HC Deb 28 June 1951 vol 489 cc1637-48

If an individual proves that, in the case of a year of assessment, he has been compelled to change his residence in order to pursue his employment, he shall be entitled to charge as an expense not liable to income-tax such sum, not exceeding fifty pounds, as he may be able to show that he spent on that removal.—[Mr. Hollis]

Brought up, and read the First time.

6.0 p.m.

Mr. Hollis

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

The arguments in favour of this Clause can be put in a very few sentences and the House need not be detained long on consideration of a point on which I hope the Government will be able to give us satisfaction. I think it is generally understood that there is a small anomaly here at present. As we all know, a person is allowed an Income Tax allowance in respect of expenses necessarily arising out of his business; but he is not entitled to an allowance in respect of expenditure on moving from one business to another business if he happens to change his occupation or to change the firm with which he is working. If he is still working with the same firm and in the course of that work moves from one place to another, it is not impossible for him to have an allowance in respect of his business; but it seems he cannot have an allowance in respect of moving from one business to another.

That is quite obviously a small anomaly which in the interest of general justice should be cleared up at any time, and at this particular time there is a special national interest involved in clearing it up. It has been impossible for me to discover what would be the cost of making this small concession because nobody can know, or at any rate it is not possible for anybody to tell me, what removal expenses are at present allowed or disallowed.

As the House knows, one cannot receive an Income Tax allowance for a daily journey between the place where one lives and the place where one works, for reasons that we all appreciate. But moving from one place to another is quite a different matter. What the immediate cost of this small concession would be it is impossible to know, but it could not be very great. If one looks at the general economic welfare of the country, so far from the concession costing the country anything it would be to the economic benefit of the country.

One of the most difficult problems now facing us with re-armament and the need for increased productivity is that we must have a certain re-distribution of labour so as to ensure that not only has everybody a job but that everybody has a job which it is most in the public interest that he or she should be performing. To get that re-distribution it is obviously necessary that it should be made as easy as possible for people to move from one job to another and therefore, if necessary, from one town to another.

My hon. Friend the Member for Wimbledon (Mr. Black), in discussing the last proposed new Clause, very properly urged as one argument in its favour that the relaxation of Stamp Duties would make the transfer of labour easier than it is at present. So would this small relaxation in Income Tax regulations to allow people to claim expenses when they are definitely moving to follow some other occupation. We are not asking that they should have an Income Tax allowance when they are moving house unnecessarily or for their own pleasure.

Mr. Mellish (Bermondsey)

How is one to prove the difference between moving for pleasure and moving for business?

Mr. Hollis

That is not a great matter. We need not delay the House over that because if a man claimed an allowance he would have to fill in a form and say why he was claiming.

Mr. Mellish

More forms.

Mr. Hollis

I do not think we need spend any time on that point. There should be no difficulty about it. I hold no special brief for the particular wording of this Clause. If the Government are willing to say they will look into the principle and they ask us to change the wording, naturally I shall be willing to meet them on that point.

Sir Woven Wakefield (St. Marylebone)

I beg to second the Motion.

There seems to me to be an anomaly here which ought to be put right and an injustice which it would be a good thing if the Government removed. It is a well known fact that when a person is changing his place of residence in order to continue his employment or to obtain fresh employment he may have part or even the whole of his expenses paid by the firm. If only one-half of those removal expenses are paid by his firm, it seems only reasonable that the other half should be allowed as a charge against his income and he should be able to reimburse himself for this very necessary expense incurred in carrying on his trade or employment. It seems to me that there is no new principle here involved, but that it is just an extension of a reasonable expense charge.

Two years ago I addressed a number of Questions to the various Service Ministers on the great cost and expense incurred by personnel when they moved from one station to another. I pointed out how the allowances granted to them by the various Service Departments were inadequate to meet their legitimate removal expenses, and I quoted examples of how civil servants were granted extra expenses to meet various instances which I quoted, and which members of the Services were not allowed. This is a special example which would be properly covered in this proposed new Clause.

I have two daughters, one married to a naval officer and the other to an Army officer, and they are frequently being moved about. I know from personal experience that they have to dip into their pockets to pay the necessary removal expenses, and so have all their brother officers. I suggest that they and other people in trade and industry who legitimately incur this necessary travelling expense should be allowed to claim against their income, up to this sum of £50. They should be allowed their expenses in moving from one residence to another in order to carry on their business or to discharge their duty. If these people have an expense over and above the amount allowed to them by the Government or by their firm which they can show was properly and legitimately incurred, I hope the Government will give sympathetic consideration to this reasonable request.

I cannot see that there would be any administrative difficulty. It is easy for a person to give complete evidence of his employment or of the requirement to go from one place to another, and by receipts and so on to show the exact cost to him- self and his family. I hope the Government will favourably consider what I regard as a very reasonable suggestion contained in this proposed new Clause.

Mr. John Edwards

I think we would all agree that enforced removal involving financial hardship is one of those unpleasant things that happen. I myself have had experience of moving and having my expenses paid, and experience also of moving and not having my expenses paid. I am sure we all feel that that kind of incident is one of the things which we would like to avoid if we could.

At the risk of being thought repetitive, I must, however, resist this new Clause, and resist it again on grounds of principle. The right hon. Member for Leeds, North (Mr. Peake) will be familiar with the argument that it is very important in this tax field to have deductions claimed on expenses which are wholly, exclusively and necessarily involved in the performance of the duties or the employment, and that successive Financial Secretaries and Chancellors have said that we should be faced with great difficulty if we were to alter the rule and cover, not only the expenditure involved in the performance of the duty, but the expenditure incurred by putting oneself in a position to perform the duty.

6.15 p.m.

This is a fundamental distinction which has been drawn, I think, by very many people who have spoken on behalf of the Treasury from this Box. It is not just trying to avoid the problem by stating the principle. If this new Clause were adopted, we should be adopting a new principle. One will have noticed that the hon. Member for St. Marylebone (Sir W. Wakefield) inadvertently referred to travelling expenses, and this Clause relates to removal expenses. I can understand him doing so because I, at any rate, would not wish to defend the position in which a person who is lucky enough to get a house to move to can get an allowance while a person who cannot do so and has to travel daily cannot get travelling expenses. Frankly, if the one were granted. I should feel obliged to grant the other.

In any event, I do not quite know who would decide whether a person was compelled to change his residence. Are we to include those people who move when their firms move, and to exclude those persons who are declared redundant and have to live somewhere else in order to find a job? Are we to include the people who move when their firms move because it is advantageous for them to do so, and exclude people who feel that they must better themselves by going somewhere else? There is a whole host of real difficulties, quite apart from the point of principle.

The real point is that we would not know how to resist very many other claims were we to adopt the new principle. There may be a case for adopting a new principle. It may be right at the end of the day for us to have some form of words which cover not only expenses arising out of and in the course of a person's employment but also expenses incurred in order to put one in a position to perform the employment but it would not be wise to adopt such a new principle on a new Clause of this kind.

For those reasons, while I appreciate, and indeed have myself incurred, the financial hardship involved in this kind of case, I do not think it would be right for us to adopt the new Clause and so depart from the principle which has been followed for a long time and which to my knowledge—and I think the right hon. Member for Leeds, North, and the right hon. and gallant Member for Gains-borough (Captain Crookshank) will confirm this—has never been departed from except in the very exceptional case of travelling expenses occasioned by the war. Except for this we have never at any time departed from this rule which is a cardinal principle in our Income Tax law. If we are to depart from it, let us do so recognising that a new principle is necessary; but not for a particular case which would only lead to a lot of other cases arising of the same order.

Lieut.-Commander Gurney Braithwaite (Bristol, North-West)

I am afraid it is becoming apparent that the Economic Secretary is today appearing in the role of the refuser of all requests. Of course, it is always diverting to see a Socialist resting himself confidently upon precedents of the bad old days, but I suggest to the Economic Secretary that, quite apart from any ideological arguments, there has been a considerable change in the circumstances in which people move their homes since the days when former Chan- cellors took the stand of which the hon. Gentleman has spoken.

May I get rid of one argument which appeared in the form of an interjection when the hon. Member for Bermondsey (Mr. Mellish) rather facetiously asked how one was to know whether a move was made for occupational purposes or employment purposes, and then made another interjection to suggest that this would mean another form? With great respect. I suggest that that necessity does not arise. The Income Tax form in its present complexity allows for the claiming of various allowances which can be set off against Income Tax, as I am sure the hon. Member for Bermondsey is fully aware. This case is not very different from that of repairs or renewals to a house, nor is the inspector in any difficulty in the case where the necessary evidence has to be produced before the allowance is granted. In the case of the painting of a house, a receipted bill has to be sent in, and so on. Often it takes time to get the allowance, but I suggest that the machinery is not incapable of dealing with these matters.

The cost of moving a house has risen very sharply, like the cost of everything else. The Economic Secretary quite fairly put before the House the parallel of travelling expenses—the expenses involved in travelling to work. It is my misfortune that a very excellent new Clause on that subject has not found favour with you, Mr. Deputy-Speaker, and has not been selected. It would have allowed a season ticket as a travelling expense, and I think there is much to be said for that point of view, although, of course, it cannot be argued now. Perhaps the Chancellor might think along those lines during the forthcoming 12 months. I suggest that this is not a party argument at all. In the times in which we live a man no longer lives where he chooses; he lives where he can, frequently at a considerable and inconvenient distance from his work. Moving a house is undoubtedly a very great financial burden.

The new Clause, of course, deals with a matter which goes further than the individual. It concerns the family—the movement of the wife and children and the furniture; and if it is a move of a considerable distance the person concerned would be lucky to keep the cost within the limit of £50 put down by my hon. Friend. It would be difficult to keep it within that limit if it were a move by road for any considerable distance. There are cases within my knowledge—and I am sure I am not alone in this, for I imagine that many hon. Members have heard people make his sort of remark—in which people have said, "We cannot afford to take a holiday this year because we have had to move house." That has been said to me over and over again, and when things reach that stage the arguments of the past require a good deal of reconsideration.

I realise that the Economic Secretary has been sent here to refuse to accept the new Clause and is not in a position to give way, however persuasive the arguments. His chief is not here; he is alone, or nearly alone, on the burning deck—accompanied only by two representatives of the usual channels who cannot take part in the debate. I realise the difficulties, but I submit that the arguments which he has deployed are not incapable of solution. I think it would be quite possible to decide whether, in the phrase of the hon. Member for Bermondsey, the move was a genuine one—whether it was for purposes of employment or not. Moreover, this very modest sum of £50 is not at all an unreasonable figure.

As to who is to decide—who decides all other matters? This House decides the principle and others, like the hon. Member for Sowerby (Mr. Houghton) in his former incarnation, decide the working of the apparatus.

Mr. John McKay (Wallsend)

Supposing a man who had to move to another residence was not earning enough money to pay Income Tax at all, would he get nothing under the new Clause?

Lieut.-Commander Braithwaite

That is not an unfair interruption, but when, in the Finance Bill, one is discussing Income Tax allowances—then one is discussing Income Tax allowances. That is where we are at the moment, and Mr. Deputy-Speaker would rule me out of order if I went on to deal with other matters. There are other ways of compensating people who do not come within the Income Tax provisions.

Mr. McKay

No provision is made here.

Lieut.-Commander Braithwaite

The new Clause deals with Income Tax allowances, and we are trying to deal with that subject. The decision as to the rightness of the claim must rest with the officials at the Economic Secretary's disposal, and I am sure that if this House laid down the principle, it could be worked out in detail. The Economic Secretary said he did not think the time had come to make this alteration of principle. That is how he is instructed this afternoon. I understand from my hon. Friends who moved and seconded the new Clause that, having deployed the arguments, they do not intend to take up the time of the House in a Division. But this is a matter to which the Government, or their successors—whoever brings in the Budget of 1952—should give careful thought during the forthcoming 12 months, because I am quite certain that here is a case which has much to recommend it in equity, quite apart from anything else.

Mr. Houghton

If I may say so, the mover and seconder of the new Clause have themselves not given to it the careful thought which they suggested the Economic Secretary should give. If hon. Gentlemen opposite will reflect on the purpose and consequences of the Clause, they will surely see that it is wrong in principle and bad from the point of view of administration.

The principles of Rule 9 of Schedule E have stood for 100 years—that the expense must be wholly, necessarily and exclusively incurred in the performance of the office. That has stood for 100 years and no Chancellor has permitted the slightest departure from that principle, with the sole exception of the departure referred to by my hon. Friend—the wartime concession for travelling expenses to and from work for those who had to move their residence owing to causes connected with the war.

Once this principle is relaxed the doors are opened to many other claims. There is this claim and also that contained in the new Clause on the Order Paper in the name of the hon. and gallant Member for Bristol North-West (Lieut.-Commander Braithwaite), concerning the cost of season tickets. There are many other expenses which could be claimed if this House went outside the narrow principle which has been sustained for 100 years.

The Royal Commission has now begun its work, and I have no doubt that it will have to give consideration to many representations dealing with expense allowances as a set-off against Income Tax; and I am sure the House would be well advised, if I may humbly say so, to await the more thorough examination of all the implications of any departure from this long-standing principle before it takes upon itself the responsibility of giving assent to a new principle of this kind.

If the new Clause were put into operation, one of the first effects would be to relieve many employers of the expense which they now incur in refunding the removal expenses of their employees. The concession would not be a benefit to the taxpayer himself; it would be of benefit to the employer, who would be relieved of some part of the payment which he now makes to his employee when removal expenses are incurred in connection with his employment with that firm.

Another point of great importance in connection with administration is this. Who is to decide what is a reasonable expense incurred in this direction? Suppose a person who has worked in Liverpool decides to take up a new appointment in London. It may be that in taking up the new appointment he considerably improves his financial position. He may take a new appointment at twice his previous salary and he may transfer to London. But he may decide that he wants to live in Brighton. Are the Income Tax authorities to be in no position to check the claim which he may make against the Inland Revenue by his own decision to live not in London but in Brighton?

Then, as my hon. Friend said, if a person is moved and cannot find a house in his new station, is he to be allowed to claim as an alternative to removal expenses the cost of travelling to and from his old residence and the new station? Or, if it is too far for daily travel, is he to be allowed to claim the cost of week-end or periodical visits to his home from his new station? Do hon. Members not see how wide the scope of claims against Income Tax liability would become with these changes?

6.30 p.m.

Sir W. Wakefield

It is not suggested for one moment that a man should be able, under this new Clause, to claim for travelling expenses to and from his work, any more than he can now. But if he moves his place of residence from the North of England to, say, London, cannot find a house in London and has to live in Brighton, the suggestion is that up to £50 shall be allowed to him for his removal expenses from the North of England to Brighton, and that finishes the thing. I cannot see that there is in our suggestion anything in any way contrary to the principles the Economic Secretary has laid down, and when the hon. Gentleman has stated, because he would be entitled only to claim expenses wholly and exclusively incurred in the discharge of his duties.

Mr. Houghton

I know from personal experience how one claim leads to another. A person transferred who could not move his home but who would get an Income Tax set-off if he could, would certainly then claim, as an alternative to the allowance for removal of residence, some relief for his expenses of daily travel, or periodical travel if his home was too far away to permit of daily travel.

I should detain the House for too long if I were to pursue the difficulties and complexities of the administration of such a proposal as this, quite apart from what would be involved in the departure from principle. If hon. Members will, from their knowledge of administration and their practical experience of these things, reflect on the consequences which would follow from accepting this new Clause, they would realise that it would be quite impossible to administer it fairly to both the Revenue and the taxpayer.

Mr. Pitman

I think that the hon. Member for Sowerby (Mr. Houghton) was misled by the Economic Secretary into thinking that the conditions of Rule 9 came into this at all, because I think I am right in saying that Rule 9 deals with expenses exclusively incurred in work. The expense dealt with in this new Clause, on the other hand, is not incurred in the daily work but in the acceptance of the post, and there are within the new Clause necessary limitations.

My hon. Friend has said that he is perfectly prepared to make the move one of at least 50 miles, or any alteration that covers any important issue of principle. Under Rule 9 we suppose that a man places himself within a reasonable distance of his work, but the housing situation now is such that he just cannot do that. The purpose of this proposal is not to create a difficult precedent for Rule 9; it is based on a principle standing entirely on its own feet. I hope that the Economic Secretary will consider it on that basis.

Mr. Hollis

I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.