post-war credit available for the holiday he was hoping to have or for a little knick-knack that he wanted to buy for the house, but in fact he finds that the credit is to be set off against one of these Income Tax demands. We can ask the Government to have a sense of proportion in this matter. The Government have just writen off £58 million for what the previous Secretary of State for War called the merry game of the black market in Germany. They wrote that off in a moment, almost laughed it off, when the subject was raised in this House. Now we are told that all these miserable sums of £50 or £80, so far from being written off have to be spread over a period of years.

I appeal to the Financial Secretary, in the terms used by his hon. Friend the Member for King's Norton a few moments ago. We all know that the right hon. Gentleman was a gallant officer in the first war. We know that he had a distinguished record. We believe that he cannot approve of this system. I am sure he does not approve of it. He cannot agree with such a millstone being placed round the necks of our returned fighting men about something which is in no sense their fault. I hope that this useful little Debate on this early Adjournment, which has come so fortunately at this hour, will not only cause a more merciful attitude in the Departmental Claims Branch but will result in the right hon. Gentleman approaching his right hon. and learned Friend the Chancellor of the Exchequer once again on this matter.

The will of the House of Commons is unmistakable in this matter. If there were crowded benches tonight the view would be just the same; in fact, the right hon. Gentleman would not have had such an easy passage as he had just now. Let him convey to his right hon. and learned Friend our views. The House of Commons must assert itself over the Executive in this matter. We private Members are the rulers, after all, when we like to assert ourselves. Although the right hon. Gentleman has been sympathetic in his attitude, and we are grateful to him for that, I am quite sure that the last has not been heard on this issue.

Lieut.-Colonel Elliot (Scottish Universities)

rose—

8.4 p.m.

Lieut.-Colonel Lipton (Brixton)

I am grateful to the right hon. and gallant Gentleman (Lieut.-Colonel Elliot) for giving way. I have been trying to extract the very last possible crumb of comfort I could from the statement made by the Financial Secretary. I must confess that when what he has said is all boiled down to its essentials, he has not made a very great concession. He has said that if Members of Parliament will write to him and bring hard cases to his attention he will see that those cases are properly investigated. Those of us who have had dealings with my right hon. Friend know that he always goes to the utmost pains to deal with any cases which are brought to his notice. When he repeats that assurance tonight, he is not telling us anything new. He also pointed out that in those hard cases where the ex-Service man dies and his widow is left in difficult circumstances, the Department will not press the claim. He has said that he will make representations, or in particular cases that are brought to his notice, will give instructions to the Commissioners of Inland Revenue. The question is whether the Commissioners are bound to accept his advice or his instructions in the matter. If they insist upon collecting the tax we are no better off than we were before my right hon. Friend gave the House his assurance.

Almost all these cases affect men who have had long service in the recent war. They are almost entirely men who came into the Forces in 1939 and 1940. By virtue of their long service many of them reached a very much higher rank at the end of the war than they had at the beginning. By reason of that higher rank they frequently suffered a considerable diminution in their income when they went into civilian life, their second. They suffered their first diminution when they went into the Army in 1939 from a good job, and became privates, or were called up by reason of their Territorial Army obligations. Those considerations ought to be in the mind of my right hon. Friend when he is looking into this matter.

The concession that he has announced that he is willing to spread the liability over a number of years has been rightly described by the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) as no concession at all. It savours to me of cat-and-mouse tactics. The men are to have this threat hanging over their heads indefinitely. Rather than that they should find themselves in this unfortunate position it would be very much simpler for my right hon. Friend to make the concession for which we are asking. He would not suffer any undesirable repercussions afterwards if he did so. No one would reproach him for it subsequently. We have the assurance of the hon. and gallant Member for Holderness that it would not be thrown up against him on that side and it certainly would not be thrown up against my right hon. Friend on this side of the House. He has the opportunity to make a very useful concession. If he cannot pin himself down to anything definite tonight I hope that he will find it possible to do something about this matter in the near future.

8.8. p.m.

Lieut.-Colonel Elliot (Scottish Universities)

It is clear that the House is unwilling to leave the matter exactly where it stands. Admittedly, the Financial Secretary to the Treasury can go no further tonight than he has gone, but part of the purpose of the Debate is to urge upon the Minister, who is not the finally responsible Minister, the duty of taking up the matter again with his right hon. and learned Friend and discussing it further. It is true that from time to time, owing to the working of the machine, demands are made upon individuals which they feel are an intolerable burden and would not have been made if the machine were working with a humane discretion.

When I was a director of public relations, I had a staff officer and other officers brought up to town to broadcast on the Battle of Britain or from a submarine. They came from some active and perilous position, on active service. When the officer broadcast, the Treasury required of him all the money that he had received from the B.B.C. They said that he was paid to fight for the whole 24 hours and seven days a week and that if he did anything else, the money for it had to come to the Treasury. It took years before even the slightest concession could be made, but it was made, and without any injury to the principles of public finance. That is one example.

There is another and more bitter one. In the case of my young brother, who was killed on 28th June, 1915, at Gallipoli, my father received two messages, one of sympathy from the King on the death of his son, and the next from the Treasury saying, "Your son was paid to fight to 31st June and he has only fought to 28th June. We, therefore, demand the balance of the pay which was given him to fight until the 31st June." That kind of demand is still being made.

Mr. Blackburn

It is not as bad as that.

Lieut.-Colonel Elliot

Yes. I know a highly respected Member of this House, with whom I was discussing that particular matter on the Front Bench not more than a few minutes ago. He had an exactly similar demand made upon him.

Lieut.-Colonel Lipton

In the 1914–18 war?

Lieut.-Colonel Elliot

No, in respect of the last war. This seems rather trivial, but the bitterness engendered is beyond all reckoning. The case of my own brother I know very well. Whatever concession has been made since, that case remains as a bitter memory. Arising out of the last war, I have had a case, as hon. Members in all parts of the House have had cases, of a school teacher who is now setting up his house again. He was mobilised in 1940 and he now finds that some sums he was due to pay, I think in respect of superannuation, were not paid. They have accumulated to what for him is a relatively large figure. He is now faced with the prospect of selling up his furniture in order to meet those sums. Nor is it any real tempering of the wind to the shorn lamb, to use the somewhat stretched phrase which the Financial Secretary used, to say, "We will only confiscate your post-war credits." In fact, that is not tempering the wind to the shorn lamb: it is going over the shorn lamb with a safety razor after the shears have been pretty thoroughly run over its skin. That, of course, is only a figure of speech: one does not usually shear lambs. When it gets going, the machine will shear lambs, and indeed, it will run a razor over them until it is sure that it has got the skin absolutely clean.

The Financial Secretary said that it is the duty of the Treasury, when it is thought that the circumstances of the person, now or presently, may improve, to keep the claim alive. In civil life, in the case of relief in the form of assistance given in trade disputes, one of the bitterest resentments was that, years after, those claims were being collected. People who had received assistance of one kind or another found that claims were collected years afterwards and payment was accepted by instalments. That caused great bitterness. Relief and loan has been abolished by the will of the House on the very ground that to keep the claims alive was the sort of thing that roused resentment and bitterness in a man's heart and actually diminished his power to work. The House there, and in other instances, introduced the principle of what is called "disregard." There is a disregard of certain sums. Quite considerable disregards are now allowed in the case of assistance. They have been given by general good will.

I have been Chairman of the Public Accounts Committee. I am sure that if a set of these figures came before the Public Accounts Committee, it would not prove itself unduly harsh in its review of those sums. From the mere accounting point of view, the Financial Secretary has said that in the case of the officer mentioned—a man who first owed £84—his post-war credit was swept away and now he owes only £54. The Financial Secretary says that it will be many years before the sum is finally collected. I suggest that from the mere business point of view the book-keeping involved in those long-maintained claims is in itself a financial disadvantage.

This is one of the cases where the House may justly press the Minister to represent to his chief that uneasiness is felt here, and that this is the sort of thing which will come up again. Discretion could be given to forgive sums up to, let us say, a ceiling of £50 or £100, if there were not involved some principle that the financial authorities must needs look for a possible Nuffield, that is to say, that these men may eventually become very rich and be able to repay far larger sums. While we are waiting for one Nuffield, 50,000 ordinary people are kept on the rack. I suggest that if the principle of disregard which has been introduced into civil life could be introduced in the matter of these military debts, and others due to circumstances arising out of the war, it might easily prove a great alleviation of the burden of bookkeeping upon the staffs.

Staffs of Government Departments tend to keep things alive for a very long time. I remember a friend of mine receiving a demand for a tithe charge amounting to 1d. I sent it, I think, to the right hon. Gentleman indicating that probably the stamps on the demand would amount before very long to far more than the sum total of the tithe charge. Yet the machine keeps the thing alive. It pursues this claim. It says, "This man owes me a penny and I will extract this penny if it costs me £100 to do so." There are certain cases in which that is right. But in these cases of persons who in the desperate days of 1940 were mobilised, no doubt they received notifications of statements of one kind or another, and either disregarded them altogether or indignantly sent them back, saying that they were really too busy defending the country to be bothered with things like that, and that disposed of the matter from the men's minds and wiped it out of their minds altogether. But not so with the machine. The machine keeps the matter going and says, "Here is a man who owes us something and has done nothing about it; it is very reprehensible, and if such practices were to spread, the financial stability of the country would be endangered."

Let us hope that 1940 will not come again, or that, if it does come again, it will be met with the same heroism as it was then. Let us hope that, if it does, the State may disregard this business of meticulous accounting to the extent that a certain number of young men have run up arrears of £50 or £80 of indebtedness to the State, and that the State will "call it a day" and will pass a sponge over these figures. Let us hope that the State will say that there are certain things which are repaid in other ways than by cash, that this debt has been paid and that the best thing that the State can do about it is to recognise it as discharged and give to the person in question a receipt, saying, "Rather does the State owe this man something than that the State is owed something by this man."

Sir D. Robertson

May 1, by leave of the House—[Interruption.]

Mr. Deputy-Speaker (Major Milner)

If leave is refused, the hon. Gentleman cannot speak again. Does the House grant leave?

An Hon. Member

No.

Adjourned accordingly at Twenty Minutes past Eight o'Clock.