Clause 12.—(CHANGES IN OLD AGE AND OTHER PERSONAL RELIEFS.)

HC Deb 11 June 1953 vol 516 cc526-97

Mr. Houghton

I beg to move, in page 7, line 42, at the end, to insert:

(2) To paragraph (b) of subsection (1) of section two hundred and ten of the said Act, as amended (which relates to personal reliefs), there shall be added the words: Provided that if a claimant proves that he is the occupier of a house or part of a house occupied as a separate dwelling, the deduction from the amount of income tax with which he is chargeable shall be equal to tax at the standard rate on one hundred and fifty pounds. This Amendment enables me to fulfil a promise which I made to some of my constituents who are single women and householders. The Amendment proposes to give to the single person who is a householder a personal allowance of £150 instead of £120. The present personal allowance of single persons does not distinguish between those who have household responsibilities and those who have not. It takes no account of any difference in civic or domestic responsibilities, except as regards dependants. A single person who has a dependent relative may claim an allowance for that relative, in addition to the personal allowance of £120.

If a single person has a child, then he or she may claim a child allowance in addition to the personal allowance of £120; but it has not so far been a feature of the system of personal allowances to distinguish between those who have household responsibilities and those who have not.

There are many single women in my constituency, and throughout the country—and this is predominantly a problem affecting single women, though not exclusively so—who are householders. They have come to me complaining that the Income Tax system takes no account of the fact that they are middle-aged or elderly, that they have been working all their lives, and that, having got a home together, or inherited their parents' home, they are trying to keep it on, and that they have a very different standard of domestic responsibility from the great bulk of single women, especially young single women who are living at home and who have the benefit of the shelter of their parents' house, and who, generally speaking, have greater freedom to spend their earnings than have women who are householders.

I am bound to add that that this sense of unfairness felt by many women householders has been aggravated by the special preferential allowances given to married women who go out to work. The Income Tax allowance in the case of a married man presumes domestic responsibility and the responsibility of maintaining a wife, and that is reflected in his higher personal allowance. But at various stages, in order to encourage married women to go out to work, and to simplify some of the complexities of Income Tax administration, the married woman is now treated on the same basis as a single person regarding the taxation of her earnings. She has the same personal allowance and the same reduced rate relief, and the Pay-As-You-Earn deduction for a married woman worker is usually identical with that of a single woman worker.

At the same time, notwithstanding the allowances given to the married woman, the husband enjoys all the reliefs which the Income Tax Act gives him in respect of his responsibilities as a married man, with the result that a man and wife who both work receive between them a personal allowance amounting to £330, £210 being the personal allowance of the husband because he is a married man, and £120 the personal allowance of the wife because she is working, which is the same rate of personal allowance as that given to a single person.

7.15 p.m.

If a brother and sister are sharing the responsibilities of a home and are both working, the total of their personal allowances is only £240 compared with the £330 given to the married man and his wife who are both working. It is understandable, therefore, that the single woman worker who has the responsibility for maintaining a household entirely out of her own resources as distinct from the partial responsibility of the many other single workers, feels aggrieved that she is taxed as if she had no responsibilities of that kind at all.

I believe that single women of middle age are in many ways badly treated in this country. For one thing, they rarely get the same rate of pay for the job as a man, though in many cases they have the responsibility to maintain single-handed their own home and to get the best they can out of life which, sometimes, is more lonely than we realise. In mobile services, such as the one which administers the whole of this complex Income Tax coding, the single woman is regarded as available for removal much more freely than a married man, and in many cases more freely than a single man.

For all these reasons, I am this afternoon the champion of the single woman who is maintaining a home and who is, I think, entitled to some favourable discrimination in the matter of Income Tax reliefs. I am supported in moving this Amendment by the weighty opinion of the Trades Union Congress, an opinion to which the right hon. Gentleman the Chancellor rightly attaches great importance. In their evidence before the Royal Commission on the taxation of profits and income, the T.U.C. advocated an allowance of this kind in order to meet the circumstances I have described.

Having briefly put the merits of the case, I propose to spend a moment or two in dealing with some of the possible objections that may be advanced, because I feel certain that the hon. Gentleman who will reply has in front of him a piece of paper at the end of which it will say, "It is presumed that this Amendment will be resisted." "It is presumed" is a piece of Civil Service jargon which always irritates me. Nobody in the Civil Service ever regrets anything—"It is regretted."

What this really means is that the Board of Inland Revenue presumes that the Chancellor will have nothing to do with this nonsense about a personal allowance for a single householder. But lest it be suggested that there are insuperable difficulties of administration, such as that of satisfying the Inland Revenue that the claimant is, in fact, a householder, I have used terms in my Amendment which I borrowed from various provisions in regard to the Rent Restrictions Acts, such as the phrase, A part of a house kept as a separate dwelling. I suggest that there would be no difficulty in asking the claimant to produce valid evidence of being a householder, such as a rent book, a tenancy agreement, a lease, or, in certain cases, there might even be physical inspection. I remember the time when I first entered the Inland Revenue Department. At that time, we had an Inhabited House Duty and we had to inspect lock-up shops because in those days Inhabited House Duty applied to the whole of the premises unless the shop premises were locked up separately from the residential part. It was part of the duty of the inspector of taxes to go out and have a look at the lock-ups. Generally speaking they were not only ready to do so, but they liked to have an afternoon out and they enjoyed it.

I do not see any reason why they should not carry out an inspection in the rare cases where it may be necessary to do so if a claim is in doubt. After all, many claims are put into the Inland Revenue Department, such as for wives, children, dependent relatives, which rest on the generally accepted doctrine that the British taxpayer is on the whole honest, and does not make false claims. I see no difficulty of administration here which is greater than the difficulties in many other directions.

What else can be said against it? Probably one thing is that it seeks to introduce a new principle of discrimination for determining allowances between one taxpayer and another. Personal allowances are based upon personal dependance, such as of wives, children, relatives, and there are other reliefs of a non-domestic kind. There is no special relief for a married person who may be living in rather expensive furnished rooms as against the married person living in a rent-controlled unfurnished house. No differentiation is made between the taxpayer who has to pay through the nose for a flat and the taxpayer who enjoys the benefit of a low rental on a long-established tenancy. Those are the difficulties which I need to overcome.

The time has come when more refinements will have to be introduced into our system of allowances if we are to give a sense of equity in the administration of the tax which we have been discussing a few moments ago, and which bears very heavily on many people. I see no reason why consideration should not be given to a differential allowance on this basis.

I therefore hope that the right hon. Gentleman will not dismiss this proposal out of hand. I shall understand if he says that it has such novel features, and raises so many questions which may need consideration in relation to other personal reliefs, that he would prefer to have the advice of the Royal Commission before committing himself to a step which might give rise to other difficulties. He can probably say with greater justification that this matter has been specifically put to the Royal Commission and he may expect them to deal with it.

I think I have not been wasting the time of the Committee in opening a short discussion on this aspect of personal reliefs. It agitates the minds of many people who cannot understand why the Income Tax system is so unyielding and unadaptable to what they believe are their very special circumstances.

Miss Elaine Burton (Coventry, South)

Some of my hon. Friends and myself had an Amendment down on similar lines last year, but were not fortunate enough to have it selected. We are very glad today of the chance of taking a little time to raise this matter.

I have never belonged to the Civil Service and I did not know that it was a habit of theirs to say, "It is to be assumed that this Amendment will be resisted." I am much more hopeful than to say that it can be assumed. I am always hopeful about the Chancellor of the Exchequer, even though we may not get anywhere, and I am not going to assume that he will resist this Amendment. As my hon. Friend the Member for Sowerby (Mr. Houghton) has said, with his very considerable experience in these matters, such a concession should not be impossible administratively. I am going to rely on his knowledge of that side, and leave it alone.

I hope that whoever replies on this debate will not dismiss this plea out of hand. It is not something which has arisen as a bee in the bonnet of a very few people in this Committee. When in the House we raise the difficulties under which most employed women are labouring, and ask for tax concessions which they should have, it is often felt that this is just a few people being troublesome and continually raising these matters over and over again. On this particular point, however, there is a real bone of contention, as my hon. Friend the Member for Sowerby has said.

In connection with the 1952 Budget proposals, the T.U.C. made representations to the Chancellor that some such differentiation as we suggest should be put forward for any unmarried person who is a householder. I should have thought that proposition perfectly fair and equitable. If the right hon. Gentleman turns down the proposal, I hope he will give us the grounds for so doing, apart from any ground of administration.

We are asking that the unmarried householder, man or woman, should have the fact that they are householders recognised. I know I would be out of order if I dealt with the subject of equal pay and I do not propose to do so, but perhaps I may throw in a short reference to the matter as background to my argument. In the last discussion we had on that subject, hon. Members generally were agreed that many people with dependants were penalised by not getting the rate for the job. That applied particularly to women. The point I want to make with the Economic Secretary is that it always seems to be the case that the unmarried woman comes off very badly in this country, both for taxation and for salary. I hope that on this occasion the Government will feel able to give a little ground.

I am convinced that nobody will get up and say that the unmarried person who keeps a house or part of a house and pays rent for it, pays any less because he is unmarried than he would if he were married. Therefore, they obviously should have a similar concession. It is not any cheaper for an unmarried person to rent a house than for a married one. Our Amendment—and this is very important—distinguishes between the young person who stays at home when starting a job and the single person who has the responsibility of a house. We know that when a young man or a young woman sets out on a career they like to live at home in order to save money. It is inequitable that the older person who sets up a house for himself should not have some differentiation made between himself and that younger person.

Our Amendment does not apply to any particular section of the community doing a particular job. Many women in the professional grades, many textile workers and others in commerce and industry, have represented this matter to me and have asked me to raise it here. They feel that the personal allowance for married couples, which totals £330 when both are working, compares badly with the £120 received by a single person, and that it is not a fair distinction. I hope that the Chancellor will be able to look into this matter.

7.30 p.m.

The Economic Secretary to the Treasury (Mr. R. Maudling)

I always listen with very keen interest to anything that the hon. Member for Sowerby (Mr. Houghton) has to say on the subject of Income Tax allowances. I listened with even more interest on this occasion to his remarks, and the remarks of the hon. Lady the Member for Coventry, South (Miss Burton), because I must confess that from a reading of the Amendment alone it was not for me possible to understand the motive underlying this proposal.

All that the Amendment does is to provide an additional rate of personal allowance for single people who are occupying separate dwellings, a house or flat. It is simply distinguishing between a person who lives in a house or flat and a person who lives in "digs." On reading the Amendment I did not realise that the problem exercising the hon. Member and the hon. Lady was the much wider problem of the comparative position of a single person and a married person under the whole of the existing system of allowances. I can well see that there may be good reason for saying that two people living together, for instance, a brother and sister sharing a house with both working, have allowances which are smaller than the allowances given to a married couple when both are working. On the other hand, we often have the argument put forward that where a single man and woman are living together, one keeping house and the other going to work, they receive a greater allowance, which is sometimes described as a premium on immorality.

All this agrees with what has been said about the complexity of this proposal and the importance of trying to look at these personal allowances as a whole. I am glad that the hon. Member for Sowerby mentioned that first and not me, because it is quite right that this is the kind of thing on which my right hon. Friend the Chancellor of the Exchequer would benefit from the advice of the Royal Commission. I am glad to hear that the matter has been put to them.

I am afraid that it is not possible for us to do other than resist the Amendment, whatever the presumptions may be. Certainly I fear that my right hon. Friend cannot accept it, and I do not think that the effect of the Amendment is quite what the two hon. Members have in mind. First of all, to give an additional personal allowance to a single person living in a flat or house irrespective of means is rather in contrast with the arguments put forward on other aspects of Income Tax allowances in discussions in this Committee.

Another point is that the Amendment distinguishes between the married couple occupying a house or flat and a single person occupying a separate house or flat. I cannot see why that distinction should be drawn. Nor can I see why a distinction should be drawn between two single people in identical circumstances because one lives in a flat and the other in "digs." I do not think that that is a justifiable distinction.

I think that both hon. Members were thinking more in terms of households than dwellings and of circumstances where there was a widow or a spinster who had dependent relatives and therefore was maintaining a household. That is a very much wider problem than that of a person living in a separate dwelling, which is the specific point in this Amendment. I hope that both hon. Members realise that in resisting this Amendment we do so not because we lack sympathy for the point of view which has been put forward but because we do not think that the Amendment would be wise or that the distinction which it would introduce into the tax system would be advisable. When the Royal Commission report on the whole question of personal allowances I am sure that they will take this matter into account as well, and their remarks on the subject will be available to all of us.

Mr. Hugh Gaitskell (Leeds, South)

I am sure that the Committee agree that we are indebted to my hon. Friend the Member for Sowerby (Mr. Houghton) for raising this matter. No doubt the problem of Income Tax allowances is a very serious one, which we know the Royal Commission are considering. Perhaps one of the more difficult aspects of that problem is the position of single people who in fact have similar responsibilities to those of married people. That is the fundamental point with which my hon. Friends were concerned in this Amendment.

All of us agree that the distinction between the single person and the married couple is a perfectly valid and natural one to draw when we think of single persons living with their parents, such as a relatively young girl or man, because clearly they have not the same degree of responsibility. Equally it is clear that a grown-up single person living on her own or his own and maintaining a household is to some extent put in a disadvantageous position compared with a married couple.

My hon. Friend the Member for Sowerby stressed particularly the special allowance for married women who go to work. I must say for myself that I think it is very necessary that that allowance should be preserved in order to encourage married women to go to work. But it is also true in my experience that it gives rise to a good deal of resentment. The Economic Secretary to the Treasury has drawn attention to some of the difficulties of the Amendment as it stands, and I appreciate that no doubt it would be very difficult to administer the allowance on the basis of occupation of a separate dwelling. Nevertheless, I hope that the problem will be examined as one of the more urgent problems in the whole field of allowances, to see whether something can be done to help these people who certainly feel that at the moment they are being discriminated against and who, I think, have some justification for complaint. But I do not think that it is a matter which my hon. Friends would wish to press very strongly at this stage. We have other Amendments on the Order Paper to consider and I hope that they will agree that we can accept the reasonably conciliatory reply of the Economic Secretary that the matter will be considered by the Royal Commission and that we shall have the opportunity of discussing their Report.

Mr. Houghton

I thank the Economic Secretary for his statement, which was no better than I expected it would be. But he was as agreeable as he can be, and in the circumstances I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Hugh Dalton (Bishop Auckland)

I beg to move, in page 7, line 42, at the end, to insert: (2) In subsections (1) and (2) of section two hundred and eleven of the said Act as amended (which relates to earned income relief), for the word "two-ninths" there shall be substituted the word "one-fourth," and in subsection (2) of section two hundred and ten as amended (which relates to the additional personal relief on a wife's earned income), for the word "seven-ninths" there shall be substituted the word "three-quarters," and in subsection (1) of section fifteen of the Finance Act, 1952 (which relates to relief for small incomes), for the reference to "two-ninths" there shall be substituted a reference to "one-fourth": Provided that there shall not by reason of this subsection be any increase in the amount of any tax for which any person would or might become liable if this subsection had not been passed. This Amendment relates to earned income reliefs, and I should like to recall to the Committee what has happened with regard to them. It has been the policy of both parties, and particularly of the Labour Party, to increase earned income reliefs from time to time. In other words, it has been the policy to emphasise the distinction between the sort of income that stops when one stops working and the sort of income that continues to flow in while one sleeps. This is an intelligible and fundamental distinction in simple economics which I hope my hon. Friend the Member for Cheetham (Mr. H. Lever), who has disappeared from the Chamber after making his contribution, would have understood and regarded as sufficiently low-brow to command his assent. He will read it in HANSARD, perhaps.

Mr. Mulley

I am rather alarmed by my right hon. Friend's glances in my direction.

Mr. Dalton

I said Cheetham not Sheffield. Well, we do not want to "cheat 'em." This is a very simple distinction, which of course is familiar to all. I want to recall the position to the Chancellor. He has not accepted any Amendments yet, but I hope that I shall give grounds, by the moderation of the very simple suggestion which I make here, that will commend this Amendment to him.

At the end of the war earned income relief stood at one-tenth. It was gradually increased. It was twice increased by me when I was Chancellor of the Exchequer—from one-tenth to one-eighth in 1946 and from one-eighth to one-sixth in 1947. It was increased by the late Sir Stafford Cripps from one-sixth to one-fifth in 1948. There it remained for a year or two. The present Chancellor, in order to show that we had a common purpose in this matter if in no other, increased it to two-ninths, a most awkward fraction which complicates everybody's calculations with regard to their private affairs. I am making the simple proposal today that we should lift it from two-ninths to one-fourth.

The Chancellor, no doubt, will tell us what the cost of that would be. I cannot think it would be much. It is an advance of only one thirty-sixth; that is all. The Chancellor last year said, when he had very little to give away, that he would be very glad to increase it from one-fifth to one-quarter, but he could not afford it last year. Last year was a tight year, but this year, as he has often explained, the position has altered. I will not use the word "largesse," but he has been able to meet a number of claims much less reasonable than this, and I am sure that he will meet us when he replies. I am sure that he will tell us how much it will cost and that this will be a bagatelle which can easily be thrown into the large margin available this year.

The general argument is surely very convincing if we are speaking in terms of incentives. The real incentive that is required is to encourage people to do more work, and in so far as people are encouraged by reduced taxation to do more work—at least, that is the common opinion—this proposal would be most effective for this purpose. It is also a just proposal from the point of view of the incidence of the reliefs which the Chancellor himself presented in his Budget speech. It has been commented before that one of the curious and paradoxical consequences—and I am sure not a deliberately desired consequence—of reducing the standard rate is that as between earned income and unearned income, on a given level of income, a larger relief is given to the person whose income is not derived from any activity 'but is what we call investment income.

I will give an illustration, and I will take it at the £2,000 level to which one hon. Member referred this afternoon as being a critical level on which it was important to give some further inducement to the managerial classes to work a little harder. Here at the £2,000 level for a married man with three children—I am quoting from the Chancellor's financial statement—the net result of the changes which the Chancellor is making is that the person who works for his £2,000 a year gets a relief from £440 down to £413, that is roughly a relief of £27 a year, whereas the person who does not work for his £2,000 and whose income is all derived from investment gets a relief from £651 to £613, that is to say £38 a year.

If we take, on a lower level, £1,000 a year, which covers a much larger number of people, £13 7s. 6d. accrues to the £1,000 a year man by way of relief if his income is unearned, but only £7 15s. 5d. if he works all out for his money. I am sure the Chancellor did not mean to produce that kind of result, and it is by the expedient of an Amendment such as I am now proposing that this injustice and anomaly can be removed. It is proposed, in other words, that we should do a little bit more for the man whose income is earned while leaving the man whose income is unearned standing where the Chancellor has put him.

I do not want to prolong my observations on this point because the matter is exceedingly simple. I will make one more reference to figures, and I hope that the Chancellor will be able to make this very slight change in his proposals. With reference to what has been said about the proportion of earned income which would be affected by this proposal at various levels of income received, there is a ceiling on this, and I am only proposing in this Amendment to touch the ceiling very indirectly.

We would leave the ceiling as it stands at £450, but we would put in the provision as is set out in the last paragraph of the Amendment that I am moving—a marginal safeguarding provision with which the Chancellor will be familiar: Provided that there shall not by reason of this subsection be any increase in the amount of any tax for which any person would or might become liable if this subsection had not been passed. We put that in, in order to make sure that we shall not be putting ourselves out of order by proposing to increase the charge upon any person, which we should not be entitled to do.

7.45 p.m.

Subject to that marginal safeguard, £450 a year relief is the ceiling. We are not proposing at this stage to raise it. Therefore, in the higher levels of earned income we shall not be giving anything additional to those who are concerned, but on the lower levels from £2,000 a year downwards we would be doing just a little to redress the anomalies which I have been expounding. I myself have always hoped that with the passage of successive Finance Bills this is one of the features which would be increasingly emphasised and that we would more and more separate earned from unearned income in terms of taxability.

Years ago when I occupied the position which the Chancellor holds I had a dim and distant dream that we might get earned income relief up to one-half. We have not got there yet, but there would be a certain natural justice in treating £2 earned as equivalent, for purposes of taxation, to £1 unearned. We are not there yet. But I am asking the Chancellor to move forward and to take this very small step by accepting this very desirable Amendment from the point of view of incentives to activity of all kinds.

Sir Robert Boothby (Aberdeenshire, East)

I only want to offer a very few words on this subject which is one upon which I feel very strongly and have felt strongly for many years before the war. I have always taken the view that there has never been a sufficient distinction between taxation on earned and unearned incomes above a certain basic level.

I do not entirely agree with the right hon. Member for Bishop Auckland (Mr. Dalton), because I do not think that the present ceiling is adequate. I think it should be higher, and I think that the distinction between earned and unearned income should be drawn not only at the lower levels of income but at the higher levels—at levels from £2,000 upwards, and should expand right through the whole range of Surtax.

I think that incentives—a word which is easily and largely used—to earn more money at every level are necessary in this country today. We are going to find out in the next few years that productivity is the most important thing of all in this country, and that applies to the managerial classes just as much to the workers and everybody else. My complaint against the Amendment is that it does not go far enough. I should like to see it go further, but it is a step in the right direction. I imagine that it would not cost more than £10 million at the outside.

I think that the House has never really seized itself of the vital necessity of giving greater incentives to the people to make themselves that bit of additional income which makes the difference between working flat out and working at what I might describe as a moderate pace. I think it is not going too far to say that practically nobody can effect substantial savings in this country today out of earned income. That cannot go on indefinitely in a society which does not become 100 per cent. Communist.

We must have increased private savings. The truth of the matter is that only the people who have capital today can increase it to a sufficient extent to effect any great addition to their savings, because—I will not say they can speculate, which is a term which is loosely used—they can use that capital to make wise investments; investments which appreciate and are tax free. That is the way in which private capital is augmented and savings increased today.

Those people belong to the old class, who have either made the money themselves or whose fathers have made it for them. The new people who should be coming up cannot save effectively out of earnings. In the long run I am absolutely certain that that is bad for the national economy. We must enable the new, up-and-coming, creative man to save money for his family and make his own life. Therefore, while hastily saying that nothing would in any circumstances induce me to vote against the Government, I would ask my right hon. Friend the Chancellor to give serious and sympathetic consideration to this very modest proposal of the right hon. Member for Bishop Auckland, which seems to me to err on the side not of going too far but of not going far enough.

Mr. Mulley

I am very delighted to follow the hon. Member for East Aberdeen (Sir R. Boothby) after his recent elevation. I am sure it would be the wish of Members on both sides of the Committee that we should congratulate him and hope he takes a further part in our Finance Bill debates. I would say to him, however, that we shall be rather disappointed if, as a consequence of his rise in status in the party opposite, we find that he is now a devout, loyal and never rebellious Member. Despite his long and devoted service to the party opposite, we reflect that on occasion, and in a good cause, he has been on the side of justice and not merely on the side of the Whips. We hope that as time goes on, after the initial honeymoon with the Whips Department, we shall have him back again in his own form.

I commend this Amendment to the Chancellor. As the hon. Member for East Aberdeen said, it is a modest Amendment, because there is a case for pressing further than the reduction from two-ninths to one-quarter in the incidence of taxation on earned income. I disagree with him, however, on the question of the ceiling. The most important means of increasing productivity is to give an incentive to people who are well within the £2,000 a year income group, which is the level of the present ceiling.

I do not believe that there is any great case for giving a financial incentive of this sort to those with earned incomes of £5,000, £6,000 and upwards, about which the hon. Member for Louth (Mr. Osborne) spoke so eloquently. In the case of someone in that range of income it is not easy to say how much he earns and how much comes to him. People in his position have responsibilities in their undertakings and, regardless of any consideration whether a little extra work will bring in £x or +1, they have to do their job.

I am not convinced that any extension of earned income reliefs to those in the large income groups would have any effect on productivity. It would be a very sad thing if it did. If people who are benefiting by earning incomes of £4,000, £5,000 and £6,000 a year are not aware of the pressing need for the utmost productivity, and are holding back because they are having to pay to the Chancellor of the Exchequer what they regard is too much, they have a poor sort of patriotism.

I am sure the hon. Member for Louth —who is not here at the moment—who stressed the need for productivity and the serious consequences to our economy if we do not increase production, would agree that that lesson should be learned by people whose incomes are in the larger brackets and who are paying considerable amounts in tax. It is a bad thing if these people are holding back in the fight for our future because they think they are paying too much in the form of taxation.

In the case of the people with small incomes, where it is a matter of actual measurement of effort against added income, this reduction in the incidence of taxation may be an inducement. We have to remember that for the lower paid wage earners it is mostly a question of physical effort and fatigue measured against the additional income obtained as a result of increased productivity. It is easy to say that a man in a factory can work harder on a payment by results method, and that he would get perhaps 10s. or £1 extra as a result of working 100 per cent. a day for the 5½ days a week on which he is employed, but he has also to consider that it is a bigger strain to work at absolute capacity all the time.

An incentive such as is offered by this Amendment may have beneficial results. Apart from the purely incentive aspect I commend it—as my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) has done far more eloquently than I can—on the grounds of social justice and of making an even greater differential between earned and unearned incomes. On those grounds I hope the Chancellor will find himself able to accept it.

Mr. J. Grimond (Orkney and Shetland)

I want to add a few words in support of this Amendment. Like the hon. Member for Cheetham (Mr. H. Lever), I find it difficult to convince my constituents that high taxation is an enjoyable thing. I find a growing disposition among them to look forward to the day when they can obtain a little more of the money they earn to put into their own pockets. They want to retain the social services at a reasonably high level, but there is a general feeling that they should have a little more money which is really worth something in their own hands and which they can spend themselves.

The hon. Member for Sheffield, Park (Mr. Mulley) said that he did not think there was such a great need for distinction between earned and unearned income in the higher ranges as there was in the lower. I do not dispute that there is need for a greater distinction in the lower ranges, but we should remember that the income which remains to a man in the higher ranges is not very great today. It is extremely difficult for anyone to retain more than £2,000 or £3,000 a year unless he works like an absolute black or is extremely lucky. It is true that many people would be very pleased to have such an income. Some would even be pleased to have the £1,000 a year which Members of Parliament receive.

Mr. Houghton

But not, I suggest, to lead the sort of life we lead.

Mr. Grimond

We should even find some people willing to lead the sort of life some of us lead. It depends upon the party to which one belongs.

Mr. Houghton

Evidently.

Mr. Grimond

If one is unwise enough to belong to one of the worst parties one is at fault. There are several professions —barristers and so on—whose members incur very considerable expenditure, who have to maintain a fairly high standard of life and have no pension to which they can look forward. I suggest that it is necessary for those people to save not only from their own point of view but, as the hon. Member for East Aberdeen (Sir R. Boothby) said, from the country's point of view. They should be able to put something by, and the differentiation should be carried up to a scale further than the £2,000 at which it now stands.

Earlier on the hon. Member for Stechford (Mr. Roy Jenkins) said there was a difference between the views of those who feel like him and the views of the party opposite. He said the party opposite would be very content to see taxation reduced and a standard rate of 5s., 6s. or 7s. introduced. That is an important point. My own feeling is that if we are to run this country by private enterprise—and hon. Members on both sides of the Committee are in general agreement that the majority of our wealth must be made by it—we have to reward that private enterprise. The person who works hard and is prepared to take a risk must be rewarded, for risk taking is very important. There must also be some private saving, more than there is today.

8.0 p.m.

This is required not only for the benefit of the people who make the savings but for the benefit of the people as a whole. Wage packets in this country more and more depend upon the work of everybody, including managers and those who are prepared to take risks. For the sake of the community as a whole it is important to reward hard work and enterprise. If the process is carried too far, I well understand that there comes a time when there is too great a differentiation between the wealth of which one man can dispose and the wealth of the poorer people in the country. Undoubtedly that happened in the past, and I should be sorry to see it happen again to any very great extent in the future.

The way to avoid that is not by penalising earnings, for that is killing the goose that lays the golden eggs. To create a stable society of reasonable equality and at the same time to maintain the system of private enterprise which is based upon earnings, what we have to do is to look at such things as Death Duties. The inheritance of money leads to a much less justifiable differentiation between people. Therefore, it is important to look at the accumulation of unearned wealth.

It is for that reason that I support the Amendment. It is time we gave consideration to the making of a greater differentiation between unearned and earned income. The welfare of the country ultimately depends upon our allowing a man to earn some wealth and to retain some of what he earns and, within reasonable limits, to save it and invest it in this country or overseas.

Mr. Gordon Walker

I am full of confidence that the Chancellor will agree with us in this matter. Not only has every hon. Member who has spoken favoured it, but the Chancellor in his 1952 Budget was also strongly in favour of this very proposal and regretted that only his inability to afford it at that time prevented his doing the very thing we are now giving him the opportunity to do.

The Chancellor certainly cannot argue this time that he cannot afford the change. He has afforded far less desirable reliefs than this. Indeed, if he can make this concession, he will do a little to redress what I regard as the improper balance that he struck in his Budget. I shall be happy to see some improvement made in that respect. The Chancellor will also be doing something else of very great importance if he concedes this. He will be taking a step towards the objective that we all have, that our society should be one of earners and not one of dividend takers and rentiers.

The Chancellor of the Exchequer (Mr. R. A. Butler)

The right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) said that this was a bagatelle and extremely simple, and the idea has been supported by hon. Members on both sides of the Committee. Therefore, I regret to have to rise to bring the Committee back to some sense of proportion about the cost that an Amendment such as this involves.

As the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) said, the Amendment is on the lines of the reforms that I introduced in my Budget last year, and I made reference in one of my speeches to the desirability, if possible, of proceeding along that line. The Amendment proposes to increase the fractions for earned income relief, old-age relief, and small income relief. I must state at the outset that the calculations we have been able to make of the cost of the Amendment, if it were accepted, are in the neighbourhood of £51½ million. I am afraid it is quite out of the question to add that sum of money to the cost of the proposals already made in the Budget.

I agree that to give concessions in the field of earned income relief is a healthy thing, and I do not dissent at all from any expressions which have been made in that direction during the course of the debate. But I should like to remind the Committee that the earned income relief now stands at the highest figure at which it has ever stood, and that is largely due to the benign and beneficent activities of Her Majesty's present Administration.

The Committee will no doubt recall that, after the earned income relief was introduced in its present form in 1920, the rate was increased under a variety of Administrations and was only reduced in the course of the war. However, I must be perfectly fair to the right hon. Gentleman opposite and say that in 1946 the rate was increased to one-eighth; the maximum allowance remained at £150, and this was thus reached at £1,200. In 1947 the rate was increased to one-sixth, with a maximum of £250. Thus, by a gradual process we have reached a stage at which last year the fraction was raised to two-ninths, the limit of income qualifying for relief being £2,025, and the maximum allowance being £450.

Except for the war period, when we were all obliged, whatever our party views, to accept the alteration, there has been a regular growth since the Royal Commission of 1920 in this method of granting relief for earned income and bringing it forward in our general fiscal devices. The Committee should remember that last year, in particular, very considerable increases were given in this very sphere. Last year the single person's allowance was raised from £110 to £120 and the married man's allowance from £190 to £210, and, while we are not discussing it at the moment, the child allowance was increased from £70 to £85. The fact that we have now increased the maximum for earned income relief from £400 to £450 should be the subject of congratulation on all sides of the Committee.

I notice that a further Amendment has recently been put on the Order Paper by right hon. Gentlemen opposite to raise the figure to £500, but I understand that we are debating that matter on this Amendment. The cost of raising the allowance to £500 would be about £4½ million. I mention that to show that I have carefully studied the Amendments put upon the Order Paper by right hon. Gentlemen opposite. Thus, were we to accept the lines of reform suggested by right hon. and hon. Gentlemen opposite, the increased cost to the Exchequer would be about £56 million, this being £4½ million to raise the allowance to £500 and £51½ million to meet the proposals in this Amendment.

It may be a source of surprise that the cost is so great. I am very glad to be able to take part in this debate, because I went through all this anguish of mind and thought before reaching the decisions which I did in my Budget. I considered the possibility of making an improvement in the earned income relief. One of the values of our debates on the Finance Bill is that they allow all these matters to come out into the open and to be understood by hon. Members and by the public. I decided eventually that I had to choose between the reduction in the standard rate of Income Tax and an increase in the earned income relief.

I decided in favour of a reduction in the standard rate for the reasons that I have mentioned once or twice before. I found that to be the only way in which I could give a definite relief to industry and to the undistributed profits of industry this year. All my other proposals to help industry involve waiting until next year. For example, the initial allowances concession will not inure this year and the E.P.L. relief will not inure for a considerable time.

Therefore, the only method I could find not only of helping the individual but also the managerial and working classes who wish an incentive was the old-fashioned method of reducing the standard rate, which would have warmed the heart of my Liberal predecessor, that most classical of all economists, Mr. Gladstone. I therefore resorted to this historic device, for which I have been badly knocked about in modern times by a good deal of class war argument, but it still remains the classical method that a normal Chancellor would adopt if he had some money to spare.

In doing that I shall have put some £45 million in the way of the undistributed profits of industry by way of relief of tax, and have been able, by a reduction in the reduced rates by 6d., not 3d., to help those in the lower scales of the Income Tax. There has not been, I think, sufficient acknowledgment given to the fact that by the 6d. reduction on the reduced rates as well as 6d. in the standard rate very considerable benefit was given to the less well off classes in the Budget—

Miss Irene Ward (Tynemouth)

Not enough.

Mr. Butler

—and that, I think, has indicated that I have tried to be fair not only to industry but also to the individual.

There remains one argument which was touched on by the right hon. Gentleman, and that is that I have in the Budget proposals helped investment income more than I should, without giving sufficient regard to earned incomes. My answer to that is that, after taking into account the Budget proposals, the reduction brings down the standard rate of Income Tax upon investment incomes to a level Is. below the war-time peak. It brings down the effective top rate of tax on earned incomes below £2,025, upon which there has been so much controversy, by 2s. below the peak.

Therefore, the proposals seen as a whole have resulted, with last year's proposals, in giving a proper and right preference to earned income over investment income. When we examine these things scientifically I think it can be seen that the proposals in the Budget have been as fair as they possibly could have been to industry and to individuals, and, by concentration on the reduced rate, have helped those classes which need help. They have preserved a proper balance in the tax as between earned and investment income, and, as far as the human brain can attempt to be fair, they have resulted in as fair a result as we could have achieved at the present time.

A voice from behind me said just now that this was not enough. One of our great figures of history once said that patriotism was not enough, and I agree that I have not gone far enough to satisfy everybody, but I think I have gone as far as I legitimately can in view of the economic situation of the country. The hon. Member for Gloucestershire, South (Mr. Crosland), upon whose economic acumen I depend at times, said it was right to give a certain amount of relief to consumers by purchasing power. He said last night that I had to be careful not to give too much. I note that he has now withdrawn from the struggle, and could not take part in this debate and support his right hon. Friends on the Front Bench. I look to his support in answering my hon. Friends who may not be too friendly on this matter.

Mr. Gaitskell

I do not want to stop my hon. Friend the Member for Gloucestershire, South (Mr. Crosland) from replying to that astonishing attack, but I hope he will allow me to get in a few remarks first. Before I come to the very disappointing reply we have had from the Chancellor—and it was very disappointing to hon. Members in all parts of the Committee—I should like to say a few words about two of the speeches we have heard. It was a pleasure to hear the hon. Member for East Aberdeenshire (Sir R. Boothby) once more, and I should like to add my personal congratulations to him. I do not think we need worry very much about his being won over. I think he will continue to attack the Government by his voice, at any rate, even if he does not come into our Lobby. He has never come into our Lobby.

Sir R. Boothby

I did vote for the nationalisation of the Bank of England.

8.15 p.m.

Mr. Gaitskell

We should welcome the hon. Gentleman again as we did not so long ago if he were to come into our Lobby. I think that what he said was, as usual, very much to the point. He did not agree with the ceiling we put in this Amendment, but we have to have some regard to the cost of the concession, and the Chancellor has told us it is a quite substantial cost. However, I shall come back in a moment or two to the question of the ceiling and the position of the higher incomes.

I should like to refer to the speech of the hon. Member for Orkney and Shetland (Mr. Grimond). I am bound to say that I did not know that any hon. Member set about the task of collecting votes in his constituency by trying to persuade the electors that high taxation was an enjoyable thing. I do offer him my most sincere congratulations on his succeeding in being returned here. I never knew anybody to suppose that to pay high taxes was an enjoyable thing, but, of course, the whole question is how we otherwise finance Government expenditure, and what we are prepared to give up in the way of various forms of Government expenditure if we want our taxes reduced.

There is the more subtle point, but my hon. Friend the Member for Cheetham (Mr. H. Lever) is not here, so, perhaps, I need not bother with it very much, about the inflationary or deflationary effect upon the Budget and the Budget surplus. One could put it in this way, by saying we have also to take into account whether, if we want reduced taxation, we also want inflation at the same time. None of us, of course, has ever suggested that high taxation is enjoyable, but we do think it necessary in the light of the general economic situation and in the light of the expenditure which the Government incur. We can argue about the exact level both in relation to total expenditure and in relation to the economic situation. We can argue, and do argue, and rightly, about the incidence of taxation and the distributional effect it has upon the real earned income of the different persons in the community, but it is not much use simply arguing that we can reduce taxation without any economic or distributional effects of any kind.

There is one other thing I would say about the speech of the hon. Member for Orkney and Shetland. I very much agree with his broad approach to this problem, when he said that the point to attack was inherited wealth and large investment incomes. I think that that is a point of view which most of my hon. and right hon. Friends very much share. There is no doubt, I think, that if we had a state of society in which we did not have this very unfair distribution of property, as we know it now, a state of society in which we did not have these large unearned incomes, most of us would take the view more akin to his own, so far as high incomes are concerned, and should be more favourably disposed to higher earned incomes and not so favourably disposed to high unearned incomes. I hope the hon. Member may see his way, when we bring in Measures to deal with Death Duties and matters of that kind, to give us his warm support.

I come now to the Chancellor's reply. All he said was that the £50 million this Amendment would cost was much too high, that the earned income relief was now higher than it had ever been, and that it was really better to reduce the standard rate of tax than to increase the earned income relief.

I should like first to fill in the right hon. Gentleman's gaps about the changes in the earned income relief. He missed out what to us were some very important years, the years in which the Labour Government increased the relief from one-tenth to one-fifth—in other words, doubled it, between the end of the war and 1951. All that the right hon. Gentleman has done since then is to make a miserable further concession amounting to one-ninth. He has a very long way to go if he is to compete with our record in this matter. I hope he realises that and that he will take seriously our advice.

It is all very well to say that we now have the largest earned income relief, but, of course, our whole argument is that that is a most desirable development. As I have said—I agree entirely with the hon. Member for East Aberdeenshire—we believe that it is in our fiscal system a desirable thing to discriminate in favour of earned income and against unearned income. It is no argument that we have now got to a stage where the relief is larger than it ever has been.

The fact is—and the Chancellor, for all the figures he produced at the end, cannot deny this—that his Budget has once again narrowed the gap which was beginning to exist in favour of earned income. As the right hon. Gentleman knows, the effect of the Budget all along the line has been to give a greater relief to unearned income than to earned income. We all know that that is the automatic result of the reduction in the standard rate, but that is, surely, one of the important arguments for not making the concessions in the way that the Chancellor has made them.

I am surprised that despite all his hard thinking on this subject the right hon. Gentleman came to the conclusion that he did. After all, he is always talking to us about incentives. He has twice christened his own Budgets "Incentive Budgets." His party almost used the word "incentives" as a slogan, and yet when there is an opportunity of really introducing additional incentives, he refuses to do so.

I do not want at this stage to add to the very many speeches that have been made during the afternoon and evening about taxation and incentives. I agree with what my hon. Friend the Member for Sheffield, Park (Mr. Mulley) said. On the whole, the operation of taxes and incentives is much more effective at the lower income levels than at the rather higher levels. The reason for that, I think, is in the nature of the job. On the whole, the professional classes and people who are paid on a salaried basis are persons whose output does not, and cannot, vary to any great extent with the rate at which they are paid. It may or may not be a good thing to pay them more, but as compared with the ordinary piece-worker, for instance, there is a clear difference.

The Financial Secretary to the Treasury is looking very disagreeably at me and I think I know what is in his mind. He is thinking of his own profession, the legal profession. I fully concede that in the case of lawyers they are paid by output, or, at any rate, by briefs. The hon. Gentleman may well say that that is an obvious illustration of the danger of taxation reducing output; but, then, the further question arises, when it comes to a question of lawyers, of whether it matters a great deal if the output is reduced.

Mr. Boyd-Carpenter

The right hon. Gentleman should consult his right hon. and learned Friend the Member for St. Helens (Sir H. Shawcross).

Mr. Gaitskell

I was not making a party point. I was quite prepared to say that to any lawyer, including my hon. Friend the Member for Cheetham (Mr. H. Lever). That is, on the whole, one justification for maintaining the ceiling in the earned income relief which we propose in the Amendment. I must remind the hon. Member for East Aberdeenshire that although there is this ceiling, nevertheless the persons above the £2,000 a year level get the benefit, of course, of the concession on that amount of their income. It is only on the higher part of their income that it is withheld from them.

The Chancellor made such an unsatisfactory reply on this important matter, and the Government's whole attitude on this is so much in conflict with what they continually proclaim, that we cannot allow the Amendment to go without recording our views. I am sorry we shall not have the support of the hon. Member for East Aberdeenshire, but perhaps he might at least abstain from voting to show how much he believes in what we say.

Although this has been a friendly and amusing debate, it is an extremely important issue. We believe that the Budget should have been planned on a different basis so as to give this relief where it is not only more needed, but also is likely to have a far better effect for the benefit of the whole economy. For that reason, I ask my hon. Friends to support us in the Lobby.

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

The Committee divided: Ayes, 227; Noes, 243.

Division No. 183.]	AYES	[8.25 p.m.
Acland, Sir Richard	Bowles, F. G.	Crossland, C. A. R.
Adams, Richard	Braddock, Mrs. Elizabeth	Crossman, R. H. S.
Allen, Arthur (Bosworth)	Brockway, A. F.	Cullen, Mrs. A.
Allen, Scholefield (Crewe)	Brook, Dryden (Halifax)	Daines, P.
Anderson, Frank (Whitehaven)	Broughton, Dr. A. D. D	Dalton, Rt. Hon. H.
Awbery, S. S.	Brown, Rt. Hon. George (Belper)	Darling, George (Hillsborough)
Baoon, Miss Alice	Brown, Thomas (Ince)	Davies, Ernest (Enfield, E.)
Baird, J	Burke, W. A.	Davies, Harold (Leek)
Barnes, Rt. Hon. A. J.	Burton, Miss F. E.	Deer, G.
Bartley, P.	Butler, Herbert (Hackney, S)	Delargy, H. J
Bellenger, Rt. Hon F. J	Callaghan, L. J.	Dodds, N. N.
Bence, C. R.	Castle, Mrs. B. A.	Donnelly, D. L
Benn, Hon. Wedgwood	Champion, A. J.	Driberg, T. E. N.
Beswick, F.	Chapman, W. D.	Dugdale, Rt. Hon. John (W. Bromwick)
Bevan, Rt. Hon. A. (Ebbw Vale)	Chetwynd, G. R.	Ede, Rt. Hon. J. C.
Bing, G. H. C.	Clunie, J.	Edwards, John (Brighouse)
Blenkinsop, A.	Coldrick, W.	Edwards, W. J. (Stepney)
Blyton, W. R.	Collick, P. H.	Evans, Albert (Islington, S.W.)
Boardman, H.	Corbet, Mrs. Freda	Evans, Edward (Lowestoft)
Bottomley, Rt. Hon A. G	Cove, W. G.	Evans, Stanley (Wednesbury)
Bowden, H. W.	Craddock, George (Bradford, S.)	Fernyhough, E.
Fienburgh, W.	Lewis, Arthur	Shackleton, E. A. A.
Finch, H. J.	Lindgren, G. S.	Shawcross, Rt. Hon. Sir Hartley
Fletcher, Eric (Islington, E.)	Lipton, Lt. Col. M.	Shinwell, Rt. Hon. E.
Follick, M.	McGovern, J.	Short, E. W.
Foot, M. M.	Mclnnes, J.	Silverman, Julius (Erdington)
Forman, J. C.	McKay, John (Wallsend)	Silverman, Sydney (Nelson)
Fraser, Thomas (Hamilton)	McLeavy, F.	Simmons, C. J. (Brierley Hill)
Gaitskell, Rt. Hon. H. T. N.	McNeil, Rt. Hon. H.	Skeffington, Arthur
Gibson, C. W.	Mainwaring, W. H.	Slater, Mrs. (Stoke, N.)
Glanville, James	Mallalieu, E. L. (Brigg)	Slater, J. (Durham, Sedgefield)
Gordon-Walker, Rt. Hon. P. C.	Mallalieu, J. P. W. (Huddersfield, E.)	Smith, Ellis (Stoke, S.)
Greenwood, Anthony (Rossendale)	Mann, Mrs. Jean	Smith, Norman (Nottingham, S.)
Grey, C. F.	Manuel, A. C.	Sorensen, R. W
Griffiths, Rt. Hon. James (Llanelly)	Marquand, Rt. Hon. H. A.	Soskice, Rt. Hon. Sir Frank
Griffiths, William (Exchange)	Mason, Roy	Sparks, J. A.
Grimond, J.	Mellish, R. J.	Steele, T.
Hale, Leslie	Messer, F.	Strachey, Rt. Hon. J.
Hall, Rt. Hon. Glenvil (Colne Valley)	Mitchison, G. R.	Stross, Dr. Barnett
Hall, John T. (Gateshead, W.)	Monslow, W.	Summerskill, Rt. Hon. E.
Hamilton, W. W.	Moody, A. S.	Swingler, S. T.
Hannan, W.	Morgan, Dr. H. B. W	Sylvester, G. O.
Hargreaves, A.	Morley, R.	Taylor, Bernard (Mansfield)
Harrison, J. (Nottingham, E.)	Morris, Percy (Swansea, W.)	Taylor, John (West Lothian)
Hastings, S.	Morrison, Rt. Hon. H. (Lewisham, S.)	Taylor, Rt. Hon. Robert (Morpeth)
Hayman, F. H.	Mort, D. L.	Thomas, David (Aberdare)
Healey, Denis (Leeds, S.E.)	Moyle, A.	Thomas, Ivor Owen (Wrekin)
Henderson, Rt. Hon. A. (Rowley Regis)	Mulley, F. W.	Thomson, George (Dundee, E.)
Herbison, Miss M.	Murray, J. D.	Thornton, E.
Hewitson, Capt. M.	Nally, W.	Tomney, F.
Hobson, C. R.	Neal, Harold (Bolsover)	Turner-Samuels, M.
Holman, P.	Noel-Baker, Rt. Hon. P. J.	Ungoed-Thomas, Sir Lynn
Houghton, Douglas	Oldfield, W. H.	Viant, S. P.
Hubbard, T. F.	Oliver, G. H.	Wallace, H. W.
Hudson, James (Ealing, N.)	Orbach, M.	Watkins, T. E.
Hughes, Cledwyn (Anglesey)	Oswald, T.	Webb, Rt. Hon. M. (Bradford, C.)
Hughes, Hector (Aberdeen, N.)	Paget, R. T.	Weitzman, D.
Irvine, A. J. (Edge Hill)	Paling, Rt. Hon. W. (Dearne Valley)	Wells, Percy (Faversham)
Irving, W. J. (Wood Green)	Paling, Will T. (Dewsbury)	Wells, William (Walsall)
Isaacs, Rt. Hon. G. A.	Pannell, Charles	West, D. G.
Janner, B.	Parker, J.	Wheeldon, W. E.
Jay, Rt. Hon. D. P. T.	Paton, J.	White, Mrs. Eirene (E. Flint)
Jeger, Dr. Santo (St. Pancras, S.)	Pearson, A.	White, Henry (Derbyshire, N.E.)
Jenkins, R. H. (Stechford)	Plummer, Sir Leslie	Whiteley, Rt. Hon. W.
Johnson, James (Rugby)	Popplewell, E.	Wilkins, W. A.
Johnston, Douglas (Paisley)	Porter, G.	Willey, F. T.
Jones, David (Hartlepool)	Prootor, W. T.	Williams, Rev. Llywelyn (Abertillery)
Jones, Jack (Rotherham)	Pryde, D. J.	Williams, Ronald (Wigan)
Jones, T. W. (Merioneth)	Rankin, John	Williams, Rt. Hon. Thomas (Don V'll'y)
Keenan, W.	Reid, Thomas (Swindon)	Williams, W. R. (Droylsden)
Kenyon, C.	Reid, William (Camlachie)	Wilson, Rt. Hon. Harold (Huyton)
Key, Rt. Hon. C. W.	Rhodes, H.	Yates, V. F.
King, Dr. H. M.	Robens, Rt. Hon. A.	Younger, Rt. Hon. K.
Kinley, J.	Roberts, Albert (Normanton)
Lee, Frederick (Newton)	Robinson, Kenneth (St. Panoras, N.)	TELLERS FOR THE AYES:
Lee, Miss Jennie (Cannock)	Rodgers, George (Kensington, N.)	Mr. Holmes and Mr. Royle.
Lever, Leslie (Ardwick)	Ross, William
NOES
Allan, R. A. (Paddington, S.)	Braithwaite, Sir Albert (Harrow, W.)	Crowder, Peter (Ruislip—Northwood)
Alport, C. J. M.	Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)	Darling, Sir William (Edinburgh, S.)
Amory, Heathcoat (Tiverton)	Brooke, Henry (Hampstead)	Davidson, Viscountess
Anstruther-Gray, Major W. J.	Brooman-White, R. C.	Deedes, W. F.
Ashton, H. (Chelmsford)	Browne, Jack (Govan)	Digby, S. Wingfield
Assheton, Rt. Hon. R. (Blackburn, W.)	Buchan-Hepburn, Rt. Hon. P. G. T.	Dodds-Parker, A. D.
Astor, Hon. J. J.	Bullard, D. G.	Dormer, P. W.
Baldock, Lt.-Cmdr. J. M.	Bullus, Wing Commander E. E.	Doughty, C. J. A.
Baldwin, A. E.	Burden, F. F. A.	Drewe, C.
Banks, Col. C.	Butcher, Sir Herbert	Duncan, Capt. J. A. L.
Barber, Anthony	Butler, Rt. Hon. R. A. (Saffron Walden)	Elliot, Rt. Hon. W. E.
Barlow, Sir John	Campbell, Sir David	Fell, A.
Baxter, A. B.	Carr, Robert	Finlay, Graeme
Beach, Maj. Hicks	Cary, Sir Robert	Fisher, Nigel
Beamish, Maj. Tufton	Channon, H.	Fleetwood-Heskelh, R. F.
Bell, Philip (Bolton, E.)	Clarke, Col. Ralph (East Grinstead)	Fletcher-Cooke, C.
Bennett, William (Woodside)	Clarke, Brig. Terence (Portsmouth, W.)	Ford, Mrs. Patricia
Bevins, J. R. (Toxteth)	Cole, Norman	Fraser, Hon. Hugh (Stone)
Birch, Nigel	Conant, Maj. R. J. E.	Fraser, Sir Ian (Morecambe & Lonsdale)
Bishop, F. P.	Cooper, Sqn. Ldr. Albert	Fyfe, Rt. Hon. Sir David Maxwell
Black, C. W.	Cooper-Key, E. M.	Galbraith, Rt. Hon. T. D. (Pollok)
Boothby, R. J. G.	Craddock, Beresford (Spelthorne)	Galbraith, T. G. D. (Hillhead)
Bossom, A. C.	Crookshank, Capt. Rt. Hon. H. F. C.	Garner-Evans, E. H.
Boyd-Carpenter, J. A	Crosthwaite-Eyre, Col. O. E.	George, Rt. Hon. Maj. G. Lloyd
Boyle, Sir Edward	Crouoh, R. F.	Godber, J. B
Braine, B. R.	Crowder, Sir John (Finchley)	Gomme-Duncan, Col. A.

Gough, C. F. H.	Macdonald, Sir Peter	Russell, R. S.
Graham, Sir Fergus	Mackeson, Brig. H. R.	Ryder, Capt. R. E. D.
Grimston, Hon. John (St. Albans)	McKibbin, A. J.	Salter, Rt. Hon. Sir Arthur
Grimston, Sir Robert (Westbury)	Mackie, J. H. (Galloway)	Savory, Prof. Sir Douglas
Hall, John (Wycombe)	Maclay, Rt. Hon. John	Scott, R. Donald
Hare, Hon. J. H.	Maclean, Fitzrey	Scott-Miller, Cmdr. R.
Harris, Fredric (Croydon, N.)	Macleod, Rt. Hon. Iain (Enfield. W)	Simon, J. E. S. (Middlesbrough, W.)
Harrison, Col. J. H. (Eye)	Macmillan, Rt. Hon. Harold (Bromley)	Smithers, Peter (Winchester)
Harvey, Air Cdre. A. V. (Macclesfield)	Maitland, Comdr. J. F. W. (Horncastle)	Smithers, Sir Waldron (Orpington)
Harvey, Ian (Harrow, E.)	Maitland, Patrick (Lanark)	Smyth, Brig. J. G. (Norwood)
Harvie-Watt, Sir George	Manningham-Buller, Sir R. E.	Snadden, W. McN.
Hay, John	Markham, Major S. F.	Soames, Capt. C.
Heath, Edward	Marlowe, A. A. H.	Spearman, A. C. M.
Hill, Dr. Charles (Luton)	Marples, A. E.	Speir, R. M.
Hill, Mrs. E. (Wythenshawe)	Marshall, Douglas (Bodmin)	Spence, H. R. (Aberdeenshire, W.)
Hinchingbrooke, Viscount	Marshall, Sir Sidney (Sutton)	Spens, Sir Patrick (Kensington, S.)
Holland-Martin, C. J.	Maude, Angus	Stanley, Capt. Hon. Richard
Hollis, M. C.	Maudling, R.	Stevens, G. P.
Holmes, Sir Stanley (Harwich)	Maydon, Lt. Comdr. S. L. C.	Steward, W. A. (Woolwich, W.)
Hope, Lord John	Medlicott, Brig. F.	Stewart, Henderson (Fife, E.)
Hopkinson, Rt. Hon. Henry	Mellor, Sir John	Stoddart-Scolt, Col. M.
Hornsby-Smith, Miss M. P.	Molson, A. H. E.	Storey, S.
Horobin, I. M.	Monokton, Rt. Hon. Sir Walter	Strauss, Henry (Norwich, S.)
Howard, Gerald (Cambridgeshire)	Moore, Lt.-Col. Sir Thomas	Studholme, H. G.
Howard, Hon. Greville (St. Ives)	Nabarro, G. D. N.	Suteliffe, Sir Harold
Hudson, Sir Austin (Lewisham, N.)	Nicholls, Harmar	Taylor, Charles (Eastbourne)
Hulbert, Wing Cdr. N. J.	Nicholson, Godfrey (Farnham)	Taylor, William (Bradford, N.)
Hutchinson, Sir Geoffrey (Ilford, N.)	Nield, Basil (Chester)	Thomas, Rt. Hon. J. P. L. (Herelord)
Hutchison, Lt.-Com. Clark (E'b'rgh W.)	Nugent, G. R. H.	Thomas, Leslie (Canterbury)
Hyde, Lt.-Col. H. M.	Nutting, Anthony	Thompson, Lt.-Cdr. R. (Croydon, W.)
Hylton-Foster, H. B. H.	Oakshott, H. D.	Thorneycroft, Rt. Hn. Peter (Monmouth)
Jenkins, Robert (Dulwich)	Odey, G. W.	Touche, Sir Gordon
Jennings, R.	O'Neill, Phelim (Co. Antrm, N.)	Turner, H. F. L.
Johnson, Eric (Blackley)	Orr, Capt. L. P. S.	Turton, R. H.
Jones, A. (Hall Green)	Orr-Ewing, Sir Ian (Weston-super-Mare)	Tweedsmuir, Lady
Joynson-Hicks, Hon. L. W.	Osborne, C.	Vane, W. M. F.
Keeling, Sir Edward	Partridge, E.	Vaughan-Morgan, J. K.
Kerr, H. W.	Peake, Rt. Hon. O.	Vosper, D. F.
Lambert, Hon. G.	Pete, Brig. C. H. M.	Wakefield, Edward (Derbyshire, W.)
Lambton, Viscount	Pilkington, Capt. R. A.	Walker-Smith, D. C.
Lancaster, Col. C. G.	Pitman, I. J.	Ward, Hon. George (Worcester)
Langford-Holt, J. A.	Powell, J. Enoch	Ward, Miss I. (Tynemouth)
Law, Rt. Hon. R. K.	Price, Henry (Lewisham, W.)	Waterhouse, Capt. Rt. Hon. C.
Legge-Bourke, Maj. E. A. H.	Prior-Palmer, Brig. O. L.	Watkinson, H. A.
Legh, Hon. Peter (Petersfield)	Profumo, J. D.	Webbe, Sir H. (London & Westminster)
Lindsay, Martin	Raikes, Sir Victor	Wellwood, W.
Linstead, H. N.	Rayner, Brig. R.	Williams, Rt. Hon. Charles (Torquay)
Lloyd, Maj. Sir Guy (Renfrew, E.)	Redmayne, M.	Williams, Gerald (Tonbridge)
Lloyd, Rt. Hon. Selwyn (Wirral)	Rees-Davies, W. R.	Williams, Paul (Sunderland, S.)
Lockwood, Lt.-Col. J. C.	Remnant, Hon. P.	Williams, R. Dudley (Exeter)
Longden, Gilbert	Renton, D. L. M.	Wilson, Geoffrey (Truro)
Low, A. R. W.	Roberts, Peter (Heeley)	Wood, Hon. R.
Lucas, Sir Jocelyn (Portsmouth, S.)	Robertson, Sir David	York, C.
Lucas, P. B. (Brentford)	Robinson, Roland (Blackpool, S.)
Lucas-Tooth, Sir Hugh	Rodgers, John (Sevenoaks)	TELLERS FOR THE NOES:
McAdden, S. J.	Roper, Sir Harold	Mr. Kaberry and Mr. Wills.

Mr. Jay

I beg to move, in page 7, line 42, at the end, to insert: (2) In sections two hundred and twelve and two hundred and thirteen of the said Act, as amended (which relate to the relief in respect of children) for the references to eighty-five pounds there shall be substituted references to one hundred pounds. This is an Amendment which seeks to raise the child allowance for Income Tax purposes from £85 to £100 in the case of each child. This is an Amendment which we shall seek to press strongly on the Government, and I am bound to say that of all the Amendments to this Bill which we have so far introduced this is the one to which I give the strongest possible support. I believe that there is a considerable inequality between the type of family in which there are a large number of dependants and perhaps only one earner and the other type—this applies to all levels of income—in which there is one earner or two earners with no dependants.

I hope that in this case the Chancellor may be able to meet us some part of the way. So far in our consideration of this Bill he has not made any concession. I do not know if he is trying to earn the reputation of being another "Iron Chancellor." I should like to suggest to him, in his own favourite words, that he should show himself a little more flexible; in this instance I think he might practice as well as preach a little flexibility. This is a case in which, if he cannot go the whole way and raise the allowance from £85 to £100, which I agree would cost a great deal of money, he might at least consider raising it, say, to £95 or at least to £90.

The basis of my argument is, I repeat, that there is a heavy inequality between the family with a large number of dependants and the family with none or few. To some extent all of us have failed to realise how great the difference is. I agree that it might be obvious, and hon. Members may say that I am merely stating the obvious, that if one divides one's income by four, five or six, one has a good deal less left than one would otherwise have had. But although we all understand that piece of arithmetic, we very seldom found our social policy on this simple truth, which is that what determines the standard of living is not the total income of the household but the income per head after tax. I do not think that that would be disputed between us but it is curious how seldom we think in those terms.

To give one example, when I quoted a few figures in terms of income per head, in the course of the Second Reading debate on this Bill, the Chancellor was a little puzzled by the conception and though I had stated it quite dearly once, he got up and asked whether that was really what I meant. It was what I meant, and it is what I am reiterating this evening. The tax tables which appear in the Financial Statement year by year show clearly the income of the earner but nowhere translate that into terms of income per head in the household.

I believe—and in saying this I show my impartiality in this matter, at least in a party sense—that we in the Labour Government of 1951 probably made a mistake in that we increased simultaneously the marriage allowance and the child allowance. At first sight it is always attractive to want to help the married man and to want to help the family with children; but, of course, if we do that we give a further bonus to one type of household which in these matters is probably better off than almost any other in the community; that is, the married couple without any dependants who are both earning. If instead we raise only the child allowance we concentrate the relief on the family where there are fewer earners. Therefore, looking back, I say frankly that it may have been a mistake to do what we did.

But I think the Chancellor last year made a worse mistake when he not merely increased the married allowance, but made a greater increase there than in the child allowance. The child allowance with which I am now concerned was raised during the period of the Labour Government from £50 to £70 and by the present Chancellor a year ago from £70 to £85. It may well be that the Financial Secretary will tell us that as the allowance has been raised in the past it cannot be raised again. Or that argument may be advanced by the learned Solicitor-General who is taking a fatherly interest —if that is the right word to use—in this Amendment. But I can say in advance that we shall not accept that argument. Our whole case is that there is still a very great inequality.

I should perhaps at this stage declare a personal interest in this question of supporting a family with a certain number of children. I believe it is customary to declare one's interest, but to show my impartiality I will rest my argument entirely on arithmetic. It was, I remember, my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) who once said that Socialism works best when it is in harmony with the laws of arithmetic. That is indeed true of many other things besides Socialism. It is true of business, politics, sport and a number of other things, and therefore I will found my case on that type of argument.

I wish to give a few examples of the difference in income per head in a family after tax has been paid as between a single man and a married man with a wife who is not working, because maybe she is looking after the children, and with three children; that is to say, a family of one individual and a family of five individuals. In these very simple calculations I have assumed that the income earned is in each case the same, and I have taken into account the family allowances which will be received. I hasten to add that the arithmetic is my own. I do not claim that is right to the last decimal place, but I hope that it is sufficiently correct for the purposes of the argument.

I have taken three levels of income; £500, or £10 a week, £800 and £1,500. If we consider a single man, or for that matter a single woman, earning £500 a year, the income per head after tax has been paid is approximately £443 10s. If we take the case of a married man with a wife and three children earning a similar amount, and if we add the family allowances, the income per head after tax is £108. That produces the result, not realised by some people, that a single person is rather more than four times better off, which is quite a remarkable differential. In spite of the family allowance and the existing child allowance the difference is as great as between an individual earning £500 a year and another earning more than four times as much.

8.45 p.m.

At the level of £800 a year a single person has about £651, after tax has been deducted, and a married man with three children has £161 per head of his family. I freely acknowledge that the ratio of rather more than four to one is the same throughout the scale so far as my calculations go. At the level of £1,500 a single person has £1,106 and the married man with three children has per head £270.

We have debated incentives and other questions of that kind. The argument I now advance is one based entirely on equity and not on incentive, except so far as some people may think that there is a certain disincentive here from having children at all. The view may be taken that it is obvious that if people are so foolish as to have three, four or five children the income per head of their family will be only one-quarter or one-fifth of that of a single person. It may have been a half-truth throughout history that the more children people have the poorer they are.

When I have advanced this argument previously, I have had anonymous letters, some of which have been abusive, saying that if people are so foolish as to breed children—that was the expression in one letter, that is their fault and they should jolly well pay. But that is not the view we should take in this Committee. While we have long discussions about industrial equipment, machinery, machine tools and so on, and the need for expanding and developing them in the interests of our future, it is also of some importance that we should produce the human beings who will work at and manage those machines.

I do not suggest that we should go as far as the French have gone in this respect. In France there is in force a remarkable system of family allowances by which at certain levels of income it is possible, by having a sufficiently large family, to be better off than if one had none at all. Obviously, the view is not taken by the French Parliament that it is undesirable to encourage an increase in the population. I do not suggest that we should go as far as they have gone or indeed that with our present financial arrangements we could afford to do so.

I argue that there is a case for an increase in this allowance above the present figure of £85. It may be that if that were done something should be done at the same time to improve the position of those below the Income Tax level. Of course the arguments I have advanced have been to some extent the classical arguments for introducing and increasing the family allowance itself as a social service payment. But it would be out of order to advance that part of the argument now. However, I do not want anyone to think that because I am putting this point for the Income Tax payer I am leaving the others out of account.

The ratio of more than four to one between the different types which prevails at all levels of income is greater than it ought to be. It appears to be one of the major defects of our Income Tax structure that it produces that remarkable difference. As this is not a case where the Chancellor is confronted with the dilemma of giving us what we want or nothing at all, it is possible for him to go some part of the way, and I hope that, although he is not to reply personally to the debate, he may be going to unbend just a little.

Mr. Houghton

I wish to support the Amendment. A little while ago, the Chancellor said that what he did last year would have warmed the heart of Mr. Gladstone, though I think he probably forgot that the great thing about Mr. Gladstone and Income Tax was his promise in 1874 to abolish it if returned to power. However, Disraeli and the Tories came back into power, and the Income Tax remained.

The Amendment which my right hon. Friend has moved would at least have warmed the heart of Mr. Lloyd George, because he was the first Chancellor to introduce the child allowance in modern Income Tax. In the famous, almost notorious, Budget of 1909, he introduced a child allowance of tax on £10 for each dependent child under the age of 16, and the actual tax remission involved in that relief was 11s. One can understand that the House did not sit up all night in order to move that 10s. should become 12s., 15s. or even 20s. when the relief was as small as that.

But that was not the first time that relief for children had been given in our income tax system, because, in Pitt's first taxing Act of 1798, there was relief for children; but, under that Act, which is commonly known as the Triple Assessment Act, there was a deduction of 10 per cent. for more than four children and less than eight, a deduction of 15 per cent. for eight or nine children, and one of 20 per cent. for 10 or more children. If there is any hon. Gentleman who likes to declare a personal interest in child allowances of this scale, I will gladly give way to him. But the extraordinary thing was that, although the relief provided for such large families, the claims made were said to reveal such unusually large families that the Chancellor of the Exchequer felt some doubt whether all these children existed, and he withdrew the child allowance in 1806 and it did not make its appearance again until the Bill of 1909. That is the history of child allowances up to 1909. Since then, it has been at various levels, and, in present circumstances, the Committee would agree that the expenses of families of young children running at such a high level would demand that every consideration must be given to them in our system of taxation.

I should like once more to draw attention to the unjustifiable disparity between the tax burden of the married man whose wife stays at home and that of one whose wife goes out to work. Taking last year's figures as a basis, if a husband earns £6 per week and his wife £5 per week, the tax they paid between them was £15 15s. But if the man worked hard in order to earn an income of £11 a week with which to keep a wife and one child, he paid £26 in tax.

If we take the case of a man who earned £500 a year and whose wife earned £300 a year, we find that their tax was £55, whereas if the husband alone worked and earned £800 with which to support a wife and one child, his tax was £85, £30 more. Even if he had two children, his tax was only £1 less than that of a married couple without children who together earned the same amount of money as the man with a wife and two children to support.

That is the sort of thing which naturally causes a sense of grievance. Mothers come to me and say," Is anyone going to say that I am not doing a job of work? Am I not making my contribution to society and to the future of the country? I and others like me are absolutely indispensable to the future of the nation. It is true that we are not able to go out and work in a factory, but if we are looking after two children that, surely, is doing enough."

My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) has said that we must encourage married women to go out to work. I agree that we must do that, but we must also encourage some mothers to stay at home. I think it is possibly offering too big an attraction to married women to go out to work when the differences in the Income Tax paid are as great as I have illustrated.

I do not know what this Amendment would cost, but I have looked at some figures, and, according to the tables in the last Report of the Commissioners of Inland Revenue, there appear to be 3 million people with one child, 2 million with two children, 750,000 with three children, and 400,000 with four or more children who come within the scope of taxable incomes.

That gives a total of 8 million children altogether, but a lot of the parents are already exempted by existing allowances. For what it is worth, I estimate that, if my Amendment were adopted, it would cost no more than £10 million, and probably a lot less. No doubt the right hon. and learned Gentleman has a much more precise estimate than that.

We have to admit, of course, that the Chancellor increased the child allowance last year, but we also have to remember that the previous Administration increased it in the previous year, so there appears to be common ground between both sides of the Committee that the child allowance is an important feature of our taxation reliefs, and that it should be progressively increased as far as is reasonably possible within the general structure of the Income Tax system.

I doubt whether any hon. or right hon. Gentlemen opposite would get up and say that this allowance is too much. In terms of tax, the maximum relief is £45 a year. No one is going to say that that is excessive in the case of a taxpayer who has the normal responsibilities of bringing up a family. Whether there should be a progressively increasing child allowance in order to meet the assumed rising cost of keeping children is another matter. That subject was discussed by the Royal Commission on Population, as hon. Members will remember.

9.0 p.m.

I am sure—and I am sorry to present the Solicitor-General with his reply so readily on this occasion since he used it very freely last year—that this year the Solicitor-General will say "After all, the Royal Commission Report is 12 months nearer than it was last year." We can expect to hear from him to that effect. Progressive child allowances may well be considered by the Royal Commission on Taxation, in relation to other matters, but the increase proposed in the Amendment will not necessarily be dealt with in their Report. The Chancellor, although the Royal Commission was in session, increased the child allowance from £70 to £85, so I feel sure that he will not plead the Royal Commission too seriously as a reason for not doing anything about this matter now.

What he will plead is that the money we want for this Amendment has already gone, beyond recall. Most of it on Clause 10. There is a little bit to come on the Clause we are now discussing, but the moneybags were opened on Clause 10 and nothing is left for the harassed parents and the starving children. When Clause 10 opened the moneybags it let through in a full year £135 million of the Revenue. My proposal, comparatively speaking, is chicken feed. When one squanders one's substance in riotous living there is not even much chicken feed left. I do not suppose there is chicken feed to spare for this Amendment. We should like hon. Members opposite, as I understand they are keen upon getting an improvement in these allowances, to support us, because we are sure that the Amendment is justified.

We are not inhibited in presenting this Amendment merely because the Chancellor has distributed tax reliefs in other directions. The problem remains a comparatively serious one. Hon. Members will realise that there is no grievance so bitter as the comparative grievance, as I have found in 30 years of adjusting wage rates, allowances and benefits of one kind and another. The disparity to which I draw attention creates a feeling of discontent among men who are the only wage earners in the household and whose wives are fully occupied with domestic responsibility. I hope that on this occasion we shall get a sensible and sympathetic answer from the Solicitor-General.

Mr. John McKay (Wallsend)

I have listened with pleasure to the exposition of principles from both sides of the Committee by hon. Members who agree that we have a duty to perform in matters of taxation. One of the primary duties is to help the under-dog as far as possible. That has always been my principle, and when I have considered any particular Amendment dealing with taxation I have always tried to analyse it as far as possible to find out how the under-dog would be helped. Men who get to the top— and it does not matter what line they are in—always have a feeling that they got there by efficiency, personal ability and so forth. That is a very nice feeling, but I am afraid that on many occasions it is not true.

When I study this Amendment I remember all the criticism that we on this side of the Committee have levelled against the Budget because of the fact that, while it was giving relief, it was giving it to the wrong people to our mind. It was giving it to people who are in a fairly comfortable position in life and was not helping the bottom dogs of society at all.

I have examined this problem from the same point of view. My hon. Friend the Member for Sowerby (Mr. Houghton) said there are 8 million children in this country. If he examines the figures more closely, as I have done, he will find that there are 11 million. The Government attempted in the Budget to help the family man and we were all glad of that. This Amendment runs on the same lines. It is out to help the family man, but it has the same weakness as was evident in the general tenor of the Budget itself— it does not help the family man in very poor circumstances. Those men on the lower rung of the ladder who have families are not paying any Income Tax at all. If the relief in respect of children is increased it does not help them one iota.

I emphasise this point now, as I have tried to do in previous Budget debates. I hope that when the Labour movement get into power they will closely consider this problem of the family man and how to help him in his difficulties. There is no question that the means to help him will not be this means. It will be by increasing the family allowances.

This Amendment, of course, would help those family men who pay Income Tax, and no doubt in many cases it would do good, but these proposals have the same weakness as the Budget provision to reduce Income Tax by 6d. in the £. Families that are in no need of help would receive the same benefit. In fact they would receive greater benefit, because the men with the higher incomes would receive benefit in respect of three children at the highest level of 9s. in the £. If the Amendment were implemented, a greater number of people would also receive relief at the rate of 5s. or 2s. 6d. in the £.

I intervene in this debate once more to try to encourage my party when they get into power to get down to the question of providing family allowances to help men in the lower income groups of £7 or £6 or less per week. Specialists who are examining this problem today tell us that as a result of the rise in the cost of living it takes £7 7s. wage, plus family allowances, to keep a family of three children. This is a great problem and I hope that when my side of the Committee have the opportunity we shall bring in legislation to enable the very poor to receive benefit, as well as those in the higher income levels.

Mr. Gordon Walker

Like my right hon. Friend the Member for Battersea, North (Mr. Jay), I can say from personal experience that it is most desirable to give extra benefits to families with young children. But apart from arguments of personal interest, there are very important arguments of principle, some of which have been mentioned, in favour of this Amendment. My hon. Friend the Member for Sowerby (Mr. Houghton) said that the disparity is now really too great between a married couple without children and a couple with children. When two people in a family can earn they are very well off. It is because the wife has children that she cannot work and earn money to bring the family earnings to the comparable level.

In addition, the family with a large number of children suffers particularly gravely from the rising cost of living, more than one would think from the cost of living figures, because the cost of living figures conceal a number of movements up and down. Food prices have gone up owing to the Government's policy, and other prices have come down largely owing to the fall in the cost of raw materials throughout the world. It is the rise in the cost of food, which is greater than one would think looking at the cost of living figures as a whole,, which bears so heavily upon a family with children. That is particularly true of families on the lower income levels.

There are two arguments of public policy that can be adduced in favour of this Amendment. One is that it is a matter of public policy to widen the gap between those with family responsibilities and those without. That was a clear principle laid down by the Royal Commission on Population. The second point of public interest is that only if we adopt the policy embodied in this Amendment can we make a real stride towards putting into practice the principle of equal pay. There is no way of getting equal pay unless the State, by one means or another, gives special benefits to those who have family responsibilities. Only if we do that as an act of social policy can we treat men and women in industry in such a way that we completely disregard whatever their other family responsibilities may be at home.

Although this Amendment will only be a small step towards that goal, it none the less is a step towards it, and as hon. Members opposite now give lip service to this principle of equal pay I hope that they will take this small step along the way that we shall have to cover before we can carry out in practice fully the principle of equal pay.

The Solicitor-General (Sir Reginald Manningham-Buller)

I was interested to observe the manner and the ingenuity with which the right hon. Member for Smethwick (Mr. Gordon Walker) introduced the topic of equal pay into a debate on children's allowances.

Mr. Gordon Walker

It was perfectly relevant.

The Solicitor-General

I am not suggesting that it was irrelevant. I said I was interested to observe the manner and the ingenuity with which he introduced that subject.

I shall seek to confine my remarks to the actual Amendment which the right hon. Member for Battersea, North (Mr. Jay) has moved. I listened with interest to his speech. I can disclose the same personal interest as he has in this matter. Both of us would be affected by this Amendment if it were carried. He did not carry forward his calculations to indicate what the difference was in the case of a family with four children, but I can work it out myself.

The hon. Member for Sowerby (Mr. Houghton) went so far not only as to give an interesting review of the past history with regard to children's allowances but he also indicated the reply that he thought I would make. Let me disappoint him on one point. I do not intend on this occasion to rely upon the answer that I am awaiting the Royal Commission's Report, although I am sure that he and I both look forward to considering its contents as soon as possible.

Last year the party opposite put forward an Amendment of a more limited character than this one, which was to increase to £100 the allowance for the first child ranking for the allowance. This is a more ambitious proposal—to give £100 to all children ranking for the allowance.

9.15 p.m.

As the right hon. Member for Battersea, North indicated, its cost would be considerable, and more than the estimate made by the hon. Member for Sowerby. According to the information with which I have been provided the cost would be in the region of £14 million. I have no doubt that all parents who pay Income Tax and who are fortunate enough to have young children regard this proposal sympathetically, but I have to say that it is not a change which is warranted at this time.

Last year there was a substantial increase in this allowance—from £70 to £85—and it is now higher than it has ever been. I am sure the hon. Member for Sowerby will agree with that. This proposal would make it higher still, and to make it now would be to put children's allowances out of line with the general scale of personal allowances. There has been a bigger increase in children's allowances than in any other war-time allowance. If we compare it with the pre-war position, I think that also holds good, except for one instance, in relation to dependants' allowances, where the increase has been proportionately greater.

This allowance will now be £85 and, after all, the allowance for a single person is £120. The right hon. Member for Battersea, North contrasted a series of figures, to which I listened with interest. I have not endeavoured to check their mathematical accuracy, but I am sure the right hon. Gentleman would agree that even if there were no taxation on the income of a single person with £500 a year it would mean that the income per head of a married couple with three children would be appreciably less.

Mr. Jay

But the hon. and learned Gentleman will agree that the point of my argument was that our taxation system had not made the situation very different from what it would be if there were no taxation. That is just my criticism.

The Solicitor-General

Expressing my personal view, I doubt whether that is a matter which could be completely corrected by taxation, but that is a general point, as were so many of the points which were put with his usual eloquence by the hon. Member for Sowerby. We shall be interested to see what the Royal Commission have to say about this matter.

For the reasons I have given the Government find themselves unable to accept this Amendment at this time. I know the arguments I have advanced will not meet with the approval or acceptance of the right hon. Gentleman because, in the course of moving this Amendment, he indicated quite clearly that he would not be very ready to accept the arguments I have advanced. Those are the arguments I have to advance, however, and I regard them as telling ones in relation to this matter, and I hope that the right hon. Gentleman, on consideration, will withdraw his Amendment.

Mr. Jay

Since the invitation is addressed to me, I am bound to say I am totally unconvinced by the hon. and learned Gentleman's arguments. Very strong arguments have been advanced from this side of the Committee on this very important matter, and we now learn that this important and far-ranging improvement could be made at a cost of not more than £14 million. I had conceived that the cost would be higher. In terms of the figures with which we have been dealing this afternoon, and indeed of the concessions the Chancellor has made in the Budget as a whole, that is not a very large figure.

If the Government take that view, I should like to press the Solicitor-General a little further, and also the Chancellor, since he has now joined in. This is a case in which it is not necessary to go the whole way. I suggested one com-

promise—raising the allowance not to £100 but to something intermediate between £85 and £100. Presumably if the whole concession would cost £14 million, some half-way house such as that would cost less than £14 million. [Interruption.] I am glad we are at one on that.

Last year we proposed a more modest change by which the allowance would go to £100 for the first child. Will the Chancellor consider going at least as far as that? He will be at one with me in agreeing that it must cost less than £14 million. Since they have made no concessions yet on the whole of the Bill, I hope that the Solicitor-General and the Chancellor will go at least as far as that. If not, I shall certainly advise my hon. Friends to divide in support of the Amendment.

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

The Committee divided: Ayes, 215; Noes, 235.

Division No. 184.]	AYES	[9.21 p.m.
Acland, Sir Richard	Davies, Ernest (Enfield, E.)	Hubbard, T. F.
Adams, Richard	Davies, Harold (Leek)	Hudson, James (Ealing, N.)
Allen, Scholefield (Crewe)	Delargy, H. J.	Hughes, Cledwyn (Anglesey)
Anderson, Frank (Whitehaven)	Dodds, N. N.	Hughes, Emrys (S. Ayrshire)
Awbery, S. S.	Donnelly, D. L.	Hughes, Hector (Aberdeen, N.)
Bacon, Miss Alice	Driberg, T. E. N.	Irvine, A. J. (Edge Hill)
Baird, J.	Dugdale, Rt. Hon. John (W. Bromwich)	Irving, W. J. (Wood Green)
Barnes, Rt. Hon. A. J.	Ede, Rt. Hon. J. C.	Isaacs, Rt. Hon. G. A.
Bartley, P.	Edwards, John (Brighouse)	Janner, B.
Ballanger, Rt. Hon. F. J.	Edwards, W. J. (Stepney)	Jay, Rt. Hon. D. P. T.
Bence, C. R.	Evans, Albert (Islington, S.W.)	Jeger, Dr. Santo (St. Pancras, S.)
Benn, Hon. Wedgwood	Evans, Edward (Lowestoft)	Johnson, James (Rugby)
Beswick, F.	Evans, Stanley (Wednesbury)	Jones David (Hartlepool)
Bevan, Rt. Hon. A. (Ebbw Vale)	Fernyhough, E.	Jones, Jack (Rotherham)
Bing, G. H. C.	Fienburgh, W.	Jones, T. W. (Merioneth)
Blackburn, F.	Finch, H. J.	Keenan, W.
Blenkinsop, A.	Fletcher, Eric (Islington, E.)	Kenyon, C.
Blylon, W. R.	Follick, M.	Key, Rt. Hon. C. W.
Boardman, H.	Foot, M. M.	King, Dr. H. M.
Bottomley, Rt. Hon. A. G.	Forman, J. C.	Kinley, J.
Bowden, H. W.	Fraser, Thomas (Hamilton)	Lee, Frederick (Newton)
Bowles, F. G.	Gaitskell, Rt. Hon. H. T. N.	Lee, Miss Jennie (Cannock)
Braddock, Mrs. Elizabeth	Gibson, C. W.	Lever, Leslie (Ardwick)
Brockway, A. F.	Glanville, James	Lewis, Arthur
Brook, Dryden (Halifax)	Gordon Walker, Rt. Hon. P. C.	Lindgren, G. S.
Broughton, Dr. A. D. D.	Greenwood, Anthony (Rossendale)	Lipton, Lt.-Col. M.
Brown, Rt. Hon. George (Belper)	Grey, C. F.	Mcinnes, J.
Brown, Thomas (Ince)	Griffiths, Rt. Hon. James (Lianelly)	McKay, John (Wallsend)
Burke, W. A.	Griffiths, William (Exchange)	McLeavy, F.
Butler, Herbert (Hackney, S.)	Hale, Leslie	Mainwaring, W. H.
Callaghan, L. J.	Hall, Rt. Hon. Glenvil (Colne Valley)	Mallalieu, E. L. (Brigg)
Champion, A. J.	Hall, John T. (Gateshead, W.)	Mallalieu, J. P. W. (Huddersfield, E.)
Chapman, W. D.	Hamilton, W. W.	Mann, Mrs. Jean
Chetwynd, G. R.	Hannan, W.	Manuel, A. C.
Coldrick, W.	Hargreaves, A.	Mason, Roy
Collick, P. H.	Harrison, J. (Nottingham, E.)	Mellish, R. J.
Corbet, Mrs. Freda	Hastings, S.	Messer, F.
Cove, W. G.	Hayman, F. H.	Mitchison, G. R.
Craddock, George (Bradford, S.)	Healey, Denis (Leeds, S.E.)	Monslow, W.
Crosland, C A. R.	Henderson, Rt. Hon. A. (Rowley Regis)	Morgan, Dr. H. B. W.
Crossman, R. H. S.	Herbison, Miss M.	Morley, R.
Cullen, Mrs. A.	Hewitson, Capt. M.	Morris, Percy (Swansea, W.)
Dames, P.	Holman, P.	Mort, D. L.
Dalton, Rt. Hon. H.	Holmes, Horace (Hemsworth)	Moyle, A.
Darling, George (Hillsborough)	Houghton, Douglas	Mulley, F. W
Murray, J. D.	Shawcross, Rt. Hon. Sir Hartley	Tomney, F.
Neal, Harold (Bolsover)	Shinwell, Rt. Hon. E.	Turner-Samuels, M.
Noel-Baker, Rt. Hon. P. J.	Short, E. W.	Ungoed-Thomas, Sir Lynn
Oldfield, W. H.	Silverman, Julius (Erdington)	Viant, S. P.
Oliver, G. H.	Silverman, Sydney (Nelson)	Wallace, H. W.
Orbach, M.	Simmons, C. J. (Brierley Hill)	Watkins, T. E.
Oswald, T.	Skeffington, Arthur	Webb, Rt. Hon. M. (Bradford, C.)
Paget, R. T.	Slater, Mrs. (Stoke, N.)	Weitzman, D.
Paling, Rt. Hon. W. (Dearne Valley)	Slater, J. (Durham, Sedgefield)	Wells, Percy (Faversham)
Paling, Will T. (Dewsbury)	Smith, Ellis (Stoke, S.)	Wells, William (Walsall)
Pannell, Charles	Smith, Norman (Nottingham, S)	West, D. G
Parker, J.	Snow, J. W.	Wheeldon, W. E
Paton, J.	Sorensen, R. W.	White, Mrs. Eirene (E. Flint)
Peart, T. F.	Soskice, Ht. Hon. Sir Frank	White, Henry (Derbyshire, N.E.)
Popplewell, E	Sparks, J. A	Whiteley, Rt. Hon. W.
Porter, G.	Steele, T.	Wilkins, W. A.
Proctor, W. T.	Strachey, Rt. Hon. J	Willey, F. T
Pryde, D. J.	Stross, Dr. Barnett	Williams, Rev. Llywelyn (Abertillery)
Rankin, John	Summerskill, Rt. Hon. E	Williams, Ronald (Wigan)
Reid, Thomas (Swindon)	Swingler, S. T.	Williams, Rt. Hon.Thomas (Don V'll'y)
Rhodes, H.	Sylvester, G. O.	Williams, W. R. (Droylsden)
Robens, Rt. Hon. A.	Taylor, Bernard (Mansfield)	Wilson, Rt. Hon. Harold (Huyton)
Roberts, Albert (Normanton)	Taylor, John (West Lothian)	Yates, V. F.
Robinson, Kenneth (St. Pancras, N.)	Taylor, Rt. Hon. Robert (Morpeth)	Younger, Rt. Hon. K.
Rogers, George (Kensington, N.)	Thomas, David (Aberdare)
Ross, William	Thomas, Ivor Owen (Wrekin)	TELLERS FOR THE AYES:
Royle, C.	Thomson, George (Dundee, E.)	MR. Pearson and
Shackleton, E A. A	Thornton, E	Mr. Arthur Allen.
NOES
Allan R. A. (Paddington, S.)	Digby, S. Wingfield	Jennings, R.
Alport, C. J. M.	Dodds-Parker, A. D	Johnson, Eric (Blackley)
Amory, Heathcoat (Tiverton)	Donner, P. W.	Jones, A. (Hall Green)
Anstruther-Gray, Major W. J	Doughty, C. J. A.	Joynson-Hicks, Hon. L. W
Ashton, H. (Chelmsford)	Drewe, C.	Keeling, Sir Edward
Assheton, Rt. Hon. R. (Blackburn, W.)	Dugdale, Rt. Hon. Sir T. (Richmond)	Kerr, H. W.
Astor, Hon. J. J.	Duncan, Capt. J. A. L.	Lambert, Hon. G.
Baldock, Lt.-Cmdr. J. M	Elliot, Rt. Hon. W. E.	Lambton, Viscount
Baldwin, A. E.	Fell, A.	Lancaster, Col. C. G
Banks, Col. C.	Finlay, Graeme	Law, Rt. Hon. R. K.
Barber, Anthony	Fisher, Nigel	Legge-Bourke, Maj. E A. H
Barlow, Sir John	Fleetwood-Hesketh, R. F.	Legh, Hon. Peter (Petersfield)
Beach, Maj. Hicks	Fletcher-Cooke, C.	Linstead, H. N.
Beamish, Maj. Tufton	Ford, Mrs. Patricia	Lloyd, Maj. Sir Guy (Renfrew, E.)
Bell, Philip (Bolton, E.)	Fraser, Hon. Hugh (Stone)	Lloyd, Rt. Hon Selwyn (Wirral)
Bennett, William (Woodside)	Fraser, Sir Ian (Morecambe & Lonsdale)	Lockwood, Lt.-Col. J. C
Bevins, J. R. (Toxteth)	Fyfe, Rt. Hon. Sir David Maxwell	Longden, Gilbert
Birch, Nigel	Galbraith, Rt. Hon. T. D. (Pollok)	Low, A. R. W.
Bishop, F. P.	Galbraith, T. G. D. (Hillhead)	Lucas, Sir Jocelyn (Portsmouth, S.)
Black, C. W.	Garner-Evans, E. H	Lucas, P. B. (Brentford)
Boothby, R. J. G	George, Rt. Hon. Maj. G. Lloyd	Lucas-Tooth, Sir Hugh
Bossom, A. C.	Gomme-Duncan, Col. A	Macdonald, Sir Peter
Boyd-Carpenter, J. A	Gough, C. F. H.	Mackeson, Brig. H. R
Boyle, Sir Edward	Graham, Sir Fergus	McKibbin, A. J
Braine, B. R.	Grimond, J.	Maclay, Rt. Hon. John
Braithwaite, Sir Albert (Harrow,W.)	Grimston, Hon. John (St. Albans)	Maclean, Fitzroy
Braithwaile, Lt.-Cdr. G. (Bristol,N.W.)	Grimston, Sir Robert (Westbury)	Macleod, Rt. Hon. lain (Enfield, W.)
Brooke, Henry (Hampstead)	Hall, John (Wycombe)	Macmillan, Rt. Hon Harold (Bromley)
Brooman-White, R. C	Hare, Hon. J. H.	Maitland, Comdr. J. F. W. (Horncastle)
Browne, Jack (Govan)	Harris, Frederic (Croydon, N.)	Maitland, Patrick (Lanark)
Buchan-Hepburn, Rt. Hon. P. G. T	Harrison, Col. J. H. (Eye)	Manningham-Buller, Sir R. E
Bullard, D. G.	Harvey, Air Cdr. A. V. (Macclesfield)	Markham, Major S. F.
Bullus, Wing Commander E E	Harvie-Watt, Sir George	Marlowe, A. A. H.
Burden, F. F. A	Hay, John	Marples, A. E.
Butcher, Sir Herbert	Heath, Edward	Marshall, Douglas (Bodmin)
Butler, Rt. Hon. R. A (Saffron Walden)	Hill, Dr. Charles (Luton)	Marshall, Sir Sidney (Sutton)
Campbell, Sir David	Hill, Mrs. E. (Wythenshawe)	Maude, Angus
Carr, Robert	Hinchingbrooke, Viscount	Maudling, R.
Cary, Sir Robert	Holland-Martin, C. J.	Maydon, Lt.-Comdr. S. L. C.
Channon, H.	Hollis, M. C.	Medlicott, Brig. F
Clarke, Col. Ralph (East Grinstead)	Holmes, Sir Stanley (Harwich)	Mellor, Sir John
Cole, Norman	Holt, A. F.	Molson, A. H. E.
Conant, Maj. R. J. E.	Hope, Lord John	Monckton, Rt. Hon. Sir Walter
Cooper, Sqn. Ldr. Albert	Hopkinson, Rt. Hon. Henry	Moore, Lt.-Col. Sir Thomas
Cooper-Key, E. M.	Hornsby-Smith, Miss M. P	Nabarro, G. D. N.
Craddock, Beresford (Spelthorne)	Horobin, I. M.	Nicholls, Harmar
Crookshank, Capt. Rt. Hon. H. F. C	Howard, Gerald (Cambridgeshire)	Nicholson, Godfrey (Farnham)
Crosthwaite-Eyre, Col. O. E.	Howard, Hon. Greville (St. Ives)	Nield, Basil (Chester)
Crouch, R. F.	Hudson, Sir Austin (Lewisham, N.)	Nugent, G. R. H
Crowder, Sir John (Finchley)	Hulbert, Wing Cdr. N. J.	Nutting, Anthony
Crowder, Petre (Ruislip—Northwood)	Hutchinson, Sir Geoffrey (Ilford, N.)	Oakshott, H. D
Darling, Sir William (Edinburgh, S.)	Hutchison, Lt.-Com. Clark (E'b'rgh W.)	Odey, G. W
Davidson, Viscountess	Hylton-Foster, H. B. H.	O'Neill, Phelim (Co. Antrim. N)
Deedes, W. F.	Jenkins, Robert (Dulwich)	Ormsby-Gore, Hon. W. D

Orr, Capt. L. P. S.	Salter, Rt. Hon. Sir Arthur	Thompson, Lt.-Cdr. R. (Croydon, W.)
Orr-Ewing, Sir Ian (Weston-super-Mare)	Savory, Prof. Sir Douglas	Thorneycroft, Rt. Hn. Peter (Monmouth)
Osborne, C.	Scott, R. Donald	Touche, Sir Gordon
Partridge, E.	Scott-Miller, Cmdr. R.	Turner, H. F. L.
Peake, Rt. Hon. O.	Simon, J. E. S. Middlesbrough,W.)	Turton, R. H.
Peto, Brig. C. H. M.	Smithers, Peter (Winchester)	Tweedsmuir, Lady
Pilkington, Capt. R. A.	Smithers, Sir Waldron (Orpington)	Vane, W. M. F.
Pitman, I. J.	Smyth, Brig. J. G. (Norwood)	Vaughan-Morgan, J. K.
Powell, J. Enoch	Snadden, W. McN.	Vosper, D. F.
Price, Henry (Lewisham, W.)	Soames, Capt. C.	Wakefield, Edward (Derbyshire, W.)
Prior-Palmer, Brig. O. L.	Spearman, A. C. M.	Ward, Hon. George (Worcester)
Profumo, J. D.	Speir, R. M.	Ward, Miss I. (Tynemouth)
Ralkes, Sir Victor	Spens, Sir Patrick (Kensington, S.)	Waterhouse, Capt. Rt. Hon. C.
Rayner, Brig. R.	Stanley, Capt. Hon. Richard	Watkinson, H. A.
Retmayne, M.	Stevens, G. P.	Webbe, Sir H. (London & Westminster)
Rees-Davies, W. R.	Steward, W. A. (Woolwich, W.)	Williams, Rt. Hon. Charles (Torquay)
Remnant, Hon. P.	Stewart, Henderson (Fife, E.)	Williams, Gerald (Tonbridge)
Renton, D. L. M.	Stoddart-Scott, Col. M.	Williams, Paul (Sunderland, S.)
Roberts, Peter (Heeley)	Storey, S.	Williams, R. Dudley (Exeter)
Robertson, Sir David	Strauss, Henry (Norwich, S.)	Wills, G.
Robinson, Roland (Blackpool, S.)	Suteliffe, Sir Harold	Wilson, Geoffrey (Truro)
Rodgers, John (Sevenoaks)	Taylor, Charles (Eastbourne)	Wood, Hon. R.
Roper, Sir Harold	Taylor, William (Bradford, N.)	York, C.
Russell, R. S.	Thomas, Rt. Hon. J. P. L. (Hereford)
Ryder, Capt. R. E. D.	Thomas, Leslie (Canterbury)	TELLERS FOR THE NOES:
		Mr. Kaberry and Mr. Studholme.

Resolution reported: That, for the purposes of any Act of the present Session to make new provision as respects the gross value for rating purposes of dwelling-houses and private garages and of hereditaments partly used as private dwellings, it is expedient to authorise the payment out of moneys provided by Parliament of any increase which is attributable to the provisions of the said Act of the present Session—

1. (a)in the sums payable out of moneys so provided under subsection (1) of section one hundred and forty-three of the Local Government Act, 1948;
2. (b)in the Exchequer Equalisation Grants payable under Part I of the said Act of 1948.

Resolution agreed to.

Mr. Frederick Lee (Newton)

I beg to move, in page 7, line 42, at the end, to insert: (2) 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), as amended by subsection (4) of section fourteen of the Finance Act, 1952, for the reference to twenty-six pounds a year there shall be substituted a reference to eighty-five pounds a year. The issue contained in this Amendment is not new. In our discussions on last year's Finance Bill, my hon. and right hon. Friends put forward a similar Amendment. We object to the retention of the discrimination in the matter of child allowances as between parents whose children are receiving a university or college education and parents whose children are apprenticed to a trade or profession.

Nothing that I or my hon. Friends say should give the impression that we wish to reduce the facilities available to parents whose children are undergoing university or college training. What we believe is that the allowances given to parents whose children are apprenticed should be brought up to the same level. In the former case an allowance is granted equal to the standard rate of tax on £85, while in the case of the apprenticeship the limit is £26. In the case of a parent whose child has won a bursary, no matter what its value may be, there is no victimisation in consequence. It is possible, therefore, to have an allowance on something like £300 to a parent in the one case, whilst a parent whose child is being apprenticed is limited to the £26.

Last year, our only answer from the Solicitor-General was that this involved a vital principle on which the Government could not be expected to make any decision until the Royal Commission had reported. My hon. Friend the Member for Sowerby (Mr. Houghton) was successful some minutes ago in forestalling the Solicitor-General by saying that he hoped the hon. and learned Gentleman would not produce that same argument again. I hold the same sentiments, and I hope to be able to show that this issue is far too serious, and the consequences of refusing the Amendment so imminent, for us to await the report of a Royal Commission in x years' time.

Last year the Solicitor-General also sought refuge in telling us that the Labour Government had done nothing about it. [HON. MEMBERS: "Hear, hear."] I hear hon. Members opposite say, "Hear, hear." When the term of office of the present Government expires, if they can show anything like our record in the education of our people they should be quite satisfied with their achievement. During our period of office the school-leaving age was increased, the university population was vastly increased and everywhere inducements were given to our people to allow children to undertake a greater degree of education.

The Deputy-Chairman (Mr. Hopkin Morris)

I hope the hon. Member will keep to the Amendment.

Mr. Lee

I am making this point because it was seriously adduced from the Front Bench against our argument last year. It was brought forward by the Government, not by the back benchers. Since last year quite important issues bearing on this subject have arisen. The Chancellor has produced a Budget in which he has felt able to give Income Tax concessions which have benefited the higher income groups to a greater extent than others. Secondly, industrial production in Britain has fallen whilst that of our competitors has continued to rise. Thirdly, the numbers of persons entering non-manufacturing industries have risen sharply.

I submit that the Chancellor cannot possibly argue that in a Budget in which he is able to give reliefs to the high income groups he cannot make this concession because of the cost. While industrial production is falling and many of our people are leaving industries which necessitate serving an apprenticeship, the right hon. Gentleman cannot afford to continue the discrimination to which we are making objection.

This discrimination against the apprentice is now more pronounced because of a great change that has taken place in the methods of serving an apprenticeship. Hon. Members may know that it is only in comparatively recent years that the trade unions have been able to negotiate wages and conditions for apprentices, and since that time conditions for apprentices have materially improved. I believe that in the 1938 Act, when the £13 concession was first given—and which the right hon. Gentleman doubled last year—there was a failure to appreciate that the old pattern of apprenticeship was fast disappearing.

In that pattern the employer was supposed to be conferring some sort of favour upon a young boy by teaching him the craft to which he had become apprenticed. Premiums were demanded, whereas today very few premiums are demanded in industry generally. It may be that in one or two of the professions, such as the legal profession, that situation still obtains, but in industry there is very little by way of premium demanded now. Instead of its being merely a question of the employer teaching a boy his craft and the boy not expecting to receive remuneration in consequence, the position now is that the apprentice is looked upon not only as someone learning the craft, but as a producer in the industry.

That is a revolutionary change which was not taken account of in the 1938 proposals—perhaps it could not be taken into account—and it is at the basis of the proposal we are discussing. Now an apprentice may go to school in his employers' time for one or two days a week and for the remainder of the week he practises his trade and is looked upon as a producer. Although it is difficult to give figures or percentages, it is certainly true to say that the majority of apprentices, at least in the engineering industry, are working on a payment-by-results system.

Let us take a look at what all this means so far as the Chancellor is concerned. If a parent with two sons sends one to a university, or if the son is able to go there because he has won a bursary, the Chancellor exempts his father to the tune of about £300 so far as Income Tax is concerned. If the same father sends his second son to be an apprentice, say in an engineering job, and the boy, taking a great interest in his work, becomes a good producer and thereby increases the amount of his earnings, the right hon. Gentleman, who tells us about his desire for production, says, "If you dare to produce more than a given amount I will penalise your father as a consequence of you doing it."

Colonel Cyril Banks (Pudsey)

I am probably one of the few of those present who have been apprentices. I started as an apprentice when I was 13. I am sure that the hon. Gentleman does not wish to mislead the Committee, but I would say that those of us who have been through our apprenticeship realise that in the engineering trade the apprentice of the past paid a premium and learned his job; he was of no effective use to the management. Today the apprentice is doing a job in the workshop as a producer and does not cover the ground and become the craftsman that he did in the past.

Mr. Lee

I should have thought that the hon. and gallant Gentleman's intervention paraphrased precisely everything that I have been saying, and I look for his support in the remainder of my speech.

I was making the point that there is a revolutionary change in what the apprentice is expected to do as compared with what the position was when the present legislation was devised. I should have thought that in the interests of the drive for production, at a time when production is falling, when not sufficient of our young people are going into the manufacturing industries which require apprentices, the right hon. Gentleman, who I know is so concerned, quite seriously and honestly, about these issues, should really look at this matter, because it penalises a parent who puts his boy to serve an apprenticeship in an industry if we are to say, when a boy responds to his training and becomes an efficient producer, that the parent must in consequence lose the child allowance which otherwise he might be able to obtain.

Colonel Banks

I am sure that the hon. Gentleman does not wish to mislead the Committee, but to go back as far as 1914–18, we had, in the time of my apprenticeship, pupils from the main industries in the country serving their apprenticeship and at the same time being educated at our universities at the expense of the employers.

The Deputy-Chairman

I suggest that the hon. and gallant Member should make his own speech.

Mr. Lee

Perhaps the hon. and gallant Gentleman and I can have the argument out afterwards. If he is saying that the apprentice of today does not make as efficient a tradesman as in the past when he and I served our apprenticeship, I would reply that he and I would be rather smug to take that point of view. The whole process has changed, the method has changed and the apprentices today are earning far more than anything he and I managed to achieve even in our most virile days.

It may well be that the Committee has heard me discuss ad nauseam the next point which I wish to raise. I hope that the Chancellor will again look at the point in respect of the numbers of scientists and technologists we are now producing. I asked him a question a few weeks ago about the ratio to our population of those who were taking science and technology. The answer he gave was that it was one in 2,600, which was an improvement on the previous year, when the figure was one in 3,000. If we take the comparable figures of our chief competitors two years ago, we find that the United States figure was one in 400; that Switzerland was leaving us hopelessly behind; that Western Germany was progressing rapidly, and that the figures for the Soviet Union showed they were leaving us behind.

9.45 p.m.

If we look again at the number of scientists and technicians we are producing and who afterwards go into industry, we find the percentage amazingly low. This afternoon the Financial Secretary had a Question to answer from one of my hon. Friends, and he implied that far too many were going into industry. I hope he will not maintain that point of view. It will be a great tragedy if we do not increase the percentage of scientists going into industry. In the United States there is a closer affinity between science and production and as a consequence more scientists remain in industry.

That being so, I think it essential, not only that we encourage parents to put their boys into industry where apprenticeships must be served, but that the boys should be encouraged to take steps to fit themselves for scientific posts. I believe this Amendment is fax too moderate to do all that needs to be done, but unless the right hon. Gentleman accepts it he will hinder apprentices from going into industry, and will curtail the flow of scientists and technicians into industry, especially into the engineering industry.

In my opinion, we are now entering a most critical phase. We hope soon to see the end of the war in Korea. If with God's blessing that comes about we must remember that it will be followed by an intensive drive on the part of all the great engineering countries in the world to produce commodities on competitive terms. Already we have intensive competition from Western Germany and Japan. Only the highest possible degree of quality in production and the application of new ideas and scientific inventions can enable us to maintain our position as a great nation.

That being so, it is anomalous that we should be asking tonight for this discrimination of the worst possible type to be swept away, and should be feeling that the Government are not convinced of the necessity for so doing. I have tried to be objective and to show that this is a most vital issue which cannot possibly await reference to a Royal Commission. If only we can start now to give an added incentive, at a time when production is falling and people are going into the wrong jobs, we may be able to reverse that tendency and to inspire fresh enthusiasm among parents to allow their children to become really efficient craftsmen and technicians.

In asking the Chancellor to accept this Amendment, I am, I believe, asking for something in which he takes the greatest interest. I cannot understand why he should find it impossible to accept this Amendment. I hope he will be convinced that by accepting our Amendment he will help to provide better technicians for the future.

Mr. Ede (South Shields)

I should like to assure the Chancellor that we attach the utmost importance to this Amendment. We believe that it raises issues in importance far beyond those raised in the previous Amendments today. We are dealing here with one of the most difficult social and industrial problems that we have to face in this Island. We must face the fact that an Island like ours must depend for its place in the world on the success of its great industries and its mercantile marine. Without those aspects of our commercial and industrial life reaching the highest point of efficiency we cannot in the years that lie ahead hope to maintain anything like the standard that I am sure we all wish to see.

I know from my happy associations with the Chancellor 10 years ago when, although the country was very unhappy, I think both he and I were very happy in the steps we were then taking to ensure that education should have a far wider concept than it has ever had before, that he realises the importance of giving to what we sometimes call technical education its real position as an education for those people whose stock-in-trade is not merely words.

It is astonishing that in this great practical country we are apt to think that the man who is the master of words and figures is the really educated man, whereas the man who is skilled in the great applied arts and who maintains us and our standard of living is regarded too often as having a somewhat inferior intellectual equipment. As one who has no practical abilities at all and who has to rely on his grand-nieces and people like that when he has got his motor-boat out to see that the mechanics of the thing run right, I say that I have great admiration for the man who when a piece of machinery goes wrong can at once diagnose what is wrong and put it right without putting everything else wrong.

The man who, in our great factories and industrial establishments is the care and maintenance man, who has to apply that sort of mental process to all sorts of unexpected happenings in the course of the day is really a very important man in the industrial life of the country. We desire to see that men like that should get adequate recognition when they reach that stage. In the formative stages there should be every inducement to lads and girls so equipped to enter industry with the knowledge that, if they do the job for which, in the jargon that the right hon. Gentleman and I put into the Education Act, their abilities and aptitudes qualify them, they will be regarded as the good citizens that they are—no better and no worse than the people whose aptitudes and abilities follow different lines.

It amazes me to hear of the wage that a boy or girl leaving school can get in a blind-alley occupation. Anyone who sits at petty sessions or quarter sessions knows that from time to time one gets in front of one lads of 16 or 17 years of age earning—or getting—£7 a week. When the learned counsel defends them his excuse is that they earn so much money that they have lost all sense of its value.

I am not in favour of underpaying lads of 16 and 17, but what an inducement it is to a lad to go into a blind alley occupation when he can get that sort of money within a few months of entering it, as compared with the time he will have to wait to get anything like that figure if he tries to equip himself as one of the skilled workers, and, particularly, if he is that type of skilled worker, whom we need more and more, who is capable of and willing to accept 'responsibility in the undertaking that he is going to join.

In my own great industrial constituency and elsewhere, I find that not merely is there criticism of the difficulty of getting apprentices, but of the difficulty of persuading men who are well trained to accept responsibility for some of the positions, just above that of the ordinary skilled worker, which entail great responsibility, but, at the same time, are very essential and must be discharged by men with skilled knowledge. In this way, they can participate in the management of the industry, and, to some extent, form a bridge, which is very often needed, between the management and the practitioner in the workshops.

These are social and industrial questions that are raised by this Amendment. We were told last year that we must wait for the Report of the Royal Commission. Royal Commissions have their uses, one of which, as I found when I sat on that side of the House, was to provide a ready answer for a Government in distress, but I am quite certain that the right hon. Gentleman does not wish to use this Royal Commission as an excuse for not doing practical things which are demanded both by the economy of the country and the justice of the case.

This concession for which we ask would place the lad who is getting his position in the country by actual acquaintanceship with his future calling in its practical aspects on the same level in the family as the lad of the same age who is going through a theoretical training in the principles, it may be, even of the same occupation, but of whatever occupation has been selected for that youth in the future of the country, and I suggest that this is a thing that is well worth doing.

In my own constituency, we have an old-established grammar school. One of its earliest pupils was the late Viscount Runciman, who was there in its very early days. Half the lads who leave that grammar school go into the shipyards and the electrical and marine engineering works of the district, and I think it is a good thing that a school which has its foundation as a grammar school should, in that way, be providing reasonably educated youths to go into the practical side of industry. The other half, of course, go into the professions or into the management side of industry.

It is surely a most anomalous thing that when two boys are becoming youths, the one who is going into a professional career should get the benefit of this allowance while the other, who is going, possibly, into a calling that will keep him in contact in after life with the other youth, is, during this period, placed in a different position.

10.0 p.m.

That seems to me to be an anomaly that cannot be defended and that is prejudicial to a really sound social unity in the country. I am quite sure that if there is one thing we need, it is to assure both management and workmen in all our great industries that they are part of a unity and not two separate sections of a community. I would welcome anything that tends to build up in industry the belief that management and workmen have a common object in getting the utmost efficiency out of the industry in which they are concerned.

Last year we had the privilege of hearing some speeches from the other side of the Committee in support of this Amendment. The hon. and gallant Member for Angus, South (Captain Duncan) last year—and not for the first time—supported not merely the principle, but the details of this Amendment. I cannot help thinking that this would be probably a far greater incentive for the permanent improvement of our skilled industries than anything else that is at the moment in the Budget, for this would give to the industrial community the belief that the House recognises the importance of getting not merely highly skilled men, but men whose educational equipment would fit them for occupying positions of responsibility.

The hon. and gallant Member for Pudsey (Colonel Banks) kept up a kind of running commentary on the speech of my hon. Friend. I am bound to say that, like my hon. Friend, I could not understand what there was between them. They were both, I understand, proud of the generation of apprentices of whom they were two outstanding examples. I hear in my own calling from my contemporaries the belief that the modern entrant into the teaching profession is not as good as we were. May I say that I do not believe it. I do not believe that the essential character of the youth of this nation has deteriorated during the 50 or 60 years that separates some of us from our apprenticeships.

As my hon. Friend said, we have to face up to the altered social conditions. My recollection of apprentices in the skilled industries in the days of my youth was of their going off with a broomstick at about 11 o'clock in the morning and returning a few minutes later with the broomstick on which were hanging a number of cans of beer which were to be distributed to the workmen. One does not see that today, and a very good job too. That recollection is a reminiscence that is part of the social case for the Amendment.

I sincerely hope that the right hon. Gentleman, who I know from my own personal contact with him takes the very liveliest interest in this part of our educational and social system, will feel that this is a matter on which he need not wait for the Royal Commission to report. and that at this moment, when our great productive industries have to be re-equipped for the new tasks that lie immediately ahead, we should do this thing to attract to them the brains that they need. It would also ensure that parents who are willing to make the sacrifice which apprenticeship of their youths entails upon them may know that their public spirit does not go unrecognised by this Committee.

Mr. Maudling

I entirely agree with the right hon. Gentleman as to the great importance of the subject of the Amendment. It is not a new subject. It has been discussed on several occasions before, and the points of view expressed by the mover of it and by the right hon. Gentleman have already been expressed from our benches as well. If we are criticised for not having accepted this Amendment last year, it is only fair to point out that similar Amendments were moved and were declined by the right hon. Gentleman's Government previously. This is therefore a matter in which both sides of the Committee have shown keenness, when out of office, while the other side did not take any action when in office.

The Committee will be aware that the children's allowance was originally designed for dependent children, and that until 1938 there was no allowance for apprentices. Then an allowance was introduced for the apprenticed child, provided that he was unpaid or received a very trivial sum indeed, amounting to 5s. a week or £13 a year. The distinction was maintained between the student child who was dependent and a child who had set out to earn his living in the world.

Last year we raised the limit from £13 to £26 because the value of money had considerably changed since 1938. The distinction was still retained between the student child, who is normally dependent upon his parents, and a child who has gone out and made a start at earning his living. That is an argument that can be sustained, but I must say that I have never been very impressed by it. There is a great deal in what has been advanced to show that the validity of the argument has become considerably less since 1938. The mover of the Amendment looked at the matter from the point of view of industry, the need for technologists, and the changing character of the apprenticeship system, in the light of the very keen competition which our industries are having to face from the resurgence of German and Japanese industry.

The right hon. Gentleman opposite looked at the matter from the slightly different angle of his interest in education, in which he has such great judgment and to which he has contributed so much. It was particularly interesting to hear what he said from his experience of the effect of the blind-alley occupations and the great attraction of them. Obviously all the arguments that have been laid before the Committee have very considerable substance to them.

However, I must also put to the Com-mitte certain objections on the other side. We heard the usual thing about Royal Commissions, and that one should not shelter behind them. The Committee must recognise that there are great advantages in obtaining the advice of a body of this experience and knowledge and which is considering this particular problem. It would be a very good thing if the Chancellor were able to recast many of these complicated personal allowances all of which to some extent interlock with the advice of the Royal Commission; but that, of course, has not been possible because they have not yet reported.

When one alters one of these personal allowances there are often considerable indirect consequences. In this case I should like to quote one practical difficulty that would be involved in increasing the sum from £26 to £85. One would have circumstances where an apprentice earned £84 and his father received the allowance, but if the apprentice received £86 his father would lose the allowance. That particular difficulty obviously underlay an Amendment which was put down by the right hon. Gentleman and was not called.

Therefore, if one raised the sum to £85 one would have pressure for a tapering, for some provision whereby if the apprentice earned £5 or £10 above the limit the parent would lose part and not the whole of the allowance. It would be very difficult in the case of apprentices. Whereas there are relatively few student children with an income of just over £85, there are tens of thousands of apprentice children, and if the tapering principle were introduced and had to be administered by the Revenue, the amount of assessment and re-assessment that would be required would involve the addition of several hundred Inland Revenue officers. That is a consequence which I think the Committee will agree my hon. Friend is perfectly justified in bearing in mind.

But the arguments put forward in favour of this Amendment carry very great weight, and my right hon. Friend has authorised me to say that if the hon. Member for Newton (Mr. Lee) would be prepared to withdraw the Amendment my right hon. Friend, between now and the Report stage, will give very close consideration to the possibility of bringing forward a suggestion that would meet the hon. Member's point of view. I cannot give any definite undertaking, by reason both of the genuine practical difficulties and of avoiding, if possible, doing something in advance of the Royal Commission which might prejudice the full value of the Commission's report when it is received.

I ask the hon. Member to withdraw the Amendment, therefore, on the understanding that between now and the Report stage my right hon. Friend will attempt in some way to meet the point which the hon. Member has advanced with such cogency this evening, subject, of course, to the practical difficulties which I have mentioned.

Mr. James McInnes (Glasgow, Central)

The hon. Gentleman has conceded that in 1938 £13 were granted and that last year an additional £13 brought the figure up to £26. But at the time that the £13 were granted the average pocket money was about 5s. a week, whereas in 1952 the average pocket money obviously was 12s. or 14s. a week. Thus the £26 brings one back to 1938. In the case of the youth who is undergoing full-time education, the hon. Gentleman is obviously overlooking the fact that by bursaries, endowments and other monetary considerations his income is considerably increased.

Mr. Tom Brown (Ince)

One feels delighted that at last we have extracted from the Government Front Bench a part concession, but I want to support the plea put forward and to show the importance of accepting this Amendment as it stands. I want to support my hon. Friend the Member for Newton (Mr. Lee) and my right hon. Friend the Member for South Shields (Mr. Ede). I put forward the view that this Amendment should be accepted not so much from the point of view of the engineering shop floor but from the point of view of the mining industry.

It is well known to hon. and right hon. Members that within the last 30 or 40 years there has been an intense mechanisation of the mining industry and that 55 per cent. to 65 per cent. of the industry is now mechanised. We are anxious that a concession should be made to trainees which would attract boys and young men into the mining industry to fit themselves to do a job, not on the shop floor where the machine is made, but at the coal face where the machine breaks down.

10.15 p.m.

I was delighted to see the Parliamentary Secretary to the Ministry of Fuel and Power put in an appearance. Today we have difficulty in getting young men to come into that side of the industry simply because they are presented with a limited concession for Income Tax purposes. I think that the feelings and sympathies of the Chancellor are towards assisting young men to become technicians and technologists in industry, in which ever industry they may be employed.

I want to reinforce the plea that has been made on this side of the Committee that the partial promise that we got from the Economic Secretary tonight will bear full fruit, and that between now and the Report stage we shall have the concession fully conceded in order to sustain the Chancellor's claim that this is an incentive Budget. This would be an incentive to the trainees to come into the industry.

Mr. Lee

I am grateful to the Economic Secretary for the spirit in which he has met our arguments. I would just point out that we shall put down this Amendment again on the Report stage. We hope that the Chancellor will manage to find some way of meeting us. Having made that plain, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Houghton

I beg to move, in page 8, line 1, to leave out subsection (2), and to insert: (2)In sections two hundred and fourteen, two hundred and fifteen and two hundred and eighteen of the said Act (reliefs for housekeepers and others) for the references to fifty pounds there shall be substituted references to seventy-five pounds. (3)In section two hundred and sixteen of the said Act (reliefs to dependent relatives) for the references to fifty pounds, except the reference in subsection (4) (where it does not relate to the amount of the relief) there shall be substituted references to sixty pounds; and for the reference in subsection (1), as amended, to one hundred and thirty-five pounds (which refers to the income limit of the dependent relative) there shall be substituted a reference to one hundred and forty-five pounds. Although this looks like an Amendment of some size, the effective point in it is merely to propose to increase the housekeeper allowance from the £60, which is intended to be in the Bill, to £75. The reference to dependent relatives in the proposed subsection (3) is merely to disentangle the two allowances which are linked together in Clause 12 as it stands. The Chancellor is proposing to increase two allowances of a different kind identical in amount to two new equal amounts of £60. We propose to leave the dependent relative amount as the Chancellor leaves it in Clause 12, and we propose an increase only in the housekeeper allowance from £60 to £75.

Last year we put forward a similar Amendment. The debate is reported in col. 139 of the OFFICIAL REPORT of 19th May, 1952. Last year we proposed to increase the housekeeper allowance to £75, but we had to jump from £50 to £75. This year we have to jump from £60 to £75 because since last year the sympathy for the Amendment expressed in the reply of the Economic Secretary has been translated into a proposal to increase the allowance by £10. So the difference between us is narrowed. It is £10 less this year than it was last year. We are hoping that with a little persistence we might get there either now or next year.

The question underlying this Amendment is, what is the fiscal value of a housekeeper? When we look back at what previous Chancellors of the Exchequer have made of this question we see that they have been much steadier in fixing the fiscal value of the housekeeper's allowance than they have been in fixing the fiscal value of a wife. The wife's allowance has fluctuated frequently over the last 30 years, whereas the housekeeper's allowance has remained fairly constant. Thirty-five years ago it was £45, which was half the allowance given for a wife. In 1924, it jumped to £60, but the wife's allowance remained the same, at £90.

In 1931, the housekeeper's allowance dropped to £50, but the wife's allowance also dropped to £50. The housekeeper's allowance has remained at £50 from 1931-32 until this year, when the Chancellor of the Exchequer proposes to increase it to £60. The wife's allowance, which was £90 in 1924, dropped to £50, then went up to £70, then up to £80, then down to £70, then down to £60, then up to £70, then up to £80, and then up to £90.

We propose that the housekeeper's allowance should be the same proportion of the wife's allowance as it was in 1941–42. If the Financial Secretary asks me why we have chosen the year 1941–42, the answer is that it is the only year when the housekeeper's allowance was five-sixths of the wife's allowance and, since our proposal to raise the housekeeper's allowance to £75 makes it five-sixths of the present wife's allowance, the year 1941–42 seems to be a very convenient one to quote at a precedent.

What is the relationship, from an Income Tax point of view, between a housekeeper and a wife? There are some things one can do with a wife which one cannot do with a housekeeper. One cannot send a housekeeper out to work, nor would she usually be willing to go if one could. No concession is given to a working housekeeper similar to that given to a working wife, because a taxpayer does not get a married man's allowance when he has a housekeeper, although the housekeeper would get no more personal allowances than a wife.

Another feature about housekeepers is that they are very difficult to get and, since the Act requires a housekeeper to be resident before an allowance is granted— at least, that is the interpretation which the Commissioners of Inland Revenue place upon the Act, and there has been no successful challenge to it yet—the difficulty of getting resident housekeepers is greater still. There is no provision for a child-minder who comes in during the day to look after young children; there is no provision for a woman who may come in first thing in the morning to help to get a man off to work, tidy up and look after the house, spring clean it, make the beds and be ready for the man when he comes home for tea.

There is no allowance for this service unless the woman—it cannot be a man; not even a woman can have a male housekeeper—is resident. Last year we drew attention to this question of residence, and we might have done so this year if another Amendment on the Order Paper had come before us. I am not raising the question of residence now, but I am stressing the fact that a resident housekeeper is more difficult to get than a non-resident one, and a resident housekeeper is therefore more expensive and has to be looked after with great consideration. She is not only paid money for her services, but she also wants reasonable time off and all the amenities of a modern household. She expects, in these days, to have a television set so that her spare time is as enjoyable as if she were in her own home.

The Chancellor proposes this year to increase the allowance from £50 to £60, but we do not think he has gone far enough. Who will say that the amount for a housekeeper should be £30 less than the amount for a wife? That is not a matter with which the Royal Commission can deal; it is far too delicate a subject. It requires the long experience, the skill and moral courage of a Chancellor of the Exchequer, who is the only man who can solve a problem like this. The right hon. Gentleman has already shown that he does not require the assistance and advice of the Royal Commission on this matter because he has made a proposal of his own in Clause 12 without waiting to hear what they have to say.

I am sure the Committee will realise that the position of a widow or widower, especially where there are young children, is one which we must bear in mind in arranging these allowances. I am not suggesting differentiation between the housekeeper allowance in cases where there are children and the allowance in cases where there are no children. I know it can be argued, and is argued in some quarters, that a widower with no children to take care of is lucky to get a housekeeper allowance at all, because from some points of view his position is no different from that of a single man who chooses to have his own household and a housekeeper to run it.

But where there are children who have lost their mother, and where the father is trying to keep the home going to give the children a proper and happy start in life; where he finds a suitable person—a relative if he can—to come into the house and act as foster mother, that is something we want to encourage instead of seeing, as we have seen, that sort of home broken up, with the father going into lodgings and the children officer of the local county authority having to take care of the children in the end.

Since we have now reached a period of sympathetic consideration of our Amendments—I hesitate to suggest that we have moved into a period of concession, but we may be very near to it— this may be another of the matters which the Chancellor is prepared to reconsider before Report stage. I believe the cost of the proposed extension would be comparatively small. I have not the figure, although I notice that according to column 141 of the OFFICIAL REPORT of 19th May last year, the Economic Secretary to the Treasury told my hon. Friend the Member for Islington, East (Mr. E. Fletcher) that the cost of granting the concession would be less than my hon. Friend supposed. I do not know what estimate we put upon it but no doubt the Financial Secretary will have some idea of what this concession will cost. May I appeal to him to give as sympathetic a response to this proposal as is possible in the circumstances?

10.30 p.m.

Mr. Mulley

At this rather late hour I do not wish to detain the Committee more than a few minutes, but I should like to endorse the plea of my hon. Friend the Member for Sowerby (Mr. Houghton) for this concession, and in particular to make some further reference to a problem with which I think all of us are familiar as Members of Parliament, the problem of the family left without a mother and the father facing the twin problem of keeping the family together as a unit and at the same time earning a living.

I should like to make reference to one aspect of this matter, though no doubt I should be ruled out of order if I developed that aspect of the matter at any length, and that is the closing of nursery schools. The father was able to leave his young family in such schools while he was at work in the day-time, but when they close down he is faced with an added difficulty. In many cases this has led to the breaking up of the family and very often the children are sent to institutions, a consequence deplorable from the point of view of the family and also deplorable from the point of view of the Exchequer. Undoubtedly it is very undesirable for children to be taken out of their family environment, and also it is more costly to maintain them in institutions of this kind rather than as a family.

This is an incentive Budget, and everything concerned with increasing production should receive favourable consideration. It would be an incentive to production if these fathers were helped in this difficult task. I hope it will be possible for the Financial Secretary to find it possible to accede to this reasonable request, and so assist them.

Mr. Gaitskell

I should like briefly to support the Amendment. The Government, of course, are proposing to increase the housekeeper's allowance and to some extent to remedy the rather unfavourable position of the housekeeper compared with the wife. My hon. Friend the Member for Sowerby (Mr. Houghton) dealt in a most delicate manner with this rather difficult subject, and he also explained the history of the allowance granted to the housekeeper and the wife, respectively. It is not very satisfactory to have these variations in the proportions which the housekeeper gets compared with the wife. Both political parties must accept some responsibility for that because there have been changes dealing with the wife's allowance without a corresponding change in respect of the housekeeper.

The Government must have given some consideration to the problem when they were looking into the matter of the housekeeper allowance. It would certainly be interesting to know why they have decided to increase it only to £60 instead of to the £75 figure, which would certainly have brought it nearly to the proportion to which it was until the last two years. I do not think it could be argued that the allowance should be exactly the same for the housekeeper as for the wife. No one would object to a relatively small difference. I feel, however, it should be small, and we hope that the Government will be more forthcoming on this Amendment than they were on the last and concede what my hon. Friend so rightly asks for.

Mr. Boyd-Carpenter

There is not very much between us on this issue. As has been pointed out, under this very Clause we are accepting the view that some increase in the housekeeper's allowance is justified in present circumstances. My right hon. Friend is proposing in this Clause to increase the allowance from the present £50 to £60, and what this Amendment seeks to do is to add a further £15 and raise it to £75.

As the right hon. Gentleman indicated, my right hon. Friend gave very careful consideration to this matter when he was deciding what particular adjustments or variations in this allowance he should recommend to this Committee, and I can respond to the right hon. Gentleman's request for me to indicate why it is that we have at this stage thought that an increase of £10 from £50 to £60 is the proper increase.

This matter is one—I almost hesitate to use the expression in view of the derisive laughter it will elicit—which is directly within the purview of the Royal Commission. I do not altogether share the feelings of the hon. Member for Sowerby (Mr. Houghton) that this matter is so delicate—I think that by "delicate" he really meant "indelicate"; people do not use the expression "delicate" when they mean "indelicate"—that the Royal Commission would find themselves in any degree of embarrassment in considering it. The Royal Commission is manned by extremely experienced men of the world.

Mr. Gaitskell

And women, too.

Mr. Boyd-Carpenter

Yes; very experienced ladies and gentlemen.

We felt that, despite that, in the circumstances of the time and in view of the fact that this allowance had not increased since before the war, a moderate increase was justified. We therefore proposed this increase of £10. To go further would, I think, tend to prejudice the relativity of these allowances, which, as the debate has shown, is a somewhat delicate matter, on which opinions can genuinely differ; and I think that before going further we ought to be in possession of the Royal Commission's recommendations. That, in response to the right hon. Gentleman, is the intellectual process by which we arrived at this figure.

There is one other consideration, which is a somewhat material one. The hon. Member for Sowerby indicated that he thought the cost involved would be small. It depends, as the late Dr. Joad would say, on what one means by "small." The cost would be £1 million, and that is a substantial item. For those reasons, although I willingly agree that this is a matter upon which opinions can differ, I think that this is the right increase. I will fortify that, as those who have spoken before me have done, by comparisons.

The single person allowance is now 20 per cent. above the pre-war level. The married allowance—the allowance for man and wife—will be 16⅔ above the pre-war level. With my right hon. Friend's proposed change, this allowance which we are discussing will be 20 per cent. above the pre-war level. Hon. Members will see that these allowances are, therefore, being kept very much in line. The real comparison is between pre-war and post-war. We are, therefore, taking the right step in making this moderate increase and then awaiting such indication as the Royal Commission may be able to give us as to how the general relativity of this allowance for, perhaps, some years to come can be worked out.

Amendment negatived.

Mr. A. J. Irvine (Liverpool, Edge Hill)

I beg to move, in page 8, line 11, at the end, to insert: (3) In section two hundred and seventeen of the said Act (services of a daughter) for (he reference to twenty-five pounds there shall be substituted a reference to forty pounds. The effect of the Amendment would be to entitle a claimant, who is compelled by reason of old age or infirmity to depend upon the services of a daughter resident with and maintained by him or her, to relief on £40 instead of, as at present, on £25. As I understand it, this allowance dates from the Finance Act, 1920, and for 33 years it has remained at the figure of £25.

It is notable that at that first stage in 1920 the relief allowed for the services of a daughter allowance was the same in amount as that allowed for a dependent relative. When the dependent relative allowance was increased to £50, the services of a daughter allowance remained at the same figure. Now the present Bill again increases the dependent relative allowance, and it provides also for an increase in the housekeeper allowance, but it leaves the services of a daughter allowance still unchanged, so that the daughter is indeed the Cinderella on this occasion, and one hopes that the Chancellor of the Exchequer will play the appropriate role.

I expect that the Government and hon. Members in all parts of the House will recognise that a family in which a daughter looks after an old and infirm father deserves every consideration. The fact that my family consists of sons does not prevent me from contemplating such cases with admiration and respect. I suggest that the figure selected in 1920 is now, having regard to the change in money values, an inappropriate figure. Although I appreciate that the claimant of this allowance does not have to be a widow or widower I say that the allowance is akin to the housekeeper allowance. I look anxiously in these matters to the hon. Member for Sowerby (Mr. Houghton) for what I hope will be corroboration.

If I am right it would seem to me that an economic situation which is regarded as justifying an increase of the housekeeper allowance should justify an increase of the daughter's services allowance. This, in my submission, will apply in few cases, but they will be hard cases. We are asking, realistically, for only a small rise. The provision in the 1952 Act appears to me to be tightly and carefully drawn, because the claimant must be compelled to depend on a daughter, the daughter must reside with him and must be maintained. I therefore ask earnestly for sympathetic consideration of this Amendment.

Mr. Gaitskell

I should like to support this Amendment, and I hope it has a better response than the last one. We must all agree that it is a very anomalous situation that this allowance should have remained unchanged for 30 years when the other allowances have been increased to such a remarkable extent. I hope that on this occasion the Financial Secretary will not fall back on the advice of his hon. Friends on how much a daughter is worth.

Mr. Boyd-Carpenter

We have given careful consideration to this matter both before and since the hon. Member for Edge Hill (Mr. Irvine) put down his Amendment. There are certain aspects of this allowance with which I do not think I will trouble the Committee at this hour, which make it perhaps not wholly comparable to some which we have been discussing. My right hon. Friend has been considering nevertheless whether, in the light of the adjustments made in the other allowances as well as the trend in the value of money since this allowance was fixed the time is not now ripe for an increase. As to the amount of the increase, I am bound to say that we have concluded that the figure on which the hon. Member for Edge Hill has alighted is the right figure. We have looked at the drafting and I and my advisers have been unable to find any fault in it. In the circumstances, I suggest that we might accept the Amendment.

Amendment agreed to.

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

Mr. Gaitskell

I do not wish to start a long disquisition on Income Tax, but I want to make sure, before we part with this Clause, what the intentions of the Chancellor of the Exchequer are. If, as I hope is the case, it is intended that we should adjourn after Clause 12, I think we might agree to dispense with a serious discussion. If, on the other hand, the right hon. Gentleman wants to go through the night I would prefer to discuss this Clause before we go to Clause 13 or 14.

10.45 p.m.

Mr. R. A. Butler

This veiled indication has at least touched a chord in my heart. I would suggest that we should not go further than Clause 12 tonight. We shall have covered Income Tax in general tonight, and I think that that is sufficient for one day. We shall be taking the Committee stage again next week, and no doubt we shall have our preliminary debates on the initial allowances. After that, I think it will be necessary to make some pretty definite progress.

We have a good deal of work still before us on the new Clauses, quite apart from the remainder of the Bill. There are many issues that will interest hon. Members in the new Clauses. The sooner we can get to the new Clauses and make progress with them the happier we shall be. We have a very congested Parliamentary programme, and naturally we want to make as much progress as we can. I should like to thank hon. Members for the spirit in which they have so far tackled the business before us. So far as I am concerned, we have made good progress today.

Mr. Gaitskell

I should certainly like to respond to the Chancellor in the same spirit. I am sure he will agree that there has not been any kind of obstruction on this side of the Committee, but that we have had sensible debates in a sensible manner. I can quite understand that, as Chancellor, he wants to proceed as rapidly as possible. I can see, looking ahead, that we shall need a considerable amount of time to discuss Clause 14. On this side of the Committee we attach a very great deal of importance to the question of the initial allowances. After that, it may be possible perhaps to proceed rather more rapidly. I hope the Committee will agree that it is far better to have proper debates on important matters and to proceed more rapidly with minor issues, than to spread our debates too thinly over the whole Bill.

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

To report Progress, and ask leave to sit again.—[Mr. R. A. Butler.] Committee report Progress; to sit again Tomorrow.