HC Deb 20 June 1950 vol 476 cc1183-91

Section twenty-seven of the Finance Act, 1922, is hereby repealed, and the following section shall be substituted therefor: 27. Pensions, grants, or allowances granted by the Minister of Pensions under a Royal Warrant, Order in Council or order administered by him to widows and widowers of members of the naval, military, or air forces of the Crown in respect of themselves or their children shall not be reckoned in computing the income of such widows or widowers for any of the purposes of the Income Tax Acts."—[Mr. Turton.]

Brought up, and read the First time.

8.45 p.m.

Mr. Turton (Thirsk and Malton)

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

The object of this Clause is to exempt from Income Tax the pensions and allowances granted to war widows. The present position of the law that is that any wound pension, any retired pay of disabled officers, or any disability pension, is exempted from Income Tax by Section 16 of the Finance Act, 1919. Any war gratuities are exempted from Income Tax by Section 23 of the Finance (No. 2) Act, 1945. But as far as the payments to war widows are concerned, only those allowances to them which are in respect of their children are exempted from Income Tax, by Section 27 of the Finance Act, 1922. Therefore, the only payment which is excluded from the exemption from Income Tax is any allowances which are made to a war widow.

I ask the Committee to consider whether, at the present time, that is a fair position. If a serving soldier is killed in war, any compensation in respect of his casualty must bear Income Tax. If, on the other hand, he is severely disabled, exemption from Income Tax is granted. I suggest that that is a very anomalous position, and I ask the Government and the Committee now to rectify it.

I would remind the Government that the last time this matter was debated was on 27th June, 1922, when Lord Lawson, whom we remember better as the former hon. Member for Chester-le-Street (Mr. Jack Lawson), moved this same new Clause in an earlier Parliament. It had the support of the whole of the Members of the Labour Party, together with a number of Conservative and Liberal Members who were interested in the position of war widows. In moving this Clause I carefully avoid trying to trade on sentiment. There is a great temptation to do so, but I do not want the Committee to be led away by sentiment. I am quite certain, however, that every hon. Member is anxious to see that those who suffer by losing their husbands through war should not be unequally penalised by Income Tax on compensation for their loss.

The proposed Clause would not cost a large sum and I suggest to the Government that from what they have gained through de-rationing of petrol, less what they have to pay on National Assistance and concessions to agricuture and in double taxation, there will still be left a sufficient margin to do belated justice by this Clause to war widows. If that is not so, I submit to the Committee that war widows are more deserving than any other object I have mentioned. Therefore, I hope the Government will accept the Clause.

Mr. Wigg

I think the hon. Member for Thirsk and Malton (Mr. Turton) overlooked a change in circumstances. Before the war, if a Regular soldier died the pension to his widow was paid by the Royal Hospital, Chelsea. When the war ended there was a possibility that the prewar practice would be reverted to, but a change has been made and now the pensions of all widows of men who died in wartime are paid by the Ministry of Pensions. If this Clause were adopted the situation would be that pensions to widows of soldiers killed in action would be exempted from Income Tax and those paid to widows of soldiers who died since the end of the war would be exempted. Those whose husbands died between the two wars, and who are receiving pensions from the Royal Hospital, Chelsea, would not have the pensions exempted from Income Tax. I hope that my right hon. and learned Friend will take note of that and, if he intends accepting the new Clause, that he will, before the Report stage, put down an Amendment which will bring it into line with the changed circumstances I have mentioned.

Mr. Gaitskell

Whether the particular wording of this new Clause is in order or not, I think we all understand its purpose. As the hon. Member for Thirsk and Malton (Mr. Turton) has reminded us, this subject has been discussed on a number of occasions. He is perfectly entitled to point out that the Labour Party supported it in the past, and I am entitled to point out that Conservative Governments have rejected it in the past. Indeed, a cynic might say that the only thing which remained perfectly clear on many of these financial matters is that the Opposition always asked for more and the Government always refused it.

More seriously, there is a fundamental difficulty about the proposed new Clause and that is that it provides benefits in inverse ratio to the needs of the recipients. The poor widow would receive no benefit because her income would be below the exemption limit, while the widow who is well to do will not only gain tax on the standard rate, but also Surtax as well. That would not be what the hon. Member would seek to achieve by making a change of this kind. In effect, the relief would amount to an indirect and concealed addition to the pension denied to those who need it most.

If the hon. Member will recall what amounts of pensions are paid to different widows he will understand what I mean. Those paid to widows of non-commissioned members of the Services vary from £1 to 40s. Those paid to widows of officers vary from £130 a year in the case of widows of subalterns to £700 a year in the case of widows of field marshals. If the pension is the only income, there is no Income Tax liability upon the widow of the non-commissioned member of the Services or widow of the subaltern. I am not attempting to raise the point that some get more than others. I am simply pointing out that this Clause would only benefit those who are comparatively well to do.

The other difficulty is also fundamental. Although there have been one or two exceptions—the case of the pensions of the wounded and the case of the children—we have to be very careful before we depart from the principle that liability to pay tax must depend upon the ability to pay. I cannot feel that there is real justification for differentiating in this matter between the soldier's widow and a neighbour who has the same income from another source.

Mr. Turton

Could the right hon. Gentleman tell us any other grant or allowance paid by the Ministry of Pensions which is subject to Income Tax?

Mr. Gaitskell

The hon. Member has mentioned the two cases that are not subject to Income Tax. I think there are other grants paid which are subject to Income Tax, but without going into the matter I cannot be quite sure. But my argument is surely applicable. Liability ought to depend upon ability to pay. If we wish to afford relief it is better to do it by general reductions in rates of tax and

increases in relief, as we have consistently done in the past five years; and the reductions made this year in the initial rates of Income Tax will assist the small taxpayer. We feel that that is a much better way of dealing with the problem. In the circumstances, I must advise the Committee to reject this Clause because it would really benefit the well-to-do, the people who need it least, and would not help those who might be said to need it more; and because it is clearly contrary to the general principles upon which Income Tax is levied, and to which we must adhere.

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

The Committee divided: Ayes, 257; Noes, 289.

Division No. 34.] AYES [9.0 p.m
Aitken, W. T. Darling, Sir W. Y. (Edinburgh, S.) Howard, G. R. (St. Ives)
Alport C. J. M. Davidson, Viscountess Howard, S. G. (Cambridgeshire)
Amery, J. (Preston, N.) Davies, Nigel (Epping) Hudson, Sir Austin (Lewisham, N.)
Amory, D. Heathcoat (Tiverton) de Chair, S. Hudson, W. R. A. (Hull, N.)
Arbuthnot John Deedes, W. F. Hurd, A. R.
Ashton, H (Chelmsford) Digby, S. Wingfield Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Assheton, Rt. Hon. R. (Blackburn, W.) Dodds-Parker, A. D Hylton-Foster, H. B.
Astor, Hon. M. Donner, P. W. Jeffreys, General Sir G.
Baldock, J. M. Douglas-Hamilton, Lord M Jennings, R.
Baldwin, A. E. Drayson, G. B, Johnson, Howard S. (Kemptown)
Banks, Col. C. Drewe, C Jones, A. (Hall Green)
Beamish, Maj. T. V. H. Dugdale, Maj. Sir T. (Richmond) Kaberry, D.
Bennett, Sir P. (Edgbaston) Duncan, Capt. J. A. L. Kerr, H. W. (Cambridge)
Bennett, R. F. B. (Gosport) Dunglass, Lord Kingsmill, Lt.-Col. W. H
Bennett, W. G. (Woodside) Duthie, W. S. Lambert, Hon. G
Bevins, J. R. (Liverpool, Toxteth) Eccles, D. M. Lancaster, Col. C. G
Birch, Nigel Erroll, F. J Langford-Holt, J.
Bishop, F. P Fisher, Nigel Law, Rt. Hon. R. K.
Black, C. W. Fletcher, W. (Bury) Leather, E. H. C.
Boles, Lt.-Col. D. C. (Wells) Fort, R. Legge-Bourke, Maj. E. A. H
Bossom, A. C. Foster, J. G. Lennox-Boyd, A. T
Bower, N. Fraser, Sir 1. (Lonsdale) Lindsay, Martin
Boyd-Carpenter, J. A. Fyfe, Rt. Hon. Sir D. P. M. Linstead, H. N
Braine, B. Gage, C. H. Llewellyn, D.
Braithwaite, Lt.-Comdr. J. G. Galbraith, Cmdr. T. D. (Pollok) Lloyd, Maj. Guy (Renfrew, E.)
Bromley-Davenport, Lt.-Col. W. Gammans, L. D. Lloyd, Selwyn (Wirral)
Browne, J. N. (Govan) Garner-Evans, E. H (Denbigh) Lookwood, Lt.-Col. J. C.
Buchan-Hepburn, P. G. T. Gates, Maj. E. E. Longden, G. J. M. (Herts, S. W.)
Bullus, Wing-Commander E. E. Glyn, Sir R. Low, A. R. W
Burden, Squadron-Leader F. A. Gomme-Duncan, Col. A Lucas, Major Sir J. (Portsmouth. S.)
Butcher, H. W. Gridley, Sir A. Lucas, P. B. (Brentford)
Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n) Grimston, Hon. J. (St. Albans) Lucas-Tooth, Sir H.
Carr, L. R. (Mitcham) Grimston, R. V. (Westbury) Lyttelton, Rt. Hon. O.
Carson, Hon. E. Harden, J R. E. McAdden, S. J.
Channon, H. Harris, R. R. (Heston) McCallum, Maj. D.
Clarke, Col. R. S. (East Grinstead) Harvey, Air-Codre. A. V. (Macclesfield) McCorquodale, Rt. Hon. M. S.
Clarke, Brig. T. H. (Portsmouth, W.) Harvey, I. (Harrow, E.) Macdonald, A. J. F. (Roxburgh)
Clyde, J. L. Hay, John Macdonald, Sir P. (I. of Wight)
Colegate, A. Head, Brig. A H Mackeson, Brig. H. R.
Conant, Maj. R. J. E. Heald, L. F. McKibbin, A.
Cooper, A. E. (Ilford, S.) Heath, Col. E. R. McKie, J. H. (Galloway)
Cooper-Key, E M. Henderson, John (Cathcart) Maclay, Hon J. S.
Corbett, Lieut.-Col. U. (Ludlow) Hicks-Beach, Maj. W. W Maclean, F. H. R.
Craddock, G. B. (Spelthorne) Higgs, J. M. C. MacLeod, Iain (Enfield, W.)
Cranborne, Viscount Hill, Mrs. E. (Wythenshawe) MacLeod, John (Ross and Cromarty)
Crookshank, Capt. Rt. Hon. H. F. C. Hill, Dr. C. (Luton) Macpherson, N. (Dumfries)
Cross, Rt. Mon. Sir R. Hirst, Geoffrey Maitland, Comdr. J. W
Crosthwaite-Eyre, Col. O. E. Hogg, Hon. Q. Marlowe, A. A. H.
Crouch, R. F. Hollis, M. C. Marples, A. E.
Crowder, F. P. (Ruislip-Northwood) Holmes, Sir J Stanley (Harwich) Marshall, D (Bodmin)
Crowder, Capt. John F- E. (Finchley) Hopkinson, H. L. D'A. Marshall, S. H. (Sutton)
Cundiff, F. W. Hornsby-Smith, Miss P. Maude, A. E. U. (Ealing, S.)
Cuthbert, W. N. Horsbrugh, Miss F Medlicott, Brigadier F.
Mellor, Sir J. Robertson, Sir D. (Caithness) Thompson, K. P. (Walton)
Molson, A. H. E. Robinson, J. Roland (Blackpool, S.) Thompson, R. H. M. (Croydon, W.)
Moore, Lt.-Col. Sir T. Robson-Brown, W. (Esher) Thorneycroft, G. E. P. (Monmouth)
Morrison, Maj. J. G. (Salisbury) Rodgers, J. (Sevenoaks) Thornton-Kemsley, C. N
Morrison, Rt. Hon. W. S. (Cirencester) Roper, Sir H. Tilney, John
Mott-Radclyffe, C. E. Ross, Sir R. D. (Londonderry) Touche, G. C.
Nabarro, G. Russell, R. S. Turton, R. H.
Nicholls, H. Ryder, Capt. R. E. D. Tweedsmuir, Lady
Nicholson, G. Sandys, Rt. Hon. D. Vane, W. M. F.
Nield, B. (Chester) Savory, Prof. D. L. Vaughan-Morgan, J. K.
Noble, Comdr. A. H. P Scott, Donald Vosper, D. F.
Nugent, G. R. H. Shepherd, W. S. (Cheadle) Wakefield, E. B. (Derbyshire, W.)
Nutting, Anthony Smiles, Lt.-Col. Sir W. Wakefield, Sir W. W. (St. Marylebone)
Oakshott, H. D. Smith, E. Martin (Grantham) Walker-Smith, D. C.
Odey, G. W. Smithers, Peter H. B. (Winchester) Ward, Hon. G. R. (Worcester)
Ormsby-Gore, Hon. W. D. Smithers, Sir W. (Orpington) Ward, Miss I. (Tynemouth)
Orr, Capt. L. P. S. Smyth, Brig. J. G. (Norwood) Waterhouse, Capt. C.
Orr-Ewing, Charles Ian (Hendon, N.) Snadden, W. McN. Watkinson, H.
Orr-Ewing, Ian L. (Weston-super-Mare) Spearman, A. C. M. Watt, Sir G. S. Harvie
Osborne, C. Spence, H. R. (Aberdeenshire, W.) Webbe, Sir H. (London)
Perkins, W. R. D. Spins, Sir P. (Kensington, S.) Wheatley, Major M. J. (Poole)
Peto, Brig. C. H. M Stanley, Capt. Hon. R. (N. Fylde) Williams, C. (Torquay)
Pickthorn, K. Stevens, G. P. Williams, Gerald (Tonbridge)
Pitman, I. J. Steward, W. A. (Woolwich, W.) Williams, Sir H. G. (Croydon, E.)
Powell, J. Enoch Stewart, J. Henderson (Fife, E.) Wills, G.
Prescott, Stanley Stoddart-Scott, Col. M. Wilson, Geoffrey (Truro)
Prior-Palmer, Brig. O. Storey, S. Wood, Hon. R.
Profumo, J. D. Strauss, Henry (Norwich, S.) York, C.
Raikes, H. V. Stuart, Rt. Hon. J. (Moray) Young, Sir A. S. L.
Rayner, Brig. R. Summers, G. S
Redmayne, M. Sutcliffe, H. TELLERS FOR THE AYES:
Remnant, Hon. P. Taylor, C. S. (Eastbourne) Mr. Studholme and
Renton, D. L. M. Taylor, W. J. (Bradford, N.) Mr. T. G. D. Galbraith.
Roberts, P. G. (Heeley) Teeling, William
Acland, Sir Richard Cove, W. G. Grenfell, D. R.
Adams, Richard Craddock, George (Bradford, S.) Grey, C. F.
Albu, A. H. Crawley, A. Griffiths, D. (Rother Valley)
Allen, A. C. (Bosworth) Cripps, Rt. Hon. Sir S Griffiths, Rt. Hon. J. (Lianelly)
Anderson, F. (Whitehaven) Crosland, C. A. R. Griffiths, W. D. (Exchange)
Attlee, Rt. Hon. C. R. Crossman, R. H. S. Gunter, R. J.
Awbery, S. S. Cullen, Mrs. A. Hale, J. (Rochdale)
Ayles, W. H. Daggar, G, Hale, Leslie (Oldham, W.)
Bacon, Miss A. Daines, P. Hall, J. (Gateshead, W.)
Baird, J. Darling, G. (Hillsboro') Hall, Rt. Hn. W. Glenvil (Colne V'll'y)
Balfour, A. Davies, A. Edward (Stoke, N.) Hamilton, W. W.
Barnes, Rt. Hon. A. J Davies, Ernest (Enfield, E.) Hannan, W.
Bartley, P. Davies, Harold (Leek) Hardman, D. R.
Bellenger, Rt. Hon. F.[...] Davies, R. J. (Westhoughton) Hardy, E. A.
Benson, G. Davies, S. O. (Merthyr) Hargreaves, A.
Beswick, F. de Freitas, Geoffrey Harrison, J.
Bevan, Rt. Hon. A. (Ebbw Vale) Deer, G. Hayman, F. H.
Bing, G. H. C. Diamond J. Henderson, Rt. Hon. A. (Rowley Regis)
Blackburn, A. R. Dodds, N. N. Herbison, Miss M.
Blenkinsop, A. Donnelly, D. Hewitson, Capt. M.
Boardman, H. Donovan, T. N. Hobson, C. R.
Booth, A. Driberg, T. E. N. Holman, P.
Bottomley, A. G. Dugdale, Rt. Hon. J. (W. Bromwich) Holmes, H. E. (Hemsworth)
Bowden, H. W. Dye, S. Houghton, Douglas
Bowles, F. G. (Nuneaton) Ede, Rt. Hon. J. C. Hoy, J.
Braddock, Mrs. E. M. Edwards, John (Brighouse) Hubbard, T.
Brockway, A. Fenner Edwards, Rt. Hon. N. (Caerphilly) Hudson, J. H. (Ealing, N.)
Brook, D. (Halifax) Edwards, W. J. (Stepney) Hughes, Emrys (S. Ayr)
Brooks, T. J. (Normanton) Evans, Albert (Islington, S. W.) Hughes, Hector (Aberdeen, N.)
Broughton, Dr. A. D. D. Evans, E. (Lowestoft) Hughes, Moelwyn (Islington, N.)
Brown, George (Belper) Evans, S. N. (Wednesbury) Hynd, H. (Accrington)
Brown, T. J. (Ince) Fernyhough, E. Hynd, J. B. (Attercliffe)
Burke, W. A. Field, Capt. W. J. Irvine, A. J. (Edge Hill)
Burton, Miss E. Finch, H. J. Irving, W. J. (Wood Green)
Butler, H. W. (Hackney, S.) Fletcher, E. G. M. (Islington, E.) Janner, B.
Follick, M. Jay, D. P. T.
Callaghan, James Foot, M. M. Jeger, G. (Goole)
Carmichael, James Forman, J. C. Jeger, Dr. S. W. (St. Pancras, S.)
Castle, Mrs. B. A. Fraser, T. (Hamilton) Jenkins, R. H.
Champion, A. J. Freeman, J. (Watford) Johnson, James (Rugby)
Chetwynd, G. R, Freeman, Peter (Newport) Johnston, Douglas (Paisley)
Clunie, J. Gaitskell, Rt. Hon. H. T. N Jones, D. T. (Hartlepool)
Cocks, F. S. Ganley, Mrs. C. S. Jones, Frederick Elwyn (West Ham, S.)
Coldrick, W. Gilzean, A. Jones, Jack (Rotherham)
Collick, P. Glanville, J. E. (Consett) Jones, William Elwyn (Conway)
Collindridge, F. Gooch, E. G. Keenan, W.
Cook, T. F. Greenwood, A. W. J. (Rossendale) Kenyon, C.
Cooper, G. (Middlesbrough, W.) Greenwood, Rt. Hn. Arthur (Wakefield) Key, Rt. Hon. C W.
King, H. M. Neal, H. Summerskill, Rt. Hon. Edith
Kinghorn, Sqn.-Ldr. E. Noel-Baker, Rt. Hon. P. J Sylvester, G O.
Kinley, J. Oldfield, W. H. Taylor, H. B. (Mansfield)
Kirkwood, Rt. Hon. D. Oliver, G H Taylor, R J. (Morpeth)
Lee, F. (Newton) Orbach, M. Thomas, D. E. (Aberdare)
Lee, Miss J. (Cannock) Padley, W. E. Thomas, George (Cardiff)
Lever, L. M. (Ardwick) Paling, Rt. Hon. Wilfred (Dearne V'lly) Thomas, I. O. (Wrekin)
Lever, N H. (Cheetham) Paling, Will T. (Dewsbury) Thomas, I. R. (Rhondda, W.)
Lewis, A. W. J. (West Ham, N.) Pannell, T. C. Thorneycroft, Harry (Clayton)
Lewis, J. (Bolton, W.) Pargiter, G. A. Thurtle, Ernest
Lindgren, G. S. Parker, J. Timmons, J
Lipton, Lt.-Col. M. Paton, J. Tomlinson, Rt. Hon. G
Logan, D. G. Peart, T. F. Turner-Samuels, M.
Longden, F. (Small Heath) Poole, Cecil Usborne, Henry
McAllister, G. Popplewell, E Vernon, Maj. W. F
MacColl, J. E. Porter, G Viant, S. P.
McGee, H. G. Price, M. Philips (Gloucestershire, W.) Wallace, H. W.
McGovern, J. Proctor, W. T Watkins, T. E
McInnes, J. Pryde, D. J. Webb, Rt. Hon. M. (Bradford. C.)
Mack, J. D. Pursey, Comdr. H Weitzman, D.
McKay, J. (Wallsend) Rankin, J. Wells, P. L. (Faversham)
Mackay, R. W. G. (Reading, N.) Rees, Mrs. D. Wells, W T. (Walsall)
McLeavy, F Reeves, J. West, D. G.
MacMillan, M. K. (Western Isles) Reid, T. (Swindon) Wheatley, Rt. Hn. John (Edinb'gh, E.)
McNeil, Rt. Hon. H. Reid, W. (Camlachie) White, Mrs. E. (E. Flint)
MacPherson, Malcolm (Stirling) Rhodes, H. White, H. (Derbyshire, N. E.)
Mainwaring, W. H. Richards, R Whiteley, Rt. Hon. W
Mallalieu, E. L. (Brigg) Robens, A. Wigg, George
Mallalieu, J. P. W. (Huddersherd, E) Roberts, Goronwy (Caernarvonshire) Wilkes, L.
Mann, Mrs. J. Robertson, J. J. (Berwick) Wilkins, W. A.
Manuel, A. C. Robinson, Kenneth (St. Pancras, N.) Willey, F. T. (Sunderland)
Marquand, Rt. Hon. H. A Rogers, G. H. R. (Kensington, N.) Willey, O. G. (Cleveland)
Mathers, Rt. Hon. George Ross, William ([...])
Mellish, R. J. Royle, C. Williams, D. J. (Neath)
Messer, F. Shackleton, E. A. A. Williams, Ronald (Wigan)
Middleton, Mrs. L Shinwell, Rt. Hon. E. Williams, Rt. Hon. T. (Don Valley)
Mikardo, Ian Shurmer, P. L. E. Williams, W. T. ([...], S.)
Mitchison, G. R Silverman, J. (Erdington) Wilson, Rt. Hon. J. H. (Huyton)
Moeran, E. W. Silverman, S. S. (Nelson) Winterbottom, I. (Nottingham, C.)
Monslow, W. Simmons C. J. Winterbottom, R. E. (Brigtitside)
Moody, A. S. Slater, J. Wise, Major F. J.
Morgan, Dr. H. B Smith, Ellis (Stoke, S.) Woodburn, Rt. Hon A,
Morley, R. Snow, J. W. Woods, Rev. G. S.
Morris, P. (Swansea, W.) Sorensen, R. W. Wyatt, W L.
Morrison, Rt. Hon. H. (Lewisham, S.) Soskice, Rt. Hon. Sir F Yates, V. F.
Mort, D. L. Steele, T. Younger, Hon. Kenneth
Moyle, A. Stewart, Michael (Fulham. E)
Mulley, F. W Stokes, Rt. Hon. R. R TELLERS FOR THE NOES:
Murray, J. D Strachey, Rt. Hon. J. Mr. Pearson and Mr. Sparks.
Nally, W. Strauss, Rt. Hon. G R (Vauxhall)