§ I think, however, that this year I can allow some further stimulus beyond that which will be given by the tax concessions I have described, with safety and indeed with benefit to the economy. This gives me an opportunity, which I very much welcome, to do something for the holders of post-war credits.
§ These credits, as the Committee knows, were created in the war years and represented the extra tax payable by reason of certain reductions in the personal allowances and in the earned income relief that were made to raise revenue for the war. Repayments of these credits are 61 being made currently to men becoming 65 and women becoming 60 and to the beneficiaries of deceased persons who would have reached those ages, at the rate of about £17½ million a year.
§ Of the original total of about £765 million of credits, about £25 million has been set off against tax arrears and £310 million has been repaid, leaving some £430 million outstanding. While inflation persisted no Government has felt able to accelerate the rate of repayment. But one of the benefits of the stability which has been attained is that it is now possible to do something more. I propose this year to start a comprehensive attack on this problem.
§ First, I propose now to reduce by two years the ages at which owners of credits become entitled to repayment of their credits. The qualifying ages will become 63 for men and 58 for women. This will mean that this year I shall pay off three years instead of one, at an additional cost of £35 million. This is as far in this direction as I feel justified in going now. I propose, however, to seek enabling powers to permit the repayment of credits by statutory order, so that if, later in the year, financial and economical circumstances were such as to justify going further I should be able to make a proposal to this effect.
§ Secondly, I propose that all credits now belonging to the beneficiaries of holders who have died shall be paid forthwith, and that, for the future, credits still outstanding shall be repaid on the death of the holder. These repayments will amount to £34 million this year.
§ Thirdly, I have carefully reviewed the question of payment in cases of hardship. The provision I have already mentioned for payment at death will cover the case of widows who are entitled to credits left by their former husbands, and that deals with one very deserving class. I have, however, decided to go further. I realise that, in so doing, I have embarked—perhaps rashly—on a course which all my predecessors, and I hitherto have thought to raise such problems of discrimination as to be inexpedient. I have done so because hon. Members have urged on me on so many occasions not to refuse to deal with certain clearly defined cases of hardship because a concession could not be extended to other, perhaps equally hard, cases. So I have selected three 62 categories which, on the top of the other administrative work caused by these proposals, are as much as we can deal with this year.
§ I would ask hon. Members to bear in mind that we can deal only with categories of hardship that can be defined readily and precisely. In practice, this means that normally we must use classifications already employed by Departments in connection with social services. Further, I must ask hon. Members not to press me to extend these hardship concessions further this year. I am aware there are many other people who on grounds of degree of hardship may have claims as strong as those I have chosen.
§ The classes I have selected are: First, persons who, for a continuous period of 'twelve weeks ending after today, have been receiving National Assistance. Secondly, persons who, after today, are persons named in a register of blind persons, required under Statute to be kept by a local authority. This will not include persons registered as partially blind. Thirdly, persons who, after today, are receiving constant attendance allowance or unemployability supplement under the War Pensions Instruments, the Industrial Injuries Acts or the Industrial Diseases (Benefit) Acts or who would have been in receipt of unemployability supplement if they had not claimed an alternative benefit, or would have been in receipt of constant attendance allowance but for being a hospital in-patient.
§ This is a start anyway, of which I hope hon. Members will approve, and we must see how it goes. Though information is scanty, I estimate that repayments in these hardship cases will total about £2 million a year.
§ Finally, as further evidence of my desire to clear up this long-standing problem, I propose that post-war credits that have not become eligible for repayment by 1st October, shall carry interest from that date until the beginning of the month in which repayment is made. or to a date three months after the beginning of the month in which the credit became eligible for repayment. The accrued interest will be paid at the time that the relative credit is itself repaid. The rate will be 2½ per cent. compounded with annual rests. This is the same as the rate now paid on Post Office Savings Bank accounts. As the amounts involved 63 for any one person will be relatively small, I propose that this interest shall not be liable to tax. The cost of interest will be negligible this year and will rise, on the assumption that there is no further acceleration of repayments—and I should hope there would be in fact—to a maximum of £7 million a year in 1980–81 and will reduce slowly thereafter.
§ I estimate that with these additional repayments we shall pay off this year a total of £89 million out of the £430 million outstanding. I hope that part of this will help to swell the total of National Savings in the coming year.
§ I should mention one other matter affecting post-war credits. The reduction of tax allowances that gave rise to individual post-war credits had the effect of increasing the compounded rate of tax paid by building societies in respect of interest to their depositors and shareholders above what it would otherwise have been. The extra tax paid by the societies on this account was calculated and recorded and one of my predecessors —the late Sir Kingsley Wood—gave the societies an assurance that it should be repaid to them at a later date. The total amount outstanding is about £31 million. I do not feel able to repay any of this amount this year but I propose to make statutory the societies' title and to provide that the amount outstanding may be repaid, partly or wholly, as and when the Treasury by Statutory Order may prescribe.
§ I propose that the amounts due to building societies, like other credits, shall carry interest from 1st October at 2½per cent. free of tax. Interest will be paid only when the relative amounts of credit are repaid.
§ To enable me to make these repayments I propose, as I have said, to seek powers in a special Bill, which will be published in a day or so, to vary by Statutory Order the conditions under which post-war credits may be repaid. I hope we shall get that Bill passed with the minimum delay and make the necessary Statutory Order giving effect to the proposals I have outlined immediately thereafter.
§ I must warn the Committee that this operation involves a lot of detailed planning and a very great effort on the part 64 of the Inland Revenue. It would jeopardise the success of the operation and involve delays in payment if the plan were to be changed. So I hope that the Committee will accept the proposals in the Bill when it comes forward as the best way I can find of taking quick action in a direction which, I am convinced, everyone will approve.
§ I have authorised the Inland Revenue and the other Departments concerned to start immediately on the task of printing and distributing the millions of application forms that will be needed for this operation. The forms will describe the precise categories of persons who may make claims as I have outlined them, and will indicate any evidence that will have to be supplied. It is hoped that these forms will be available in Post Offices in about a month's time and that the Inland Revenue may begin to make repayments early in June. I hope that, apart from difficult cases, the bulk of the repayments can be made by the end of August. I urge all concerned, once they have sent in their application forms, not to pester the Inland Revenue, which will work with the utmost speed, since a mass of reminding letters may merely delay the operation. I feel justified in describing this as a comprehensive attack on the post-war credits problem.