HC Deb 19 May 1952 vol 501 cc93-155
Mr. Hugh Dalton (Bishop Auckland)

I beg to move, in page 14, line 16, after "to," insert": one hundred pounds in respect of the first child and for each subsequent child. We would be glad to know what are the feelings of the Government about priorities here. We are not sure that their judgment on priorities, which they have shown in their proposals, is right. Before the war the child allowance was £60 a year, which can be taken to be the equivalent of £120 a year now. It was reduced during the war to £50 and it was increased by me to £60 for the year 1947–48 and to £70 by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), for the year 1951–52. We are glad that the Chancellor proposes now to raise it to £85, but even so, if my estimate is correct, it is still worth substantially less to a parent than was the pre-war £60 a year. We are therefore proposing that it should be further raised to £100.

We are accepting, as they are not debatable at this stage or on this Clause, other features of the financial policy of the Government, including what we take note of, the rise in the cost of living because of the food subsidy cut. This has borne with exceptional hardship on families containing a large number of young children. The effect of the change which I am proposing would be to relieve a substantial number of such families who fall just within the limits of tax liability, as redefined this year, and perhaps to relieve them of tax altogether.

I can think of no class more deserving of complete relief than that class of family with a number of small children. Since we are discussing the child allowance which operates flatly right up the scale, I appreciate that the effect of the Amendment would be to give relief, in proportion, to the richer parents of considerable families, but that is inevitable within the field which we are now considering.

I do not know whether the Chancellor has read a leading article in "The Times" this morning, in the course of which the writer says, talking of the Family Allowances and National Insurance Bill, that both the Government and the Opposition alike— have shown themselves unhappily aware that policy since the Beveridge Report has increasingly favoured the claims of the elderly and under-emphasised those of the dependent family; and the present Bill carries this process a step farther. We do not grudge what has been done for the elderly, but we feel that this is a moment when we should also emphasise the needs of the dependent family, particularly those in which there is a substantial number of young children. I should be glad if, in due course, we could have the Government's view of this matter.

Mr. Douglas Houghton (Sowerby)

I saw the Parliamentary Secretary to the Ministry of Civil Aviation make a move just now, as though to reply. I hope that the Amendment has nothing to do with civil aviation. Nor do I think that it is a flight of fancy which can come within his province as Parliamentary Secretary for Civil Aviation. Although there is novelty in the suggestion made in the Amendment of a higher child allowance for the first child, it is by no means an unusual feature in the history of child allowance for Income Tax purposes.

The Amendment seeks to distinguish between the amount of child allowance for the first child and for all subsequent children. The increase proposed is from £85 to £100. Before 1935–36, the allowance for the first child was higher than for subsequent children. In that year it was made uniform for all children. The subsequent introduction of the family allowance scheme seems to add point now to the case for distinguishing favourably between the first child and subsequent children. We propose that the £15 additional allowance for the first child shall yield for those who are paying tax anything between £2 5s. and £7 2s. 6d. a year, over and above the higher child allowance which the Chancellor proposes and which is contained in the Clause.

I doubt whether, even with the combination of tax allowances and family allowances, the margin between the single person or the childless couple and the family man is yet wide enough. Take as an example a single man getting £7 a week and a married man with three children and getting £7 a week also. In the case of the single man, his take-home pay after tax deduction is £6 8s. 4d. The take-home pay of the married man is his gross wage, which is exempt from taxation owing to the operation of the allowances, plus family allowances amounting to 16s. The single man takes home £6 8s. 4d. and the married man with three children takes home £7 16s., a difference of 27s. 8d. per week.

I can give other examples to show that even at £10 a week the margin between the single man and the married man with three children, after taking account of family allowance and taxation, is only just over £2 a week. I think that the Chancellor will agree that this gap could be widened more suitably by improved child allowances for taxation purposes than in any other way.

The Chancellor saw fit in his proposals to increase the personal allowance to single persons as well as to the married. Last year, my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) proposed to increase the married man's allowance but not the single person's allowance. That was an attempt to lighten the burden of taxation for the family man while not giving a corresponding relief to the single person. I hope the Chancellor will feel that our present proposal is not unreasonable.

As to the cost of it, my own estimate, for what it is worth, is about £5 million a year, a large sum I have no doubt, having regard to other concessions the right hon. Gentleman has made, and to concessions that he will no doubt feel called upon to make during further stages of the Bill. I hope that he will see the case for differentiation. If he can accept the Amendment he will be twice blessed by all the family men who are taxpayers, who welcome the relief already given but are still looking for more.

The Parliamentary Secretary to the Ministry of Civil Aviation (Mr. R. Maud-ling)

As the hon. Member for Sowerby (Mr. Houghton) has just said, the Amendment is not an instruction to the Civil Aviation Department. I noticed in the Press that the right hon. Member for Leeds, South (Mr. Gaitskell) whose name heads the Amendment, is not present with us because he is grounded in New York, but that is not the responsibility of the Minister for Civil Aviation, so far as I can see.

The purpose of the Amendment is to extend from £85 to £100 the child allowance only to the first child, a fact that I did not find apparent in the speech of the right hon. Gentleman who moved it. It is, as the hon. Member for Sowerby said, no innovation in our taxation to have different allowances as between the first child and subsequent children, and there is a certain amount of strong reasoning behind it. Those of us who are parents know that the first child is the most expensive. We can pass on some of the first child's clothes, and the pram, to the second child. When the first child whimpers, we send for the doctor. When the next child bellows, we say that that is good for its lungs.

6.30 p.m.

There are solid, sensible reasons for differentiating between the first and subsequent children. There were varied differentiations between 1919 and 1935, when the then Chancellor decided to cancel the differential and to increase the rate for subsequent children to that of the rate for the first child on grounds of social policy. He maintained that with the need to increase the birth-rate it was desirable not to perpetuate the distinction between the first and subsequent children. That reason which held good in 1935 still holds good today to a considerable extent.

The hon. Member also referred to family allowances. It is true that the increase of the family allowance applies only to the second and subsequent children, and that the parents with only one child gain no benefit. Again, some people argue strongly that we should extend the family allowance to the first child, but there are weighty reasons on the other side of social policy and cost and my right hon. Friend has made it clear that he cannot do this.

This Amendment would do precisely what hon. and right hon. Gentlemen opposite have been upbraiding us for doing. It would give higher benefits the higher we go up the scale of income. The family allowance is subject to tax. The person who does not pay Income Tax gets the full benefit of 3s. a week or 156s. a year. The person who pays at the surtax rate gets a much smaller benefit. The effect of this proposal would be precisely the opposite. It would mean that the larger the income the greater would be the benefit. The person drawing the greatest benefit would be the person paying the full rate of standard tax and he would get £7 17s. 6d. a year. Today, the right hon. Gentleman the Member for Battersea, North (Mr. Jay) was angry with us for giving the same to the man with an unearned income of £10,000. This Amendment would give him another £7 17s. 6d., which is a little inconsistent with the line that has been taken by hon. and right hon. Gentlemen opposite.

The strongest argument against this Amendment is its cost. I am advised that it would cost £8 million this year and £10 million in a full year, which is a very large sum in addition to the concessions already made. The right hon. Gentleman who moved the Amendment laid stress, very properly, on the importance of assisting families with small children. He referred to the excellent article in "The Times" this morning. It should be pointed out, however, that the increase in the child allowance this year is £15 compared with the previous increases of £10. So my right hon. Friend has already taken a substantial step in the direction of helping the family in this matter.

Another point to bear in mind is that the Royal Commission on Taxation, established under the previous Administration, is considering these matters. For the moment, therefore, we can only look at present conditions because it is not possible or desirable to rule out any future increases in child allowance. In the present year, however, on the grounds of cost and because the Royal Commission is considering all these matters of allowances, I ask the Committee to reject the Amendment.

Mr. John McKay (Wallsend)

The policy of this Government has been to take away the subsidies and that has directly increased the cost of living. They have tried to console the country by their policy in regard to family allowances. They have argued that, when they increased the family allowances for the second child and all other children from 5s. to 8s., they mitigated the hardship imposed on the people of this country, and particularly on the family man.

But by their policy the Government have laid a penalty upon the married man with one child who is not paying Income Tax because of his low wages. The Chancellor of the Exchequer is supposed to be a fair and just man. I suggest that he is not being just, and he knows that he is not being just, because in the policy he has adopted in regard to the family allowance scheme he is giving no benefit to the married man with one child.

This Amendment introduces a new policy, an extra allowance for the first child. I agree that it is simply extending the policy of the Government by giving more relief to the people who are paying Income Tax and, to that extent, to those who are in a better position than the lower-paid worker. Unfortunately, as I have said, the lower-paid worker has had increased liabilities imposed upon him by the policy of this Government.

The question then arises whether there is any justice in the claim that we should do something for the first child. I do not believe that family allowances increase the birth rate, because the incentive is not sufficient to outweigh the liability. The family allowance scheme is merely a small financial help to the family man who has more liabilities than other people. Therefore, in justice and on moral grounds, because this is a question merely of helping the family man because of his greater liabilities, the Chancellor ought to consider the question of the first child, although in a different way, perhaps, from that suggested in the Amendment.

The Government should go once again into the question of overcoming the penalties that they are imposing upon the family with only one child. An analysis of the figures which have been given in answer to questions on family allowances and other subjects shows that there are 4,480,000 children in respect of whom the present 5s. is paid. The number in the "first child" category is about 6,300,000. Even though some of the families concerned are receiving allowances for subsequent children, there is nevertheless a very large number of families with only one child, and something ought to be done by the Government to meet the liability of these families upon whom penalties have been placed.

I do not pretend to be a statistician, but elementary arithmetic will show that if 5s. were paid for every child, the cost would be £145 million as against the £102 million which is proposed by the Bill. Surely, there is some way of helping the one-child family without imposing such a penalty upon them.

I should like the Government to consider the justice of our claim and to see whether the whole family allowances question could not be modified by giving, say, at least 3s. for the first child, 5s. for the second child and 8s., which is the figure proposed in the Bill, for third and subsequent children. We are already paying £63 million to meet the existing 5s. payment. If 3s. were paid for the six million-odd first children, the cost would be £49 million. As far as the second child is concerned, the cost would be no greater than at present and I calculate that the total extra cost of paying the 3s., 5s. and 8s., as I have suggested, would be only about £24 million.

That is a lot of money. The Amendment, however, would involve only an increase of £10 million. I put forward my claim for the one-child family for the Chancellor to consider its justice.

Mr. R. A. Butler

I should very much like to help the hon. Member if I were able to do so in the Bill, but these matters relate largely to the Bill dealing with social insurance, which is to be discussed on another day. Therefore, I am unable to help or to answer him on matters affecting social insurance. I cannot add to the reply given by my hon. Friend the Parliamentary Secretary to the Ministry of Civil Aviation, because the Bill deals only with families coming into the Income Tax scale.

6.45 p.m.

Mr. McKay

I agree with the right hon. Gentleman. At the same time, however, it was because of the amount that he allocated that family allowances could be increased under the Bill which deals with social insurance. All that needs to be done is to increase the Exchequer contribution to meet any Amendment that may be proposed.

The Chancellor's policy has placed a direct penalty upon the one-child families, who are not being helped by his family allowance scheme or by his Income Tax reliefs. He could meet our case if he wished to do so, and upon him must rest the blame for not helping these families with their liabilities.

Mr. W. W. Astor (Wycombe)

I do not propose to follow the hon. Member for Wallsend (Mr. McKay) into everything he has said, but I should like to say a word from this side in support of the principle of the Amendment. It is a sad thing that today these allowances do not begin to cover the same amount of need as was covered by the similar allowances before the war.

My old schoolfellow the right hon. Member for Bishop Auckland (Mr. Dalton) made a very fair case, and I hope that next year, perhaps, we shall have some amelioration. Speaking as the father of a first child, and knowing the costs and how much greater they are today, whether for clothes or for education, compared with before the war, I think that there is a strong case for the Amendment. I hope that the hon. Member will realise that our hearts, if not our votes, are with him.

Mr. Jay

Although we were surprised to find the Treasury calling in help from the Ministry of Civil Aviation so early in the Bill, we have no objection to a change in the bowling, and so I am very glad to welcome the hon. Gentleman to our discussion. I do not, however, think that he did anything like justice to the strength of the Amendment, for which there is a very strong case indeed, and which we feel bound to press. He pointed out quite correctly that the acceptance of the Amendment by itself would be to give greater assistance to those higher up the income scale. That is the nature of the child allowance.

But we do not put our proposal forward as an alternative to assistance in other ways—by way, for instance, of the ordinary family allowances, of which my hon. Friend the Member for Wallsend (Mr. McKay) spoke, and on which I should not have ventured to speak at such length, as I should have been doubtful whether I should have been in order in doing so on the Amendment. My hon. Friend has, however, established the point that this is not an alternative, but is one part of the proposals which we would make to remove the difficulty arising from the fact that it is the large family, it seems to us, which is today most in need.

We have, both by our taxation arrangements, our ordinary income structure and our social benefits, to an extent which perhaps very few of us have realised, produced a rather extreme inequality between the family, on the one hand, which has a high proportion of earners and very few dependents, and the family, on the other hand, with perhaps only one earner and many dependents. A typical example of the latter case would be the family of a man with three, four or five children, whose wife very likely, simply because there are a number of children, is herself unable to earn. On the other hand, we have either the single man or the married couple without children, both earning—just because the wife has no children and is able to earn.

If we go into the figures, we find a remarkable discrepancy between the actual income per head available in those different families. I think that perhaps unintentionally in the last few years, by changes in Income Tax, made for very well meaning reasons, we have actually accentuated that inequality, for instance, by increasing the wife's earned income allowance, which stands at £110 compared with £45 before the war, whereas the child allowance only stands at £85 compared with £60 before the war. I suspect that it is these families, consisting of married couples each of whom is earning, who can spend money on cinemas, etc., which have been put forward as a reason for saying that people can spend more on food and necessities. That is not a sound argument because they are probably quite different families.

I wish to illustrate the point by giving one or two other figures, which I think are relevant to the controversy on equal pay as well as to the controversy on this Amendment. What determines the standard of living is, after all, not the net income per family or household but the net income per head. That actually determines the individual's standard of living; but it is a figure at which we seldom look. Perhaps I might supplement the figures which have been given and take two cases, the £10 a week level and the £20 a week level. In these figures I have included family allowances. A single man, without any dependents, earning £10 a week takes home £8 14s. approximately in net income per head. If he is married and his wife is also earning the same sum, they have a gross income of £20 a week, and the net income per head is very little less, something like £8. But, if the same man is married and has three children and his wife cannot earn for that reason, the net income per head for that family is £2 3s. against £8 14s.—or about a quarter, a very remarkable difference.

At the £20 a week level the single man is left with £15 5s. That is the income per head for him; whereas if he has a wife and three children, his income per head is down to £3 12s. which is again about a quarter. It is clearly impossible by Income Tax to produce a situation in which the income per head will be the same if one has four, five or six children, although in France they have a family allowance system, I believe, by which they almost achieve that. That would be vastly expensive, and beyond anything we could propose; but I do suggest these figures show that we have gone too far in the other direction. There is a very remarkable inequality between the family with few dependents and the family with a number of dependents.

It may be that in last year's Budget, on further consideration, we made a mistake in that sense by increasing both the child allowance and the married allowance. It would, of course, have been possible, as an alternative, not to have increased the married allowance, but to have increased the child allowance by more. That would benefit the needy family more effectively. But the remarkable thing is that the Chancellor this year has increased the married allowance by more than the child allowance—

Mr. Maudling

And he has increased the family allowance.

Mr. Jay

Yes, but I am now arguing that in the structure of Income Tax there is an unbalance between the different types of families. It seems to me that there is a strong reason for making a change; and I wish to quote one other sentence from the leader of "The Times" this morning from which my right hon. Friend quoted: Without going to the extremes of the French, there is still room for a substantial improvement in the family's social income, as a means both of remedying the inevitable disregard of family needs by the wage system"— which is, of course, the source of the problem— and of eventually securing the general introduction of equal pay, which all parties now desire. That seems to be a good summing up, and I commend it to the Committee.

Captain Robert Ryder (Merton and Morden)

If the Government are unable to accept the full measure of this Amendment, I wonder whether I could ask them to consider the case of the widow with children? These people are, I believe, among the more hard-pressed sections of the community deserving special interest. By what seems a freak of this personal

allowance, a widow with one child has to pay a higher rate of tax—

The Chairman

I think the hon. and gallant Member is going wide of the Amendment; this is nothing to do with the Amendment.

Captain Ryder

I was speaking about the personal allowance.

The Chairman

This Amendment is a quite simple one If the hon. and gallant Member will look at the Bill, he will see what it does.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 206: Noes, 227.

Division No. 136.] AYES [6.58 p.m.
Acland, Sir Richard Evans, Edward (Lowestoft) MacColl, J. E.
Adams, Richard Ewart, R. McGhee, H. G.
Albu, A. H Field, W. J. McInnes, J.
Allen, Arthur (Bosworth) Finch, H. J. McKay, John (Wallsend)
Anderson, Frank (Whitehaven) Fletcher, Eric (Islington E.) McLeavy, F.
Attlee, Rt. Hon. C. R. Follick, M. MacMillan, M. K. (Western Isles)
Awbery, S. S. Forman, J. C. MacPherson, Malcolm (Stirling)
Ayles, W. H. Fraser, Thomas (Hamilton) Mallalieu, J. P. W. (Huddersfield, E.)
Balfour, A. Freeman, John (Watford) Marquand, Rt. Hon. H. A.
Barnes, Rt. Hon. A. J Gibson, C. W. Mellish, R. J.
Bartley, P. Glanville, James Messer, F.
Bellenger, Rt. Hon. F. J. Gooch, E. G. Mitchison, G. R.
Bence, C. R. Gordon Walker, Rt. Hon. P. C. Monslow, W.
Benn, Wedgwood Grenfell, Rt. Hon. D. R. Moody, A. S.
Benson, G. Grey, C. F. Morgan, Dr. H. B. W.
Beswick, F. Griffiths, David (Rother Valley) Morris, Percy (Swansea, W.)
Bing, G. H. C. Griffiths, Rt. Hon. James (Llanelly) Morrison, Rt. Hon. H. (Lewisham, S.)
Blackburn, F. Grimond, J. Mort, D. L.
Blenkinsop, A. Hale, Leslie (Oldham, W.) Moyle, A.
Blyton, W. R. Hall, Rt. Hon. Glenvil (Colne Valley) Mulley, F. W.
Boardman, H. Hall, John (Gateshead, W.) Neal, Harold (Bolsover)
Bottomley, Rt. Hon. A. G. Hamilton, W. W. Noel-Baker, Rt. Hon. P. J
Bowden, H. W. Hannan, W. Oldfield, W H.
Bowen, E. R. Hardy, E. A. Oliver, G. H.
Braddock, Mrs. Elizabeth Hargreaves, A. Oswald, T.
Brockway, A. F. Harrison, J. (Nottingham, E.) Padley, W. E.
Brook, Dryden (Halifax) Hastings, S. Paget, R. T.
Brown, Rt. Hon. George (Belper) Hayman, F. H. Paling, Rt. Hon. W. (Dearne Valley)
Brown, Thomas (Ince) Henderson, Rt. Hon. A. (Rowley Regis) Paling, Will T. (Dewsbury)
Burke, W. A. Herbison, Miss M. Pargiter, G. A.
Burton, Miss F. E. Holman, P. Parker, J.
Butler, Herbert (Hackney, S.) Holmes, Horace (Hemsworth) Paton, J.
Carmichael, J. Houghton, Douglas Pearson, A.
Castle, Mrs, B. A Hoy, J. H. Pearl, T. F.
Champion, A. J. Hubbard, T. F. Poole, C. C.
Chapman, W. D. Hudson, James (Ealing, N.) Price, Joseph T. (Westhoughton)
Chetwynd, G. R. Hughes, Emrys (S. Ayrshire) Proctor, W T.
Clunie, J. Hughes, Hector (Aberdeen, N.) Pursey, Cmdr. H.
Cocks, F. S Hynd, J. B. (Attercliffe) Reeves, J.
Coldrick, W. Irvine, A. J (Edge Hill) Reid, Thomas (Swindon)
Collick, P. H. Irving, W. J. (Wood Green) Richards, R.
Cove, W. G. Isaacs, Rt. Hon. G. A. Robens, Rt. Hon A
Craddock, George (Bradford, S.) Jay, Rt. Hon. D. P. T. Roberts, Albert (Normanton)
Crosland, C. A. R. Jeger, Dr. Santo (St. Pancras, S.) Roberts, Goronwy (Caernarvonshire)
Dalton, Rt. Hon. H. Jenkins, R. H. (Stechford) Rogers, George (Kensington, N.)
Darling, George (Hillsborough) Johnson, James (Rugby) Ross, William
Davies, A. Edward (Stoke, N.) Johnston, Douglas (Paisley) Royle, C.
Davies, Ernest (Enfield, E.) Jones, David (Hartlepool) Schofield, S. (Barnsley)
de Freitas, Geoffrey Jones, Frederick Elwyn (West Ham, S.) Shackleton, E. A. A.
Deer, G. Jones, Jack (Rotherham) Shawcross, Rt. Hon. Sir Hartley
Delargy, H. J. Jones, T. W. (Merioneth) Silverman, Julius (Erdington)
Dodds, N. N. Keenan, W. Silverman, Sydney (Nelson)
Donnelly, D. L. Kinley, J. Simmons, C. J. (Brieriey Hill)
Driberg, T. E. N. Lee, Frederick (Newton) Slater, J.
Ede, Rt. Hon. J. C. Lever, Leslie (Ardwick) Smith, Ellis (Stoke, S.)
Edwards, Rt. Hon. Ness (Caerphilly) Lindgren, G. S Smith, Norman (Nottingham, S.)
Edwards, W. J. (Stepney) Logan, D. G. Sorensen. R W
Soskice, Rt. Hon Sir Frank Turner-Samuels, M. Willey, Frederick (Sunderland, N.)
Sparks, J. A. Ungoed-Thomas, Sir Lynn Williams, Rev. Llywelyn (Abertillery)
Steele, T. Viant, S. P. Williams, Ronald (Wigan)
Stewart, Michael (Fulham, E.) Wade, D. W. Williams, Rt. Hon Thomas (Don V'll'y')
Strachey, Rt. Hon. J. Watkins, T. E. Williams, W. R. (Droylsden)
Strauss, Rt. Hon. George (Vauxhall) Webb, Rt. Hon. M. (Bradford, C.) Wilson, Rt. Hon. Harold (Huyton)
Sylvester, G. O. Weitzman, D. Winterbottom, Richard (Brightside)
Taylor, Bernard (Mansfield) Wells, Percy (Faversham) Woodburn, Rt. Hon. A
Taylor, John (West Lothian) West, D. G. Yates, V. F.
Taylor, Rt. Hon. Robert (Morpeth) Wheatley, Rt. Hon. John
Thomas, lorwerth (Rhondda, W.) White, Hoary (Derbyshire, N.E.) TELLERS FOR THE NOES:
Thorneycroft, Harry (Clayton) Whiteley, Rt. Hon. W. Mr. Kenneth Robinson and
Tcmney, F. Wilkins, W. A. Mr. Wigg.
Aitken, W. T. Fraser, Hon. Hugh (Stone) Maudling, R.
Alport, C. J. M. Fraser, Sir Ian (Morecambe & Londsale) Maydon, Lt.-Cmdr S. L. C.
Amery, Julian (Preston, N.) Gage, C. H. Medlicott, Brig. F.
Amory, Heathcoat (Tiverton) Galbraith, Cmdr. T. D. (Pollok) Mellor, Sir John
Anstruther-Gray, Major W. J. Galbraith, T. G. D. (Hillhead) Molson, A. H. E.
Arbuthnot, John Garner-Evans, E. H. Moore, Lt.-Col. Sir Thomas
Ashton, H. (Chelmsford) George, Rt. Hon. Maj. G. Lloyd Mott-Radclyffe C. E.
Assheton, Rt. Hon. R. (Blackburn, W.) Godber, J. B. Nabarro, G. D. N.
Astor, Hon. J. J. (Plymouth, Sutton) Gomme-Duncan, Col. A Nicolson, Nigel (Bournemouth, E.)
Astor, Hon. W. W. (Bucks, Wycombe) Gough, C. F. H Nield, Basil (Chester)
Baker, P. A. D. Gower, H. R. Noble, Cmdr. A. H. P.
Baldock, Lt.-Cmdr. J. M Graham, Sir Fergus Nugent, G. R. H.
Baldwin, A. E. Grimston, Sir Robert (Westbury) Nutting, Anthony
Barber, A. P. L. Harris, Frederic (Croydon, N.) Oakshott, H. D.
Baxter, A. B. Harris, Reader (Heston) Ormsby-Gore, Hon. W. D.
Beach, Maj. Hicks Harrison, Col. J. H (Eye) Orr, Capt. L. P. S.
Bell, Ronald (Bucks, S.) Harvie-Watt, Sir George Orr-Ewing, Ian L (Weston-super-Mare)
Bennett, F. M. (Reading, N.) Higgs, J. M. C. Partridge, E.
Bevins, J. R (Toxteth) Hill, Dr. Charles (Luton) Peake, Rt. Hon. O
Birch, Nigel Hill, Mrs. E. (Wythenshawe) Perkins, W R. D
Bishop, F. P. Hinchingbrooke, Viscount Peto, Brig. C. H. M
Black, C. W. Hirst, Geoffrey Peyton, J. W. W
Boyd-Carpenter, J. A Holland-Martin, C. J. Pitman, I. J.
Boyle, Sir Edward Hollis, M. C. Powell, J. Enoch
Braine, B. R. Holmes, Sir Stanley (Harwich) Prior-Palmer, Brig, O. L
Braithwaite. Lt. Cdr. G. (Bristol, N.W.) Hope, Lord John Profumo, J. D.
Brooke, Henry (Hampstead) Hornsby-Smith, Miss M. P Raikes, H. V.
Brooman-White, R. C. Horobin, I. M. Rayner, Brig. R
Buchan-Hepburn, Rt. Hon. P. G. T Horsbrugh, Rt. Hon. Florence Redmayne, E.
Bullard, D. G. Howard, Gerald (Cambridgeshire) Remnant, Hon. P
Bullus, Wing Commander E. E. Hudson, Sir Austin (Lewisham, N.) Robinson, Roland (Blackpool, S.)
Burden, F. F. A. Hulbert, Wing Cmdr. N. J. Robson-Brown, W.
Butcher, H. W. Hurd, A. R. Rodgers, John (Sevenoaks)
Butler, Rt. Hon. R. A. (Saffron Walden) Hutchinson, Sir Geoffrey (Ilford, N.) Roper, Sir Harold
Carr, Robert (Mitcham) Hutchison, Lt.-Corn. Clark (E'b'rgh W) Russell, R. S.
Cary, Sir Robert Hylton-Foster, H. B. H Ryder, Capt. R. E. D.
Channon, H. Jennings, R. Salter, Rt. Hon Sir Arthur
Churchill, Rt. Hon. W. S. Johnson, Eric (Blackley) Sandys, Rt. Hon D.
Clarke, Col. Ralph (East Grinstead) Johnson, Howard (Kemptown) Savory, Prof. Sir Douglas
Cole, Norman Jones, A. (Hall Green) Schofield, Lt.-Col. W. (Rochdale)
Golegate, W. A. Kerr, H. W. (Cambridge) Scott, R. Donald
Conant, Maj. R. J. E Lambert, Hon. G. Scott-Miller, Comdr. R
Cooper, Sqn. Ldr. Albert Lambton, Viscount Shepherd, William
Craddock, Beresford (Spelthorne) Lancaster, Col. C. G Simon, J. E. S. (Middlesbrough, W.)
Crookshank, Capt. Rt. Hon. H. F. C Langford-Holt, J. A Smithers, Sir Waldron (Orpington)
Crosthwaite-Eyre, Cot. O. E. Law, Rt. Hon. R. K Snadden, W. McN.
Crouch, R. F. Leather, F. H. C Soames, Capt. C.
Darling, Sir William (Edinburgh, S.) Legge-Bourke, Maj E. A. H Spearman, A. C. M
Deedes, W. F. Legh, P. R. (Petersfield) Speir, R. M
Digby, S. Wingfield Linstead, H. N. Spence, H. R. (Aberdeenshire, W.)
Dodds-Parker, A. D. Lockwood, Lt.-Col. J. C Spens, Sir Patrick (Kensington, S.)
Donaldson, Cmdr. C. E. McA. Low, A. R. W. Stanley, Capt. Hon Richard
Donner, P. W. Lucas, P. B. (Brentford) Stevens, G. P.
Doughty, C. J. A. Lucas-Tooth, Sir Hugh Steward, W. A. (Woolwich, W.)
Douglas-Hamilton, Lord Malcolm Lyttelton, Rt. Hon. O. Stewart, Henderson (Fife, E.)
Drayson, G. B. McCorquodale, Rt. Hon. M. S. Storey, S.
Dugdale, Maj. Rt. Hn. Sir T. (Richmond) Macdonald, Sir Peter (I. of Wight) Strauss, Henry (Norwich, S.)
Duncan, Capt. J. A. L Mackeson, Brig. H. R. Stuart, Rt. Hon. James (Moray)
Duthie, W. S. McKibbin, A. J. Studholme, H. G.
Eccles, Rt. Hon. D. M. McKie, J. H. (Galloway) Summers, G. S.
Elliot, Rt. Hon. W. E. MacLeod, Rt. Hon. lain (Enfield, W.) Sutcliffe, H.
Erroll, F. J. MacLeod, John (Ross and Cromarty) Taylor, William (Bradford, N.)
Fell, A. Macmillan, Rt. Hon. Harold (Bromley) Thomas, Rt. Hon. J. P. L. (Hereford)
Finlay, Graeme Macpherson, Maj. Niall (Dumfries) Thompson, Lt.-Cdr. R. (Croydon, W.)
Fisher, Nigel Maitland, Comdr J. F. W. (Horncastle) Thorneycroft, R. Hn. Peter (Monmouth)
Fleetwood-Hesketh, R. F. Maitland, Patrick (Lanark) Thornton-Kemsley, Col C. N
Fletcher-Cooke, C. Manningham-Buller, Sir R. E. Turner, H. F. L.
Fort, R. Marshall, Douglas (Bodmin) Turton, R. H.
Foster, John Maude, Angus Vane, W. M. F.
Vaughan-Morgan, J. K. Watkinson, H. A. Wills, G.
Vosper, D. F. Webbe, Sir H. (London & Westminster) Wilson, Geoffrey (Truro)
Wakefield, Edward (Derbyshire, W.) Wellwood, W. Wood, Hon. R.
Wakefield, Sir Wavell (Marylebone) While, Baker (Canterbury) York, C
Walker-Smith, D. C Williams, Rt. Hon. Charles (Torquay)
Ward, Hon. George (Worcester) Williams, Gerald (Tonbridge) TELLERS FOR THE NOES:
Ward, Miss I. (Tynemouth) Williams, Sir Herbert (Croydon, E.) Mr. Drewe and Mr. Heath.
Waterhouse, Capt. Rt Hon. C Williams, R Dudley (Exeter)

7.0 p.m.

Mr. Victor Raikes (Liverpool, Garston)

I beg to move, in page 14, line 16, at the end, to insert: and in paragraph (b)of subsection (3) of section two hundred and twelve for the reference to thirteen pounds there shall be substituted a reference to seventy pounds.

The Chairman

The Amendment in the name of the hon. Member for Glasgow, Central (Mr. McInnes), in page 14, line 16, at the end, to insert: (4) In paragraph (b) of subsection (3) of section two hundred and twelve of the said Act (which relates to relief in respect of children undergoing training for the reference to thirteen pounds there shall be substituted a reference to eighty-five pounds. might be considered with this one, as both of them deal with the same point.

Mr. Raikes

I hope that on this occasion I may obtain a concession from the Government. I have not until now intervened on the Finance Bill, and I propose to intervene only for a very short time to try to clear up an anomaly which has existed for some time and has had attention drawn to it by Members on both sides of the Committee.

Under Section 212 of the Income Tax Act, parents are allowed tax relief on £70, a figure which is now being raised to £85, for every child over the age of 16 who is being fully educated, if that child has not an income on his own behalf of more than £70 per annum. On the other hand, in the case of a parent who has a child of over 16 years of age fully apprenticed under contract, the parent will only receive an allowance if the child's income is under £13. If it is more than that, the whole allowance of £70 is withheld.

I hold the view very strongly that there should be no differentiation between the tax deduction allowance in the case of the child over 16 at college and the child of the same age who is an apprentice. It is rather a disincentive to parents to maintain this anomaly. Parents who would otherwise be inclined to send their child as an apprentice might, because they do not get the allowance, be persuaded to send their child into a dead- end occupation in which more money is paid.

That point was raised last year by my hon. Friend the Member for Scotstoun (Mr. J. R. H. Hutchison), who is now Under-Secretary of State for War, and was received with some favour by the Government of the day. The right hon. Member for Battersea, North (Mr. Jay) took the opportunity of saying that the point would not be overlooked. For various reasons it was overlooked. I hope that this evening we shall be able to get some assurance that it will be dealt with now.

This may seem to be a small point, but it is an important one to the type of parents whom we wish to encourage, who are prepared to make some sacrifice to give their child an opportunity to get a job which, in the long run, will be to his or her advantage—

Mr. Ede (South Shields)

And to the national advantage

Mr. Raikes

—and of course, as the right hon. Gentleman says, to the national advantage.

I have intervened briefly, and I have not intervened previously in the discussion of the Finance Bill, both of which points should be an encouragement to my right hon. Friend to regard my plea a little more tenderly than he might otherwise do. That is my hope. Whether or not he accepts the exact terms of the Amendment, I hope that he will look into this matter with the object of levelling out the position in the course of his Budget. It might be better, of course, if my right hon. Friend accepted the figure of £85 suggested in the Amendment of the hon. Member for Glasgow, Central (Mr. McInnes) rather than the £70 in this Amendment, which relates to the existing law in regard to other children over 16 who are being educated. But I think the time has come when this anomaly should be altered, and from a completely nonparty point of view I appeal to the Chancellor to consider favourably this Amendment.

Mr. James McInnes (Glasgow, Central)

I understand that we are taking this Amendment along with the Amendment in my name and that of my hon. Friend the Member for Hamilton (Mr. T. Fraser).

As the Committee will appreciate the Amendment is designed to bring young persons in training into the same scale of tax relief as is accorded to other young people mentioned in the Income Tax Act. Under that Act relief is allowed in respect of a young person under the age of 16, provided that young person is not in receipt of his own income in excess of £85 per annum.

Relief is allowed to a young person over 16 provided that young person is attending an educational establishment in pursuance of his education, and is not in possession of an income in excess of £85. A relief is also allowed to a young person over 16 who may have an unearned income not in excess of £85. But where a young person over 16 is undergoing training as an apprentice and earns more than £13 a year, the parents receive no Income Tax allowance.

If we take a case of a young person who remains at school in order to obtain the higher leaving certificate and then decides to enter either the law or accountancy, or any other of the professions, if he earns more than £13 a year —and we all recognise that the general scale of salary in these professions is in the region of £20 or £30 a year—the parent is faced with the problem of providing class fees, examination fees, travelling expenses, food and clothes and the rest. But because the young person earns more than £13, the parent loses the right to the Income Tax relief.

I think the Committee will agree that this is very discouraging to the young people and, as has been indicated, it tends to lead them into dead-end occupations. We ought not to discourage young people from becoming skilled in industry. It is these young people who will form the components of a successful commercial or industrial machine; and I hope that the Chancellor in his generosity will look favourably on the proposal that the scale of relief allowed to young persons in training should be the same as that allowed to the other categories which I have mentioned.

7.15 p.m.

Captain Duncan

I remember late one night last year sitting on the benches opposite listening to my hon. Friend the Member for Scotstoun (Mr. J. R. H. Hutchison), who is now the Under-Secretary of State for War, pleading this case. I am glad that my hon. Friend the Member for Garston (Mr. Raikes) has re-introduced it in this Finance Bill.

Just after I listened to my hon. Friend last year, I had a case in my own constituency of a man who had a son of 18 who was becoming an apprentice quantity surveyor. Because he was earning £36 a year gross, out of which there were deductions for insurance, travelling, meals and so on, his father received no Income Tax allowance at all. When I read about this case, and after correspondence with the Government out of which I got no change, I deterbined to add my name to this Amendment if it appeared on the Order Paper.

On general grounds, it seems to me there ought not to be any difference between the young man or woman who goes to college and the young person who goes for an apprenticeship. The object is the same. Looking to the future of our industries, what we shall want more than anything is more and more highly technically trained people. If we are to keep our position in the world—I tried to make this point on the last Amendment—we have to make industry efficient in every possible way and give it every chance to progress. If the lack of this facility prevents parents from apprenticing their children to a trade or profession in any way, it will not be to the national interest, and it is for those reasons that I support this Amendment.

Mr. Ede

I would appeal to the Chancellor to listen to what has been said about this Amendment. A good many years ago, when I was formerly in Opposition, I moved an Amendment which, as the result of consideration by the Treasury, secured the first allowance for apprentices.

Captain Duncan

I think it was Tinker who moved the Amendment.

Mr. Ede

My name was on Amendment, and whether I spoke first or second, I was associated with it. I hope that this reasonable extension, which is really only the fulfilment of the idea behind the scheme, may now be considered.

What amazes most people who have to give attention to details of the earnings of juveniles is the very large amount that some can get immediately after they leave school in the most iniquitous of blind alley occupations. Curiously enough, I come across it as a defence for committing petty burglary; that they are so well off that they have to do something like that to get a little excitement in their spare time. I recollect a recent case at Surrey Quarter Sessions when eight youths, just beyond the school-leaving age, appeared before the court. All were earning sums of over £5 a week.

It must be a very great temptation to parents, just on the fringe of putting the permanent interests of their children over the immediate interests of the family, to say, "Why should I worry? The boy can earn £5 a week or more straight away, whereas if I apprentice him he will be bound for a substantial number of years. He will be an expense to me and I shall get no benefit from it."

In a former association the right hon. Gentleman and I were exceedingly anxious that we should give equal status to the lad whose abilities are practical and the lad whose abilities are academic. One of my hon. Friends mentioned the kind of lad who goes in for one of the learned professions by way of apprenticeship or articles. After all, there is not much difference between the lad who is articled and the lad who goes to university.

Let us consider the case of the aspiring solicitor. He goes to the university to get his LL.B., and his parents secure the advantage because he is in a place of higher education. But if he is articled to the local solicitor and is learning his profession in that way, his parents are unlikely to qualify for the Income Tax concession which is given to the parents of the lad who goes to university.

All of us desire that there should be no differentiation between lads of parts who are striving to qualify themselves to serve the country in a skilled occupation, whether it be a manual occupation or one of the learned professions. This differentiation is one of the remaining marks of social inferiority which some people think exists between youths of either sex whose aptitudes are practical and those whose aptitudes are academic

I know that on the general principle the right hon. Gentleman would not for one moment dispute the line of argument which I have adopted. I urge that this is a concession which is well worth while, not merely in the interests of the parents concerned, but in the interests of the young people and of the nation. It is by recruiting the skill of our young craftsmen and increasing the number of men and women capable of creative designing that we shall be able to hold our position in the world of the future.

This concession is one of those which will not merely help the country but will make it apparent to the parents that we recognise the contribution that all children of parts can make towards national recovery and the maintenance of our national position. I sincerely hope that the right hon. Gentleman will find himself able to make a substantial concession to what, I am sure, is the general feeling of the Committee on this issue.

The Solicitor-General (Sir Reginald Manningham-Buller)

I do not think that anyone has cause to complain about the manner in which the argument in favour of this Amendment has been put forward by my hon. Friends or by hon. and right hon. Gentlemen opposite. I should like to begin by reminding the Committee of the history of this matter. From 1920, when the child allowance was introduduced, there was no allowance until 1938 in respect of a child undergoing training for any trade, profession or vocation.

It was then introduced, and from that moment until now the distinction has always been maintained between the child undergoing whole-time education in an educational establishment and an unpaid apprentice—using that term in its widest sense—on the one hand, and the child who has started on his or her career and is earning a living. The intent of the original extension was to make it apply to what one might call the unpaid apprentice, and no more.

My hon. Friend the Member for Garston (Mr. Raikes) fell into one slight error—he was not alone in this—in suggesting that the receipt by the apprentice of £13 in one year would of itself disqualify the parents from obtaining the child allowance. That is not quite accurate. In calculating the £13, one disregards entirely any sum that is paid in repayment of premium during the course of the year. In the case which the right hon. Gentleman the Member for South Shields (Mr. Ede) mentioned of the young gentleman articled to a firm of solicitors, and I think in many other cases, it is common to secure that during the period of the apprenticeship there should be a refund of at least part of the premium.

Mr. Alfred Robens (Blyth)

Surely that is a capital repayment.

The Solicitor-General

It is certainly a receipt by the individual.

Mr. Robens

The father of the child provides a premium. That is repaid while the child is earning some money. Surely it is not suggested that the amount of premium so returned is to be computed as the income of the child.

The Solicitor-General

What I was saying was that when one calculates the £13 one ought not to ignore the provision in the statute which says that, in taking into account the earnings of the child, one should disregard any refund of the premium to him. The right hon. Gentleman will find that there is express provision for that in Section 212.

That is the history of the matter so far. The important point is that ever since 1938—and, indeed, throughout the last six years—the distinction has been made between the position of what I might call the unpaid apprentice, and the child who has started his or her career. That distinction was maintained by the late Government. At present, as the Committee are aware, a Royal Commission is considering all these personal allowances. It would be much better to receive their Report on the changes which they may propose, not only to child allowances, and to consider that rather than to make some piecemeal changes, it may be of a somewhat radical character, while they are still sitting.

It has been well recognised that when matters have been referred to a Commission, as they were by the last Government, one ought to wait to see what the Commission report before making an important change in principle. But, so far as the allowance of £13 is concerned, it may well be that one can make some adjustment, without in any way materially affecting the principle on which, so far, this allowance has been administered in respect of children undergoing full-time education and children who are also receiving training whole-time for not less than two years.

I am afraid that, in some respects, what I have just said does not entirely satisfy the arguments advanced, but I assure hon. and right hon. Gentlemen that we are not unsympathetic to the views they have put forward. We certainly will give consideration to whether this time we can raise the limit of £13 to a more—

Captain Duncan

In this Bill?

The Solicitor-General

In this Bill. We will consider the precise amount and the exact implications involved. It may be possible, and we hope that it will, to make some adjustment to that figure without departing from the principle which has been in existence since 1938. A departure from that principle must, we feel, await the Report of the Royal Commission.

Mr. Jay

Does the hon. and learned Gentleman undertake to give a definite reply by the Report stage of the Bill saying what the Government can do?

The Solicitor-General

I hope that we shall be in a position to put down an Amendment on the Report stage. In conclusion I should like to say that I intervened at this early stage in the hope that what I said might shorten the discussion. The argument in favour of the Amendment has been made from both sides of the Committee, and surely it will not gain force from repetition.

7.30 p.m.

Mr. Houghton

I think that the right hon. and learned Gentleman could have shortened the discussion had he given a more definite promise as to the Government's intentions towards this Amendment. Surely it must be apparent that this maximum amount of earnings for apprentices, of £13 a year which was fixed in 1938–39, should now be adjusted to current levels of money values. The child allowance was £60 a year when this figure of £13 was fixed as the maximum amount that an apprentice could earn to enable the parents still to qualify for the child allowance, so that, on simple arithmetical proportions, there is justification for raising the figure of £13.

There is another aspect of the matter, to which the right hon. and learned Gentleman referred, but which is not being pressed in the narrow terms of this Amendment, though it is referred to in a subsequent Amendment standing in the names of my right hon. Friend and myself which is not before the Committee and which may not be in order. That concerns the reckoning of the returned premiums to which the right hon. and learned Gentleman referred, and that might well be a matter which the Royal Commission should consider in relation to this type of allowance. On the maximum earnings of apprentices, surely the right hon. and learned Gentleman can say that the Government will put down a proposal before Report stage. It is nothing short of monstrous—

The Solicitor-General

I thought that I had made it quite clear that I certainly hope to be in a position to put down an Amendment before the Report stage. I hope it will be possible, and I think it will. If it is not, we shall, presumably, be open to violent attack by the Opposition.

Mr. Houghton

I wish Ministers would say what they mean. They are worse than civil servants, and are bad enough, in all conscience. A few moments ago he told us that he would certainly consider whether the Government could put down a further proposal. Now he carries the matter a stage further and says that he certainly intended to convey the hope that the Government intend to do something about it. Why does he not get up and say, "We will do something about it," in which case the Committee could be reassured, we could shut up and get on with something else?

When he is so cagey and unforthcoming, I am bound to say that it is nothing short of monstrous that the parents of a boy who is learning a trade and who may be getting 15s. or even 25s. a week, and who have to maintain, clothe and feed him, should be denied the child allowance. while another boy who is receiving £80 from a settlement by his grandfather, can qualify for that child's allowance in full.

This is class distinction. I do not know why so many years have had to pass before the apprentice was placed on the slightest footing of comparison with the child having an extended whole-time education. Certainly, this is a case in which the right hon. and learned Gentleman should give the Committee an assurance, upon which we could be satisfied that the Government intend to do something about it.

Mr. Raikes

In view of the Minister's assurance that he intends—

Mr. Thomas Fraser (Hamilton)

On a point of order. If the hon. Gentleman is seeking to withdraw the Amendment, as, I have my name to another Amendment in the name of my hon. Friend the Member for Glasgow, Central (Mr. McInnes), which has been referred to in this discussion, may I inquire whether, if the hon. Gentleman withdraws his Amendment, I should be in order in moving that Amendment?

The Temporary Chairman (Colonel Sir Leonard Ropner)

No. That Amendment has not been selected by the Chair, but in the circumstances, if the hon. Member for Garston (Mr. Raikes) will give way, I will call the hon. Member for Hamilton (Mr. Fraser).

Mr. Fraser

I shall not detain the Committee for long. I was a little disappointed in the reply given by the Solicitor-General, who gave the impression that nothing could be done because a Royal Commission was sitting, and then went on to say that he hoped that this matter would be further considered and that the Government would be able to bring forward another Amendment. I sincerely hope that the Government will be able to bring forward such an Amendment, and that it will have the effect of carrying out the purpose of the Amendment on the Order Paper in the name of the hon. Member for Glasgow, Central, and myself.

My reason for expressing that hope is that it seems to me that justice can only be done by accepting that Amendment. After all, the parents of a child who goes to college or university receive the child allowance if that child earns less than £85 a year, and many of them, in fact, come very near to that. It seems to me to be monstrous that the parents of a young person who is articled to a profession or who, after going to technical college, goes into the office of a surveyor or architect, receives training there and receives £20 or £30 a year, should receive no child's allowance.

The only way of giving justice to the parents of a child who is not actually at school but has gone into full-time training and is earning very little, is to give them the same treatment as would be given if the child was at a school or educational establishment and receiving full-time training there. That would mean, of course, that this figure of £13 must be altered to £85 per year, and I do not think that any hon. Member of the Committee will argue that there is any reason for a differentiation between the one and the other.

The right hon. and learned Gentleman made reference to the repayment of premiums. I have made inquiries in Scotland, and I am assured that this is not the case in Scotland. I was told that the reason why little attention was paid to that provision in the 1952 Act was because this system of repayment of premiums did not obtain in Scotland, and there was no possible illusion about income from the repayment of premiums.

However, the main point is that the young person who is at school can earn £85 a year, but the young person in training can have an unearned income of £85 a year and the parents will still get this relief, so that the young person with an unearned income of £85 a year still attaches to his parents this relief provision, and it seems to me to be monstrous that unearned income should be treated more generously than earned income.

I hope that an Amendment will appear on the Order Paper in the name of the Chancellor, and that it will provide for an increase in the sum of £13.

Mr. Raikes

In view of the statement of my right hon. and learned Friend, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Sir Frank Soskice (Sheffield, Neepsend)

I beg to move, in page 14, line 16, at the end, to insert: (4) In subsection (1) of section two hundred and twelve of the Income Tax Act, 1952, insert after the words: "In this provision 'child' includes a step-child" the following words— "(including a child of a former marriage both of whose parents are still living). This Amendment deals with a small, but not altogether unimportant point, and I hope that the Solicitor-General, if he is going to reply, will tell us that he is prepared to give it very careful thought. It arises in this way. The child allowance is granted under Section 212 (1) of the Income Tax Act, 1952, if the claimant proves inter alia that he has living at any time any child, and then certain other requirements are specified in the subsection. The word "child" is then defined in the subsection as including a step-child, and the question which arises is what the term "step-child" means in that connection.

I suppose that if a man marries a widow who has a child, anybody would say without much hesitation that the child of the widow is his step-child; but I am informed that in the Departments which have to administer this branch of the law, there is some doubt whether that expression would include the case of a man who marries a woman who has divorced a previous husband and who has a child by that previous husband, the question being whether that child is the step-child of the second husband.

I am told, whether rightly or wrongly, that as a matter of practice an allowance is given under Section 212 (1) in a case of that sort where the wife has the custody of the child of her former marriage, but that the allowance is not given in a case where the wife has not had the custody of the child awarded to her. I can quite see that that is a commonsense position. But supposing that the expression "step-child" in the definition of Section 212 (1) does include the child of a woman who has previously divorced her husband, then clearly Section 212 (1) should require that the second husband should have the allowance in both cases, so that either the definition does include such a child or it does not.

I think everybody will agree that it is in the public interest that whatever the law is, it should, so far as possible—and I know there are limits to that possibilty—be made plain. We and the Inland Revenue authorities should know whether a step-child in that sense includes a child of a woman who has previously divorced her husband, and I am simply asking by this Amendment that some steps should be taken to make it perfectly plain whether it does or does not.

This actual Amendment contains certain imperfections. If it is common sense that the second husband should get the allowance when his wife has been given the custody of the child, but not otherwise, then the Amendment should be so drafted, but in its present form it does not draw a distinction between the two cases. The reason I commend the Amendment to the Solicitor-General is that there is some obscurity at the moment. If the term "step-child" does include such a child, then the requirement of Section 212 (1) is that in any case the second husband should get the allowance. If it does not, then in neither case does he get the allowance.

7.45 p.m.

We should know whether such a child comes within the Section or not. I ask the Solicitor-General to recognise that there is a problem here and to tell the Committee that between now and the Report stage he will give the matter very earnest thought, and that if he really thinks there is a problem here he will on the Report stage introduce an Amendment putting the matter beyond all doubt in regard to the two situations I have described.

The Solicitor-General

I think the Committee will agree that the point made by the right hon. and learned Member for Neepsend (Sir F. Soskice) would not be immediately apparent from reading the Amendment on the Order Paper, and I think we can all agree that in its present form the Amendment will not do. The right hon. and learned Gentleman has asked two specific questions to which I will endeavour to give him answers.

He asked, first, whether the definition of "step-child" in Section 212 would cover the child of a former marriage both of whose parents were still living, and whether where, for instance, the wife had married again, that child would be the step-child of the second husband. As I understand the position in law, that is quite clearly covered by the terms of this Section. A step-child does not, in fact, cease to be a step-child because both its parents are living.

Sir F. Soskice

Can the hon. and learned Gentleman refer me to any definition contained in the statute or to any reported case so decided?

The Solicitor-General

I have looked at one or two cases, and there is a very old one in line with that view I have put forward to which I can draw the right hon. and learned Gentleman's attention, though I have not the reference with me now. I personally can see no grounds whatever for forming the view that a step-child ceases to be a step-child if it happens that both its parents are living. I do not think we need argue about that part of it, however, because that was not the real point behind the Amendment.

The right hon. and learned Gentleman asked what was the position where the first husband had the custody of the child. That is a point of considerable substance, and I can give him the assurance that between now and the Report stage we will give careful consideration to that point. I am not in a position at the moment to give him an answer to the question he has asked with regard to that. I think he will understand the reason why; it is because it does not immediately appear from reading the Amendment.

As regards the practice which he says has grown up in the Inland Revenue Department, I have made very recent inquiry and I can assure him that I am informed that there is no general practice of treating a child of a former marriage as not being a step-child. It may be that in some instances that child has not been treated as a step-child where the custody has rested in the other parent, but where the wife has the custody and she has married again, I am advised that the general rule is that that child is treated as a step-child. If the right hon. and learned Gentleman knows of any case where that has not happened, I shall be indeed grateful if he will bring it to our attention and we will seek to put it right.

If there has been a divorce, express provision is made, very often by agreement between the parties, as to which of them shall be entitled to the child allowance, and I think the Inland Revenue has sometimes regard to that arrangement. In any case, we will look at the point between now and the Report stage and will endeavour to give the right hon. and learned Gentleman an answer either then or before then.

Sir F. Soskice

I thank the hon. and learned Gentleman for what he has said and, in view of what he has said, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. G. R. Mitchison (Kettering)

I beg to move, in page 14, line 16, at the end, to insert: (4) After subsection (4) of section two hundred and twelve of the said Act (which relates to relief in respect of children) there shall be inserted the following subsection: — (4A) Notwithstanding subsection (4) of this section relief shall be allowed under this section in respect of any child who is entitled in his own right to an income of between eighty-five pounds and one hundred and seventy pounds a year if no more than eighty-five pounds of his income is unearned: Provided that the amount of such relief under the preceding provisions of this section shall be diminished by the amount of tax at the standard rate on the excess of the income over eighty-five pounds. These are provisions with regard to children's relief. The short point is that at present there is an entitlement to children's relief provided that the child's income will not exceed the statutory amount, which is at present £85. What frequently happens is that in the case of a child who is growing up and is, let us say, in the last year to qualify for children's allowance, the child goes out to work and the result of that work is to bring it in an income which exceeds, perhaps by a small amount, the present limit of £85.

What happens then is that the child, by doing perhaps a comparatively small amount of work, has deprived the family of quite a considerable relief. It is true, of course, that in general one has to draw a line somewhere in these cases, but it has been common practice in Income Tax matters, for instance, when one fixes a rate of Surtax, if I may give an example at the other extreme, and in a number of other cases, to provide for marginal relief where the effect of the taxation provisions is that someone receiving a slightly larger gross income becomes, by reason of taxes, entitled to a net income which is actually smaller than he would have received if his gross income had been beneath the limit. That, I apprehend, is the general nature of marginal relief.

That has not yet been done in the case of children's allowances, and the result is —without for the moment making any distinction between earned and unearned income—that where the total income amounts to say £84, then that £84 gross becomes £84 net, whereas if the gross income is £100 then, after the deduction of tax at the present rate, the total net receipt is only £52 10s. I do not want to go back to Purchase Tax, but one has a curious kind of blind spot above the limit where, because there has been some additional income—in the particular case I have in mind from additional earnings —the net amount the person receives is less than it would have been but for those additional earnings or additional income.

I was very much impressed the other day by hearing the Chancellor complain that he had many burdens on his shoulders at present. We appreciate that. We do not want to add many more, but this seems a case where, at any rate, we might make a beginning with removing this anomaly. It is particularly appropriate that we should seek to remove it in the first instance with regard to earnings which bring the child's income just above the limit.

After all, what is the effect of leaving things as they are? So far as the tax position goes, it is to discourage young persons from going into industry or into some small business, or whatever it might be, and earning money as soon as they could earn it. And if the present Budget is, and so far as it is, a Budget which promises incentives, here is an opportunity for the Chancellor to give effect to that intention, to give effect to it in a not very large way so as to get rid of what is at present a real unfairness.

It is not right, and it cannot commend itself to the Committee as right, that someone or other—a young man or woman in this instance—by earning a little money at the end of his or her period of school and training, should thereby lose instead of gaining. That is the result of the present system. Perhaps it has not been so important in the past —the rather distant past now—when children's allowance was quite small, but the children's allowance is a substantial matter now. It has become more substantial because the expense of keeping children has risen. That has been recognised by successive increases in the children's allowance.

Surely this Amendment must commend itself particularly to the Committee. It has the advantage that it allows an appropriate reward to those who start their enterprise, be it public, or be it private, at a reasonably early age. I suggest it ought to be in line with the views of both sides of the Committee. It ought to commend itself on grounds of justice and as a first step towards removing a real hardship.

I need not go into detail on the effect of the Amendment. I submit it is perfectly clear. The effect is that when earned income brings the child's income over the statutory limit of £85, there should be what I might call a tapering relief that will gradually decrease from £85 up to £170. It need not, of course, be tied to every penny of those particular figures, though I think they are obviously the most reasonable ones. The form of the Amendment is perfectly simple, and it should involve no administrative difficulty whatever.

8.0 p.m.

The Solicitor-General

The hon. and learned Member for Kettering (Mr. Mitchison) has put the case for the Amendment with his usual clarity, although I must say that I am a little surprised to find him advancing it bearing in mind the attack which has been made on my right hon. Friend's Budget. I think the right hon. Member for Leeds, South (Mr. Gaitskell) referred to the Budget as a shabby device for taking money away from the poorer wage earners and handing it over to the better off taxpayers.

After that unwarranted attack, it is a little odd to find the hon. and learned Gentleman suggesting that children's allowances should still be paid to parents of children who are enjoying an income of up to £170 a year. I do not believe there are so very many children who have that income of their own in their own right every year—

Mr. Mitchison

I am sure the hon. and learned Gentleman has read the Amendment and recognises that it applies only to the excess over £85 in so far as that excess is earned. It is not the youthful capitalist I have in mind; it is the young man who, having already a little income, goes to work and supplements it.

The Solicitor-General

I did read, and I think understand, the hon. and learned Gentleman's Amendment. I do not think I need vary anything that I have said. The object of the Amendment is to enable the parent to draw a children's allowance if his son is earning or is in receipt of income up to £170 a year. It is true that the hon. and learned Gentleman says that the second half of the income must be earned and the first part unearned, but the point of the Amendment is to extend the right to child allowance to cover cases where children are in receipt of an income of £170. To find him putting that forward at this time is to me somewhat surprising.

The hon. and learned Gentleman put forward the arguments in support of his proposal with his usual clarity, and I am afraid I must repeat to him the argument that I advanced at this Box a little earlier today in relation to the children's allowances. I said then that there is, as the hon. and learned Gentleman knows, a Royal Commission sitting, appointed by the late Government, going into many matters relating to tax laws and having under review the whole question of children's allowances. As I said earlier this evening, pending the results of their deliberations, Her Majesty's Government are not prepared to make any radical alterations in the present structure of the Income Tax law with regard to child allowances.

I gave notice in an earlier discussion of an alteration which I hoped to make, but I am afraid that this is a radical Amendment, and I cannot hold out any hope of any concession pending the report of the Royal Commission. But so far as the principle of the matter is concerned, I can assure the hon. and learned Gentleman that it will have our sympathetic consideration. I would, however, point out that there are certain difficulties in tying in his proposals with other parts of the Income Tax law.

To give him an example, the upper limit of income that he proposes now for the child allowance of £170 is somewhat out of relation to the upper limit for the dependant's allowance. Those factors will have to be taken into account. Rather than make any further alteration at the present time, I suggest to the hon. and learned Gentleman that it would be wise to await the Report of the Royal Commission, and I hope that will not be long forthcoming.

Mr. Chapman

The Solicitor-General's reply is disappointing. This is not, as he claimed, a radical alteration in the structure of Income Tax law. Before I come to the extent of the alteration, let me give an example which came to my knowledge two months ago. This does not apply only to a child who is earning during the latter part of his education or some such case.

Let me give the case of a child whose parents are receiving an allowance, and who is ending his university or training college education in the month of July, and then perhaps is going to start teaching in September. This is a case which affects many people year after year. The child in that Income Tax year is dependent on his parents in the months of April, May, June, July, August and, perhaps, even part of September. For five-twelfths of the year his parents are going to keep and clothe him.

In September the child perhaps starts a job at the conclusion of his university education; certainly in the case of the teaching profession he would start in September. Between September and April the child receives seven months' earnings. In the case of a school teacher that would he quite substantial, and as I read the Act, because of those earnings, the parents will be unable to claim any allowance for the earlier five months when the child has been completely dependent on his parents.

I should have thought that this was no radical alteration. In fact, I support this Amendment on the grounds that half a loaf is better than no bread. It would only mean that a child who, in those first seven months of teaching, earned more than £170 a year would be outside this provision and the parent would still get no relief for the five-twelfths of the Income Tax year when he had been supporting that child. So this is indeed only half a loaf.

I am rather shocked that the Solicitor-General thinks that this is a radical alteration which is going to make all the difference to Income Tax law. If I had had an opportunity, I would have tabled an Amendment by which a parent could have an even better chance of claiming up to one-third of the amount of children's allowance if, in terms of months of the Income Tax year, the child was dependent on the parent for that period of the Income Tax year. That would have been much more just than this Amendment, but at least this is some step along the road.

A child can be dependent on his parents, at the present rate of earnings, for a long as six months of the financial year, and the parents can get no allowance for the child if, in the second half of the year, having finished his education, the child earns more than £85 a year. It is monstrous that the Solicitor-General should say that in that case, where there is real disability and hardship, he can make no allowance.

An even more difficult case came to my knowledge in which the parent was a widow who existed entirely on unearned income of a very small amount. She had made sacrifices so that the child could complete his training college education, only to find in the last year, and perhaps the most expensive year, that she would have to keep the child for a further five months and then be denied even a proportion of the child allowance for that period.

I hope it is not too late to press the Solicitor-General to have another look at this matter and see whether he can meet us in some way—perhaps not going so far as the Royal Commission may recommend, but providing some interim measure in the meantime until we can get the law thoroughly examined. Some such measure would, at least, mitigate the hardships which I have described.

Mr. Houghton

When I saw the Parliamentary Secretary to the Ministry of Civil Aviation back in his place, I thought to myself, "My unlucky star has risen again." I see that more than half the Liberal Party is in its place, and I feel reassured. I think they can lend support to the plea we make to the right hon. and learned Gentleman to promise some concession in regard to this Amendment.

The right hon. and learned Gentleman has reminded us yet again that there is a Royal Commission sitting on the taxation of profits and incomes. He is asking us to await their report before pressing him in relation to certain reforms which we think ought to be made; but his right hon. Friend the Chancellor of the Exchequer did not await the report of the Royal Commission before he introduced, in his Budget statement, some significant changes in the wide field of taxation that are now incorporated in this Bill. He has not awaited the report of the Commission before plunging into a reckless fulfilment of a still more reckless promise that an Excess Profits Tax would be introduced if the Conservative Party were returned to office.

Now he has to deal with the consequences of that Bill. He has made changes in the personal allowances of single and married persons. He has made changes in the allowances for children. He has done all this without awaiting the report of the Royal Commission. It is a well-known principle of our system of graduated taxation to have an escalator Clause—or what the tax experts call marginal relief—in relation to allowances having a limit of income and where, without marginal relief, income which is in excess of the limit would bear a heavy penalty as compared with the relief given in the case of an income which is just under the limit.

For instance, under the proposals of this Bill, a child with an income of £86 a year will not be eligible for any child allowance whatever, but a child with an income of £84 a year will bring the full child allowance to its parents. In terms of tax that may mean anything between £12 15s., at the 3s. rate, and £40 a year where the parent is paying Income Tax at the standard rate. In connection with the age allowance which is already in operation there is an escalator Clause. In connection with the proposed relief to small incomes, which is contained in this Bill, the Chancellor of the Exchequer provides for marginal relief. An Amendment has been put down by the Chancellor in regard to dependent relatives which will extend the marginal relief given in the case of the allowance to a dependent relative based on the income of the dependent relative.

In other ranges, too, escalator Clauses operate to ensure that a person whose income is just above the limit does not pay more in tax than if his income was just within the limit. Here we have a clear case for marginal relief. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) pointed out that we wished to restrict the marginal relief to the excess over the present limit of £85 a year of earned income. We felt in some difficulty in trying to meet the case which the right hon. and learned Gentleman mentioned as an illustration of what we were trying to do.

This is not an Amendment designed to assist the parents of children who have a settled unearned income over the maximum of £85 a year, though I think that, in justice, by reference to the principles to which I have referred, the marginal relief Clause should, in some measure, apply to them. But we have restricted this to the excess over the limit of £85 a year where that excess is earned income.

I have in my hand a letter from a woman who lives in my constituency drawing attention to the harsh operation of the present child allowance rule in the case of her daughter who has started work. I visited this woman. She lives in a modest worker's home in Todmorden. She says: I have a daughter, aged 15 last 18th May,"— this was last year— who started work on July 23rd learning to weave at £2 10s. per week. She had her first wage on August 2nd. I wrote to Halifax"— to the income Tax officials. She was an honest woman; lots of people do not write to Halifax to tell the Income Tax people when their child has started work —where there may be a continuance of the child allowance—and when parents do not write there are 99 chances out of a 100 that they will get away with the child allowance for the remainder of the year, for the simple reason that there is no administrative means of checking up on the child allowance in respect of parents who have claimed an allowance in the proper way earlier in the year and are getting allowance under P.A.Y.E. But in this case this honest woman wrote to Halifax.

8.15 p.m.

She received in reply a letter saying that she owed the Inland Revenue £7 10s. because they were withdrawing her child allowance from the beginning of the financial year. The child had not actually earned the £70 which, last year, would have been the limit of earnings for the purpose of the child allowance. They did not wait for the child to earn the £70. They reckoned out that at £2 10s. a week this child would have exhausted the qualification for child allowance before the end of the financial year, so they withdrew it there and then.

Our Amendment seeks to mitigate the harsh operation of the present rule in regard to child allowance. In such a case as the one I have quoted, if the child's earnings in the financial year exceeded £85 then, by as much as they exceeded £85, the child allowance would be correpondingly reduced, which is strictly in accordance with all the escalator Clauses operating in relation to other allowances under the Income Tax code. I hope that the hon. and learned Gentleman, on reflection, will feel able to promise some reconsideration of this matter without waiting for the report of the Royal Commission.

When does the hon. and learned Gentleman expect to get the report of the Royal Commission? It is only in the last week or two that a new chairman has been appointed, after a period of many months during which the Commission has been without the services of a chairman. It is true that under the stimulus of great urgency the Royal Commission of 1919 reported within a year, but I doubt whether any hon. or right hon. Member of this Committee is expecting to get within a year the report of the Royal Commission which is now sitting. Taxation is much more complex now, and a wide variety of matters has to be considered.

I would, therefore, impress upon the hon. and learned Gentleman the need for meeting the case of the Amendment, for tapering off the allowance when earned income exceeds the £85 limit. I trust that he is not going to leave the parents of children in the invidious circumstances of the woman whose case I have just mentioned, of two parents, both weavers, both working in the textile industry—though not both working today—both helping to maintain output for export, whose joint earnings rendered them liable to Income Tax and who, just at the moment when they were buying their daughter a new frock, new clothes, overalls for the mill, a bicycle to go to work and other things which were needed for the girl starting off at the age of 15 in her first job, received a claim for arrears of tax amounting to £7 10s. That is not right, and I feel that the hon. and learned Gentleman ought to see that it is put right.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 204; Noes, 219.

Division No. 137.] AYES [8.20 p.m.
Acland, Sir Richard Dalton, Rt. Hon. H. Harrison, J. (Nottingham, E.)
Adams, Richard Darling, George (Hillsborough) Hastings, S.
Albu, A. H. Davies, A. Edward (Stoke, N.) Hayman, F. H.
Anderson, Alexander (Motherwell) Davies, Rt. Hn. Clement (Montgomery) Henderson, Rt. Hon A. (Rowley Regis)
Anderson, Frank (Whitehaven) Davies, Ernest (Enfield, E.) Herbison, Miss M.
Attlee, Rt. Hon. C. R. Davies, Stephen (Merthyr) Holman, P.
Awbery, S. S. de Freitas, Geoffrey Holmes, Horace (Hemsworth)
Ayles, W. H Deer, G. Holt, A. F.
Balfour, A Delargy, H. J. Houghton, Douglas
Barnes, Rt. Hon. A J Dodds, N. N. Hoy, J. H.
Bartley, P. Donnelly, D. L. Hubbard, T. F.
Bence, C. R. Driberg, T. E. N. Hudson, James (Ealing, N.)
Benn, Wedgwood Ede, Rt. Hon. J. C. Hughes, Cledwyn (Anglesey)
Benson, G. Edwards, Rt. Hon. Ness (Caerphilly) Hughes, Hector (Aberdeen, N.)
Bing, G. H. C. Edwards, W. J. (Stepney) Hynd, J. B. (Attercliffe)
Blackburn. F. Evans, Edward (Lowestoft) Irvine, A. J. (Edge Hill)
Blenkinsop, A. Ewart, R. Irving, W. J. (Wood Green)
Blyton, W. R. Fernyhough, E Isaacs, Rt. Hon. G. A
Boardman, H. Field, W. J. Janner, B.
Bottomley, Rt. Hon. A. G. Finch, H. J. Jay, Rt. Hon. D. P. T.
Bowden, H. W. Fletcher, Eric (Islington, E.) Jeger, Dr. Santo (St. Pancras, S.)
Braddook, Mrs. Elizabeth Follick, M. Jenkins, R. H. (Stechford)
Brockway, A. F. Forman, J. C. Johnson, James (Rugby)
Brook, Dryden (Halifax) Fraser, Thomas (Hamilton) Johnston, Douglas (Paisley)
Brown, Rt. Hon. George (Belper) Freeman, John (Watford) Jones, David (Hartlepool)
Brown, Thomas (Ince) Gibson, C. W. Jones, Jack (Rotherham)
Burke, W. A. Glanville, James Jones, T. W. (Merioneth)
Burton, Miss F. E. Gooch, E. G. Keenan, W.
Butler, Herbert (Hackney, S.) Gordon Walker, Rt. Hon. P. C Kinley, J.
Carmichael, J. Grenfell, Rt. Hon. D. R. Lee, Frederick (Newton)
Castle, Mrs. B. A. Grey, C. F. Lever, Leslie (Ardwich)
Champion, A. J. Griffiths, David (Rother Valley) Lindgren, G. S.
Chapman, W. D Griffiths, Rt. Hon. James (Llanelly) Logan, D. G.
Chetwynd, G. R Grimond, J. MacColl, J. E.
Clunie, J. Hale, Leslie (Oldham, W.) McGhee, H. G.
Coldrick, W. Hall, Rt. Hon. Glenvil (Colne Valley) McInnes, J.
Collick, P. H. Hall, John (Gateshead, W.) McKay, John (Wallsend)
Corbet, Mrs. Freda Hamilton, W. W. McLeavy, F.
Craddock, George (Bradford, S.) Hardy, E. A. MacMillan, M. K. (Western Isles)
Crosland, C. A. R. Hargeaves, A Mallalieu, J. P. W. (Huddersfield, E.)
Manuel, A. C. Pursey, Cmdr. H. Thomas, Ivor Owen (Wrekin)
Marquand, Rt. Hon H. A. Reeves, J. Thorneycroft, Harry (Clayton)
Mellish, R. J. Reid, Thomas (Swindon) Thurtle, Ernest
Messer, F. Richards, R. Turner-Samuels, M.
Mitchison, G. R. Robens, Rt. Hon. A. Ungoed-Thomas, Sir Lynn
Moody, A. S. Roberts, Albert (Normanton) Viant, S. P.
Morgan, Dr. H. B. W Robinson, Kenneth (St. Pancras, N.) Wade, D. W.
Morris, Percy (Swansea, W.) Rogers, George (Kensington, N.) Watkins, T. E.
Morrison, Rt. Hon. H. (Lewisham, S.) Ross, William Webb, Rt. Hon. M. (Bradford, C.)
Mort, D. L. Royle, C. Weitzman, D.
Moyle, A. Schofield, S. (Barnsley) Wells, Percy (Faversham)
Mulley, F. W. Shackleton, E. A. A. West, D. G.
Neal, Harold (Bolsover) Shawcross, Rt. Hon. Sir Hartley Wheatley, Rt. Hon. John
O'Brien, T. Silverman, Julius (Erdington) White, Henry (Darbyshira, N. E.)
Oldfield, W. H. Simmons, C. J. (Brierley Hill) Whiteley, Rt. Hon. W.
Oliver, G. H. Slater, J. Wigg, George
Oswald, T. Smith, Ellis (Stoke, S.) Wilkins, W. A.
Padley, W. E. Smith, Norman (Nottingham, S.) Willey, Frederick (Sunderland, N.)
Paget, R. T. Sorensen, R. W. Williams, Rev. Llywelyn (Aberilliery)
Paling, Rt. Hon. W. (Dearne Valley) Soskice, Rt. Hon. Sir. Frank Williams, Ronald (Wigan)
Paling, Will T. (Dewsbury) Sparks, J. A. Williams, Rt. Hon. Thomas (Don V'll'y)
Pargiter, G. A. Steele, T. Williams, W. R. (Droylsden)
Parker, J Stewart, Michael (Fulham, E.) Wilson, Rt. Hon. Harold (Huyton)
Paton, J. Strachey, Rt. Hon. J. Winterbottom, Richard (Brightside)
Pearson, A. Sylvester, G. O. Woodburn, Rt. Hon. A.
Pearl, T. F. Taylor, Bernard (Mansfield) Yates, V. F.
Poole. C. C. Taylor, John (West Lothian)
Prica, Joseph T. (Westhoughton) Taylor, Rt. Hon. Robert (Morpeth) TELLERS FOR THE NOES:
Proctor, W. T Thomas,Iorwerth (Rhondda W.) Mr. Arthur Allen and Mr. Hannan.
Aitken, W. T. Drewe, C Johnson, Howard (Kemptown)
Alport, C. J. M. Dugdale, Maj. Rt. Hon. Sir T. (Richmond) Jones, A. (Hall Green)
Amery, Julian (Preston, N.) Duncan, Capt. J. A. L. Keeling, Sir Edward
Amory, Heathcoat (Tiverton) Duthie, W. S. Kerr, H. W. (Cambridge)
Anstruther-Gray, Major W. J. Eccles, Rt. Hon. D. M. Lambert, Hon. G.
Arbuthnot, John Elliot, Rt. Hon. W. E. Lambton, Viscount
Ashton, H. (Chelmsford) Erroll, F. J. Lancaster, Col. C. G
Assheton, Rt. Hon. R. (Blackburn, W.) Fell, A. Langford-Holt, J. A.
Astor, Hon. J. J. (Plymouth, Sutton) Finlay, Graeme Law, Rt. Hon. R. K.
Astor, Hon. W. W. (Bucks, Wycombe) Fisher, Nigel Leather, E. H. C.
Baker, P. A. D Fleetwood-Hesketh, R. F. Legh, P. R. (Petersfield)
Baldock, Lt.-Cmdr. J. M. Fletcher-Cooke, C. Linstead, H. N.
Baldwin, A. E. Foster, John Lockwood, Lt.-Col. J. C.
Barber, A. P. L. Fraser, Hon. Hugh (Stone) Low, A. R. W.
Baxter, A B. Gage, C. H. Lucas, P. B. (Brentford)
Beach, Maj. Hicks Galbraith, Cmdr. T. D. (Pollok) Lucas-Tooth, Sir Hugh
Bell, Ronald (Bucks, S.) Galbraith, T. G. D. (Hillhead) Lyttelton, Rt. Hon. O.
Bennett, F. M. (Reading, N.) Garner-Evans, E. H. Macdonald, Sir Peter (I. of Wight)
Bevins, J R. (Toxteth) George, Rt. Hon. Maj. G. Lloyd Mackeson, Brig. H. R.
Birch, Nigel Godber, J. B. McKibbin, A. J.
Bishop, F. P. Gomme-Duncan, Col. A. McKie, J. H. (Galloway)
Black, C. W. Gough, C. F. H. MacLeod, Rt. Hon. Iain (Enfield, W.)
Bossom, A. C. Gower, H. R. MacLeod, John (Ross and Cromarty)
Bowen, E. R. Graham, Sir Fergus Macmillan, Rt. Hon. Harold (Bromley)
Boyd-Carpenter, J. A. Gridley, Sir Arnold Maitland, Comdr. J. F. W. (Horncastle)
Boyle, Sir Edward Grimston, Sir Robert (Westbury) Maitland, Patrick (Lanark)
Braine, B. R. Harris, Frederic (Croydon, N.) Manningham-Buller, Sir R. E
Braithwaite, Sir Albert (Harrow, W.) Harris, Reader (Heston) Marshall, Douglas (Bodmin)
Brooke, Henry (Hampstead) Harrison, Col. J. H. (Eye) Maude, Angus
Buchan-Hepburn, Rt. Hon. P. G. T. Harvie-Watt, Sir George Maudling, R.
Bullard, D. G. Heald, Sir Lionel Maydon, Lt.-Comdr. S L. C
Bullus, Wing Commander E. E. Heath, Edward Medlicott, Brig. F.
Burden, F. F. A. Higgs, J. M. C. Mellor, Sir John
Butler, Rt. Hon. R. A. (Saffron Walden) Hill, Dr. Charles (Luton) Molson, A. H. E.
Carr, Robert (Mitcham) Hill, Mrs. E. (Wythenshawe) Moore, Lt.-Col. Sir Thomas
Channon, H. Hirst, Geoffrey Mott-Radclyffe, C. E.
Clarke, Col. Ralph (East Grinstead) Holland-Martin, C. J. Nabarro, G. D. N.
Cole, Norman Hollis, M. C. Nicholson, Godfrey (Farnham)
Colegate, W. A. Holmes, Sir Stanley (Harwich) Nicolson, Nigel (Bournemouth, E.)
Conant, Maj. R. J. E. Hope, Lord John Nield, Basil (Chester)
Craddock, Beresford (Spelthorne) Hornsby-Smith, Miss M. P. Noble, Comdr. A. H. P.
Crookshank, Capt. Rt. Hon. H. F. C. Horobin, I. M. Nugent, G. R. H
Crosthwaite-Eyre, Col. O. E. Horsbrugh, Rt. Hon. Florence Nutting, Anthony
Crouch, R. F. Howard, Gerald (Cambridgeshire) Oakshott, H. D.
Darling, Sir William (Edinburgh, S.) Hudson, Sir Austin (Lewisham, N.) Ormsby-Gore, Hon. W. D.
Deedes, W. F. Hurd, A. R. Orr, Capt. L. P. S.
Digby, S. Wingfield Hutchison, Lt.-Corn. Clark (E'b'rgh W.) Orr-Ewing, Ian L. (Weston-super-Mare)
Dodds-Parker, A. D. Hutchison, James (Scotstoun) Partridge, E.
Donaldson, Cmdr. C. E. McA. Hyde, Lt.-Col. H. M. Peake, Rt. Hon. O
Donner, P. W. Hylton-Foster, H. B. H. Perkins, W. R. D.
Doughty, C. J. A. Jenkins, R. C. D. (Dulwich) Pete, Brig. C. H. M
Douglas-Hamilton, Lord Malcolm Jennings, R. Peyton, J. W. W.
Drayton, G. B. Johnson, Eric (Blackley) Pickthorn, K. W. M.
Pitman, I. J. Smithers, Sir Waldron (Orpington) Tweedsmuir, Lady
Powell, J. Enoch Snadden, W. McN. Vane, W. M. F.
Prior-Palmer, Brig O. L. Soames, Capt. C. Vaughan-Morgan, J K
Profumo, J. D. Spearman, A. C. M. Vosper, D. F.
Raikes, H. V. Speir, R. M Wakefield, Edward (Derbyshire, W.)
Rayner, Brig. R Spence, H. R. (Aberdeenshire, W.) Wakefield, Sir Wavell (Marylebone)
Redmayne, E. Stanley, Capt. Hon. Richard Ward, Hon. George (Worcester)
Remnant, Hon. P. Stevens, G. P. Ward, Miss I. (Tynemouth)
Robinson, Roland (Blackpool, S.) Steward, W. A. (Woolwich, W.) Waterhouse, Capt Rt. Hon. C.
Robson-Brown, W. Stewart, Henderson (Fife, E.) Webbe, Sir H. (London & Westminster)
Rodgers, John (Sevenoaks) Storey, S. Wellwood, W.
Roper, Sir Harold Strauss, Henry (Norwich, S.) White, Baker (Canterbury)
Russell, R. S. Stuart, Rt. Hon. James (Moray) Williams, Rt. Hon. Charles (Torquay)
Ryder, Capt. R. E. D. Studholme, H. G. Williams, Gerald (Tonbridge)
Salter, Rt. Hon. Sir Arthur Summers, G. S. Williams, Sir Herbert (Croydon, E.)
Savory, Prof Sir Douglas Sutcliffe, H. Wills, G.
Schofield, LL-Col. W. (Rochdale) Taylor, William (Bradford, N.) Wilson, Geoffrey (Truro)
Scott, R. Donald Thorneycroft, R. Hn. Peter (Monmouth) York, C.
Scott-Miller, Cmdr, R. Thornton-Kemsley, Col. C. N.
Shepherd, William Turner, H. F. L. TELLERS FOR THE NOES:
Simon, J. E. S. (Middlesbrough, W.) Turton, R. H. Mr. Butcher and
Mr. Richard Thompson.

8.30 p.m.

The following Amendments stood upon the Order Paper in the name of Mr. GAITSKELL:

In page 14, line 16, at end, insert: (4) After subsection (1) of section two hundred and twelve of the said Act (which relates to relief in respect of children) there shall be inserted the following subsection— (1A) For the purpose of subsection (1) of this section an adopted child entered on the adopted children register under the Adoption Act, 1950 (including any register deemed to be part of such adopted children register) shall be deemed to be the child of the adopter or adopters entered on the said register and not of the child's parent or parents.

In page 14, line 16, at end, insert: (4) After subsection (2) of section two hundred and twelve of the said Act (which relates to relief in respect of children) there shall be inserted the following subsection— (2A) For the purpose of subsection (2) of this section a person who has undertaken for reward the nursing and maintenance of an infant under Part VII of the Public Health Act, 1936, Part XIII of the Public Health (London) Act, 1936, or Part I of the Children and Young Persons (Scotland) Act, 1937, or of a child boarded out by a local authority under Part II of the Children Act, 1908, shall be deemed to have custody of and to maintain at his own expense the infant or child: Provided that from any relief to which but for this proviso such a person would be entitled there shall be deducted the amount of tax at the standard rate on such reward as aforesaid received during the year of assessment.

The Deputy-Chairman (Mr. Hopkin Morris)

These Amendments are out of order. The next Amendment to be selected is that in the name of the Chancellor of the Exchequer.

Mr, Mitchison

On a point of order. Do I understand that you have ruled out the two Amendments in the name of my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), both relating to page 14, line 16.

The Deputy-Chairman

Yes. The effect of each of those two Amendments is to change the incidence of the tax, and they are therefore beyond the scope of the Ways and Means Resolution.

Mr. Mitchison

I understand that neither of those Amendments have that effect, and I therefore wish to raise two points of order.

On the first point of order, I submit that the first Amendment does not change the incidence of the tax. It can be said to do so only upon the ground that the natural, and not the adoptive, parent would be entitled to this relief. In my submission, that interpretation is inconsistent with the Adoption Act, which provides that the rights and liabilities of the parent in respect of a child shall be transferred to the adopter, and that on the creation of an adoption order they shall, as regards the parent or parents, be extinguished.

I submit that the right to an Income Tax relief of this character is a right in relation to the maintenance of a child, and that before there is any question of the operation of this proposal that right has been extinguished already. A child cannot appear on an adopted-children register until an adoption order has been made and until, accordingly, the rights of the parents have been extinguished already.

I beg to submit, therefore, that the Amendment does not have the effect of imposing any additional burden on the original parent or alter the position in any way as regards that parent. It really effects an improvement, in relation to the Revenue, of the position of the adoptive parent. I shall raise the second point of order subsequently.

The Deputy-Chairman

I must rule that before the adoption is completed the Amendment may transfer the incidence of the burden, and the Amendment has, on that ground, been ruled out of order.

Mr. Mitchison

With the greatest respect, I think that that cannot be right. The Amendment can only have effect as regards a child on the adopted-children register, and a child cannot get on to that register until an adoption order has been made and until the rights of the parent have accordingly been extinguished. I therefore venture to suggest tthat, in point of time as well as on other grounds, I am correct in saying that there is no shred of right at all. There is merely a provision which will reduce the burden by the Revenue on the adopter.

The Deputy-Chairman

I have listened with great care to the argument of the hon. and learned Member. I am advised that the Amendment goes beyond the scope of the Resolution agreed to by the Committee of Ways and Means, and I must therefore rule it out of order.

Mr. Glenvil Hall (Colne Valley)

I have also listened carefully to what my hon. and learned Friend the Member for Kettering (Mr. Mitchison) has said, as I think we all have, and it is my view that he made out an extremely good case. What he said carried with it the absolute unanimity of the Committee. [An HON. MEMBER: "No."] Well, perhaps not quite. At any rate, on this side of the Committee we feel that my hon. and learned Friend has a point, although I realise that as you have given your Ruling, Mr. Hopkin Morris, it may not be possible for you to go back upon it.

I wonder whether the Financial Secretary to the Treasury, who has been sitting here, who has some knowledge of the law, and knows the Act which has been cited, can give us an assurance that between now and the Report stage the Treasury will look at this matter. If there is something in the point made by my hon. and learned Friend, I am sure that they will do something to put right what is obviously an injustice.

Mr. Boyd-Carpenter

I imagine that I shall not be in order in giving an assurance in these circumstances upon an Amendment which you, Mr. Hopkin Morris, have ruled out of order and which the Committee are not discussing. The most I can say to the right hon. Gentleman is that what has been said will no doubt appear in HANSARD, so that he who runs may read.

Mr. Mitchison

On my second, and better point of order, the case that I respectfully submit with regard to the second Amendment is completely watertight. The Amendment affects Section 212 of the Income Tax Act, 1952. Subsection (1) deals with a claim in respect of the claimant's child. It is completely unaffected by the proposed Amendment, which relates to subsection (2). 'This subsection relates to a claimant who has the custody of, and maintains at his own expense, a child. Later on, the subsection provides for the claimant to show that there is no claim, or that the claim has been waived under subsection (1). Accordingly, under the Amendment, there can be no question of affecting in any way the rights of a parent.

What I suppose to be the objection is that the Amendment may deal with cases where someone has boarded out a child and could otherwise have had a claim to relief under the Section. I submit with great respect that it cannot so deal, for the reason that, apart from the question of the custody of the child, the person who maintains a boarded-out child, whether at his own expense or, as is far more likely, at the expense of someone else, is the foster parent.

That that is so is abundantly borne out by the language of the Act to which I am referring. In the Public Health Act, 1936, there is express reference, first of all to a person who undertakes for reward the nursing and maintenance of the child. A person who undertakes the maintenance of a child, and carries out that undertaking, is the one who maintains the child, whether he does it at his own expense or at the expense of anyone else. Thus, yet again, in the following Section of the Public Health Act we get references to a change of residence by the foster parent, who is described as a person who is maintaining a foster child.

Accordingly, if a child is boarded out in this way, in no instance can anyone be entitled to claim in respect of the maintenance, whatever may be said about the custody, except the foster parents. Therefore, we are not depriving the uncle or the stranger of any possible relief any more than we are depriving the parent. Therefore, I submit, respectfully and with confidence, that this cannot possibly be a case in which a burden is shifted. This is an entirely new demand on the Revenue.

If I may have the attention of the Committee for a further moment, may I point out that foster parents in these circumstances can easily, and very often do, show that no one else has a claim, for that is required under subsection (2), hut they are in the constant difficulty of being unable to show that they have the custody and maintenance at their own expense. I am informed that, in practice, concessions are made from time to time. I recognise that on a point of order I cannot go into that, but it illustrates the fact that the person who is alone entitled, if anyone, is the foster parent. That is obviously so where the boarding out is done by a local authority, for a local authority cannot have a personal allowance of this character under the Act.

I have endeavoured to submit that it applies equally in the other cases where the boarder-out—if I may use the term as distinct from the boardee-out—is the parent or other relative or a complete stranger. Therefore, I submit respectfully that this Amendment is in order and does no more than lighten the burden on the taxpayer.

The Deputy-Chairman

I regret that I must again rule against the hon. and learned Member. In stating that argument he has already stated the argument against this Amendment being in order. We will pass on to the Amendment of the Chancellor of the Exchequer.

Mr. Maudling

I beg to move, in page 14, line 25, at the end, to insert: (5) In section two hundred and sixteen of the said Act (under which a relief is given to a person maintaining a dependent relative with a total income not exceeding one hundred and thirty pounds a year, but the relief is reduced where the relative's total income exceeds eighty pounds a year) a reference to one hundred and thirty-five pounds shall be substituted for the reference to one hundred and thirty pounds, and a reference to eighty-five pounds for the reference to eighty pounds. The effect of this Amendment will be to continue what has become recently a normal practice in regard to the dependant's allowance when the old age pension is raised. The dependant's allowance of £50 is only granted in full when the income of the dependant does not exceed £80. After that, an allowance of £50 is reduced £ by £ as the dependant's income rises to a maximum of £130, when the dependant's allowance ceases altogether.

It has been the practice for some years that the miinimum figure for the dependant's allowance should be strictly related to the old age pension, and that it should be increased when the old age pension is increased. For example, in 1947 when the old age pension was increased to 26s. a week, that is, £67 10s. a year, the income limit went up to £70. Last year, when the old age pension was increased to £78 a year, the income limit for full relief was increased to £80. As the Committee is aware, this year there is an increase in the old age pension to the equivalent to £84 10s. a year and so, continuing the practice established in recent years, the effect of this Amendment would be to raise the minimum to £85 and the maximum £50 higher, to £135.

Mr. Houghton

There is only a slight difference between the Amendment moved by the hon. Gentleman and the one lower down on the same page in the name of my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), and other of my hon. Friends, namely, in page 14, line 25, at end, insert: (5) Subsection (1) of section two hundred and sixteen of the Income Tax Act, 1952 (which relates to the total income of dependent relatives) shall be amended by substituting the words "one hundred and forty pounds a year," for the words "one hundred and thirty pounds a year," and the words "ninety pounds a year," for the words "eighty pounds a year. Therefore, we do not wish to press our Amendment. Otherwise it would have been convenient for the two to be considered together. The arithmetic of the Chancellor is a little finer than our own. He has carried the increased weekly pension to an annual sum with arithmetical accuracy, whereas we thought there might be a baker's dozen, a little thrown in, that we might go to the nearest £10, rather than restrict the allowance to almost the exact annual equivalent of the weekly amount of the retirement pension.

8.45 p.m.

Of course, the Amendment is liberal to the extent that it will concede the allowance on the higher basis for the whole of the financial year, whereas the increased pensions will not operate until a little later in the year; but it is clearly convenient to deal with this year and to deal with it as a complete year.

How much longer it will be necessary to adjust the dependent relative allowance to a rising scale of social security payments, I do not know. This is clearly one matter, perhaps, which would be suitably considered by the Solicitor-General's wonderful standby: a Royal Commission. Certain aspects of its relationship between the dependent allowance and the level of social security payments clearly need examination.

There are other aspects of the allowance which call for attention also, but the Amendment deals with the narrow question of the money limits of the allowance, and I do not want to dwell on these other things. We on this side are grateful to the Chancellor for adjusting the allowance to the new level of social insurance payment, and we will not press our own Amendment.

Amendment agreed to.

Mr. E. Fletcher

I beg to move, in page 14, line 25, at the end, to insert: (5) Subsection (1) of section two hundred and fourteen of the Income Tax Act, 1952 (relating to an allowance in respect of a person taking charge of a widower's or widow's children or acting as his or her housekeeper) shall be amended by substituting the words "seventy-five pounds," for the words "fifty pounds. (6) Section two hundred and fifteen of the Income Tax Act, 1952 (which provides for an allowance in respect of a relative taking charge of unmarried person's young brother or sister) shall be amended by substituting the words "seventy-five pounds," for the words "fifty pounds. (7) Section two hundred and eighteen of the -Income Tax Act, 1952 (relating to a person employed or maintained to take charge of children) shall be amended by substituting the words "seventy-five pounds," for the words "fifty pounds. The proposed additional words are designed to introduce changes in Sections 214, 215 and 218 of the Income Tax Act, 1952. This is an Amendment which we shall press and which, I hope, the Government will concede.

Shorn of technical language, the object of the Amendment is, in common parlance, to increase the housekeeper allowance from the present rate of £50 to a rate which, we suggest, is just and equitable: namely, £75. You will be surprised, Mr. Hopkin Morris, to hear that whereas all other personal allowances have been raised, either by the previous Government or in this year's Budget, the housekeeper allowance has remained static for over 20 years. It has been £50 since 1931. The curious thing is that as long ago as 1924 it was higher than it is today.

On what grounds can it be suggested that all other personal allowances should be raised in accordance with the trend of the time but that the housekeeper allowance should be left where it is for more than 20 years? The proposition only has to be stated in these clear and simple terms to make its absolute justice manifest to all.

Let me remind the Committee how the other allowances have been increased. For example, the personal allowance, which used to be £80, is now £120. The married allowance, which used to be £180 for a man and his wife, is now £210. To take the allowance for a wife alone, it has been raised from £80 to £90. The child's allowance was raised in the last Budget and quite properly, has been raised again in this Budget, although we do not think it has been raised by as much as it should have been. But whereas the child allowance was formerly £50 and is now £85, and the dependent relative allowance, which used to be £25, has in the course of the years been raised to £50, the surprising thing is that the housekeeper allowance still remains at £50.

The effect of that is to penalise widows, widowers and other taxpayers who, for one reason or another, have to look after young children. Why should they be penalised in this way? If it is just—and it is—to have increased the married allowance, which has now gone up to £90, how can the Financial Secretary to the Treasury defend leaving the housekeeper's allowance at £50? Does he not realise that it is just as necessary for a widower to keep pace with the rising cost of living as it is for the married man with a wife? Does he not know that it is even more expensive if one unfortunately has suffered bereavement and is a widower and has to employ a housekeeper than if one is happily married?

One of our learned judges said last week that the wisest and cheapest kind of housekeeper is a wife. That may be debatable, but what I think is true is that in the ordinary circumstances it is more expensive for a widower who has to employ a housekeeper to look after his children than it is for a married man.

This Amendment is not confined to the case of widowers but applies equally to widows and, perhaps, to a limited number of cases of individual taxpayers who have the care of young children, either of members of their family or in other circumstances, and have to maintain a resident housekeeper to look after those children. The Financial Secretary is a just man and it is no use his trying to avoid the force of argument by taking refuge in private conversation. He knows as well as I do the justice of this argument.

I do not know what the cost would be, but, as far as I can calculate, it would be relatively insignificant. It might amount to £3 million or £4 million a year. What is that compared with the surplus of £500 million which the hon. Gentleman's friends on the back benches suggest should be distributed as largesse to the higher ranges of Income Tax payers? It is a mere bagatelle compared with that. The allowance has been raised for the single man and for the married man, and the children's allowance has been raised, but unhappy widowers and others, notwithstanding that they have to meet the same increased cost of living, are still given the same allowance for a housekeeper as has been given for 20 years.

I hope I have said sufficient to make the case to the satisfaction of the Financial Secretary and, if not, to the satisfaction of the Committee, and I hope that hon. Members will support me in pressing this Amendment.

Mr. Maudling

The hon. Member for Islington, East (Mr. E. Fletcher) has moved this Amendment in the most persuasive terms and I can tell him straight away that the cost of granting this concession would be less than he supposes. It is a proposition which commends itself, and has commended itself, to hon. Members on both sides of the Committee, not only this year but in previous years. I think that in having to turn down the suggestion I shall have to plead in aid the argument used by his right hon. Friend the Member for Battersea, North (Mr. Jay), on an almost precisely similar case last year.

The hon. Member for Islington, East, is right in saying that the allowance has not changed since 1931. It may be that since then every Financial Secretary has advanced the same argument. These three different allowances, all of which go together, are particularly designed to assist people making provision for the maintenance of children. It is important to point out that already in his Budget the Chancellor has made provision for an increased allowance of £15 for anyone maintaining a child. Therefore, the point about assisting in the maintenance of children has already been met.

There remains the argument that the housekeeper is analogous to the wife in certain respects, as the hon. Member has pointed out. That is in some ways a persuasive argument. I advanced it myself last year, so naturally I think it rather persuasive. It was rejected by the then Financial Secretary on the grounds that there was no real analogy that could be drawn in these matters. Since 1931 this figure has always been consistently maintained. It is not right to draw an analogy in this matter between the wife's personal allowance and the personal allowance granted in respect of a housekeeper. After all, a housekeeper who is looking after a widow or widower with no children is in the position of a domestic servant or anyone else who assists in the household. That does not seem to be any strong reason why that allowance should be automatically increased.

This is undoubtedly a matter of principle. Is it right in principle, as some people argue—so far they have always done so unsuccessfully—to say that there should be a relation between the housekeeper allowance, apart from the maintenance of children aspect of it, and the allowance for a married person? That being a matter of principle, I suggest that it is pre-eminently a suitable matter for the Royal Commission.

I would point out that when last year we tried, from the other side of the Committee, to move quite a number of Amendments dealing with matters that had been considered by the Millard Tucker Committee, the then Chancellor of the Exchequer was not prepared to consider them at the time because, although that Committee had already reported, he had not had time to study their recommendations in detail. A fortiori we are justified in saying that these matters, which are complex and a change in respect of which would give rise to very wide ramifications, it would be wise to have the benefit of the advice of the Royal Commission which has been established and is already sitting to consider precisely this type of point, among other things, of course.

I hope I have said enough to indicate that we do not regard this Amendment with lack of sympathy, but I ask the Committee not to accept it on the grounds put forward, and which have been advanced, with great respectability, by hon. Gentlemen opposite in previous years.

Mr. Anthony Crosland

(Gloucestershire, South): I wish to make a point about the fact of the Royal Commission being used as an excuse by the Government Front Bench for saying that because matters are being considered by that Commission nothing should be done. We are glad to see that the hon. Member for Barnet (Mr. Maudling) has so little to do with civil aviation that he has time to come to speak on matters of finance in which we know he is interested.

He has used the analogy of the Millard Tucker Committee, and the Financial Secretary has used that argument. There is no analogy, because the Millard Tucker Committee was set up to consider a number of extremely detailed, complex and subtle points of company finance. On points as detailed and difficult as those, it was reasonable to say that the Report of that expert Committee was required before the Government could come to a decision. The Royal Commission was not set up for this purpose at all, though one might have got that impression from the Financial Secretary and the hon. Member for Barnet.

The Royal Commission on Taxation was set up to consider such major issues as the taxation of distributed as opposed to undistributed profits, whether corporate taxation as a whole was bearing too heavily, the relation of taxation and incentives, etc. It was not set up primarily to consider small matters involving particular allowances against Income Tax.

The same excuse has been used previously, very unconvincingly, by the Solicitor-General, about the £13 limit. I think that some protest should be made from this side of the Committee if this sort of thing is to go on for the rest of this stage of the Finance Bill. It is misusing the whole purpose for which the Royal Commission was set up to say that nothing can be done on these small questions of Income Tax reliefs and allowances until the Royal Commission has reported.

If the Government and the Royal Commission go on at their present rate, the Commission will not report in the lifetime of the hon. Member. There was a certain dispute about the chairmanship of the Royal Commission, as a result of which it did not sit for three months. I believe I am correct in saying it has not sat even since the new Chairman was appointed, and that the last time the Royal Commission sat was somewhere about last October. In view, therefore, of the negligibly rapid progress, the practically non-existent progress of the Commission, it does seem intolerable that every single Amendment, or any form of proposal from this side of the Committee, is to be met by this nonsensical alibi of the Royal Commission.

9.0 p.m.

Mr. Houghton

I would agree that there are a number of matters connected with the housekeeper allowance which would be suitable for examination by the Royal Commission, but the amount of the allowance is not one of them. The Royal Commission may study some of the complexities and anomalies, or difficulties of administration of the existing allowances of this kind, but one thing they are unlikely to do is to recommend to the Chancellor that the amount of allowances should be altered, when they know full well that revenue will depend on any changes which might be made.

Moreover, the Royal Commission are not to know, and it is probably not within their terms of reference to say, what should be the relative priorities for the Chancellor of the Exchequer in matters of changes in personal allowances. There are some difficult questions about the residential qualifications of a housekeeper which the Royal Commission might wish to unravel. There is another important question about why should housekeepers always be females. Some men are better housekeepers than women. Why should not they be employed as housekeepers?

There is probably a good case for allowing a widow in her loneliness to employ a male housekeeper. Yet under the existing law she is not entitled to claim a housekeeper allowance, because it must be a female person who is employed as a housekeeper. All this, I will grant to the hon. Gentleman, may go to the Royal Commission, but if hon. Members opposite want to quote the Royal Commission as an alibi for every Amendment which is moved, the sooner the whole of the Commission are called to the Bar of this Committee to hear what we have to say the better.

This allowance, as has been stated, has remained unchanged for a long time. It may be that the Chancellor wishes to distinguish in his own mind between the allowance for a housekeeper to be given to a person who has young children, and the amount to be given for a housekeeper where the taxpayer has no young children, as in the case of a childless widower; where under the existing law the same type of allowance may be granted for the two different kinds of housekeeper. But while a debate may go on as to where the differential in amount of allowance should be introduced, there is the present case of housekeepers, in whatever circumstances they are employed or serving, who are receiving, so far as the taxpayer is concerned, the same allowance as long before the war.

By reference to all other changes which have been made, there is a case for adjustment, and it can be done for a small amount of money. If the right hon. Gentleman is proposing to charge my right hon. Friend the Member for Battersea, North (Mr. Jay) with having resisted this Amendment last time—las we are so frequently charged with having resisted things we are now proposing—all I can do is to quote the Prime

Minister. He said that as circumstances change events moved forward. That was his alibi for not doing what he said he would do. That is our alibi for now proposing what last year we said could not be done.

Mr. Jay

May I make clear that when I welcomed the Parliamentary Secretary to the Ministry of Civil Aviation I did not mean to imply that we did not wish to hear the Minister of State for Economic Affairs again at all in these debates? I hope my remarks were not taken as putting a ban on the Minister for the rest of the discussions on this Bill. Nor would we wish to keep the Parliamentary Secretary entirely away from Civil Aviation, because I am sure that the co-ordination of transport might then suffer even more than it has already.

Whatever I said last year about this particular allowance, I am sure I did not blame it on the Royal Commission on Taxation and Income Profits. I think it is correct to say that that Royal Commission had not then started work. In addition to what my hon. Friends have said about the Royal Commission argument, I wish to say that there is no validity in it at all. This Royal Commission was sitting when the Chancellor introduced his Budget in March, but it did not prevent him from making extensive changes in the child allowances, the marriage allowance and the earned income allowance.

If the existence of this Royal Commission had made it impossible to carry out any changes in these allowances, it would have been impossible for him to introduce that Budget. If, on the other hand, it is possible for him to change these allowances in his Budget, clearly it is possible, as far as the Royal Commission is concerned, to make a change such as the one we suggest. There is no substance in that argument. If neither the hon. Gentleman nor the Minister of State can produce a better one, we must press this Amendment to a Division.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 231; Noes, 231.

Division No. 138.] AYES [9.7 p.m.
Adams, Richard Anderson, Frank (Whitehaven) Bacon, Miss Alice
Albu, A. H. Attlee, Rt. Hon. C. R. Baird, J.
Allen, Arthur (Besworth) Awbery, S. S. Balfour, A.
Anderson, Alexander (Motherwell) Ayles, W. H. Barnes, Rt. Hon. A. J.
Bartley, P. Hall, John (Gateshead, W.) Paling, Will T. (Dewsbury)
Bellanger, Rt. Hon. F. J Hamilton, W. W. Pannell, Charles
Bence, C. R. Hannan, W. Pargiter, G. A
Benn, Wedgwood Hardy, E. A. Parker, J.
Benson, G. Hargreaves, A. Paton, J.
Bing, G. H. C. Harrison, J. (Nottingham, E.) Peart, T. F.
Blackburn, F. Hastings, S. Poole, C. C.
Blenkinsop, A. Hayman, F. H. Porter, G.
Blyton, W. R. Henderson, Rt. Hon. A. (Rowley Regis) Price, Joseph T. (Westhoughton)
Boardman, H. Herbison, Miss M. Proctor, W. T.
Bottomley, Rt. Hon. A. G. Holman, P. Pursey, Cmdr. H.
Bowden, H. W. Holt, A. F. Reeves, J.
Braddock, Mrs. Elizabeth Houghton, Douglas Reid, Thomas (Swindon)
Brockway, A. F. Hoy, J. H. Rhodes, H.
Brook, Dryden (Halifax) Hubbard, T. F. Richards, R.
Brown, Rt. Hon. George (Belper) Hudson, James (Ealing, N.) Robens, Rt. Hon. A
Brown, Thomas (Ince) Hughes, Cledwyn (Anglesey) Roberts, Albert (Normanton)
Burke, W. A. Hughes, Hector (Aberdeen, N.) Rogers, George (Kensington, N.)
Burton, Miss F. E. Hynd, J. B. (Attercliffe) Ross, William
Butler, Herbert (Hackney, S.) Irvine, A. J. (Edge Hill) Royle, C.
Carmichael, J. Irving, W. J. (Wood Green) Schofield, S. (Barnsley)
Castle, Mrs. B. A Isaacs, Rt. Hon. G. A Shackleton, E. A. A.
Champion, A. J. Janner, B. Shawcross, Rt. Hon. Sir Hartley
Chapman, W. D. Jay, Rt. Hon. D. P. T. Silverman, Julius (Erdington)
Chetwynd, G. R Jeger, Dr. Santo (St. Pancras, S.) Simmons, C. J. (Brierley Hill)
Clunie, J. Jenkins, R. H. (Stechford) Slater, J.
Coldrick, W. Johnson, James (Rugby) Smith, Ellis (Stoke, S.)
Collick, P. H. Johnston, Douglas (Paisley) Smith, Norman (Nottingham, S.)
Corbet, Mrs. Freda Jones, David (Hartlepool) Sorensen, R. W.
Cove, W. G. Jones, Jack (Rotherham) Soskice, Rt. Hon. Sir Frank
Craddock, George (Bradford, S.) Jones, T. W. (Merioneth) Sparks, J. A.
Crosland, C. A. R. Keenan, W. Steele, T.
Dalton, Rt. Hon. H. Key, Rt. Hon. C. W. Stewart, Michael (Fulham, E.)
Darling, George (Hillsborough) Kinley, J. Strachey, Rt. Hon. J.
Davies, A. Edward (Stoke, N.) Lee, Frederick (Newton) Sylvester, G. O.
Davies, Ernest (Enfield, E.) Lever, Harold (Cheetham) Taylor, Bernard (Mansfield)
Davies, Stephen (Merthyr) Lever, Leslie (Ardwick) Taylor, John (West Lothian)
de Freitas, Geoffrey Lewis, Arthur Taylor, Rt. Hon. Robert (Morpeth)
Deer, G. Lindgren, G. S. Thomas, Iorwerth (Rhondda, W.)
Delargy, H. J. Logan, D. G. Thomas, Ivor Owen (Wrekin)
Dodds, N. N. MacColl, J. E. Thurtle, Ernest
Donnelly, D. L. McGhee, H. G. Turner-Samuels, M.
Driberg, T. E. N. McInnes, J. Ungoed-Thomas, Sir Lynn
Ede, Rt. Hon. J. C. McKay, John (Wallsend) Viant, S. P.
Edwards, RI. Hon. Ness (Caerphilly) McLeavy, F. Wade, D. W.
Edwards, W. J. (Stepney) MacMillan, M. K. (Western Isles) Wallace, H. W.
Evans, Edward (Lowestoft) Mallalieu, E. L. (Brigg) Watkins, T. E.
Evans, Stanley (Wednesbury) Mallalieu, J. P. W. (Huddersfield, E.) Webb, Rt. Hon. M. (Bradford, C.)
Ewart, R. Manuel, A. C. Weitzman, D.
Fernyhough, E. Marquand, Rt. Hon. H. A. Wells, Percy (Faversham)
Field, W. J. Mellish, R. J. West, D. G.
Finch, H. J. Messer, F. Wheatley, Rt. Hon. John
Fletcher, Eric (Islington, E.) Mitchison, G. R. White, Henry (Derbyshire, N.E.)
Follick, M. Moody, A. S. Whiteley, Rt. Hon. W.
Forman, J. C. Morgan, Dr. H. B. W. Wigg, George
Fraser, Thomas (Hamilton) Morris, Percy (Swansea, W.) Wilkins, W. A.
Freeman, John (Watford) Morrison, Rt. Hon. H. (Lewisham, S.) Willey, Frederick (Sunderland, N.)
Gibson, C. W. Mort, D. L. Williams, Rev. Llywelyn (Abertillery)
Glanville, James Moyle, A. Williams, Ronald (Wigan)
Gooch, E. G. Mulley, F. W. Williams, Rt. Hon. Thomas (Don V'll'y)
Gordon Walker, Rt. Hon. P. C. Neal, Harold (Bolsover) Williams, W. R. (Droylsden)
Grenfell, Rt. Hon. D. R. O'Brien, T. Wilson, Rt. Hon. Harold (Huyton)
Grey, C. F. Oldfield, W. H Winterbottom, Richard (Brightside)
Griffiths, David (Bother Valley) Oliver, G. H. Woodburn, Rt. Hon. A
Griffiths, Rt. Hon. James (Llanelly) Oswald, T. Yates, V. F.
Grimond, J. Padley, W. E
Hale, Leslie (Oldham, W.) Paget, R. T. TELLERS FOR THE NOES:
Hall, Rt. Hon. Glenvil (Colne Valley) Paling, Rt. Hon. (Dearne Valley) Mr. Pearson and Mr. Holmes
Aitken, W. T. Banks, Col. C. Braine, B. R.
Alport, C. J. M. Barber, A. P. L. Braithwaite, Sir Albert (Harrow, W.)
Amery, Julian (Preston, N.) Baxter, A. B. Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)
Amory, Heathcoat (Tiverton) Beach, Maj. Hicks Brooke, Henry (Hampstead)
Anstruther-Gray, Major W. J Bell, Ronald (Bucks, S.) Brooman-White, R. C.
Arbuthnot, John Bennett, F. M. (Reading, N.) Buchan-Hepburn, Rt. Hon. P. G. T
Ashton, H. (Chelmsford) Bevins, J. R. (Toxteth) Bullard, D. G.
Assheton, Rt. Hon. R. (Blackburn, W.) Birch, Nigel Bullus, Wing Commander E. E.
Astor, Hon. J. J. (Plymouth, Sutton) Bishop, F. P. Burden, F. F. A.
Astor, Hon. W. W. (Bucks, Wycombe) Black, C. W Butcher, H. W.
Baker, P. A. D. Bossom, A. C. Butler, Rt. Hon. R. A. (Saffron Walden)
Baldock, Lt.-Cmdr. J. M Boyd-Carpenter, J. A Carr, Robert (Mitcham)
Baldwin, A. E. Boyle, Sir Edward Channon, H
Churchill, Rt. Hon. W. S. Howard, Gerald (Cambridgeshire) Peyton, J. W. W.
Clarke, Col. Ralph (East Grinstead) Hudson, Sir Austin (Lewisham, N.) Pickthorn, K. W. M.
Cole, Norman Hudson, W. R. A. (Hull, N.) Pitman, I. J.
Colegate, W. A. Hulbert, Wing Cmdr. N. J. Powell, J. Enoch
Conant, Maj. R. J. E Hurd, A. R. Prior-Palmer, Brig. O. L
Craddock, Beresford (Spelthorne) Hutchison, Lt.-Com Clark (E'b'rgh W.) Profumo, J. D.
Crookshank, Capt. Rt. Hon. H. F. C. Hyde, Lt.-Col. H. M Raikes, H. V.
Crosthwaile-Eyre, Col O. E Hylton-Foster, H. B. H. Rayner, Brig. R.
Crouch, R. F. Jenkins, R. C. D. (Dulwich) Remnant, Hon. P
Crowder, Petre (Ruislip—Northwood) Jennings, R. Roberts, Peter (Heeley)
Darling, Sir William (Edinburgh. S) Johnson, Eric (Blackley) Robinson, Roland (Blackpool, S.)
Deedes, W. F. Johnson, Howard (Kemptown) Robson-Brown, W.
Digby, S. Wingfield Jones, A. (Hall Green) Rodgers, John (Sevenoaks)
Dodds-Parker, A. D. Kaberry, D. Roper, Sir Harold
Donaldson, Cmdr. C. E McA Keeling, Sir Edward Russell, R. S.
Donner, P. W. Kerr, H. W. (Cambridge) Ryder, Capt. R. E. D.
Doughty, C. J. A. Lambert, Hon. G. Salter, Rt. Hon. Sir Arthur
Douglas-Hamilton, Lord Malcolm Lambton, Viscount Schofield, Lt.-Col. W. (Rochdale)
Drayson, G. B. Lancaster, Col. C. G. Scott, R. Donald
Drewe, C. Langford-Holt, J. A Scott-Miller, Cmdr. R.
Dugdale, Maj. Rt. Hn. Sir T (Richmond) Law, Rt. Hon. R. K Shepherd, William
Duncan, Capt. J A L Leather, E. H. C. Simon, J. E. S. (Middlesbrough, W.)
Duthie, W. S. Legh, P. R. (Petersfield) Smithers, Sir Waldron (Orpington)
Eccles, Rt. Hon. D. M. Linstead, H. N. Snadden, W. McN
Elliot, Rt. Hon. W E Lockwood, Lt.-Col J. C. Soames, Capt. C
Erroll, F. J Low, A. R. W. Spearman, A. C. M
Fell, A. Lucas, P. B. (Brentford) Speir, R. M.
Finlay, Graeme Lucas-Tooth, Sir Hugh Spence, H. R. (Aberdeenshire, W.)
Fisher, Nigel Lyttelton, Rt. Hon. O. Spens, Sir Patrick (Kensington, S.)
Fleetwood-Hesketh, R. F. McCorquodale, Rt. Hon. M. S Stanley, Capt. Hon. Richard
Fletcher-Cooke, C Macdonald, Sir Peter (I. of Wight) Stevens, G. P.
Foster, John Mackeson, Brig, H. R. Steward, W. A. (Woolwich, W.)
Fraser, Hon. Hugh (Stone) McKibbin, A. J. Stewart, Henderson (Fife, E.)
Fyfe, Rt. Hon. Sir David Maxwell McKie, J. H. (Galloway) Storey, S.
Gage, C. H. MacLeod, Rt. Hon. Iain (Enfield, W.) Strauss, Henry (Norwich, S.)
Galbraith, Cmdr T D (Pollok) MacLeod, John (Ross and Cromarty) Stuart, Rt. Hon. James (Moray)
Galbraith, T. G. D. (Hillhead) Macmillan, Rt. Hon Harold (Bromley) Studholme, H. G
Garner-Evans, E. H Maitland, Comdr. J. F. W. (Horncastle) Summers, G. S.
George, Rt. Hon. Maj G. Lloyd Maitland, Patrick (Lanark) Sutcliffe, H.
Godber, J. B. Manningham-Buller, Sir R. E. Taylor, William (Bradford, N.)
Gomme-Duncan, Col. A. Marshall, Douglas (Bodmin) Thompson, Lt.-Cdr. R. (Croydon, W.)
Gough, C. F. H Maude, Angus Thorneycroft, R. Hn. Peter (Monmouth)
Gower, H. R. Maudling, R. Thornton-Kemsley, Col. C N
Graham, Sir Fergus Maydon, Lt.-Comdr. S. L. C Turner, H. F. L.
Gridley, Sir Arnold Medlicotl, Brig. F. Turlon, R. H
Grimston, Hon. John (St. Albans) Mellor, Sir John Tweedsmuir, Lady
Grimston, Sir Robert (Westbury) Molson, A. H. E. Vane, W. M. F.
Harris, Frederic (Croydon, N.) Moore, Lt.-Col. Sir Thomas Vaughan-Morgan, J K.
Harris, Reader (Heston) Morrison, John (Salisbury) Wakefield, Edward (Derbyshire, W.)
Harrison, Col. J. H. (Eye) Mott-Radclyffe, C. E. Wakefield, Sir Wavell (Marylebone)
Harvie-Watt, Sir George Nabarro, G. D. N. Ward, Hon. George (Worcester)
Heald, Sir Lionel Nicholson, Godfrey (Farnham) Ward, Miss I. (Tynemouth)
Heath, Edward Nicolson, Nigel (Bournemouth, E.) Waterhouse, Capt. Rt. Hon. C.
Higgs, J. M. C. Nield, Basil (Chester) Webbe, Sir H. (London & Westminster)
Hill, Dr. Charles (Luton) Noble, Cmdr. A. H. P. Wellwood, W.
Hill, Mrs. E. (Wythenshawe) Nugent, G. R. H. While, Baker (Canterbury)
Hinchingbrooke, Viscount Nutting, Anthony Williams, Rt. Hon. Charles (Torquay)
Hirst, Geoffrey Oakshott, H. D. Williams, Gerald (Tonbridge)
Holland-Martin, C. J. Ormsby-Gore, Hon W. D. Williams, Sir Herbert (Croydon, E.)
Hollis, M. C. Orr, Capt. L. P. S. Wills, G.
Holmes, Sir Stanley (Harwich) Orr-Ewing, Ian L. (Weston-super-Mare) Wilson, Geoffrey (Truro)
Hope, Lord John Partridge, E. York, C.
Hornsby-Smith, Miss M. P. Peake, Rt. Hon. O.
Horobin, I. M. Perkins, W. R. D. TELLERS FOR THE NOES:
Horsbrugh, Rt. Hon Florence Peto, Brig. C. H. M. Mr. Vosper and Mr. Redmayne.

Question, "That this House doth agree with the Committee in the said Resolu- tion," put forthwith, pursuant to Standing Order No. 86 (Ways and Means Motions and Resolutions), and agreed to.

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

9.15 p.m.

Mr. Chapman

The Clause as it now stands perpetuates an anomaly to which I wish to draw attention in the hope that in future years, perhaps, we can get it rectified. It is an anomaly which I think the Parliamentary Secretary to the Ministry of Civil Aviation will again say is one which should be examined by the present Royal Commission before he dares to give any advice to the Committee. However, I raise the matter at this point in the hope that even if he will not do anything to deal with the situation now, he will at least consider doing so next year.

As the Clause stands at present, points concerning the definition of a housekeeper are left in obscurity. If a female relative is appointed as a housekeeper, she must be resident with the widower who appoints her. Again, if the widower employs someone who is not a relative, he has to prove that he has no female relative who could have looked after his children.

I suggest that those conditions attaching to the claiming of a housekeeper's allowance are totally anomalous and out of date in modern conditions. Surely in these days we cannot insist that a female relative appointed to look after a widower's children must actually reside on the premises before the housekeeper's allowance can be claimed. That seems totally anomalous, and, indeed, it gave rise to the well-known case of the Crown v. Adamson. The whole matter was further examined by the Joint Committee of the two Houses which produced the 1952 consolidation Act. The Committee refused to come down on either one side of the fence or the other concerning what amounts to "residence," or whether residence should be kept on as a definite condition in the claiming of the housekeeper's allowance.

It seems perfectly ridiculous, secondly, that before a widower can claim a housekeeper's allowance he should have to prove that he has no female relative who could do the job. If a widower chooses to employ another person, why should he be forced by law to turn down all his female relatives or to go through his family tree before he can prove to the Income Tax authorities that he should have an allowance for the person who is his housekeeper?

I think both these points leave the law—and, as I said, this was rather admitted by the Joint Committee which prepared this Act—to some extent an absurdity. I hope that by next year, now that we have some remarks on the subject on record, we shall get some slight amendment to this part of the Income Tax legislation in order to clear up the matter.

Captain Ryder

I wish to put forward a very narrow but important point raised in this Clause—the position of widows. I think I can best illustrate this by comparing cases where there are two in a family.

In the case of two single persons, the personal allowance aggregates £240. In the case of a married couple it works out at £210, but in the case of a widow with one child it works out at only £205. The widow with one child has the smallest personal allowance in aggregate, and therefore she is taxed at a higher rate. It seems to me that this is not the way we would wish things to work out. It appears to have arisen through no intention but more by some freak in these personal allowances, which should receive the attention of the Chancellor of the Exchequer.

Last year I moved an Amendment on the Report stage of the Finance Bill to call attention to this matter. It was opposed not only in the Lobby but in a speech in the House by the right hon. Gentleman the Member for Battersea, North (Mr. Jay), and his hon. Friends. I was supported in my Amendment by my hon. and right hon. Friends on this side. In fairness to them, however, we have gone a very considerable way by increasing children's allowance this year, but there is still this discrepancy, and the widow with one child is still taxed at a higher rate.

These people are a section of the community which are least able to bear the higher tax. Single people living together, or a married couple, are in a far stronger position to go out and each earn a full wage than the widow who might find it difficult to earn more than a single part-time wage, and even then has to bear a relatively higher transport charge to and from her place of work. I hope that between now and the Report stage the Chancellor will see whether this discrepancy can be removed.

Mr. F. M. Bennett (Reading, North)

I feel that, in view of the widespread and deliberate campaign in the country to denigrate the beneficial effect on P.A.Y.E. of the Budget proposals, hon. Members and the Government, in particular, might be interested in facts which take this question out of the realm of dispute whether millions will or will not benefit from the changes. I wish to bring the Committee down to earth by quoting a typical example from a factory in my constituency.

During the Second Reading debate the hon. Member for Reading, South (Mr. Mikardo), in a characteristically mischievous speech, brought up a large number of marginal cases and sought to prove that these changes in fact had no good effect on the average wage earner. I should like to read three short paragraphs from a letter sent to me from a factory in my constituency.

It states: The total number of employees is 290, of which about 90 are women. Prior to the Budget, of these 290, 208 (or 71.7 per cent.) were paying Income Tax, and 82 (28.3per cent.) were free from Income Tax. Under the new Budget proposals, of the 290 employees, 120 (41.4 per cent.) will pay Income Tax and 170 (58.6 per cent.) will not pay. There will, of course, also be a reduction on the weekly P.A.Y.E. payment of the 120 employees estimated as taxable under the new proposals, but the amount is difficult to assess until the revised Tax Tables are sent to us. When the propaganda clouds are dissipated by the implementation of the changes, millions of people will be grateful to the Chancellor.

Mr. E. Fernyhough (Jarrow)

It would have been better if the hon. Member for Reading, North (Mr. Bennett), had given the total of taxation paid before and after the Budget proposals, respectively, and then, of course, we would have been in a position to assess what permanent benefit accrued from this wonderful Budget. However, I do not want to deal with that point, but rather to support the plea made by my hon. Friend the Member for Northfield (Mr. Chapman).

On Saturday one of my constituents came to see me; his wife had died recently and he had been left with three children. He is working in an engineering factory earning only modest wages, and he had been informed by the Inland Revenue that unless the people who came to assist him with the washing and looking after the children resided with him, there was no opportunity for him to get any relief for the money that he was paying for that assistance. That is most unfair. I do not believe that anybody would try to condone that state of affairs. While it may not be possible on this occasion for anything to be done to deal with such circumstances, I hope the Financial Secretary will bear that case in mind for the future—if the party opposite are fortunate enough to introduce another Budget.

The condition that such people as I have referred to, who render assistance, must reside on the premises may be almost impossible to fulfil, because the housing conditions in some of our industrial towns make it impossible to take in an additional adult of the opposite sex. In those circumstances, surely the Inland Revenue ought to have some regard to this problem. I hope this will be borne in mind, so that that constituent of mine who is making a gallant effort to bring up three children in circumstances which are a tribute to his courage, tenacity and determination, and any other person finding himself in similar circumstances, will after the next Budget be able to get the relief to which they are certainly morally entitled.

Mr. Mott-Radclyffe

It is not very easy to draw a clear dividing line between the discussion which took place on Clause 10 about incentives and the discussion which has taken place on this Clause, because Clause 11 is obviously the incentive Clause. It is, in my view, the most constructive Clause in the whole of the Finance Bill.

We have had a good deal of exhortation during the last few years from hon. Members opposite—and we on this side have supported them—about increased production. But exhortations to increase production fall upon deaf ears if we apply to excess the principle of "The more you earn the less you keep." That is why it always seems to me a pity when any Chancellor tries to work against human nature instead of working with human nature. To that extent the tax concessions totalling £180 million in this Clause are wholly welcomed.

Hon. Members opposite frequently make the criticism that the tax concessions benefit those in the higher income groups at the expense of those in the lower income groups, on the grounds that those who are in the lowest income groups do not pay tax anyway. My hon. Friend the Financial Secretary to the Treasury has already dealt with that argument on the last Clause, and I do not want to add anything to it. I would only say that if the arguments of hon. Members opposite against the tax concessions in this Clause mean anything at all, they really mean that there must never be any tax revisions in any direction except upwards. They must mean that, because the larger the income the larger the tax and, therefore, the larger the tax relief in any concession given.

I do not accept the argument that anybody who earns £1,000 a year is a menace to society, or that anybody who is earning £2,000 a year has a double dose of original sin. Still less do I accept this argument when applied to investment income. I would ask hon. Gentlemen opposite to make up their minds on which leg they wish to stand. They cannot in one breath condemn those who are earning a high income and in the next breath extol the virtues of savings, because it is the income from savings which is regarded, for tax purposes, as investment income.

9.30 p.m.

Although it may be a very unpopular thing to say, I would remind the Committee that we are a nation of 50 million people cooped up in a very small island, able to support from our own resources only about half the present population. We are very largely dependent for our standard of living upon that section of the community who, by hard work, ingenuity and good luck, or a combination of all three, is managing to earn incomes well above the lowest income group. It is to that section of the commuity that incentives are the most necessary.

The real incentive which drives a man to work harder is not wholely immoral. It is not that he wants to earn a lot of money in order to "blow" it. He wants to keep some of his earnings for the purpose for providing for his wife and family when he dies, or for himself in his old age. That is a wholely healthy urge. It is closely aligned to family life, and family life is one of the fundamental features of all civilised nations. For that reason I welcome the concessions, totalling £180 million, made by the Chancellor in Clause 11.

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

Clause 12 ordered to stand part of the Bill.