Clause 16.—(ALTERATIONS IN RELIEFS.)

HC Deb 13 May 1959 vol 605 cc1256-341

3.50 p.m.

Mr. Douglas Houghton (Sowerby)

I beg to move, in page 14, line 11, at the end to insert: (2) In section two hundred and sixteen of the Income Tax Act, 1952 (dependent relatives), references to seventy-five pounds shall be substituted for references to sixty pounds (the amount indicating the relief), wherever the Occur. I understand, Sir Charles, that it would be convenient with this Amendment to discuss the Amendment in page 14, line 27, at the end to insert: (4) In sections two hundred and fourteen and two hundred and fifteen of the Income Tax Act, 1952 (which refer respectively to a person taking charge of widower's or widow's children or acting as his or her housekeeper, and to a relative taking charge of an unmarried person's young brother or sister), for the references to sixty pounds (which indicate the amount of the relief in each case) there shall be substituted references to seventy-five pounds. We have now passed from indirect to direct taxation—from, "pay as you spend" to, "pay as you earn"—and other more painful forms of extraction. This is the first of a number of Amendments designed to improve personal reliefs. A number of Amendments on the Notice Paper in the names of my right hon. and hon. Friends and myself are designed to increase Income Tax allowances for certain personal circumstances. This Amendment deals with one of them, that relating to dependent relatives, and the associated Amendment relates to another, the housekeeping relief. Later, we shall consider some new Clauses which are designed, in some cases, to enlarge the scope of or relax the conditions relating to certain personal reliefs. There are also proposals for new personal reliefs. The Amendments and the new Clauses are part of our general approach to the tax reliefs in the Bill and by them we seek to redress the balance of reliefs between those who have much to gain from the reduction in the standard rate of tax and those in the lower Income Tax brackets who benefit little from these very large tax reductions.

The Chancellor of the Exchequer, on several occasions, has justified concentrating practically the whole of the tax reliefs on reductions in the standard rate and the reduced rates of tax, to the exclusion of personal reliefs, on the ground that it is the turn of the standard rate—as if the standard rate were a petulant child tugging at the Chancellor's apron strings and demanding that it should have a turn. We believe that it is also the turn of those whose personal circumstances entitle them to some adjustment of their tax burden, and who should get more generous reliefs at a time when the Chancellor is able to introduce proposals for very large reductions in the standard rate and lower rates of tax.

We know, of course, that the Chancellor can argue that Income Tax reliefs can go only to those who pay tax, and that those who pay most tax must inevitably benefit most when reliefs are given. We know, also, that it can be argued that those in the lower Income Tax brackets can benefit from the Purchase Tax reductions which we discussed yesterday. But we believe that it is out of balance to make such a big reduction in the rates of tax without, at the same time, adjusting the reliefs.

Looking back, we find that the last time the standard rate of tax was reduced, in the Budget of April, 1955, the Lord Privy Seal, who was then the Chancellor, introduced reliefs in personal allowances as well as proposals to reduce the rates of tax. Although I quoted what he said in a speech which I made during the Second Reading debate on this Bill, I think it worth while to recall his words again today.

The right hon. Gentleman said: This reduction in the rates of tax "— that was a reduction of 6d. in the standard rate and 3d. in the reduced rates— will bring relief to the individual taxpayer at all levels of income. But it will do nothing, of itself, to improve the points at which tax starts to be payable."—[OFFICIAL REPORT, 19th April, 1955; Vol. 540, c. 59.] The right hon. Gentleman therefore supplemented the remission in the reduced rates by reliefs on smaller incomes, and he increased the personal allowance for single and married persons by £20 and £30 respectively though he did, at the same time, adjust the bands of the reduced rates of tax.

The right hon. Gentleman also introduced the small incomes relief and increased the child relief. We find that in 1955, when the then Chancellor was proposing remissions of tax in respect of the standard rate amounting to £116 million, he proposed improvements in the single and married personal reliefs costing £17 million and an improvement in the child allowance costing £18 million. The introduction of the small income relief cost £750,000. When embarking on tax remissions on this scale that seems to us to be a better balance than is effected by the proposals of the Chancellor on this occasion. That is why we have put on the Notice Paper, in the form of Amendments and new Clauses, proposals which, taken together, seek to restore something of the balance which the lower income groups have lost by the proposed reduction of 9d. in the standard rate.

The Chancellor will probably say, "Well, I am very sorry, but the money has gone."In a colloquial phrase, he may say," Search me!" Because, by the acceptance by the Committee last night of Clause 14, the reductions in the standard rate and in the reduced rates were approved. We may be challenged, as were some of my right hon. and hon. Friends yesterday, "If you propose further reliefs on this scale, where do you intend to get the money?" To that, we should answer that had we introduced a Finance Bill this year, our Measure would have been better balanced. It would have been different in construction. There would 'have been some general fundamental differences between the proposals of the Chancellor and those which we should have introduced in the same set of economic and financial conditions.

Within the framework of this Bill we cannot give any precise answer to a question about where we should get the money. Moreover, this Committee has never accepted that doctrine as the basis for the discussion of Amendments to the Finance Bill. Had it done so, debates during the Committee stage would collapse and grievances would go unheard, because the answer, "I am unable to concede more tax reliefs on this occasion," would be conclusive, and bring effective discussion to an end.

We believe that even within the framework of the Chancellor's financial proposals there is still room for some, if not all, of the changes that we propose by this series of Amendments. We shall not be content with the sort of fulsome satisfaction which seemed to be expressed by hon. Members opposite when the Chancellor said he was prepared to allow a tractor with a produce box to wander 15 miles away from the farm instead of five; nor shall we be as excited as apparently were hon. Members opposite at the fact that a grit spreader and a snow plough can be given some concessions from the Excise Duty on vehicles.

There is room within the framework of the Chancellor's financial proposals for some substantial concessions other than those which he made the other day. We certainly wish to press some of our Amendments upon the right hon. Gentleman.

4.0 p.m.

Sir Alexander Spearman (Scarborough and Whitby)

Has the hon. Gentleman ever formed an estimate of the approximate cost of his present proposals?

Mr. Houghton

I shall be coming to that. I cannot keep within the rules of order and give the whole lot, so I hope that I may be permitted to make this general introductory statement that we are putting forward this series of proposals so that we need not explain them every time as we go along. This is part of a concerted drive to get more relief for people with smaller incomes, those upon whose shoulders Income Tax burdens bear most harshly, even though they are small taxpayers. After those remarks, I will come to the Amendment which I moved a few minutes ago.

That Amendment relates to dependent relative relief, and the one which we are debating with it to housekeeper relief. I must try to keep these two matters in some sort of relationship. Although there is nothing necessarily linking dependent relative and housekeeper reliefs, in both cases they have been the same and when they have moved they have done so at the same time and by the same amount. That fact rather ties them together though, unhappily from the point of view of the taxpayers with housekeepers, the cost of higher relief for housekeepers is very much smaller than the cost of improved relief for dependent relatives.

I will not go into the long history of these reliefs, because we discussed these matters last year. We had a short but interesting debate in June—as will be seen in the OFFICIAL REPORT for 17th June, 1958, beginning at col. 903—upon three associated Amendments, which included these two in relation to dependent relatives and housekeepers.

The dependent relative relief was at £50 from 1948 to 1953, and then it was increased to £60. The housekeeper relief was at £50 from 1931 to 1953, when it was increased to £60. In 1953, when those two reliefs were improved by £10 each, the relief for a daughter maintained by an infirm taxpayer was increased from £25 to £40, though it must be admitted that that did not come about until my hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine) moved an Amendment to that effect. These three reliefs were those improved in 1953, and none others.

In 1955, when the Chancellor of the day introduced a 6d. reduction in the standard rate of Income Tax and proposed improvements in personal reliefs, he left alone the housekeeper, dependent relative and daughter-maintained-by-infirm-taxpayer reliefs, but he did lift the single person's relief, as I have said, from £120 to £140, and the married man's personal relief from £210 to £240. He increased the child allowance from £85 to £100. The only change that he made in dependent relative relief was to lift the ceiling of income of the dependent relative for qualifying purposes, to take account of the increase in the level of the National Insurance retirement pension. I have mentioned those facts to show that not necessarily do all these reliefs move together. Some move together, but not all of them. The two which I am discussing now have moved together when they have moved at all.

There was a time when much more interest was taken on the Government side of this Committee on those reliefs than appears to be the case today. I see the hon. Member for Portsmouth, Langstone (Mr. Stevens) present. I noticed that during the debate on the Finance Bill, 1951, he headed the list of Members who wished to improve housekeeper relief. There was also the present Paymaster-General and the present Minister of Housing and Local Government and Minister for Welsh Affairs, also seems to have done nothing more for taxpayers employing housekeepers than to put their rents up. There was Mr. Angus Maude, then Member for Ealing, South, and the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) and the hon. Member for Wokingham (Mr. Remnant), whom I saw in his place only a few minutes ago. It is true that they had to wait until 1953 to see a modest improvement in this relief, but I am sure that their interest in the housekeeper relief was not exhausted by that small reward after their strenuous efforts in 1951. Last year, all that the Financial Secretary to the Treasury had to say against these proposals was that they were costly. This year one might think that that objection to improving these reliefs could not be made, because the Chancellor has much more room to manoeuvre than he had a year ago.

I see that there is support for this Amendment from a quite unexpected quarter, The Accountant, which had an article in its issue for 9th May headed, "Finance Bill reactions." Judging from the objectivity and anonymity of its reports of our debates, one could assume that The Accountant is run by the B.B.C. Only Ministers are identified in utterances on these occasions, apparently. I see that I am referred to as "an Opposition Member", and for the moment I must be content with that.

Brigadier 0. L. Prior-Palmer (Worthing)

The hon. Member is an Opposition Member.

Mr. Houghton

I am not saying that it is not true, but that it is not the whole truth. I do happen to have a name as well, and I do not see the slightest reason why it should not be used occasionally, especially when it is attached to something that the paper is going to support.

Referring to something that I said during the Second Reading debate about the failure of the Chancellor to improve these reliefs, the housekeeper relief in particular, the comment of The Accountant is: …this allowance seems to be very niggardly, compared with child allowance. For this small mercy I am truly grateful. It assists the Amendment that I am putting to the Committee.

As the Financial Secretary to the Treasury pointed out last year, the depen dent relative relief is more costly to improve than is the housekeeper relief. To improve the housekeeper allowance as we now propose, from £60 to £75, would cost, he said, approximately £750,000 a year, and to improve the dependent relative allowance by an equivalent amount, from £60 to £75, would cost more than £6 million. The latter figure surprised me when the Financial Secretary gave it last year. My own estimate had been very much smaller than that, but I have not the slightest reason to think that my figure was right and that the Financial Secretary's figure was wrong.

We should bear in mind in this connection an aspect of the dependent relative relief which makes for considerable distinction between some taxpayers and others. If right hon. and hon. Gentlemen on the Government benches had to give assistance to dependent relatives they would not be foolish enough to rely on dependent relative relief. Of course they would not. They would enter into a covenant, This is what the better-off taxpayers do. They enter into a covenant to pay any amount which may be within their means or suitable to their circumstances, for a period of more than six years. That would then, rank as a deduction from their own tax liability, and would be taxable income in the hands of the recipient, if the recipient were liable to tax at all.

There are tens of thousands of these covenants. I wonder that there are not more of them. I hereby give free tax avoidance advice to anyone who cares to listen. The way to deal with this matter is to make out a covenant, if one has sufficient security of income and stability of employment and wishes to do it in the most beneficial way from one's own point of view. One cannot, of course, do it to a child of one's own; that is outside the scope of this idea of course, though one can, make a covenant in the interest of other children. I am dealing here solely with the question of covenants in favour of dependent relatives. How much tax avoidance by way of relief for covenants in this field there is I do not know, but this emphasises that the dependent relative relief is the poorer man's relief for aged parents and those incapacitated by old age or infirmity.

I hope that the Financial Secretary will give us this afternoon something different from the explanation that he gave last time. He cannot say that it is too costly and that the Chancellor could not afford it this time. The only explanation he can give surely, is that. although it would have cost several millions of pounds, the Chancellor could well have afforded it, but he decided to do something else. He decided on that something else in the perfectly sincere belief, I have no doubt, that that would be the best for the economy, but the economy must also take account of social and fiscal justice at a time when very big shots in the arm are being given to companies, to those who pay substantially on the standard rate and who will benefit most from the reliefs that the Chancellor has given.

It is not for me now to say how he should have reconstructed his proposals to enable this concession to be made. It would not need a very big reconstruction to make the concessions we are proposing and certainly less still to meet the proposal contained in the Amendment I have moved.

Mr. Geoffrey Stevens (Portsmouth, Langstone)

The hon. Gentleman for Sowerby (Mr. Houghton) has made, as he always does, a very agreeable and highly persuasive speech. It was also very skilful in that, within the framework of two very limited Amendments, he managed to carry out quite a comprehensive survey of personal allowances in Income Tax as a whole.

I entirely agree with the hon. Member that the Opposition are in no way inhibited from discussing reliefs which cost a very great deal of money. Hon. Members opposite are fully entitled to do so, but it is a fact that the Chancellor has to count the cost and bear these things in mind in dealing with suggestions made in speeches, however agreeable they may be. I thought that two points of view did not come out very clearly from the speech of the hon. Member which, none the less, must be borne in mind.

First, I think it is for consideration that in certain circumstances reliefs are better given in other forms of taxation than in Income Tax. The whole question of the balance between direct and indirect taxation requires very careful consideration. I think it is for argument that to take more people out of Income Tax altogether at this particular time is necessarily a desirable thing.

There is quite a case for giving every person a vested interest in the standard rate of Income Tax. People do not notice the payment of Purchase Tax as they do reductions from wages by P.A.Y.E. and when the Income Tax bills come along. That is a point for consideration; and the second one, which is uppermost in my mind at present, came to me very strongly when the hon. Member was referring to certain Amendments which were put forward in 1951. The point which came to my mind immediately was that the time must come when, whatever the party political bias or allegiance of the Chancellor, the standard rate of Income Tax as such has got to be very seriously considered.

4.15 p.m.

That is particularly so after a world war in which the standard rate went up to heights which I do not think the Labour Party would ever wish to see maintained for long in peacetime. Fourteen years after the end of the war, the standard rate is 7s. 9d. in the £, despite the 9d. reduction that we shall soon see operative when the Finance Bill becomes law. It is perfectly true that a very large proportion of that reduction does not go direct to people who have dependent relatives and expenses of that sort, but a reduction in the standard rate benefits industry. To the extent that it encourages industry, commerce and enterprise, everybody—whether paying Income Tax or not, or having dependent relatives or not—incurs a considerable and obvious benefit.

Despite the persuasiveness of the hon. Member's arguments, despite the line that I have taken on personal allowances before and shall do in future, I say that the judgment of my right hon. Friend on this occasion in concentrating in direct taxation on reduction of the standard rate was not only the right judgment but the only decision a responsible Chancellor of the Exchequer could this year have properly taken.

Mr. John Cronin (Loughborough)

I wish to make one or two brief points in support of the Amendment so ably moved by my hon. Friend the Member for Sowerby (MT. Houghton). There are certain arguments in favour of the Amendment in equity and there are social and economic ones.

From the point of view of equity, there is no doubt that a dependent relative is a considerable burden. It seems unfortunate that the dependent relative allowance now compares so unfavourably with the wife or child allowance. A wife and children are normally a source of comfort and ratification to a taxpayer, yet. if he has the inconvenience of a dependent relative, his allowance is considerably less. It seems, also, that as there has been considerable inflation since the dependent relative allowance was increased in 1953, there is a strong argument for making the burden rather less than it is now.

From a social point of view, I think that in this country we are rather unfortunate in that dependent relatives are not given quite the same family status as they have in other countries. There is a tendency for young people to try to avoid taking over personal charge of elderly dependent relatives. I come personally into contact with this quite a lot. For instance, one finds that where a dependent relative has been the subject of a major operation in hospital, and it has been necessary for him or her to have a few months care and attention afterwards in the home of the family, it is common for the family to reject the liability and not to take the relative. This is a frequent occurrence. It seems to be a symptom of the whale attitude of the country towards dependent relatives. On the Continent, dependent relatives have a much more recognised status in the family and people are much more prepared to take over their care.

No one will suggest that a small increase in dependent relative allowance would revolutionise the system, but it would certainly be an additional inducement. There can be little doubt that the taxpayer would be more likely to do his family duties if there were an additional financial advantage. He certainly would not be deterred from doing so and there would be a marginal effect in swaying his decision.

It is also very important from the point of view of the psychology of the dependent relatives. They can feel that they are less of a burden if the taxpayer is receiving more financial consideration for looking after them. There can also be no doubt that there will be a saving for the National Health Service if more dependent relatives are treated or looked after at home. Exactly the same argument applies to the finances of local authorities, which have often to provide shelter and accommodation for elderly people.

From the point of view of the housekeeper allowance, the same arguments on equity apply with regard to the burden and unfavourable comparison with the married person's allowance and child allowance. It is a curious anomaly that when a man who has been enjoying a personal allowance as a married man becomes a widower, and has to find someone to look after his children, he is put at a considerable financial Income Tax disadvantage. That seems to be quite an unreasonable anomaly.

From the social point of view, the housekeeper allowance exists, as its name implies, primarily for the benefit of children. As my hon. Friend the Member for Sowerby pointed out, the cost of this Amendment would be comparatively small. It would seem to be rather niggardly if the Chancellor rejected the Amendment, which will be of enormous benefit to so many children. I therefore trust that the Chancellor will, if possible, concede both the Amendments. There can be little excuse for his not conceding the Amendment with regard to the housekeeper allowance.

The Financial Secretary to the Treasury (Mr. J. E. S. Simon)

I had occasion on the Finance Bill last year and I have occasion again this year to say how valuable it always is to follow the hon. Gentleman the Member for Sowerby (Mr. Houghton), who is an acknowledged master of this branch of the law and of the practice in our fiscal system. I do not doubt that later I shall have occasion to thank him for setting out with great clarity not only the background to this Amendment, but of subsequent Amendments, and I should like to take this opportunity of reiterating what I have said before, so that I shall not embarrass him on subsequent Amendments by saying it again.

The hon. Gentleman was followed by my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens), who is particularly adept in dealing with our fiscal system professionally, and who has shown over the years great interest in these problems of allowances. Then we had from the hon. Gentleman the Member for Loughborough (Mr. Cronin) his own very valuable experience, although his medical experience in this respect was rather different from the circumstances when he was indirectly medically responsible for my own health, as he may remember.

I will deal, first, with the dependent relative allowance. The people who are the beneficiaries of this allowance have been dealt with quite favourably in recent years. As the hon. Gentleman the Member for Sowerby reminded us, this allowance and the housekeeper allowance were raised to £50 in 1943 and to £60 in 1953—percentage-wise quite a large increase. The matter does not end there because, as I ventured to point out on several occasions last year, the system of allowances is not really intended to compensate the taxpayer for the burden of the particular circumstances that are envisaged; on the contrary, as the Royal Commission pointed out, the part which these allowances play in the tax system is to take their place in the system of graduation in the tax burden. In a number of circumstances it is better to give assistance through the social services. Most of those who support dependent relatives have been greatly helped in recent years by successive increases in the retirement and widows' pensions. That has meant that the State is giving an increased contribution to the maintenance of their dependants.

Then again, as the hon. Gentleman the Member for Sowerby so fairly reminded us, there have been successive increases in the limits of the dependent's income which disqualifies a person on whom he is dependent from benefiting from this relief. We have reached the position where an income of £195 can be exempted from tax. That is £60 in the hands of the claimant and £135 of the dependent's income. That compares with a figure, which I shall have to emphasise later, of £180 at which a single person begins to pay tax.

As I have pointed out, the dependent relatives' allowance—this really takes up the point which the hon. Member for Loughborough made about the effect of the cost of living since the relief was last improved—is not intended, as the Royal Commission pointed out, to cover the full cost of maintaining a relative. Its purpose is to play a part in the system of graduation. Therefore, to my mind, the hon. Member for Sowerby was quite right, at the very outset of his speech, in relating this Amendment to the rest of the series of Amendments which the Opposition, for the reasons which he gave, with perfect propriety in the circumstances, have put down.

The two reliefs which we are discussing on this Amendment necessarily move together; they always have moved together and there is no reason for differentiating between them, but they must also be viewed in the wider system of reliefs and allowances. It is against that background that I venture to make my next point.

At present, the full allowance of £60, as the Committee was reminded, is given for maintaining a dependent relative with an income not exceeding £135 a year, which, I think I am right in saying, was increased last year. There is also a tapering or marginal relief. If a relative's income exceeds £135, the allowance otherwise due to the claimant is cut down by £1 for each £1 of the increase, until the allowance runs out completely when the relative's income reaches £195. Thus the maximum amount of income which can be exempted from tax on account of a dependent relative in his own hands and the hands of the taxpayer who maintains him is now £195, that is, £60 plus £135. That is above the figure of £180 at which a single person pays tax.

Mr. Houghton

The hon. and learned Gentleman will not, of course, have overlooked the age exemption for a person over 65, which gives total exemption from tax on an income up to £275 in the case of a single person and £440 in the case of a married couple.

4.30 p.m.

Mr. Simon

I have that in mind. The hon. Member is right to remind the Committee of that fact, but I think that the Committee has always regarded that relief as exceptional. The circumstances have been made exceptional for aged persons enjoying that relief. In this case it is a question of comparing two people of similar age, and it therefore seems to me that the time for improving this relief—I think I made this point last year—is when we are improving the personal reliefs generally and that it would be wrong to change the dependent relative allowance or the housekeeper allowance until we are ready to improve the personal allowances generally.

I know that the hon. and learned Member for Kettering (Mr. Mitchison) last year stigmatised that argument as "centipede trouble", saying, "You must not move one leg forward until you are ready to move the other ninety-nine forward." Nevertheless, if it is right, as I am sure it is, that this allowance and the housekeeper allowance are designed to play their part in the system of graduation, then by and large they ought to be changed together.

That brings me to the cost. The cost of the first Amendment is £5½ million in a full year. Last year, I gave the figure of £6 million. The difference is due to the reduction in the standard rate this year. The second Amendment, dealing with the housekeeper allowance, would cost about £750,000. Thus, a substantial sum of £6¼ million is at stake here. As I have said, however, one must consider the Amendments in the setting, which the hon. Member himself gave, of all the other allowances and, costing as best I can, it seems to me that the Amendments to the Clause which the Opposition have put down would cost £245¼ million at the 1959–60 rates and £2581 million at the 1958–59 rates. In other words, if we had not passed Clause 14, the cost would be considerably higher.

It is right for the hon. Member to say that that factor does not prevent the Amendments from being tabled as a basis for discussion. I do not think it does. It seems to me that it is a different matter, however, when we come to a vote. It is right to put it down to say "This is what we should have done"; but when it comes to a vote the Committee is in a different position, because the Committee has passed Clause 14 and has done so not even by a vote but without a dissentient voice being raised. The reduction in the standard rate effected by that Clause involves £128 million in a full year. The Opposition, quite rightly, would not wish to stop there, and the provisions for the reduction must also be extended to the reduced rates. That adds another £101 million in a full year.

Although we can have no possible complaint that this Amendment has been put down as a basis for discussion, I suggest that it would be irresponsible of the Committee to try to add to the reliefs —which have been effected by way of reduction in the standard rates—these very substantial reductions in taxation through improving the allowances.

Both because of the cost and because of the reasons which I gave earlier, therefore, I cannot recommend the Committee to accept the Amendment. As my hon. Friend the Member for Langstone pointed out, my right hon. Friend thought it right this year to concentrate his reliefs on reduction of the standard rate. That has been approved by the Committee. Although the Opposition are entitled to have their point of view registered in the discussion, in my respectful submission the Committee ought to reject the Amendment.

Mr. G. R. Mitchison (Kettering)

Apparently we are allowed to talk but not to vote. This seems to me to be turning the procedure of the Committee upside down.

Of course, we should not have introduced the same Budget as that which the Chancellor has introduced and we have to look at the Clause in the light of what has been done. The Financial Secretary has justified it by graduation. As a Treasury poet put it, "Graduation is a lovely thing, God wot." I think that the hon. and learned Member pushed it so far, however, that he defeated his own ends. If graduation is to settle the matter and if this were the right relief when Income Tax was at a higher rate, now that the rate has been reduced this relief should be increased proportionately. If it were wrong previously, we have not heard that from the hon. and learned Gentleman. He gets up every year and, in the sacred name of proportion, defends that which was inconsistent the year before and no doubt will be inconsistent the following year.

That kind of argument merely defeats itself. Graduation may justify many things, but not complete illogicality. Ought we not to consider the matter on its merits? The hon. and learned Member relied on a distinction between the relief given in some cases of old age and the dependent relief allowance. I have never understood the principles which govern the Income Tax Acts. Sometimes I wonder whether there are any. When I look at the dependent relief allowance I find that the very case which is dealt with is that of people incapacitated by old age or infirmity.

If we say that we should give special treatment in relation to old age in one case, why do we not give it in the other? If we are to have a spot of graduation in the matter, it might be a good plan to get these two things a little more similar than they are at present.

Mr. Simon

I am sure that the hon. and learned Member has the matter in mind, but for the sake of completeness I ought to say that the relief extends beyond that case to that of the taxpayer's or his wife's widowed mother, whatever her age or state of health.

Mr. Mitchison

I have it well in mind. When I am told that we cannot give this relief when we are giving greater relief in other cases because those other cases are cases of old age, I am entitled to point out that this relief also includes cases of old age and incapacity from old age. I am not saying that it does not include other cases, too, but if it is right to give relief in relation to people who are incapacitated through old age, then if we are to stick to the present form of relief it must also extend to the other types of case which are classed with those in the dependent relief allowance. That means incapacity, infirmity, and various other cases. Unless we go into the question of whether the whole class needs amending —and we cannot do so at the moment—we are considering only the question of amount.

I want to put forcibly to the Committee that what we are talking about is an increase in an amount between £20 and £25 at the standard rate by under £6. That is what it would be. We are discussing it in connection with a Budget which gives to every middle class taxpayer a relief considerably in excess of that. We are giving it in a Budget which leaves Surtax payers in the same position as they were in before. They therefore benefit from the reduction in the Income Tax rate, without any modification of Surtax. I am not discussing whether that is right or wrong, but that is the context in which we are considering this relief.

We are told that, if we are to take that matter into account, we must for the moment leave the field of graduation and consider the merits. I am only too anxious to do so. When we come to the consideration of the merits, the Government's only answer is that these people have done quite well out of pension increases.

On this side of the Committee we dispute that. We are well aware that those pension increases have come largely not from central funds, but from increases in stamps and various other matters. I will not go into that now. We cannot regard it as appropriate to defend a refusal to give an Income Tax concession in cases of this kind on the ground that the people concerned may have had some increase in what is, after all, a totally different field and is largely financed from other sources.

We prefer to conclude that the Government deliberately prefer to give relief to the standard rate payer, however well off he may be, rather than to extend it, even by the comparatively small amount involved in the Amendment, to people who, on merit, have a far better claim.

The hon. Member for Portsmouth, Langstone (Mr. Stevens) defends this by saying that we must at all costs support the interests of industry, commerce and enterprise. I agree entirely, but I have never understood the logic of the Income Tax Acts in matters of this kind. If a merchant or an industrialist incurs expenditure, he is allowed to deduct that in full before arriving at his profits or gains. On the other hand, if someone takes in a dependent relative, and thereby has to pay out a great deal more money than these allowances represent, he is not allowed the loss of his personal income which results from that. He is only given an allowance which, admittedly, does not meet the loss he thereby suffers.

Mr. Stevens

Will not the hon. and learned Member for Kettering (Mr. Mitchison) agree that the savings from the incomes of companies are taxed at the full standard rate?

Mr. Mitchison

What I am concerned with now is a deduction which is made on the grounds that the taxpayer, be he a company in the one case or an individual in the other, incurs an expense. There is not the least doubt that, in relation to these dependants, the individual incurs an expense which, admittedly, is far greater than any relief we can give him. Therefore, if we are to look at the question from that point of view, I fail completely to see the reason for not having a much larger scale of allowances than we have ever had.

I return to what I said at the beginning. These are the really hard cases. If we do not give an adequate concession to these people, in many cases we may be denying them the opportunity of carrying out family duties which they wish to carry out. They should, on every ground of fairness and morality, have their relief increased, if the reliefs given to other people, companies or individuals, are being increased on the scale by which they are increased in the Budget.

4.45 p.m.

I agree with the hon. and learned Gentleman when he talks about graduation. It is a matter of graduation, but he is breaking away from the very principle he puts forward. He prefers to give advantages to those who do not

stand in need of them so sorely as the people whom we are considering in the Clause. I cannot understand properly the principles of taxation. I cannot understand the motives which have led to some of the differences in taxation, particularly the point I have now been discussing. Most of all, I cannot understand the moral principles of a party which prefers to give such very considerable advantages to some people and, at the same time, denies this measure of relief to people who merit it far more. The only answer of hon. Members opposite is the thin and "phoney" plea for graduation, "They are doing well enough on pensions". Let hon. Members opposite try to live on pensions if that is what they think.

Question put, That those words be there inserted:—

The Committee divided: Ayes 198, Noes 237.

Division No. 107.]	AYES	[4.47 p.m.
Abse, Leo	Ede, Rt. Hon. J. C.	Jones, Jack (Rotherham)
Ainsley, J. W.	Edwards, Rt. Hon. John (Brighouse)	Jones, J. Idwal (Wrexham)
Albu, A. H.	Edwards, Rt. Hon. Ness (Caerphilly)	Kenyon, C.
Allaun, Frank (Salford, E.)	Edwards, W. J. (Stepney)	Key, Rt. Hon. C. W.
Allen, Arthur (Bosworth)	Evans, Albert (Islington, S.W.)	King, Dr. H. M.
Allen, Scholefield (Crewe)	Fernyhough, E.	Lawson, G. M.
Awbery, S. S.	Forman, J. C.	Lee, Frederick (Newton)
Bacon, Miss Alice	Fraser, Thomas (Hamilton)	Lee, Miss Jennie (Cannock)
Balfour, A.	Gaitskell, Rt. Hon. H. T. N.	Lewis, Arthur
Bence, C. R. (Dunbartonshire, E.)	Gibson, C. W.	Lipton, Marcus
Benn, Hn. Wedgwood (Bristol, S.E)	Gooch, E. G.	Mahon, Dr. J. Dickson
Benson, Sir George	Gordon Walker, Rt. Hon. P. C.	McAlister, Mrs. Mary
Bevan, Rt. Hon. A. (Ebbw Vale)	Greenwood, Anthony	MacColl, J. E.
Blackburn, F.	Grenfell, Rt. Hon. D. R.	Mcinnes, J.
Blenkinsop, A.	Grey, C. F.	McKay, John (Wallsend)
Blyton, W. R.	Griffiths, David (Rother Valley)	McLeavy, Frank
Boardman, H.	Griffiths, Rt. Hon. James (Lianelly)	MacPherson, Malcolm (Stirling)
Bonham Carter, Mark	Griffiths, William (Exchange)	Mann, Mrs. Jean
Bottnmley, Rt. Hon. A. G.	Grimond, J.	Marquand, Rt. Hon. H. A.
Bowden, H. W. (Leicester, S.W.)	Hale, Leslie	Mason, Roy
Bowen, E. R. (Cardigan)	Hall, Rt. Hn. Glenvil (Colne Valley)	Mayhew, C. P.
Bowles, F. G.	Hamilton, W. W.	Mitchison, G. R.
Brockway, A. F.	Hannan, W.	Monslow, W.
Broughton, Dr. A. D. D.	Hastings, S.	Moody, A. S.
Brown, Thomas (Ince)	Hayman, F. H.	Morris, Percy (Swansea, W.)
Burke, W. A.	Henderson, Rt. Hn. A. (Rwly Regis)	Mort, D. L.
Burton, Miss F, E.	Herbison, Miss M.	Moss, R.
Butler, Herbert (Hackney, C.)	Hewitson, Capt. M.	Moyle, A.
Butler, Mrs. Joyce (Wood Green)	Hobson, C. R. (Keighley)	Mulley, F. W.
Carmiohael, J.	Holman, P.	Neal, Harold (Bolsover)
Castle, Mrs. B. A.	Holmes, Horace	Noel-Baker, Francis (Swindon)
Champion, A. J.	Holt, A. F.	Noel-Baker, Rt. Hon. P. (Derby, S.)
Chetwynd, G. R.	Houghton, Douglas	Oliver, G. H.
Cliffe, Michael	Hughes, Cledwyn (Anglesey)	Oram, A. E.
Coldrick, W.	Hughes, Emrys (S. Ayrshire)	Orbach, M.
Collick, P. H. (Birkenhead)	Hughes, Hector (Aberdeen, N.)	Oswald, T.
Corbet, Mrs. Freda	Hunter, A. E.	Owen, W. J.
Cove, W. G.	Hynd, H. (Accrington)	Palmer, A. M. F
Craddock, George (Bradford, S.)	Hynd, J. B. (Attercliffe)	Parker, J.
Cronin, J. D.	Irvine, A. J. (Edge Hill)	Parkin, B. T.
Grossman, R. H. S.	Irving, Sydney (Dartford)	Paton, John
Cullen, Mrs. A.	Isaacs, Rt. Hon.G. A.	Pearson, A.
Davies, Ernest (Enfield, E.)	Janner, B.	Peart, T. F.
Davies, Stephen (Merthyr)	Jay, Rt. Hon. D. P. T.	Pentland, N.
Deer, G.	Jeger, George (Goole)	Plummer, Sir Leslie
Delargy, H. J.	Jeger, Mrs. Lena(Holbn & St. Pncs, S.)	Popplewell, E.
Diamond, John	Jones, Rt. Hon. A. Creech(Wakefield)	Prentice, R. E.
Price, Philips (Gloucestershire, W.)	Simmons, C. J. (Brierley Hill)	Watkins, T. E.
Probert, A. R.	Slater, J. (Sedgefield)	Weitzman, D.
Purley, Cmdr. H.	Snow, J. W.	Wells, Percy (Faversham)
Rankin, John	Sorensen, R. W.	Wells, William (Walsall, N.)
Redhead, E. C.	Soskice, Rt. Hon. Sir Frank	Wheeldon, W. E.
Reeves, J.	Sparks, J. A.	White, Henry (Derbyshire, N.E.)
Reid, William	Spriggs, Leslie	Wilkins, W. A.
Reynolds, G. W.	Stewart, Michael (Fulham)	Willey, Frederick
Rhodes, H.	Stones, W. (Consett)	Williams, Rev. Llywelyn (Ab'tillery)
Robens, Rt. Hon. A.	Strauss, Rt. Hon. George (Vauxhall)	Williams, Rt. Hon. T. (Don Valley)
Roberts, Albert (Normanton)	Summerskill, Rt. Hon. E.	Willis, Eustace (Edinburgh, E.)
Roberts, Goronwy (Caernarvon)	Sylvester, G. 0.	Wilson, Rt. Hon. Harold (Huyton)
Robinson, Kenneth (St. Pancras, N.)	Taylor, Bernard (Mansfield)	Winterbottom, Richard
Rogers, George (Kensington, N.)	Thomas, lorwerth (Rhondda, W.)	Woodburn, Rt. Hon. A.
Ross, William	Thomson, George (Dundee, E.)	Woof, R. E.
Royle, C.	Thornton, E.	Yates, V. (Ladywood)
Shinwell, Rt. Hon. E.	Tomney, F.	Zilliacus, K.
Short, E. W.	Viant, S. P.
Silverman, Julius (Aston)	Wade, D. W.	TELLERS FOR THE AYES:
Silverman, Sydney (Nelson)	Warbey, W. N.	Mr. John Taylor and Mr. J. T, Price
NOES
Agnew, Sir Peter	Erroll, F. J.	Lehurn, W. G.
Aitken, W. T.	Farey-Jones, F. W.	Legge-Bourke, Maj. E. A. H.
Allan, R. A. (Paddington, S.)	Fell, A.	Legh, Hon. Peter (Petersfield)
Amery, Julian (Preston, N.)	Finlay, Graeme	Lindsay, Hon. James (Devon, N.)
Amory, Rt. Hn. Heathcoat(Tiverton)	Fisher, Nigel	Lindsay, Martin (Solihull)
Anstruther-Gray, Major Sir William	Fletcher-Cooke, C.	Linstead, Sir H. N.
Arbuthnot, John	Fort, R.	Lloyd, Maj. Sir Guy (Renfrew, E.)
Armstrong, C. W.	Fraser, Hon. Hugh (Stone)	Longden, Gilbert
Ashton, H.	Freeth, Denzil	Loveys, Walter H.
Atkins, H. E.	Galbraith, Hon. T. G. D.	Low, Rt. Hon. Sir Toby
Baldock, Lt.-Cmdr. J. M.	Gammans, Lady	Lucas, Sir Jocelyn (Portsmouth, S.)
Baldwin, Sir Archer	George, J. C. (Pollok)	Lucas-Tooth, Sir Hugh
Barber, Anthony	Glover, D.	Macdonald, Sir Peter
Barlow, Sir John	Glyn, Col. Richard H.	McLaughlin, Mrs. P.
Barter, John	Godber, J. B.	Maclean, Sir Fitzroy (Lancaster)
Batsford, Brian	Goodhart, Philip	Macleod, Rt. Hn. lain (Enfield, W.)
Baxter, Sir Beverley	Gough, C. F. H.	McMaster, S. R.
Bearnish, Col. Tinton	Gower, H. R.	Macmillan, Rt. Hn. Harold(Bromley)
Bell, Philip (Bolton, E.)	Graham, Sir Fergus	Maitland, Cdr.J.F. W.(Horncastle)
Bell, Ronald (Bucks, S.)	Grant, Rt. Hon. W. (Woodside)	Maitland, Hon. Patrick (Lanark)
Bevins, J. R. (Toxteth)	Grant-Ferris, Wg Cdr. R. (Nantwich)	Markham, Major Sir Frank
Biggs-Davison, J. A.	Green, A.	Marlowe, A. A. H.
Birch, Rt. Hon. Nigel	Gresham Cooke, R.	Marples, Rt. Hon. A. E.
Bishop, F. P.	Grimston, Hon. John (St. Albans)	Marshall, Douglas
Black, Sir Cyril	Grosvenor, Lt.-Col. R. G.	Mathew, R.
Body, R. F.	Gurden, Harold	Mawby, R. L.
Boyd-Carpenter, Rt. Hon. J. A.	Hall, John (Wycombe)	Maydon, Lt.-Comdr. S. L. C.
Boyle, Sir Edward	Hare, Rt. Hon. J. H.	Medlicott, Sir Frank
Braine, B. R.	Harris, Reader (Heston)	Milligan, Rt. Hon. W. R.
Brewis, John	Harrison, A. B. C. (Maldon)	Molson, Rt. Hon. Hugh
Brooman-White, R. C.	Harvey, John (Walthamstow, E.)	Morrison, John (Salisbury)
Browne, J. Nixon (Craigton)	Heald, Rt. Hon. Sir Lionel	Mott-Radclyffe, Sir Charles
Burden, F. F. A.	Heath, Rt. Hon. E. R. G.	Nairn, D. L. S.
Butler, R t. Hn.R.A. (Saffron Walden)	Henderson, John (Cathcart)	Heave, Airey
Campbell, Sir David	Henderson-Stewart, Sir James.	Nicholls, Harmar
Carr, Robert	Hicks-Beach, Maj. W. W.	Nicholson, Sir Godfrey (Farnham)
Cary, Sir Robert	Hill, Mrs. E. (Wythenshawe)	Nicolson, N. (B'n'm'th, E. & Chr'ch)
Channon, H. P. G.	Hill, John (S. Norfolk)	Noble, Michael (Argyll)
Chichester-Clark, R.	Hinchingbrooke, Viscount	Nugent, Richard
Clarke, Brig. Terence (Portsmth, W.)	Hirst, Geoffrey	Oakshott, H. D.
Cole, Norman	Holland-Martin, C. J.	Ormsby-Gore, Rt. Hon. W. D.
Conant, Maj. Sir Roger	Hornhy, R. P.	Orr-Ewing, C. Ian (Hendon, N.)
Cooke, Robert	Horobin, Sir Ian	Osborne, C.
Cordeaux, Lt.-Col. J. K.	Horsbrugh, Rt. Hon. Dame Florence	Page, R. G.
Corfield, F. V.	Howard, John (Test)	Pannell, N. A. (Kirkdale)
Craddock, Beresford (Spelthorne)	Hughes Hallett, Vice-Admiral J.	Partridge, E.
Crosthwaite-Eyre, Col. 0. E.	Hughes-Young, M. H. C.	Peel, W. J.
Crowder, Sir John (Finchley)	Hurd, Sir Anthony	Peyton, J. W. W.
Crowder, Petre (Ruislip—Northwood)	Hutchison, Michael Clark(E'b'gh, S.)	Pickthorn, Sir Kenneth
Cunningham, Knox	Hyde, Montgomery	Pike, Miss Mervyn
Currie, G. B. H.	Hylton-Foster, Rt. Hon. Sir Harry	Pilkington, Capt. R. A.
Dance, J. C. G.	Iremonger, T. L.	Pitman, I. J.
Davidson, Viscountess	Jenkins, Robert (Dulwich)	Pott, H. P.
D'Avigdor-Goldsmid, Sir Henry	Jennings, Sir Roland (Hallam)	Powell, J. Enoch
de Ferranti, Basil	Johnson, Eric (Blackley)	Price, David (Eastleigh)
Dodds-Parker, A. D.	Joseph, Sir Keith	Prior-Palmer, Brig. 0. L.
Doughty, C. J. A.	Kerby, Capt. H. B.	Ramsden, E.
du Cann, E. D. L.	Kerr, Sir Hamilton	Rawlinson, Peter
Duncan, Sir James	Kirk, P. M.	Redmayne, M.
Eden, J. B. (Bournemouth, West)	Lambton, Viscount	Rees-Davies, W. R.
Emmet, Hon. Mrs. Evelyn	Lancaster, Col. C. G.	Remnant, Hon. P.
Errington, Sir Eric	Langford-Holt, J. A.	Renton, D. L. M.
	Leavey, J. A.

Ridsdale, J. E.	Studholme, Sir Henry	Walker-Smith, Rt. Hon. Derek
Robertson, Sir David	Summers, Sir Spencer	Wall, Patrick
Robinson, Sir Roland (Blackpool, S.)	Taylor, Sir Charles (Eastbourne)	Ward, Rt. Hon. G. R. (Worcester)
Roper, Sir Harold	Taylor, William (Bradford, N.)	Ward, Dame Irene (Tynemouth)
Ropner, Col. Sir Leonard	Teeling, W.	Watkinson, Rt. Hon. Harold
Russell, R. S.	Temple, John M.	Webbe, Sir H.
Sharpies, R. C.	Thomas, Leslie (Canterbury)	Webster, David
Simon, J. E. S. (Middlesbrough, W.)	Thorneycroft, Rt. Hon. P.	Whitelaw, W. S. I.
Spearman, Sir Alexander	Thornton-Kemsley, Sir Colin	Williams, Paul (Sunderland, S.)
Speir, R. M.	Turner, H. F. L.	Wills, Sir Gerald (Bridgwater)
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)	Turton, Rt. Hon. R. H.	Wilson, Geoffrey (Truro)
Stanley, Capt. Hon. Richard	Tweedsrnuir, Lady	Wood, Hon. R.
Stevens, Geoffrey	Vane, W. M. F.	Woollam, John Victor
Steward, Harold (Stockport, S.)	Vaughan-Morgan, J. K.	Yates, William (The Wrekin)
Steward, Sir William (Woolwich, W.)	Vickers, Miss Joan
Stoddart-Scott, Col. Sir Malcolm	Vesper, Rt. Hon. D. F.	TELLERS FOR THE NOES:
Storey, S.	Wakefield, Edward (Derbyshire, W.)	Colonel J. H. Harrison and
Stuart, Rt. Hon. James (Moray)	Wakefield, Sir Wavell (St. M'lehone)	Mr. Bryan.

Mr. Stevens

I beg to move, in page 14, line 15, to leave out "third" and to insert "next".

I read subsection (2) of the Clause with great care and I saw the reference to the third £150. I spent some time diligently searching for the first £150 and the second £150. I was able to find only one, and I think that this must be a drafting error. The substitution of the word "next" for the word "third" would give the subsection the meaning which my right hon. Friend would like it to have.

Mr. Simon

It seems to me that my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) has a good point. After being in trouble the other day for using the word "confidentiality", I hasten to put myself right with the Committee by accepting the Amendment.

Mr. Harold Wilson (Huyton)

Will the hon. and learned Gentleman say how much the acceptance will cost the Exchequer?

Amendment agreed to

Mr. H. Wilson

I beg to move, in page 14, line 23, at the end to insert: and for the words '£60', '£210' and '£360', in each place where they occur, there were substituted respectively the words '£100'. '£250' and £E400.'". I ought to begin by saying that the words used by my hon. Friend the Member for Sawerby (MT. Houghton) when moving the first Amendment we took this afternoon should be taken as governing this Amendment and most of the others that we have tabled.

This is part of a series of Amendments which we feel would give a better way of disposing of this part of the Chancellor's surplus than some of the things he has done. We propose to restore the lowest band, the first band, at reduced rates of tax to £100, the figure at which it stood until 1955. It will be recalled that, in the 1955 Budget, which went through rather rapidly without the degree of constructive criticism which would normally be given—no one complains of that—the then Chancellor, the Lord Privy Seal, reduced this first band from £100 to £60. He took 6d. off the standard rate and 3d. off each of the reduced rates.

The right hon. Gentleman said: I want, therefore, to supplement the 3d. remission in the reduced rates by an improvement on the lines suggested by the Royal Commission. I have been impressed by the principles which lie behind its proposals for relief for the smaller incomes, and I therefore, propose, in addition, to exempt many of such incomes from all liability to tax by increasing the personal allowance—from £120 to £140 for a single person and from £210 to £240 for a married couple—while reducing the band of income taxable at the lowest rate from £100 to £60. In other words, this was a rather smart piece of work by the then Chancellor which went through, I think, without the degree of comment which, perhaps, it would have evoked at other times, because, having altered the personal allowances, he then, in effect, took the amount off the lowest band of tax instead of putting it right up through the system.

The right hon. Gentleman went on to say: By this means, I shall achieve, though in a simpler way, the object the Royal Commission had in mind in proposing its scheme for a minimum earned income relief"— [Of At. REPORT, 19th April, 1955; Vol. 540, c. 59.] 5.0 p.m.

Before the 1955 Budget the various bands of tax were as follows: the first one was £100 at 2s. 6d., the second £150 at 5s. and the next £150 at 7s., the standard rate then being 9s. After the April, 1955, Budget, the reduced rate bands became £60, £150 and £150, the rates being respectively 2s. 3d., 4s. 9d. and 6s. 9d., and the standard rate being 8s. 6d. These bands have remained at this figure until this year, and so, indeed, have the rates. The Chancellor has proposed to take 6d. off each of the reduced rates, but, while there is this reduction of 6d. in the rates, the size or width of the band—it is a little difficult to choose the right metaphor—remains the same; that is to say, the standard rate becomes chargeable after the first £360 of taxable income, whereas up to 1955 the standard rate was only chargeable after the first £400 of taxable income.

Our Amendment proposes to increase the amount at the lowest rate of tax from £60 to £100, and that works right through the system to the second and third bands, so that the standard rate will become payable after the first £400 of taxable income instead of £360, and by returning to this figure of £400 we are returning to the situation which obtained from the financial year 1952–53 up till the April, 1955 Budget.

Obviously, the reason for proposing this is to redistribute the tax concessions much more heavily in favour of the taxpayers with smaller incomes. I do not want to weary the Committee with examples. No doubt the Financial Secretary will have been furnished with a list of examples. I only wish that he had been furnished with such a list to show to the Chancellor before the Chancellor took his Budget decisions.

A married couple without children, on £600 a year—that is a fairly representative earning at the present time, though, of course, such a family is not representative in terms of absence of children—would gain about £5 13s. under the Chancellor's proposals for reduced rates, and that family would gain an additional £6 a year as a result of the Amendment which I am moving. It is clear that by this very small and simple change—indeed, by the restoration of something which the Lord Privy Seal upset in 1955 —in the case which I have mentioned, we have more than doubled the amount of tax relief which will be enjoyed under this present Budget. Anyone paying tax at the standard rate would get the maximum benefit under this Amendment of £12.

We recognise the difficulties which have been put forward by the Financial Secre tary. We wish we had the amount of money to play with that the Chancellor has. It would have been possible to have done very many of the things proposed in these worth-while Amendments. We have made clear on a number of occasions that tax relief for companies and that sort of thing, even to the extent of the reduction in the standard rate, could have been far better and more fairly distributed among the population if the Chancellor had put through a number of reforms of the kind which we are moving this afternoon. This, however, is a very clear and simple one which would benefit millions of families and those whose needs are greatest. It is in that spirit that I move this Amendment.

Mr. Simon

The right hon. Member for Huyton (Mr. H. Wilson) has explained the purpose of this Amendment and, indeed, how it operates. I can give very briefly, in consonance with his own speech, and I hope equally cogently, the reasons why my right hon. Friend cannot accept this Amendment.

The first reason is that the Amendment gives no relief to those with the lowest taxable income. For example, it gives no relief to a married man with two children under 11 years of age living on earnings of less than £643 a year. The right hon. Gentleman gave an example, perfectly fairly, of a married couple without children having roughly the same average earnings, and he said that the benefit to them would be £6 a year. I think that shows the second disadvantage of this Amendment, namely, that it runs counter, as I understand it, to the argument of hon. Members opposite that the relief should be concentrated primarily on the married man with children; secondly, on the married man without children, and thirdly, on the single man. Indeed, my right hon. Friend was criticised in that the reduction in the standard rate that he has proposed and that the Committee has approved operates primarily or greatly to the advantage of the single man.

Mr. H. Wilson

Of course, this argument is fair and is true related purely to this one Amendment. But, as the hon. and learned Gentleman will be aware, we are moving a succession of Amendments which will take full account of the point he has in mind. The earned income relief example will affect all families. We also have proposals relating to the child allowance.

Mr. Simon

That is a perfectly fair point and it will have relevance when I come to consider the cost. It is right to point out that the argument which I have addressed applies solely to this Amendment, but, after all, it is to this Amendment that I am speaking at the moment.

The Amendment taken by itself gives no relief to those with the lowest taxable incomes. It concentrates the greatest relief on the single man, secondly on the married man without children, and thirdly —again applying purely to this Amendment—the reduction in tax would be smallest to those liable only at the reduced rate and greatest to those liable at the standard rate.

The right hon. Gentleman said that this was restoring the bands to where they stood in 1955. By itself, that is absolutely true. As he pointed out, my right hon. Friend the Lord Privy Seal did that as part of a larger operation whereby there were increases in the single and married personal allowances. The combined effect of those two things that he did was to raise the starting point of liability for tax, and to restrict the benefit in the main to those with the smallest incomes.

The fact remains that the reduced rate structure today is considerably more favourable than it was in 1951. In 1951 the band of taxable income chargeable at the lowest rate was only £50 in width—if I may follow the right hon. Gentleman into his metaphors—and was charged at 3s. in the £. Today it is £60 in width and will be charged only at ls. 9d. in the £. The next band was £200 and was charged at 5s. 6d. in the £. Today, the middle band is £150, charged at 4s. 3d. in the £. Then, in 1951, one went direct into the standard rate, whereas today there is a third reduced band of £150. I say a third without prejudice to the Amendment which we have just accepted from my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens). The third reduced band of £150 is charged at 6s. 3d. in the £.

In the end, this Amendment must be resisted on cost. By itself, it costs £124 million, and even taking that by itself, it would mean that the reductions which my right hen. Friend has proposed in the standard rate, and which have been accepted by the Committee, would have been limited to 3d. all round-3d. in the standard rate, and 3d. in the reduced rates. As the right hon. Gentleman perfectly fairly points out, to be equitable, this must be read in the context of his other proposals, and it means that there would have been no reduction in the standard or reduced rates at all, if the right hon. Gentleman's way of dealing with the sum that was remissible in direct taxation was accepted.

Therefore, the Committee having accepted my right hon. Friend's proposals for reducing the standard rate, with its corollary that the reduced rates should also come down, it seems to me that the Committee is bound to reject this Amendment, and I so advise it.

Mr. Houghton

It is a very hard job to reconstruct the whole Bill and the Budget in the course of a series of Amendments like this, and we make no complaint when the Financial Secretary to the Treasury does exactly what I said the Committee should do—put this Amendment in the context of the whole series. Otherwise, separately, they would not fully achieve the purpose we have in mind.

What strikes me as being quite extraordinary about this Amendment is what happened in 1955. I have made a very careful search, and I find that the then Chancellor, now the Lord Privy Seal, put no figure to the step that he then took of reducing the lowest rate band from £100 to £60. There were figures given in the Financial Statement of the cost to the Exchequer of improved personal allowances and so on, but his references to this matter in his statement were most casual, and, so far as I can trace, there was never a cost put on it.

What the right hon. Gentleman did in 1955, at the time when he improved the personal allowances and reduced the standard rate, was to transfer from the lowest band at 2s. 3d. in the £ the amount of £40 of taxable income to the rate of 4s. 9d. in the £, which was quite an uplift of the rate of tax upon the £40 of taxable income falling between the £60—of the new limit to the lowest band—and the £100 which was the upper limit to the old band. It looks as if, almost by sleight-of-hand, the right hon. Gentleman in 1955 clawed back a very large proportion of the reliefs that he was giving in other directions.

We see little guidance on this in the Report of the Royal Commission, as on other matters. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) was complaining a few moments ago that he did not understand the principles of income taxation, and suggested that probably there were not any. I think he is right; there are none, at least not many, and even the fundamental principle of assumed ability to pay can scarcely withstand examination today.

5.15 p.m.

The Royal Commission seemed to have no alternative bands of reduced rates to offer as being preferable to the ones which then existed, although it did link with the reduced rate bands the whole of the principle of graduation, exemption limits, personal allowances and so on. The Royal Commission did a very detailed exercise on the whole problem of how the graduated principle is applied, and there is no doubt that some distortions come into the scheme as a result of the steps taken, in times of stress, which probably had little justification, except on expediency, from a revenue point of view.

I very much regret that the hon. and learned Gentleman has felt moved to resist the Amendment. What is the formula he has on his paper? It is, "Presumed that the Amendment will be resisted." It is the sort of standing formula which is printed automatically at the foot of every page of foolscap which the Inland Revenue use for the purpose of briefing the hon. and learned Gentleman.

Mr. H. Wilson

Not on the last Amendment.

Mr. Houghton

There was no money in that, was there? That was probably dealt with in the Central Office of Information. That was a matter of the use of English, and the Inland Revenue would not know the answer to that one.

Certainly, on this matter, the Financial Secretary has been left in no doubt what he should do, and that is a pity. It means that I shall have to ask my hon. and right hon. Friends to support the Amendment in the Lobby. When the hon. and learned Gentleman says that it would be irresponsible to regard this set of Amendments as a feasible change in the Bill as it now stands, all I can say is that, as the wheels of the Committee grind slowly, the degree of irresponsibility will decline as time goes on, because the last Amendment will cost little or nothing, and he will not be able to say to us that the whole thing costs £200 million.

I warn the hon. and learned Gentleman that the time will come when we shall say "This is your last chance to show how reasonable you are." We have already dismissed one Amendment which the Financial Secretary said would cost about £6 million. Presumably, we are about to dismiss this one, and the grand total of cost is being reduced very rapidly. The point of reasonableness will soon be reached, and I hope that we shall secure a reasonable response from the hon. and learned Gentleman when he has an opportunity of moving in our direction without disastrous consequences to the financial structure of the Bill.

Question put, That those words be there inserted:—

The Committee divided: Ayes 194, Noes 240.

Division No. 108.]	AYES	[15.20 p.m.
Abse, Leo	Brockway, A. F.	Davies, Ernest (Enfield, E.)
Ainsley, J. W.	Broughton, Dr. A. D. D.	Davies, Stephen (Merthyr)
Albu, A. H.	Brown, Thomas (Ince)	Deer, G.
Allaun, Frank (Salford, E.)	Burke, W. A.	Delargy, H. J.
Allen, Arthur (Bosworth)	Burton, Miss F. E.	Diamond, John
Allen, Scholefield (Crewe)	Butler, Herbert (Hackney, C.)	Ede, Rt. Hon. J. C.
Awbery. S. S.	Butler, Mrs. Joyce (Wood Green)	Edwards, Rt. Hon. John (Brighouse)
Bacon, Miss Alice	Carmichael, J.	Edwards. Rt. Hon. Ness (Caerphilly)
Balfour, A.	Castle, Mrs. B. A.	Edwards, W. J. (Stepney)
Bence, C. R. (Dunbartonshire, E.)	Champion, A. J.	Evans, Albert (Islington, S.W.)
Benn, Hn. Wedgwood (Bristol, S.E.)	Chetwynd, G. R.	Fernyhough, E.
Benson, Sir George	Cliffe, Michael	Fletcher, Eric
Bevan, Rt. Hon. A. (Ebbw Vale)	Coldrick, W.	Forman, J. C.
Blackburn, F.	Collick, P. H. (Birkenhead)	Fraser, Thomas (Hamilton)
Blenkinsop, A.	Corbet, Mrs. Freda	Galtskell, Rt. Hon. H. T. N.
Blyton, W. R.	Cove, W. G.	Gibson, C. W.
Boardman, H.	Craddock, George (Bradford, S.)	Gooch, E. G.
Bottomley, Rt. Hon. A. G.	Cronin, J. D.	Gordon Walker, Rt. Hon. P. C.
Bowden, H. W. (Leicester, S.W.)	Grossman, R. H. S.	Greenwood, Anthony
Bowles, P. G.	Cullen, Mrs. A.	Grenfell, Rt. Hon. D. R.
Grey, C. F.	Mahon, Simon	Ross, William
Griffiths, David (Rother Valley)	Mann, Mrs. Jean	Royle, C.
Griffiths, Rt. Hon. James (Lianelly)	Marquand, Rt. Hon. H. A.	Shinwell, Rt. Hon. E.
Griffiths, William (Exchange)	Mason, Roy	Short, E. W.
Hale, Leslie	Mayhew, C. P.	Silverman, Julius (Aston)
Hall, Rt. Hn. Glenvil (Colne Valley)	Mitchison, G. R.	Silverman, Sydney (Nelson)
Hamilton, W. W.	Monslow, W.	Simmons, C. J. (Brierley Hill)
Hannan, W.	Moody, A. S.	Slater, J. (Sedgefieid)
Hastings, S.	Morris, Percy (Swansea, W.)	Snow, J W.
Hayman, F. H.	Mort, D. L.	Sorensen, R. W.
Henderson, Rt. Hn. A. (Rwly Regis)	Moss, R.	Soskice, Rt. Hon. Sir Frank
Herbison, Miss M.	Moyle, A.	Sparks, J. A.
Hewitson, Capt. M.	Mulley, F. W.	Spriggs, Leslie
Hobson, C. R. (Keighley)	Neal, Harold (Bolsover)	Stewart, Michael (Fulham)
Holman, P.	Noel-Baker, Francis (Swindon)	Stones, W. (Consett)
Holmes, Horace	Noel-Baker, Rt. Hon. P. (Derby, S.)	Strauss, Rt. Hon. George (Vauxhall)
Houghton, Douglas	Oliver, G. H.	Summerskill, Rt. Hon. E.
Hughes, Cledwyn (Anglesey)	Oram, A. E.	Sylvester, G. 0.
Hughes, Emrys (S. Ayrshire)	Orbach, M.	Taylor, Bernard (Mansfield)
Hughes, Hector (Aberdeen, N.)	Oswald, T.	Thomas, lorwerth (Rhondda, W.)
Hunter, A. E.	Owen, W. J.	Thomson, George (Dundee, E.)
Hynd, H. (Accrington)	Padiey, W. E.	Thornton, E.
Hynd, J. B. (Attercliffe)	Palmer, A. M. F.	Tomney, F.
Irvine, A. J. (Edge Hill)	Parker, J.	Vlant, S. P.
Irving, Sydney (Dartford)	Parkin, B. T.	Warbey, W. N.
Isaacs, Rt. Hon. G. A.	Paton, John	Watkins, T. E.
Janner, B.	Pearson, A.	Weitzman, D.
Jay, Rt. Hon. D. P. T.	Peart, T. F.	Wells, Percy (Faversham)
Jeger, George (Goole)	Pentland, N.	Wells, William (Walsall, N.)
Jeger, Mrs. Lena(Hlbn & St. Pncs, S.)	Plummer, Sir Leslie	Wheeldon, W. E.
Jones, Rt. Hon. A. Creech(Wakefield)	Popplewell, E.	White, Henry (Derbyshire, N.E.)
Jones, Jack (Rotherham)	Prentice, R. E.	Wilkins, W. A.
Jones, J. Idwal (Wrexham)	Price, J. T. (Westhoughton)	Willey, Frederick
Kenyon, C.	Price, Philips (Gloucestershire, W.)	Williams, Rev. Llywelyn (Ab'tillery)
Key, Rt. Hon. C. W.	Probert, A. R.	Williams, Rt. Hon. T. (Don Valley)
King, Dr. H. M.	Pursey, Cmdr. H.	Willis, Eustace (Edinburgh, E.)
Lawson, G. M.	Rankin, John	Wilson, Rt. Hon. Harold (Huyton)
Lee, Frederick (Newton)	Redhead, E. C.	Winterbottom, Richard
Lee, Miss Jennie (Cannock)	Reeves, J.	Woodburn, Rt. Hon. A.
Lewis, Arthur	Reid, William	Woof, R. E.
Lipton, Marcus	Reynolds, G. W.	Yates, V. (Ladywood)
Mahon, Dr. J. Dickson	Rhodes, H.	Zilliacus, K.
McAlister, Mrs. Mary	Robens, Rt. Hon. A.
McInnes, J.	Roberts, Albert (Normanton)	TELLERS FOR THE AYES:
McKay, John (Wallsend)	Roberts, Goronwy (Caernarvon)	Mr. John Taylor and Mr. Rogers.
McLeavy, Frank	Robinson, Kenneth (St. Pancras, N.)
MacPherson, Malcolm (Stirling)
NOES
Agnew, Sir Peter	Butler, Rt. Hn.R.A.(Saffron Walden)	George, J, C. (Pollok)
Aitken, W. T.	Campbell, Sir David	Glover, D.
Allan, R. A. (Paddington, S.)	Carr, Robert	Glyn, Col. Richard H.
Amery, Julian (Preston, N.)	Cary, Sir Robert	Godber, J. B.
Amory, Rt. Hn. Heathcoat (Tiverton)	Channon, H. P. G.	Goodhart, Philip
Anstruther-Cray, Major Sir William	Chichester-Clark, R.	Gough, C. F. H.
Arbuthnot, John	Cole, Norman	Gower, H. R.
Armstrong, C. W.	Conant, Maj. Sir Roger	Graham, Sir Fergus
Ashton, H.	Cooke, Robert	Grant, Rt. Hon. W. (Woodside)
Atkins, H. E.	Cordeaux, Lt.-Col. J. K.	Grant-Ferris, Wg Cdr. R. (Nantwich)
Baldock, Lt.-Cmdr. J. M.	Corfield, F. V.	Green, A.
Baldwin, Sir Archer	Craddock, Beresford (Spelthorne)	Gresham Cooke, R.
Barber, Anthony	Crowder, Sir John (Flnchley)	Grimond, J.
Barlow, Sir John	Crowder, Petre (Ruislip—Northwood)	Grimston, Hon. John (St. Albans)
Barter, John	Cunningham, Knox	Grosvenor, Lt.-Col. R. G.
Batsford, Brian	Currie, G. B. H.	Gurden, Harold
Baxter, Sir Beverley	Dance, J. C. G.	Hall, John (Wycombe)
Beamish, Col. Tufton	Davidson, Viscountess	Hare, Rt. Hon. J. H.
Bell, Philip (Bolton, E.)	Davies, Rt. Hn. Clement(Montgomery)	Harris, Reader (Heston)
Bell, Ronald (Bucks, S.)	D'Avigdor-Goldsmid, Sir Henry	Harrison, A. B. C. (Malden)
Bevins, J. R. (Toxteth)	de Ferranti, Basil	Harrison, Col. J. H. (Eye)
Biggs-Davison, J. A.	Dodds-Parker, A. D.	Harvey, John (Walthamstow, E.)
Bingham, R. M.	Doughty, C. J. A.	Heald, Rt. Hon. Sir Lionel
Birch, Rt. Hon. Nigel	du Cann, E. D. L.	Heath, Rt. Hon. E. R. G.
Bishop, F. P.	Duncan, Sir James	Henderson, John (Cathcart)
Black, Sir Cyril	Eden, J. B. (Bournemouth, West)	Henderson-Stewart, Sir James
Body, R. F.	Emmet, Hon. Mrs. Evelyn	Hicks Beach, Maj. W. W.
Bonham Carter, Mark	Errington, Sir Eric	Hill, Mrs. E. (Wythenshawe)
Bowen, E. R. (Cardigan)	Erroll, F. J.	Hill, John (S. Norfolk)
Boyd-Carpenter, Rt. Hon. J. A.	Farey-Jones, F. W.	Hinchingbrooke, Viscount
Boyle, Sir Edward	Fell, A.	Hirst, Geoffrey
Braine, B. R.	Fisher, Nigel	Holland-Martin, G. J.
Brewis, John	Fletcher-Cooke, C.	Holt, A. F.
Brooman-White, R. C.	Fort, R.	Hornby, R. P.
Browne, J. Nixon (Cralgton)	Freeth, Denzil	Horobin, Sir Ian
Bryan, P.	Galbraith, Hon. T. G. D.	Horshrugh, Rt. Hon. Dame Florence
Burden, F. F. A.	Gammans, Lady

Howard, John (Test)	Maydon, Lt.-Comdr. S. L. C.	Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Hughes Hallett, Vice-Admiral J.	Medlicott, Sir Frank	Stanley, Capt. Hon. Richard
Hughes-Young, M. H. C.	Milligan, Rt. Hon. W. R.	Stevens, Geoffrey
Hurd, Sir Anthony	Molson, Rt. Hon. Hugh	Steward, Harold (Stockport, S.)
Hutchison, MichaelClark(E'b'gh, S.)	Morrison, John (Salisbury)	Steward, Sir William (Woolwich, W.)
Hylton-Foster, Rt. Hon. Sir Harry	Mott-Radclyffe, Sir Charles	Stoddart-Scott, Col. Sir Malcolm
Iremonger, T. L.	Nairn, D. L. S.	Storey, S.
Jenkins, Robert (Dulwich)	Neave, Airey	Stuart, Rt. Hon. James (Moray)
Jennings, Sir Roland (Hallam)	Nicholls, Harmar	Studholme, Sir Henry
Johnson, Eric (Blackleg)	Nicholson, Sir Godfrey (Farnham)	Summers, Sir Spencer
Joseph, Sir Keith	Nicolson, N. (B'n'm'th, E. & Chr'ch)	Taylor, Sir Charles (Eastbourne)
Keegan, D.	Noble, Michael (Argyll)	Taylor, William (Bradford, N.)
Kerby, Capt. H. B.	Nugent, Richard	Teeling, W.
Kerr, Sir Hamilton	Oakshott, H. D.	Temple, John M.
Kirk, P. M.	Ormsby-Gore, Rt. Hon. W. D.	Thomas, Leslie (Canterbury)
Lambton, Viscount	Orr-Ewing, C. Ian (Hendon, N.)	Thorneycroft, Rt. Hon. P.
Lancaster, Col. C. G.	Osborne, C.	Thornton-Kemsley, Sir Colin
Langford-Holt, J. A.	Page, R. G.	Turner, H. F. L.
Leavey, J. A.	Pannell, N. A. (Kirkdale)	Turton, Rt. Hon. R. H.
Leburn, W. G.	Partridge, E.	Tweedsmuir, Lady
Legge-Bourke, Maj. E. A. H.	Peel, W. J.	Vane, W. M. F.
Legh, Hon. Peter (Petersfield)	Peyton, J. W. W.	Vaughan-Morgan, J. K.
Lindsay Hon. James (Devon, N.)	Pickthorn, Sir Kenneth	Vickers, Miss Joan
Lindsay, Martin (Solihull)	Pike, Miss Mervyn	Vosper, Rt. Hon. D. F.
Linstead, Sir H. N.	Pilkington, Capt. R. A.	Wade, D. W.
Lloyd, Maj. Sir Guy (Renfrew, E.)	Pitman, I. J.	Wakefield, Edward (Derbyshire, W.)
Longden, Gilbert	Pott, H. P.	Wakefield, Sir Wavell (St. M'lebone)
Loveys, Walter H.	Powell, J. Enoch	Walker-Smith, Rt. Hon. Derek
Low, Rt. Hon. Slr Toby	Price, David (Eastleigh)	Wall, Patrick
Lucas, Sir Jocelyn (Portsmouth, S.)	Prior-Palmer, Brig. 0. L.	Ward, Rt. Hon. G. R. (Worcester)
Lucas-Tooth, Sir Hugh	Ramsden, J. E.	Ward, Dame Irene (Tynemouth)
Macdonald, Sir Peter	Rawlinson, Peter	Watkinson, Rt. Hon. Harold
McLaughlin, Mrs. P.	Redmayne, M.	Webbe, Sir H.
Maclean, Sir Fitzroy (Lancaster)	Rees-Davies, W. R.	Webster, David
Macleod, Rt. Hn. lain (Enfield, W.)	Remnant, Hon. P.	Williams, Paul (Sunderland, S.)
McMaster, S. R.	Renton, D. L. M.	Wills, Sir Gerald (Bridgwater)
Macmillan, Rt. Hn. Harold (Bromley)	Ridsdale, J. E.	Wilson, Geoffrey (Truro)
Maitland, Cdr. J. F. W. (Horncastle)	Robinson, Sir Roland (Blackpool, S.)	Wood, Hon. R.
Maitland, Hon. Patrick (Lanark)	Roper, Sir Harold	Woollam, John Victor
Markham, Major Sir Frank	Ropner, Col. Sir Leonard	Yates, William (The Wrekin)
Marlowe, A. A. H.	Russell, R. S.
Marples, Rt. Hon. A. E.	Sharpies, R. C.	TELLERS FOR THE NOES:
Marshall, Douglas	Simon, J. E. S. (Middlesbrough, W.)	Mr. Finlay and Mr. Whitelaw.
Mathew, R.	Spearman, Sir Alexander
Mawby, R. L.	Spelr, R. M.

Mr. Houghton

I beg to move, in page 14, line 23, at the end, to insert: (3) Subsection (1) (earned income relief) of section two hundred and eleven of the Income Tax Act, 1952, shall have effect as if after the words "standard rate on" there were inserted the words "one quarter of the claimant's earned income, if that income does not exceed one thousand pounds, or, if that income exceeds one thousand pounds but does not exceed one thousand one hundred and twenty-five pounds, on two hundred and fifty pounds, or, if that income amounts to or exceeds one thousand, one hundred and twenty-five pounds. on". This Amendment proposes a change in the earned income relief. The Committee will remember that, prior to 1957, earned income relief was a deduction of two-ninths from income with a maximum of £450. From 1957 onwards, the limit of earned income qualifying for the two-ninths relief was raised to £4,005 and a new and reduced earned income relief of one-ninth was given to income beyond £4,005, so that from 1957 onwards the earned income relief of two-ninths on the first £4,005 and one-ninth on the next £5,940 increased the total earned income relief from £450 to £1,550.

In 1957, we on this side of the Committee said that that was going too far. It certainly went further than the Royal Commission recommended. However, that is how it was and that is how it is. Now we propose to bring in a new and more favourable relief of one-quarter instead of two-ninths for earned incomes which do not exceed £1,000 a year, but we make provision in the Amendment for marginal adjustments for incomes which do not exceed £1,125.

5.30 p.m.

I want to make it clear that this relief stands by itself as an alternative to the older earned income relief. A person can have one or the other, but not both. The Committee will appreciate that this is an attempt to give a more favourable earned income relief to those with lower incomes. We strike the same note in this Amendment, as we did in the two previous Amendments and shall do in subsequent Amendments, of giving more relief than the Bill provides to those on smaller incomes and to whom the personal reliefs matter most. The maximum benefit which any taxpayer could obtain under the Amendment would be an increase in earned income relief of £27—from £223 to £250. In terms of the new standard rate of tax, the tax saving would be £10 9s. 3d. That is the most that anyone would get out of it.

To give an example, as a result of our proposal the tax saving to a married man with an income of £700, and with one child under 11 years of age, would be £4 Os. 9d.—a very modest saving, it must be admitted. He will already have gained under the Bill a tax reduction of £6 a year, so that if the Chancellor's proposals are added to our proposal a married man with £700 and with one child under 11 would gain a tax relief of £10 instead of £6. You will note, Sir Robert, in what modest terms we are speaking.

I know that the modesty of the benefit which individuals would receive is not an index to the ultimate cost because of the large numbers involved. I am keeping a shopping list, and I think that at the moment the Financial Secretary, by his skill and persuasion in argument, has persuaded the Committee to reject £130 million worth of desirable improvements to the Bill.

Mr. A. J. Champion (Derbyshire, South-East)

He did it by his majorities in the Lobby.

Mr. Houghton

Yes, but I hope that we shall not mix up majorities in Committee with the millions of £s involved in these proposals.

The danger to the financial stability of the Bill is growing less as time goes by. I confess that I do not know what our proposal would cost, but I have no doubt that the Financial Secretary will be able to tell us. When dealing with the previous Amendment a few moments ago, the Financial Secretary repeated the converse of the customary argument of himself and his right hon. Friend in these matters. He said that the proposal would give the least benefit to those who pay the least amount of tax. His argument usually is that we cannot help giving the most relief to those who pay the most tax and that we just have to accept the arithmetic and not import any arguments of social justice, of fiscal equity or anything else which has to do with the morality or desirability of the situation.

The hon. Member for Wokingham (Mr. Remnant) was absent a little while ago when I was relying heavily on his support for an Amendment to improve the housekeeper relief. I had in front of me a good mark for his behaviour in 1951, when he tabled an Amendment, in company with other of his hon. Friends, to improve the housekeeper relief. Now he is in some way impeding me in trying to persuade the Committee to accept the Amendment.

Mr. Peter Remnant (Wokingham)

I must apologise for my reference to the Inland Revenue merely accepting figures as they stand without introducing other elements.

Mr. Houghton

The apology is accepted.

Here we are trying to give more relief than the Bill provides to those on the smaller and what one might call middle incomes. Hon. Members opposite profess a great interest in the problems of the middle income groups—those who are managers and supervisors and those who occupy positions of responsibility, very frequently for modest rewards. They are not in business on their own. They have not all the benefits of the relaxed expenses rule under Schedule D. They are tightly held by the Inland Revenue by the words "wholly, exclusively and necessarily incurred in the performance of their office". They have no room to move except by the connivance of their employers, or something of that sort. These people are held in the grip of the Income Tax machine and have no reliefs except those which the Bill and the Income Tax Acts provide.

We are not afraid of asking hon. Members opposite to extend their sympathetic interest to these people. It is true that the man with an earned income of £1,000 a year, which is a modest but not large income today, would get the maximum benefit from the Amendment. A person with an income of £500 a year would not. I simply cannot help that. One cannot do everything one would like in the proportions that one would wish when dealing with the mathematics of a progressive system of taxation, but it is a step in the right direction. I hope that the hon. and learned Gentleman will give it sympathetic attention.

I am becoming increasingly conscious of the problem in moving Amendments, namely, that as we erect them in a group and confront the Committee with them, the hon. and learned Gentleman merely bowls them over, rather like ninepins, one after the other. The pattern of our proposals becomes less coherent and less convincing as the Amendments are destroyed one by one. However, as the Chancellor said to me in another context once. "I must soldier on", and that is what I am doing. If the Committee will look at this Amendment, in relation to the other Amendments, on its merits, I think that it will see that it is deserving of support.

In conclusion, I would remind the Committee that the Lord Privy Seal, when Chancellor of the Exchequer, said in a debate on a Finance Bill that he was looking forward to the time—I am not quoting him literally, but this is the gist of what he said—when he would be able to improve the earned income relief to one-quarter. I distinctly remember that, although I have not been able to put my hand on the reference. He was hoping to improve the earned income relief to one-quarter. To make it one-quarter to £4,005 and one-eighth instead of one-ninth from £4,005 to £9,945 would be going further than we would wish to go. We are trying to make a beginning on the one-quarter earned income relief on earned incomes which in total do not exceed £1.000.

Mr. Eric Fletcher (Islington, East)

I wish to support the Amendment moved by my hon. Friend the Member for Sowerby (Mr. Houghton) in, if I may say so, so persuasive a manner. I think that he can congratulate himself on the fact that he is soldiering on with very great determination and efficiency, and on this occasion, I hope, with success.

We have still not been granted any concessions in this Finance Bill, and I hope that as on previous occasions the Chancellor and his able deputies are saving something up their sleeves as a concession which they will be able to give to the Committee in the course of this stage of the Bill. After all, this is a year in which without precedent the Chancellor has had a larger sum of money to give away in tax reliefs than ever before, and, stickler as he is for precedents —so we gathered yesterday—I hope that on this Finance Bill he will follow the precedents that have been observed in nearly every other Finance Bill by making at least some concession to the Opposition during the Committee stage. I can think of nothing more deserving than that for which the Amendment asks. The cost would not be very considerable. I think that, if anything, my hon. Friend almost exaggerated the modesty of the Amendment.

May I briefly try to restate in my own words the arguments which I hope will influence the Treasury to accept the Amendment? I believe that it has long been recognised that there ought to be a distinction in tax liability between earned income and unearned income. The Royal Commission emphatically recommended that the differential between the tax on earned income and the tax on unearned income should be widened.

We have held for a long time that the existing differential, namely, two-ninths up to a certain figure and one-ninth beyond that figure, is inadequate. We think that it is in the interest of the objective of encouraging enterprise and industry that there should be some real attractiveness in earned income as distinct from unearned income which could best be observed by way of an appropriate tax relief. We do not think it would be right that the same figure should be constant throughout the whole range of unearned income. That principle is now conceded.

We are particularly concerned with the relatively small incomes of those earning up to £1,000 a year. These are people who, for the most part, marry and have families and for whom every shilling and every penny counts in their household budget.

My hon. Friend said that if this tax concession were granted, the maximum relief which any individual would receive from it would be £10 9s. 3d. in tax liability. In most cases, of course, it would be rather less than that, but whether it is £4, £5 or £6, it is something which would make a difference to those people. We think that it would be meritorious because the relief would go only to those with earned incomes and not to those with unearned incomes. We believe that these people constitute a section of the community which, I would hope, both sides of the Committee would wish to encourage.

5.45 p.m.

As the Committee knows, one of our major criticisms of this Budget and this Finance Bill is that the Chancellor, having decided to reduce the standard rate of tax, necessarily had to confer tax reliefs on all taxpayers regardless of the size of their incomes. In so doing, the right hon. Gentleman failed, in our view, to give what is far more necessary at the present time, a correspondingly greater tax relief to those with small or relatively small incomes. We believe that the Chancellor would have been much better advised had he conferred some of his relief from taxation by extending the allowances and reliefs to which this series of Amendments relates. The first two Amendments, of course, have been disposed of.

I hope that the Government will accept the Amendment on the ground that it will increase enterprise, will promote social justice, will be in accordance with the recommendations of the Royal Commission and will give assistance where it is badly needed.

Mr. John McKay (Wallsend)

I sometimes think that it is useless to try to get any Amendment on these matters accepted by the Government. The greater one's experience in the House of Commons the more it tends on most occasions to indicate that fact. There is a kind of psychology about Finance Bills and Income Tax, a psychology with which I do not agree. It is that the Income Tax machine is so complicated that one cannot differentiate sufficiently to be able to help the lower income groups without helping the higher income groups. This Amendment indicates that that is not correct.

If we are willing and anxious to help the lower income groups there is nothing at all in the Finance Bill, or in practice, which prevents us from doing so. I do not know why the Amendment has fixed the figure at £1,000. It is an indication that we can use our arithmetic and our Amendments to the Finance Bill in such a way that we can, if we wish, give something to a particular section of the community. I always regard the average wage earner as the person earning £7, £8, £9, £10, £11 or £12 a week.

Had the Amendment fixed on the sum of £500 a year instead of £1,000 a year we could, perhaps, have amended one-quarter to one-third and made it apply more definitely to the much poorer section of the community. The Amendment is a very small attempt on the part of the Labour Party to see whether Parliament is really an instrument whereby we can get a greater degree of justice in this matter so that more groups of the community can really be helped.

The Amendment asks so little, but, of course, the Government will not accept it. In fact, I would wonder what had come over the Government if they agreed to even the slightest amendment of the Income Tax provisions that would benefit the lower section of taxpayers. If that did happen, we would look on in wonderment. It would be such an unexpected thing that we would be watching the newspapers to see what the Press had to say about it.

On the other hand, the Government should be open to persuasion, and it is true that sometimes they are prepared to take account of what is said and to change their minds. I notice that the Government went out of their way to help one section of the community, the only proviso being that those benefiting should be 65 years of age or over. A year or two ago the Government legislated for that class by enacting that in respect of the investment income of a married couple, one of whom was 65 or over, the first £440 should be absolutely exempt from Income Tax.

That is investment income, yet the poor worker in the factory, in the pit or on the farm has to slave all the year round to earn that much, and from it has to meet travelling expenses, insurance premiums and the rest. In addition, it must be remembered that an investment income of £440 a year can come only from several thousands—more likely running into the twenties of thousands—of capital.

The Amendment asks for very little. Indeed, it asks for so little that it is questionable whether it was worth putting on the Notice Paper, but we have learned from experience that there is never any chance of the Government accepting, or even considering, an Amendment that contains a really worth-while benefit. On this occasion, the Opposition have asked for the very least, and suggest that here there is cause for some improvement.

I have no idea what the cost would be, but the scope of the Amendment is tremendously limited when compared with the earlier Amendments we have discussed today. I must admit that I was surprised to hear how much one of the earlier Amendments would have cost. What would this Amendment cost? Would it be such an amount that the Government really could not consider it? If it does not involve a very big sum, let the Government give the poor Opposition the credit for once of being able to say, "Look what we have done. We have improved the situation."

Viscount Hinchingbrooke (Dorset, South)

I hope that the Government will not accept this Amendment. I was very glad that there was not any reference to such a concession in the Budget. My right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) went very far in this direction in his Budget of 1957–58—beyond, I think, the terms recommended by the Royal Commission in its second Report.

We have advanced very far on these lines—so far, it seems to me, that we are almost in danger of discriminating adversely against saved or invested income. If we make the earned income relief very substantial, the moment the person had earned money and invested it, it would become saved income and be subject to a higher tax rate. The knowledge that that would happen would be a disincentive to saving. We have gone as far as we can possibly go here, and I hope that the Government will not concede the Amendment.

The Economic Secretary to the Treasury (Mr. F. J. Erroll)

The hon. Member for Sowerby (Mr. Houghton) spoke of the Government knocking down the Opposition's Amendments one by one as though they were ninepins, and my hon. and learned Friend thought that it might make an agreeable change if I were to have a turn in this particular bowling-alley—although I admit at once that I have nothing like his experience.

First, I should like to elicit an item of explanation from the hon. Member. I am not quite clear whether this Amendment is part of the Opposition's plan for what might be described as an alternative Finance Bill, presented in a series of Amendments, or whether it was a modest attempt to reverse the arrangements for earned income allowances introduced in the 1957 Budget.

In what the hon. Gentleman said I thought that I detected a kind of unwilling acceptance of the major changes then introduced. I got the impression that he would rather not have seen the earned income reliefs given up to £4,005, and then an allowance of one-ninth up to £9,000-odd, and that this was the time to reverse the reliefs in favour of the small incomes—

Mr. Houghton

I referred to the events of 1957, first, to explain what happened then, and, secondly, to recall that we on this side of the Committee thought that the then Chancellor, the right hon. Member for Monmouth (Mr. P. Thorneycroft) had gone too far. Nevertheless, I thought that I had made it very plain that we accepted that earned income relief structure, and were not proposing to change it in any way. All the benefits then given are retained in full by our proposal.

What this Amendment proposes to do is to build into the structure of earned income relief a special concession of one-quarter instead of two-ninths of earned incomes not exceeding £1,000 a year. Therefore, those with the large earned income relief would keep it. This benefit would go only to the smaller incomes.

Mr. Erroll

I am grateful to the hon. Gentleman for that explanation. This Amendment, therefore, would give an additional relief to the smaller man earning up to £1,000, with marginal relief up to £1,125.

The real point at issue is whether this should be our Budget or the Opposition's Budget. My right hon. Friend has decided to introduce his Budget in the particular form and in the particular structure he has deemed to be best. Therefore, I really cannot shed many tears over the plea of the hon. Gentleman when he complains that this Opposition grand plan, interesting and well worth study as it may be, is being disposed of point by point as we knock each of their Amendments off its feet—with, so far, very telling arguments, and I hope that the arguments on this occasion will be as telling at the conclusion of the debate.

6.0 p.m.

What we have to appreciate is that the present scale of earned income allowances so generously distinguishes between the taxable capacity of earned and of investment income that there is already a substantial differential, and it would not be wise to carry that differential any further. Earned income is still much more favourably treated than unearned income, which is a matter which the Committee would do well to remember.

The hon. Gentleman the Member for Sowerby referred to a figure of £1,000 in giving his examples, and I will use the same figure. A childless married man with an earned income of £1,000 per annum will pay this year £152 in tax, if all the income is earned, but if it is income solely derived from investments he will pay no less than £239 in tax. So that there is still a substantial relief in favour of the earned income, which is quite proper and as it should be, but it has to be remembered that we should not carry the differential too far; and I was glad to have the support of my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke) in this matter.

The importance, in our view, of not making the discrimination too severe is, we feel, that, while earning money is important, saving and investing is also important. Hon. Gentlemen opposite have frequently said that what they would wish to see is a greater degree of investment and a higher level of personal savings. People are prepared to save and invest only if they are to get some reward for doing so; in other words, if they are to derive an income from saving or investment. That being so it is only reasonable that that reward, called, perhaps by reason of historic accident, unearned income, should not be so heavily taxed as to make it not worth while to save or to invest.

I think that everyone who saves or invests realises that the tax borne on unearned income should be higher than that borne on earned income, but not so high as to make it a powerful deterrent to further saving and investment. I hope that what I have said will serve as an explanation in reply to the remarks made by the hon. Gentleman the Member for Islington, East (Mr. E. Fletcher).

The hon. Gentleman the Member for Wallsend (Mr. McKay) spoke of this Amendment as though it were a small one which could easily be accepted because the cost involved in so doing would be negligible. I am sorry to have to tell the Committee that quite apart from any other arguments in favour of rejecting this Amendment it would have to be rejected by the Committee, in my view, on the ground of the very high cost. It would cost no less than £72 million in a full year. Therefore, to accept this Amendment would be substantially to alter the structure of my right hon. Friend's Budget and to introduce an altogether different element into it.

I am sorry to have to knock down yet another of the Opposition's ninepins, but I hope that the Committee will agree with me that I am right in asking it to do so this time.

Mr. Houghton

The hon. Gentleman the Economic Secretary, of course, made an agreeable change from his hon. and learned Friend the Financial Secretary. [HON. MEMBERS: "0h."] I knew I was expressing myself badly as the words came out. I did not mean that at all. What I mean to say is that they are equally welcome contributors to our deliberations. Unfortunately, I must inflict myself on the Committee again, because my right hon. Friend the Member for Smethwick (Mr. Gordon Walker) has been called away and I am left somewhat alone on this Amendment.

Mr. H. Wilson

Not altogether alone.

Mr. Houghton

My right hon. Friend the Member for Huyton (Mr. H. Wilson) would enter the debate with his usual zest and skill, but he did not hear the earlier argument fully deployed, though, of course, he is in full support of the Amendment.

Mr. Wilson

Hear, hear.

Mr. Houghton

His presence here now is evidence of that.

The Economic Secretary cannot tell any of us who have been in the Committee upstairs on the National Insurance Bill anything about trying to alter a Government Bill into our Bill. We had more than 20 meetings of that Committee without, on our side, having altered the Bill by a single letter or comma, which was a very frustrating experience beside which this is quite a mild one.

I realise that we have several times tried to put into the right hon. Gentleman's Budget what is not there, and into the Bill that which is deliberately left out of his proposals, but that really does not detract from the value of discussing what we think are the deficiencies of the Bill in this respect, and we are still not without hope that before long we may propose something which so appeals to right hon. and hon. Gentlemen opposite as being reasonable, even within the context of this Bill, that we may get them to accept it.

It may be that the right hon. Gentleman the Member for Monmouth (Mr. P. Thorneycroft), by going too far in 1957, will prevent us from going far enough in 1959. That is another problem we are up against, not only on this Bill, for we have been up against it in considering previous Measures. In 1957, £24½ million in a full year were conceded in the additional earned income relief, and no part of any of the £24½ million went to any person earning less than £2,005 a year. Not only did the two-ninths go up to a limit of income of £4,005, as against the recommendation of the Royal Commission on the Taxation of Profits and Income that it should go to £2,500, but the right hon. Gentleman carried the reduced one-ninth relief much further than the Royal Commission recommended.

The Royal Commission suggested that the one-ninth relief should be on incomes between £2,500 and £3,000. The right hon. Gentleman the Member for Monmouth gave the one-ninth relief on incomes between £4,005 and nearly £10,000 a year. The small incomes which we are now proposing to benefit through a one-fourth earned income relief are having

to pay for the bounty given in the higher ranges of earned income in 1957.

The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) made a plea for fair treatment of income from savings. None of us on this side of the Committee wishes to injure in any way the rewards for genuine savings, for the money which people put aside out of their earnings and save for themselves or their families. The Amendment would facilitate savings in a range of incomes where it is most difficult to save today. It would reduce the tax burden which those small incomes bear and release a very modest amount of additional money for savings. The Amendment does nothing to penalise the income from savings in any way whatsoever.

We on this side have on the Notice Paper for consideration later a new Clause to extend the scope of tax relief on small savings beyond the amounts in the Post Office Savings Bank and Trustee Savings Banks. This indicates that we are trying to spread the reliefs not only to small un-earned incomes, but to small unearned incomes from certain sources.

The Chancellor does not like the expression that he has "given away". I have no wish to offend him, but we are confronted with the difficulty that the right hon. Gentleman has given tax remissions in Clause 14 amounting in a full year to £229 million. It is against that background that this small additional benefit to the lower incomes is being proposed. Once more, I can only urge my right hon. and hon. Friends to press this matter to a Division, in view of the unsatisfactory response that we have had from the new batsman on the Front Bench opposite.

Question put, That those words be there inserted:—

The Committee divided: Ayes 188, Noes 227.

Division No. 109.]	AYES	[6.12 p.m.
Ainsley, J. W.	Boardman, H.	Chapman, W. D.
Albu, A. H.	Bottomley, Rt. Hon. A. G.	Chetwynd, G. R.
Allaun, Frank (Salford, E.)	Bowden, H. W. (Leicester, S.W.)	Cliffe, Michael
Allen, Arthur (Bosworth)	Bowles, F. G.	Coldrick, W.
Allen, Scholefield (Crewe)	Brockway, A. F.	Collick, P. H. (Birkenhead)
Awbery, S. S.	Broughton, Dr. A. D. D.	Corbet, Mrs. Freda
Bacon, Miss Alice	Brown, Rt. Hon. George (Belper)	Craddock, George (Bradford, S.)
Bence, C. R. (Dunbartonshire, E.)	Brown, Thomas (Ince)	Cronin, J. D.
Benn, Hn. Wedgwood (Bristol, S.E.)	Burke, W. A.	Crossman, R. H. S.
Benson, Sir George	Burton, Miss F. E.	Davies, Ernest (Enfield, E.)
Bevan, Rt. Hon. A. (Ebbw Vale)	Butler, Herbert (Hackney, C.)	Delargy, H. J.
Blackburn, F.	Butler, Mrs. Joyce (Wood Green)	Diamond, John
Blenkinsop, A.	Carmichael, J.	Ede, Rt. Hon. J. C.
Blyton, W. R.	Champion, A. J.	Edelman, M.
Edwards, Rt. Hon. John (Brighouse)	Lee, Miss Jennie (Cannock)	RObens, Rt. Hon. A.
Edwards, Rt. Hon. Ness (Caerphilly)	Lindgren, G. S.	Roberts, Albert (Normanton)
Edwards, W. J. (Stepney)	Lipton, Marcus	Roberts, Goronwy (Caernarvon)
Evans, Albert (Islington, S.W.)	Mabon, Dr. J. Dickson	Robinson, Kenneth (St. Pancras, N.)
Fernyhough, E.	McAlister, Mrs. Mary	Rogers, George (Kensington, N.)
Fletcher, Eric	McInnes, J.	Ross, William
Forman, J. C.	McKay, John (Wallsend)	Royle, C.
Fraser, Thomas (Hamilton)	McLeavy, Frank	Shinwell, Rt. Hon. E.
Gaitskell, Rt. Hon. H. T. N.	MacPherson, Malcolm (Stirling)	Short, E. W.
Gibson, C. W.	Mahon, Simon	Silverman, Julius (Aston)
Gooch, E. G.	Mann, Mrs Jean	Silverman, Sydney (Nelson)
Greenwood, Anthony	Marquand, Rt. Hon. H. A,	Simmons, C. J. (Brierley Hill)
Grenfell, Rt. Hon. D. R.	Mason, Roy	Slater, J. (Sedgefield)
Grey, C. F.	Mayhew, C. P.	Smith, Ellis (Stoke, S.)
Griffiths, David (Rother Valley)	Mitchison, G. R.	Snow, J. W.
Griffiths, Rt. Hon. James (Llanelly)	Monslow, W.	Sorensen, R. W.
Griffiths, William (Exchange)	Moody, A. S.	Soskice, Rt. Hon. Sir Frank
Hale, Leslie	Morris, Percy (Swansea, W.)	Spriggs, Leslie
Hall, Rt. Hn. Glenvil (Coins Valley)	Mort, D. L.	Stones, W. (Consett)
Hamilton, W. W.	Moss, R.	Strauss, Rt. Hon. George (Vauxhall)
Hannan, W.	Moyle, A.	Summerskill, Rt. Hon. E.
Hastings, S.	Mulley, F. W.	Sylvester. G. 0.
Hayman, F. H.	Neal, Harold (Bolsover)	Taylor, Bernard (Mansfield)
Healey, Denis	Noel-Baker, Rt, Hon. P. (Derby, S.)	Taylor, John (West Lothian)
Henderson, Rt. Hn. A. (Rwly Regis)	Oliver, G. H.	Thomas, Lorwerth (Rhondda, W.)
Herbison, Miss M.	Oram, A. E.	Thomson, George (Dundee, E.)
Hewitson, Capt. M.	Orbach, M.	Thornton, E.
Hobson, C. R. (Keighley)	Oswald, T.	Tomney, F.
Holman, P.	Owen, W J.	Viant, S. P.
Houghton, Douglas	Padley, W. E.	Warbey, W. N.
Hughes, Cledwyn (Anglesey)	Palmer, A. M. F.	Watkins, T. E.
Hughes, Emrys (S. Ayrshire)	Parker, J.	Weitzman, D.
Hughes, Hector (Aberdeen, N.)	Parkin, B. T.	Wells, Percy (Faversham)
Hunter, A. E.	Paton, John	Wells, William (Walsall, N.)
Hynd, H. (Accrington)	Pearson, A.	Wheeldon, W. E.
Hynd, J. B. (Attercliffe)	Peart, T. F.	White, Henry (Derbyshire, N.E.)
Irvine, A. J. (Edge Hill)	Pentland, N.	Wilkins, W. A.
Irving, Sydney (Dartford)	Plummer, Sir Leslie	Willey, Frederick
Janner, B.	Popplewell, E.	Williams, Rev. Llywelyn (Ab'tillery)
Jay, Rt. Hon. D. P. T.	Prentice, R. E.	Williams, Rt. Hon. T. (Don Valley)
Jager, George (Goole)	Price, J. T. (Westhoughton)	Willis, Eustace (Edinburgh, E.)
Jager, Mrs. Lena(Holbn & St. Pncs, S.)	Price, Philips (Gloucestershire, W.)	Wilson, Rt. Hon. Harold (Huyton)
Jones, Rt. Hon. A. Creech(Wakefield)	Probert, A. R.	Winterbottom, Richard
Jones, Jack (Rotherham)	Pursey, Cmdr, H.	Woof, R. E.
Jones, J. Idwal (Wrexham)	Rankin, John	Yates, V. (Ladywood)
Kenyon, C.	Redhead, E. C.	Zilliacus, K.
Key, Rt. Hon. C. W.	Reeves, J.
King, Dr. H. M.	Reid, William	TELLERS FOR THE AYES:
Lawson, G. M.	Reynolds, G. W.	Mr. Holmes and Mr. Deer.
Lee, Frederick (Newton)	Rhodes, H.
NOES
Agnew, Sir Peter	Brooman-White, R. C.	Erroll, F. J.
Aitken, W. T.	Browne, J. Nixon (Craigton)	Farey-Jones, F. W.
Allan, R. A. (Paddington, S.)	Bryan, P.	Fell, A.
Amory, Rt. Hn. Heathcoat (Tiverton)	Burden, F. F. A.	Finlay, Graeme
Anstruther-Gray, Major Sir William	Butler, Rt. Hn. R. A. (Saffron Walden)	Fisher, Nigel
Arbuthnot, John	Campbell, Sir David	Fletcher-Cooke, C.
Armstrong, C.W.	Carr, Robert	Fort, R.
Ashton, H.	Cary, Sir Robert	Fraser, Hon. Hugh (Stone)
Atkins, H. E.	Channon, H. P. G.	Freeth, Denzil
Baldock, Lt.-Comdr. J. M.	Chichester-Clark, R.	Galbraith, Hon. T. C. D.
Baldwin, Sir Archer	Clarke, Brig. Terence (Portsmth, W.)	Gammans, Lady
Barber, Anthony	Cole, Norman	George, J. C. (Pollok)
Barlow, Sir John	Conant, Maj. Sir Roger	Glover, D.
Barter, John	Cooke, Robert	Glyn, Col. Richard H.
Bateford, Brian	Cordeaux, Lt.-Col. J. K.	Godber, J. B.
Baxter, Sir Beverley	Corfield, F. V.	Goodhart, Philip
Beamish, Col. Tufton	Craddock, Beresford (Spelthorne)	Gough, C. F. H.
Bell, Philip (Bolton, E.)	Crosthwaite Eyre, Col. 0. E.	Gower, H. R.
Bell, Ronald (Bucks, S.)	Crowder, Sir John (Finchley)	Graham, Sir Fergus
Bevins, J. R. (Toxteth)	Cunningham, Knox	Grant Rt. Hon. W. (Woodside)
Biggs-Davison, J. A,	Currie, G. B. H.	Green, A.
Bingham, R. M.	Dance, J. C. G.	Gresham Cooke, R.
Birch, Rt. Hon. Nigel	Davies, Rt. Hn. Clement(Montgomery)	Grimond, J.
Bishop, F. P.	D'Avigdor-Goldsmid, Sir Henry	Grosvenor, Lt.-Col. R. G.
Black, Sir Cyril	de Ferranti, Basil	Gurden, Harold
Body, R. F.	Doughty, C. J. A.	Hall, John (Wycombe)
Bonham Carter, Mark	du Cann, E. D. L.	Hare, Rt. Hon. J. H.
Bowen, E. R. (Cardigan)	Dugdale, Rt. Hn. Sir T. (Richmond)	Harris, Reader (Heston)
Boyd-Carpenter, Rt. Hon. J. A.	Duncan, Sir James	Harrison, A. B. C. (Maldon)
Boyle, Sir Edward	Eden, J. B. (Bournemouth, West)	Harrison, Col. J. H. (Eye)
Braine, B. R.	Emmet. Hon. Mrs. Evelyn	Harvey, John (Walthamstow, E.)
Brewis, John	Errington, Sir Eric	Heald, Rt. Hon. Sir Lionel

Heath, Rt. Hon. E. R. G.	Maitland, Cdr. J. F. W.(Horncastle)	Shepherd, William
Henderson-Stewart, Sir James	Maitland, Hon. Patrick (Lanark)	Simon, J. E. S. (Middlesbrough, W.)
Hicks-Beach, Maj. W. W.	Markham, Major Sir Frank	Spearman, Sir Alexander
Hill, Mrs. E. (Wythenshawe)	Marlowe, A. A. H.	Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Hill, John (S. Norfolk)	Marples, Rt. Hon. A. E.	Stanley, Capt. Hon. Richard
Hinchingbrooke, Viscount	Marshall, Douglas	Stevens, Geoffrey
Hirst, Geoffrey	Mathew, R.	Steward, Harold (Stockport, S.)
Holland-Martin, C. J.	Mawby, R. L.	Steward, Sir William (Woolwich, W.)
Hornby, R. P	Maydon, Lt.-Comdr. S. L. C.	Stoddart-Scott, Col. Sir Malcolm
Horobin, Sir Ian	Medlicott, Sir Frank	Stuart, Rt. Hon. James (Moray)
Horsbrugh, Rt. Hon. Dame Florence	Molson, Rt. Hon. Hugh	Studholme, Sir Henry
Howard, John (Test)	Morrison, John (Salisbury)	Summers, Sir Spencer
Hughes Hallett, Vice-Admiral J.	Nairn, D. L. S.	Taylor, Sir Charles (Eastbourne)
Hurd, Sir Anthony	Neave, Airey	Taylor, William (Bradford, N.)
Hutchison, Michael Clark(E'b'gh, S.)	Nicholls, Harmar	Teeling, W.
Hylton-Foster, Rt. Hon. Sir Harry	Nicholson, Sir Godfrey (Farnham)	Temple, John M.
Iremonger, T. L.	Nicolson, N. (B'n'm'th, E. & Chr'ch)	Thomas, Leslie (Canterbury)
Jenkins, Robert (Dulwich)	Noble, Michael (Argyll)	Thorneycroft, Rt. Hon. P.
Jennings, Sir Roland (Hallam)	Nugent, Richard	Thornton-Kemsley, Sir Colin
Johnson, Eric (Blackleg)	Oakshott, H. D.	Turner, H. F. L.
Keegan, D.	Ormsby-Gore, Rt. Hon. W. D.	Turton, Rt. Hon. R. H.
Kerby, Capt. H. B.	Osborne, C.	Tweedsmuir, Lady
Kerr, Sir Hamilton	Page, R. G.	Vane, W. M. F.
Kirk, P. M.	Pannell, N. A. (Kirkdale)	Vaughan-Morgan, J. K.
Lambton, Viscount	Partridge, E.	Vickers, Miss Joan
Lancaster, Col. C. G.	Peel, W. 3.	Vosper, Rt. Hon. D. F.
Langford-Holt, J. A.	Peyton, J. W. W.	Wakefield, Edward (Derbyshire, W.)
Leavey, J. A.	Pickthorn, Sir Kenneth	Wakefield, Sir Wavell (St.M'lebone)
Leburn, W. G.	Pike, Miss Mervyn	Walker-Smith, Rt. Hon. Derek
Legge-Bourke, Maj. E. A. H.	Pilkington, Capt. R. A.	Wall, Patrick
Legh, Hon. Peter (Petersfield)	Pitman, I. J.	Ward, Rt. Hon. G. R (Worcester)
Lindsay, Hon. James (Devon, N.)	Pott, H. P.	Ward, Dame Irene (Tynemouth)
Lindsay, Martin (Solihull)	Powell, J. Enoch	Watkinson, Rt. Hon. Harold
Linstead, Sir H. N.	Price, David (Eastlelgh)	Webbe, Sir H.
Lloyd, Maj. Sir Guy (Renfrew, E.)	Prior-Palmer, Brig. 0. L.	Webster, David
Longden, Gilbert	Ramden, J. E.	Williams, Paul (Sunderland, S.)
Loveys, Walter H.	Redmayne, M.	Williams, R. Dudley (Exeter)
Low, Rt. Hon. Sir Toby	Rees-Davies, W. R.	Wills, Sir Gerald (Bridgwater)
Lucas, Sir Jocelyn (Portsmouth, S.)	Remnant, Hon. P.	Wilson, Geoffrey (Truro)
Lucas, P. B.(Brentford & Chiswick)	Ridsdale, J. E.	Woollam, John Victor
Lucas-Tooth, Sir Hugh	Robinson, Sir Roland (Blackpool, S.)	Yates, William (The Wrekin)
Macdonald, Sir Peter	Roper, Sir Harold
McLaughlin, Mrs. P.	Ropner, Col. Sir Leonard	TELLERS FOR THE NOES:
Macleod, Rt. Hn. lain (Enfield, W.)	Russell, R. S.	Mr. Hughes-Young and
Macmillan, Rt. Hn. Harold(Bromley)	Sharpies, R. C.	Mr. Whitelaw.

Mr. Douglas Jay (Battersea, North)

I beg to move, in page 14, line 27, at the end to insert: (4) In subsection (1A) (appropriate amounts for child relief) of section two hundred and twelve of the Income Tax Act, 1952, references to one hundred and seventy-five pounds, one hundred and fifty pounds and one hundred and twenty-five pounds shall be substituted respectively for references to one hundred and fifty pounds, one hundred and twenty-five pounds and one hundred pounds (indicating the amount of the relief at various ages of the child).

The Chairman

With this Amendment I think we can discuss the new Clause "Children", on page 2290 of the Notice Paper, in the name of the hon. and gallant Member for Cheltenham (Major Hicks Beach).

Mr. Jay

This Amendment has the simple purpose of enlarging the Income Tax child allowance at all the three stages into which it is now divided. I have often moved similar Amendments before, and have often declared an interest in them. The interest is so widely shared that it is hardly worth declaring, but, on the other hand, the Chancellor of the Exchequer, if he were here, would be a standing proof that it is not universally shared, and therefore I mention the point.

This Amendment to raise the child allowance and thereby give further Income Tax reliefs to families—which is one of the alternatives Which we would like to have seen adopted to the straight, sweeping reduction in the standard rate of tax—has many merits Ito recommend it. One is that it is extremely simple. Everybody can understand What is involved in having children, and everybody can understand what a relief for each extra dependent child in the family means. Whether or not we are fully conversant with dividend stripping, bond-washing, or even some of the more complicated Income Tax allowances, we can all understand what is proposed here.

The second great merit of this proposal is that, on grounds of equity, this form of relief has more to recommend it than almost any other form of relief from Income Tax one can propose. I will not argue this case on the ground of incentives, which are no doubt important in their own way. We agree that they are important, but we also think that the equity of the tax is important too, and if we look to the argument of equity, the case for the child relief is extremely strong.

Many of us, looking at Income Tax, feel inclined to argue on equity grounds that it is about time a large number of those with the smallest incomes were swept out of tax liability altogether. There are several million people in this country paying very small amounts of Income Tax which do not add up to a large total. I believe it is true that in the case of the 5 million or 6 million people, who are one-third of the Income Tax payers, the total tax they pay is £50 million at the outside, and the total Income Tax yield is £2,000 million or more. Therefore, one is inclined to sweep away the 5 million by what the plain man would call raising the exemption limit.

Although we could devise a method for cutting out those paying the smallest amount of tax, that proposal, though it has something to be said for it, is open to criticism in that a high proportion of those individuals are single juveniles who, though their incomes are low, nevertheless are not the people most in need, since they do not have anybody else to support out of their incomes. Therefore, purely on grounds of equity, that argument is not as attractive as it looks compared with this one, and the case for the child allowance is even stronger.

The second ground on which I would justify it from the point of view of equity is the following. I believe it is still true—the Financial Secretary can tell me if I am wrong, because I have not got the exact figures—that if we make a comparison in this way, and if we make a correction for the decline in the value of money, we find that the child allowance in any of the three hands is actually less today than it was before the wartime changes in Income Tax were made. Indeed, this is just one more proof that in some respects Income Tax today is more regressive than it was in the years immediately before the war.

The simplest—one might say the crudest—but to me the valid test of the strange way in which our Income Tax system, in spite of all the allowances, still bears hardly on the family, is to make the straight calculation of what is the income per head after tax in each family. After all, what determines the standard of living, broadly speaking, is the income left after tax, divided by the number of the people in the family.

I am far from suggesting that in this country we should base our Income Tax solely on that consideration, taking each individual separately, but it is always worth remembering that, in principle, this is the system in force in France. It was one of the most interesting points made by the Royal Commission on Taxation that in France they do not take the income of the earner of the household and consider this as one unit, with certain small adjustments. They divide the income by three or five or some other figure for the individuals in the family and then charge Income Tax approximately on the remaining figure. I think it is called the quotient system.

I am not suggesting that we should do that here, but I would draw the attention of the Financial Secretary to the way in which the figures work out under our system. If we take, on the one hand, the single man or woman who is earning and solely supporting himself or herself, and, on the other, the man with a wife and three children, and if we calculate in each case what is the income per head after tax in each of those families, we reach what always seems to me a rather surprising result. I find that the ratio is about the same, in spite of changes made in intervening years, as it was a few years before, whether we take the level of £10, £20 or £30 a week. There may be some mathematical reason about which I do not know, but it works out the same. We find that the single man is four and a quarter times better off than the family of five.

I have tried to allow for family allowances, though my calculation is fairly simple, but at all those levels the income of a single man is about four and a quarter times higher than that of the family. That is a remarkable difference. It means that to a great extent inequalities in the standard of living are more dependent on the number of dependants per earner in a household than they are on differences between gross income.

6.30 p.m.

It may be said that this is all very obvious and that if people have large families and have a number of dependants to support, they will naturally be very much worse off than if they were single earners who had no such responsibilities. That is true, but it does not dispose of the matter. We are, after all, looking at this from the point of view of equality in taxation. We are not just trying to discover how this rather curious ratio comes about.

If one looks at it from the point of view of equity and ethics, one might well say that if a man and woman choose to have so many children, that is purely their responsibility, that the results must fall on them and that they cannot try to push the responsibility off on the rest of the community by wanting huge taxation reliefs. At the same time, however, one has to remember that the resulting inequalities of the lowering of the standard of living fall not merely on the earner but on the children in the family. This is one case where by no possible argument can we say that a moral responsibility rests on the other members of the family, who are, clearly, not accountable for the household in which they happen to live.

Therefore, I do not think that one can just brush the calculation aside and say that no doubt everybody in a large family is much worse off than if they were in a small one and that that is their fault and responsibility. It is rather surprising that, in spite of our family allowances and system of child allowances for Income Tax, which at first sight look considerable and generous, there is this extraordinary difference between the single earner and the family with two, three or four children if one works out the simple calculation of the income per head after taxation.

For all these reasons—this is a much simpler subject than some even though the arithmetic is not wholly simple—I think that among the possible allowances—if we are looking at equity and at adjusting our tax system to capacity to pay, which, in a sense, is the oldest and most traditional test of a good taxation system, as calculated by the actual standards of living of the people affected—there remains an extremely strong case year by year for fairly generous relief by way of this tax allowance.

I say this to the Financial Secretary and the Economic Secretary not in the confident hope that they will immediately accept my argument and the Amendment today, but because I strongly believe that, not just this year but year by year, this is an extremely important element in our whole direct taxation system. If they do not, by some miraculous feat of intelligence, accept my Amendment today, and if by some even more miraculous stroke of ill luck they are still here in the future, I hope that they will keep these arguments firmly in mind.

Dr. Horace King (Southampton, Itchen)

I want to put to the Committee what is perhaps a new point in the long discussion that we have had on this matter from year to year. I do so from my intimate knowledge of one learned profession which is affected by the point that I shall try to make.

We are moving steadily towards equal pay for men and women. Within two or three years in most of the professions in this country, and, indeed, eventually in all occupations, men will be paid the same as women. One of the old arguments against equal pay—I think that it was a false argument—was that a married man was much worse off than a single woman earning the same money. The fallacy in that is that the real discrepancy on which the opponents were basing their case is the discrepancy which still exists between the standard of living of the married man, especially the married man with children, and the single person, of whatever sex, earning the same salary. It is that economic difference, that difference in the standard of living, that the Amendment seeks to improve a little.

I believe that the fact that the professions are moving towards equality of pay as between men and women and that in the teaching profession, my own profession, year by year more than 100,000 women are receiving equal pay, means that much more notice will be taken by the married folk of the country of the discrepancy that exists between them and the single person earning exactly the same money. I know, for example, that many members of the teaching profession are suggesting that there should be a family allowance as part of the salary scale. University professors already have it. I do not think that that is the real solution to the problem. The solution is not one to be tackled piecemeal by separate professions. The discrepancy is national. It is one to be tackled by the whole country, because the sense of injustice as between the married person and the single person runs through the whole of the national system. It could easily revive sex-antagonism on a fallacious basis.

I find, for instance, that those who resist wage and salary increases very often base their resistance on the standard of living that a certain salary or wage represents for the single earner. All hon. Members, however, will know that such a salary or wage does not represent the same standard of living for the married man, especially the married man with children.

The Royal Commission on the Taxation of Profits and Income stated the issue clearly for all time in its second Report. Speaking of the married man with two children, it said: The married man's income has to support four people and there is nothing manifestly unfair in attributing to it the same taxable capacity as that of a single man supporting himself on about one-third of the income. It is towards that conception that we have to move as we build up the reliefs in Income Tax for the married person with children.

I most sincerely congratulate the present Government and the Socialist Government which preceded it on what they have done during the last few years. In 1950–51, the allowance was £60 for all children. In 1951–52, it was raised to £70; in 1952–53, to £85; in 1955–56, to £100; and in 1957–58 it was raised to the differentiated pattern, for children of various ages, referred to in the Amendment, of £100, £125 and £150. The Government have also made a similar, but not quite so significant, increase in the Income Tax allowance for a man's wife, but I still do not believe that we are doing enough in the fiscal field for the family man. I do not believe that we do enough in taxation relief for the family, and the family is the backbone of British life.

It is common knowledge to every father or grandfather in the Committee that children are costing more year by year. This results not merely from the rise in the cost of living, but from the rise in the demands of the young population for all kinds of things which we did not have as children. If the Chancellor could afford to make the concessions that we seek, they would represent in a year perhaps the cost of clothing or of providing boots for the children, and this would at any rate narrow to some extent, justifiably I believe, the gap in the standard of living between the single person and the married person doing exactly the same job and receiving exactly the same income but having a widely differing standard of living which they manage to obtain from that income. I hope that the Chancellor will give serious consideration to our proposal.

Viscount Hinchingbrooke

I understand that with this Amendment there is being taken a new Clause in the name of my hon. and gallant Friend the Member for Cheltenham (Major Hicks Beach). However, none of my hon. Friends who put their names to that new Clause is in the Chamber. I do not know the machinery in these affairs. It is a little unfortunate suddenly to jump into the middle of a new Clause. There is sometimes provision for placing Schedules against related Amendments on the Notice Paper so that we at least know that they are to be taken together.

I suppose that even if hon. Members think that the new Clauses are not to be taken until two or three weeks from now, they should still go to the Chair and say, "Please, Sir Charles, by any chance is my Clause being taken today with any Amendment?" Now that we have Clauses and Amendments numbered, we might look into the whole machinery whereby hon. Members are advised that their Clauses are to be taken with certain Amendments. I hope that that will be done.

I doubt very much whether the Government will accept this year what the Amendment suggests. There have been many other concessions and in recent years, notably under my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft), there have been changes in the amount of children's allowances. We have been progressing steadily and satisfactorily towards a situation in which people with middle and moderate incomes are enabled to receive such allowances for marriage and children that they are carried out of the taxation ranges altogether.

For example, anyone who is married with two children over 16 and is earning a salary of £900 or less does not pay any tax. Looked at starkly like that, it is staggering to see what happened in the years before and immediately after the war, when some of these benefits had not been conferred. We should rejoice in that and if we had time to study the matter I have no doubt that we would find that we could congratulate right hon. and hon. Gentlemen opposite as much as ourselves.

Nevertheless, there are still very large gaps. There is a very interesting, if alarming, table on page 83 of the second Report of the Royal Commission on the Taxation of Profits and Income, which may not be accurate now since it was for the taxation scales of 1953–54. However, it shows the discrepancy in the weight of taxation at that time and before the war at various levels of income. This table also refers to married persons with two children.

According to those figures, a family of that kind, with an income of £800 a year, at that time was paying thirteen and a half times as much Income Tax as it was in 1928–39. Of course, the Income Tax paid in 1938–39 was not very large, and one cannot go lower down the scale and talk about incomes of £750 or £700 or less without making the argument absurd and getting into infinite scales. Families with incomes of £850 paid eight times as much as pre-war; incomes of £900, six and a half times as much; and of £950 five times as much.

It then goes sharply down so that incomes of £1,500 and above paid as much again as before the war. That rate of as much again runs up to the top incomes. It is round about the class of persons earning about £800 to £1,200 that the tremendous differential of taxation today compared with taxation before the war is applied. It is towards that class that the Government should direct their closest attention next year.

6.45 p.m.

I hope that we shall get away from this comparatively unsatisfactory system of allowances and get to a proportionate basis. For instance, if we said that one-tenth of a person's income, irrespective of the size of the income, so that it would operate throughout Surtax, should be allowed per child, or some ratio of that kind, we should do far more justice to those people who most deserve justice, namely, the class to which I have just referred, and we should not militate against what we have done for people in the lower income groups.

Mr. Jay

The noble Lord will realise that in a sense the present system is proportionate since those people with higher incomes who get the larger reliefs have to pay more.

Viscount Hinchingbrooke

But that is infinitesimal. I should have thought that the right non. Gentleman himself, with his level of salary, received a very unsatisfactory allowance in respect of his children, two of whom, I know, are at university. The amount of child allowance at certain levels of income is out of all proportion to the responsibilities discharged by the parents.

It may be that this is a simple party issue, but I do not believe that there is any point in remitting it to a Royal Commission or other neutral body, because we should receive only a neutral answer. The Royal Commission did not dare to make what I and, I am sure, my right hon. Friend consider the real changes which should be made in this aspect of taxation. I hope that, in spite of that, the Government, which will be the same Government, will have the courage to do something of the kind next year.

Mr. J. Grimond (Orkney and Shetland)

We have had three reasonable and well reasoned speeches in favour of the principle behind the Amendment, which should commend itself in principle to the Government as well as to the Committee since it recognises that relief should be given to families. We have had a very welcome reduction in Income Tax this year and progressively over the years we have built up a system of reliefs.

I do not want to go over the arguments for and against this suggestion, which were eloquently deployed by the right hon. Member for Battersea, North (Mr. Jay), nor do I want to reiterate the extremely important argument of the hon. Member for Southampton, Itchen (Dr. King), which will be extremely important to the teaching profession as equal pay becomes more general throughout the system.

There are arguments against this proposal. It might be said that everyone is entitled not to have a family and that to have a family is enjoyable and that one must he prepared to bear some extra cost because of it. Nevertheless, it is not a form of life which we should single out for high taxation. In spite of the concessions, do not the Government agree that the position of the family man, at any rate in certain trades, is worse than it was? It is a complicated matter, because there are alterations in the value of money and allowances and the whole tendency in the economy as it gets richer is for people to move into higher brackets of income so that what appears to be a substantial reduction in tax in real terms may turn out to be rather different from what it first appears to be.

Having made substantial concessions, I think that the Government will be unable to agree to accept the Amendment this year, but I add my plea to those who have asked the Government to accept it in principle. I should appreciate a lucid statement from the Government on the tax position of the family man and whether it is true, as I suspect, that the figures given by the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) are correct in indicating that in certain classes the family is still taxed unduly heavily. Will the Government say whether they favour themselves or their successors reviewing the position?

Major W. Hicks Beach (Cheltenham)

I am happy to hear that the new Clause, "Children", standing in my name— Section two hundred and twelve of the Income Tax Act, 1952, as amended by section twelve of the Finance Act, 1957, shall be read and have effect as if in subsection (4) thereof (which subsection limits by reference to the child's income the relief allowed in respect of the child) in place of the words "income exceeding one hundred pounds a year" there were substituted the words "annual income exceeding the appropriate amount for the child"— is being discussed with this Amendment.

May I briefly explain the purpose of the new Clause? The present position under the Income Tax Acts is that where a child is a beneficiary under a settlement the parent of that child is entitled to claim the ordinary child allowance, which we know is now £150 a year, provided that the income from the settlement in which the child has an interest is not more than £120 a year. Since the war children's allowances have steadily increased. The amount which a child is entitled to receive under a settlement without the parent losing the allowance has not been kept in line with the child's allowance.

I should have thought that that was a gross and probably quite unintentional anomaly on the part of the Inland Revenue. The purpose of my new Clause is a simple one. It is to ensure that the child allowance as such should be tied to the amount to which a child is entitled from an outside income under a settlement and that the parent should not lose the child allowance. Since the war all the evidence shows that the child allowance and the independent income allowance of the child has been tied to the allowance which the parents can claim. If the hon. and learned Gentleman studies this matter, I think he will accept my new Clause as bringing into line what has, until the last four years, been the policy of Governments of both parties, and which is in conformity with the general taxation policy.

Mr. Simon

This has been an extremely interesting debate which has ranged pretty wide into the social purpose that lies behind this particular relief. If he will forgive me, I do not think I will follow the right hon. Gentleman the Member for Battersea, North (Mr. Jay) into the French tax code, which is based on a completely different property relationship between the spouses.

It is clear that there is always a discrepancy between the standard of living of the single man and the married man without a family on the one hand, and those who have a large family of young children to bring up on the other. That has always been so. Hon. Members of the Committee will call to mind Trollope's juxtaposition of the Warden on the one hand and the Rev. Mr. Quiverful on the other. That is a feature that has gone on throughout social history. Nor indeed is it the purpose of this allowance to correct that. It is to go some way towards correcting it, but none of these reliefs are intended to indemnify the taxpayer against the cost in respect of which they are granted. It is to some extent to temper the wind to the shorn lamb—to take us back again, as I said earlier, repeating the Royal Commission, to the system of graduation.

This relief takes its place with the various social payments like the family allowances and the cognisance which the National Assistance Board takes of family circumstances. That is not to say that this relief has not got an important social or fiscal purpose, and when the hon. Member for Orkney and Shetland (Mr. Grimond) asks me whether the Government are committed to this in principle, I think the answer is clearly "Yes", for the reasons very fairly given by the hon. Member for Southampton, Itchen (Dr. King). That is shown by the action of the Government.

I cannot advise the Committee to accept the Amendment for two main reasons. First, this allowance has been pretty generously treated in recent years. It was increased in the 1951 Socialist Budget from £60 to £70. It is true that that was concomitant with an increase in the standard rate of Income Tax, but it was nevertheless a conscious differentiation in favour of the family man.

The allowance has been increased three times under Tory Governments. The first time it was increased from £70 to £85 in 1952. Then came the observations of the Royal Commission to which the hon. Member for Itchen and my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke) drew attention. I think it was partly in consequence of those observations that the allowance was increased to £100 in 1955. In 1957 it was increased again by my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft)—to £150 in the case of children over 16—to take account of the greater expense of maintaining the older dependent children.

Those are substantial increases over a comparatively short period of years. As my right hon. Friend the Chancellor reminded the Committee, it amounts to an increase of over 40 per cent. in the case of the allowance for children under 11 years of age; 80 per cent. for children between 11 and 16; and more than double for children over 16.

The important thing to remember, and it is not always kept in sight by commentators on our fiscal system, is that an allowance improved like that enures not only in the year that it is granted, but from year to year. In approving Clause 14, the general Clause imposing the new rates of Income Tax, the Committee has approved that there shall be those increased benefits which were conferred in 1951, 1952, 1955 and 1957, all of them continuing again to the benefit of the family man in the coming Income Tax year.

The second, and conclusive, reason why it would be wrong for the Committee to accept the Amendment is the cost. It costs £42 million. The Committee has already approved the reduction in the standard rate of Income Tax, and the reduction in the reduced rates must necessarily follow. It seems to me that nobody in any part of the Committee could really contemplate adding £42 million to the sum which should be borrowed this year. It must necessarily follow that the Committee should disapprove the Amendment, although I understand very well the reasons why it has been put forward from the benches opposite.

7.0 p.m.

I propose now to refer to the new Clause in the name of my hon. and gallant Friend the Member for Cheltenham (Major Hicks Beach). I think I may deal with it quite briefly. My first point is that there is no necessary equivalence between the income limit and the amount of the child's allowance. That point was made by my predecessor in 1957 and I need not repeat the arguments which he gave at length. Secondly, this allowance is intended for those with dependent children, and it has always been recognised that there must come a point at which it is excessive both to give the parent an allowance for his child and to give the child the ordinary single person's allowance against his own income. The two allowances together means that there is in the case of a child, that is, a child under 11, an income of £200 which is exempt—£100 of the child's income and £100 of allowance. Of course, if the child is older, the amount will be different.

We have to compare that £200 of exempt income with the exempt income of £180 for a single person under 65 years of age. Therefore, again we come back to the situation that it would be inequitable to move one of these rates without a general increase in the personal allowances; and it seems to me that the right time to review the point made so cogently and forcibly by my hon. and gallant Friend would be when the personal allowances generally are being reviewed.

There is one further reason which I am bound to mention. It is that his proposal would cost £2 million in a full year. That is not a sum that my right hon. Friend could find after the very substantial remissions which he has made. For those reasons, I must ask the Committee to vote against the Amendment, if the matter is taken to a Division, and I hope that my hon. and gallant Friend will ask leave to withdraw his New Clause.

Mr. Ede (South Shields)

We have had a very interesting discussion on this Amendment. Every speaker has devoted some part of his argument to how this form of taxation may be used to secure some kind of social justice which is rather more easily recognisable than the present system. I was particularly impressed by the comparisons given by the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) illustrating the amount paid in taxation in some cases today and what was paid in the years before the war.

When discussing this matter with younger friends of mine who are now bringing up families, I find is very difficult to ascertain exactly how the burden of bringing up a family today compares with the situation before the war. Of course, I can go back even further than that in my own recollection. I can recall the way in which I was brought up and the apparent cost of bringing up a family in those days. I was the eldest of a family of four, and the youngest was only three years and six months younger that I was. We were the kind of family in which the members were happy only if they worked in with the family. In many ways I think that where the children are so nearly of the same age that they are naturally companionable, if they are of that frame of mind, is the ideal form of family.

It would be interesting to have some investigation into the problems raised by the noble Lord. There is no doubt that the standard of expectation of a child has altered since the remote time when one's weekly allowance could be assessed in the form of ginger beer. It would be interesting to compare the situation then with what happens today.

When I was Home Secretary I was once consulted about the allowances to be paid to children who were under the control of various bodies over which I had some supervision. If we take the ginger beer standards, a bottle of ginger beer in my day cost 1d. But try to get a battle of ginger beer today for 1d. So far as the child is concerned, the cost of living appears to have increased by 500, 600 or 700 per cent. One does not wish to carry these 'analogies too far, but undoubtedly a problem confronts parents in receipt of a reasonable income of, say, £1,000 or £1,200 a year, who are trying to bring up three or four children reasonably well without being extravagant. In the light of the figures and comparisons brought to our notice today by the noble Lord the Member for Dorset, South, I hope that in future discussion's on this matter we shall be able to compare conditions in pre-war days with those prevailing today.

One of the things which always astonishes me is the high proportion of single English women, compared with other members of the English community, that one meets if one happens to be enjoying a holiday at some foreign resort. It seems to indicate that the standard of living which may be enjoyed in this day and age by single people with no family obligations cannot be experienced by parents confronted with the task of bringing up a family.

I regret that these proposals will cost too much to implement. I find some consolation in the thought that as the £2 million which represents the cost of implementing the proposals of the hon. and gallant Member for Cheltenham (Major Hicks Beach) would ruin this Budget, the eminently reasonable proposals of my right hon. Friend the Member for Battersea, North (Mr. Jay), which would cost £42 million, must be regarded as a wrecking Amendment. I am sure that no one would wish to wreck the Budget on such a fine afternoon as this.

Mr. Jay

I thought that the Financial Secretary was a little unsympathetic to the various arguments which have been advanced and that he used one or two rather curious arguments. My right hon. Friend the Member for South Shields (Mr. Ede) has spoken of the comparisons between present-day conditions and prewar conditions, as did the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke). I asked the Financial Secretary whether the child allowance today, after all these increases which the hon. and learned Gentleman rightly enumerated, was as high as it would have to be in order to command the same purchasing power and to allow for the fall in the value of money.

Mr. Simon

I need hardly say that it was not an intentional discourtesy on my part that I did not answer the question of the right hon. Gentleman. The reason was that I have not the figures available.

Mr. Jay

I was not reproaching the Financial Secretary. I was about to say that I have myself made the calculation. Apparently the hon. and learned Gentleman cannot contradict me, and so I will give him the result of my calculations.

According to my researches, the child allowance before the war was £60. During the war it went down and it has now risen by three bands—£100, £125 and £150. I do not wish to commit myself over the cost of ginger beer, which was mentioned by my right hon. Friend the Member for South Shields, but it is usual in such estimates to multiply by three in order to allow for the fall in the value of money since 1938. Therefore, if there has not been an actual deduction in this allowance, it should stand at about £180 today.

In 1954, the Royal Commission recommended a figure of £160. In fact the figure has been £100, £125, and £150 so that, in effect, in real terms, the allowance is lower than before the war. That is also relevant to what was said by my hon. Friend the Member for Southampton, Itchen (Dr. King). We are moving into a period when equal pay will become much more prevalent both in public and private service. That is, indeed, as he rightly said, an argument both for increasing family allowances and the child allowances for Income Tax purposes. On those grounds alone it would seem that these allowances should be larger in real terms and not, as they are, smaller than pre-war.

The Financial Secretary used one rather extraordinary argument. He said that the reliefs given by way of child allowances in previous years were being continued and that in voting Clause 12 we should, so to speak, be re-enacting them. I think we all realise that, but it is rather extraordinary that in refusing to give one relief the Financial Secretary should take credit for not taking back another relief. We do not accept that the Financial Secretary, in refusing to increase the child allowance, can take credit for continuing those allowances. I must remind him that in this Budget greater reliefs have been given to the single person than to the earner with dependants and that in each case the more dependants he has the less relief he gets from the Budget. I must say that as the Financial Secretary actually claims credit for what has been done in the Budget.

The Financial Secretary to the Treasury finally said, "Of course, these allowances are not intended to restore the situation as it would be if the taxpayer had no children at all." I am aware of that. I remember saying that to my own father in 1920, when he was complaining about the inadequacy of the child allowance. The allowances are merely intended to go some way towards bridging the gap. Our case is that they do not go far enough. We do not argue that a man with a wife and three children should be exactly as well off after tax per head as if he were a single earner.

If, as a result of all our child allowances and fiscal arrangements today, the single man were twice as well off as the man with a wife and three children, that might be reasonable, but he is more than four times as well off. I think that the figure is something like four and a quarter times. If we had no taxation system at all, the single man might be five times as well off, but the whole effect of Income Tax and child allowances makes him four and a quarter times better off. That seems to us to go very little way indeed. Therefore, I hope that the Committee, in order to point this argument, will divide in favour of the Amendment.

Question put, That those words be there inserted:—

The Committee divided: Ayes 177, Noes 214.

Division No. 110.]	AYES	[7.14 p.m
Ainsley, J. W.	Hall, Rt. Hon. Glenvil (Caine Valley)	Parker, J.
Albu, A. H.	Hamilton, W. W.	Paton, John
Allaun, Frank (Salford, E.)	Hannan, W.	Pearson, A.
Allen, Arthur (Bosworth)	Hastings, S.	Peart, T. F.
Allen, Scholefield (Crewe)	Hayman, F. H.	Pentland, N.
Awhery, S. S.	Healey, Denis	Plummer, Sir Leslie
Bacon, Miss Alice	Henderson, Rt. Hn. A. (Rwly Regis)	Popplewell, E.
Bence, C. R. (Dunbartonshire, E.)	Herbison, Miss M.	Prentice, R. E.
Benn, fin. Wedgwood (Bristol, S.E.)	Hewitson, Capt. M.	Probert, A. R.
Benson, Sir George	Hobson, C. R. (Keighley)	Pursey, Cmdr. H.
Blackburn, F.	Holman, P.	Rankin, John
Blenkinsop, A.	Houghton, Douglas	Redhead, E. C.
Blyton, W. R.	Hughes, Cledwyn (Anglesey)	Reeves, J.
Boardman, H.	Hughes, Enlrya (S. Ayrshire)	Reid, William
Bottomley, Rt. Hon. A. G.	Hughes, Hector (Aberdeen, N.)	Reynolds, G. W.
Bowden, H. W. (Leicester, S.W.)	Hunter, A. E.	Rhodes, H.
Bowles, F. G.	Hynd, H. (Accrington)	Robens, Rt. Hon. A.
Brockway, A. F.	Hynd, J. B. (Attercliffe)	Roberts, Goronwy (Caernarvon)
Broughton, Dr. A. D. D.	Irving, Sydney (Dartford)	Robinson, Kenneth (St. Pancras, N.)
Brown, Rt. Hon. George (Belper)	Janner, B.	Rogers, George (Kensington, N.)
Brown, Thomas (Ince)	Jay, Rt. Hon. D. P. T.	Ross, William
Burke, W. A.	Jeger, George (Goole)	Royle, C.
Burton, Miss F. E.	Jeger, Mrs. Lena(Holbn & St. Pncs, S.)	Shinwell, Rt. Hon. E.
Butler, Herbert (Hackney, C.)	Jones, Rt. Hn. A. Creech(Wakefield)	Short, E. W.
Carmichael, J.	Jones, Jack (Rotherham)	Silverman, Julius (Aston)
Castle, Mrs. B. A.	Jones, J. Idwal (Wrexham)	Silverman, Sydney (Nelson)
Champion, A. J.	Kenyon, C.	Simmons, C. J. (Brlerley Hill)
Chapman, W. D.	Key, Rt. Hon. C. W.	Slater, J. (Sedgefield)
Chetwynd, G. R.	King, Dr. H. M.	Smith, Ellis (Stoke, S.)
Coldrick, W.	Lawson, G. M.	Snow, J. W.
Collick, P. H. (Birkenhead)	Lee, Frederick (Newton)	Sorensen, R. W.
Corbet, Mrs. Freda	Lee, Miss Jennie (Cannock)	Spriggs, Leslie
Craddock, George (Bradford, S.)	Lindgren, G. S.	Stones, W. (Consett)
Cronin, J. D.	Lipton, Marcus	Strauss, Rt. Hon. George (Vauxhall)
Crossman, R. H. S.	Mahon, Dr. J. Dickson	Summerskill, Rt. Hon. E.
Davies, Ernest (Enfield, E.)	McAllister, Mrs. Mary	Sylvester, G. 0.
Davies, Harold (Leek)	McInnes, J.	Taylor, Bernard (Mansfield)
Davies, Stephen (Merthyr)	McKay, John (Wallsend)	Taylor, John (West Lothian)
Deer, G.	McLeavy, Frank	Thomas, lorwerth (Rhondda, W.)
Delargy, H. J.	MacPherson, Malcolm (Stirling)	Thomson, George (Dundee, E.)
Diamond, John	Mahon, Simon	Thornton, E.
Ede, Rt. Hon. J. C.	Mann, Mrs. Jean	Tourney, F.
Edelman, M.	Marquand, Rt. Hon. H. A.	Vlant, S. P.
Edwards, Rt. Hon. John (Brighouse)	Mason, Roy	Watkins, T. E.
Edwards, Rt. Hon. Ness (Caerphilly)	Mayhew, C. P.	Weitzman, D.
Edwards, W. J. (Stepney)	Monslow, W.	Wells, William (Walsall, N.)
Evans, Albert (Islington, S.W.)	Moody, A. S.	W heeldon, W. E.
Fernyhough, E.	Morris, Percy (Swansea, W.)	White, Henry (Derbyshire, N.E.)
Fletcher, Eric	Mort, D. L.	Wilkins, W. A.
Forman, J. C.	Moss, R.	Willey, Frederick
Fraser, Thomas (Hamilton)	Moyle, A.	Williams, Rt. Hon. T. (Don Valley)
Gibson, C. W.	Mulley, F. W.	Willis, Eustace (Edinburgh, E.)
Gooch, E. G.	O'Brien, Sir Thomas	Wilson, Rt. Hon. Harold (Huyton)
Greenwood, Anthony	Oliver, G. H.	Winterbottom, Richard
Grenfell, Rt. Hon. D. R.	Oram, A. E.	Woof, R. E.
Grey, C. F.	Orbach, M.	Yates, V. (Ladywood)
Griffiths, David (Rother Valley)	Oswald, T.	Zilliacus, K.
Griffiths, Rt. Hon. James (Lianelly)	Owen, W. J.
Griffiths, William (Exchange)	Padley, W. E.	TELLERS FOR THE AYES:
Hale, Leslie	Palmer, A. M. F.	Mr. Holmes and Mr. J. T. Price.

NOES
Agnew, Sir Peter	Bishop, F. P.	Cordeaux, Lt.-Col. J. K.
Aitken, W. T.	Black, Sir Cyril	Corfield, F. V.
Amory, Rt. Hn. Heathcoat (Tiverton)	Body, R. F.	Craddock, Beresford (Spelthorne)
Anstruther-Gray, Major Sir William	Bowen, E. R. (Cardigan)	Crosthwaite Eyre, Col. 0. E.
Arbuthnot, John	Boyd-Carpenter, Rt. Hon. J. A.	Crowder, Sir John (Finchley)
Armstrong, C. W.	Boyle, Sir Edward	Cunningham, Knox
Ashton, H.	Brains, B. R.	Dance, J. C. G.
Atkins, H. E.	Brewia, John	Davles, Rt. Hon. Clement(Montgomery)
Baldock, Lt.-Cmdr. J. M.	Brooman-Whlte, R. C.	D'Avigdor-Goldsmid, Sir Henry
Baldwin, Sir Archer	Browne, J. Nixon (Craigton)	de Ferranti, Basil
Barber, Anthony	Burden, F. F. A.	Doughty, C. J. A.
Barlow, Sir John	Butler, Rt. Hn. R. A.(SaffronWalden)	du Cann, E. D. L.
Barter, John	Campbell, Sir David	Dugdale, Rt. Hn. Sir T. (Richmond)
Batsford, Brian	Carr, Robert	Duncan, Sir James
Beamish, Col. Tufton	Cary, Sir Robert	Eden, J. B. (Bournemouth, West)
Bell, Philip (Bolton, E.)	Channon, H. P. G.	Elliott, R.W.(Ne'castle upon Tyne, N.)
Bevins, J. R. (Toxteth)	Clarke, Brig. Terence (Portsmth, W.)	Emmet, Hon. Mrs. Evelyn
Biggs-Davison, J. A.	Cole, Norman	Errington, Sir Eric
Bingham, R. M.	Conant, Maj. Sir Roger	Erroll, F. J.
Birch, Rt. Hon. Nigel	Cooke, Robert	Fell, A.

Finlay, Graeme	Kerr, Sir Hamilton	Redmayne, M.
Fisher, Nigel	Kirk, P. M.	Rees-Davies, W. R.
Fletcher-Cooke, C.	Lambton, Viscount	Remnant, Hon. P.
Fort, R.	Lancaster, Col. C. G.	Ridsdale, J. E.
Freeth, Denzil	Langford-Holt, J. A	Robinson, Sir Roland(Blackpool, S.)
Galbraith, Hon. T. G. D.	Leavey, J. A.	Roper, Sir Harold
Gammans, Lady	Legge-Bourke, Maj. E. A. H.	Ropner, Col. Sir Leonard
George, J. C. (Pollok)	Legh, Hon. Peter (Petersfield)	Russell, R. S.
Glover, D.	Lindsay, Hon. James (Devon, N.)	Sharpies, R. C.
Glyn, Col. Richard H.	Lindsay, Martin (Solihull)	Shepherd, William
Godber, J. B.	Linstead, Sir H. N.	Simon, J. E. S. (Middlesbrough, W.)
Goodhart, Philip	Lloyd, Maj. Sir Guy (Renfrew, E.)	Spearman, Sir Alexander
Gough, C. F. H.	Longden, Gilbert	Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Gower, H. R.	Loveys, Walter H.	Stanley, Capt. Hon. Richard
Graham, Sir Fergus	Lucas, P. B. (Brentford & Chiswick)	Stevens, Geoffrey
Grant, Rt. Hon. W. (Woodside)	Lucas-Tooth, Sir Hugh	Steward, Harold (Stockport, S.)
Green, A.	Macdonald, Sir Peter	Steward, Sir William (Woolwich. W.)
Gresham Cooke, R.	McLaughlin, Mrs. P.	Stoddart-Scott, Col. Sir Malcolm
Grimond, J.	Maitland, Cdr.J. F. W. (Horncastle)	Studholme, Sir Henry
Grosvenor, Lt.-Col. R. G.	Markham, Major Sir Frank	Summers, Sir Spencer
Gurden, Harold	Marlowe, A. A. H.	Taylor, Sir Charles (Eastbourne)
Hall, John (Wycombe)	Marples, Rt. Hon. A. E.	Taylor, William (Bradford, N.)
Hare, Rt. Hon. J. H.	Marshall, Douglas	Teeling, W.
Harris, Reader (Heston)	Mathew, R.	Temple, John M.
Harrison, A. B. C. (Maldon)	Mawby, R. L.	Thomas, Leslie (Canterbury)
Harrison, Col. J. H. (Eye)	Maydon, Lt.-Comdr. S. L. C.	Thorneycroft, Rt. Hon. P.
Harvey, John (Walthamstow, E.)	Medlicott, Sir Frank	Turner, H. F. L.
Heald, Rt. Hon. Sir Lionel	Molson, Rt. Hon. Hugh	Turton, Rt. Hon. R. H.
Heath, Rt. Hon. E. R. G.	Morrison, John (Salisbury)	Tweedsmuir, Lady
Henderson Stewart, Sir James	Mott-Radclyffe, Sir Charles	Vane, W. M. F.
Hicks-Beach, Mar. W. W.	Nairn, D. L. S.	Vaughan-Morgan, J. K.
Hill, Mrs. E. (Wythenshawe)	Neave, Airey	Vickers, Miss Joan
Hill, John (S. Norfolk)	Nicholson, Sir Godfrey (Farnham)	Vosper, Rt. Hon. D. F.
Hinchingbrooke, Viscount	Nicolson, N.(B'n'm'th, E. & Chr'ch)	Wade, D. W.
Hirst, Geoffrey	Noble, Michael (Argyll)	Wakefield, Edward (Derbyshire, W.)
Holland-Martin, C. J.	Nugent, Richard	Walker-Smith, Rt. Hon. Derek
Holt, A. F.	Oakshott, H. D.	Wall, Patrick
Hornby, R. P.	Ormsby-Gore, Rt. Hon. W. D.	Ward, Rt. Hon. G. R. (Worcester)
Horobln, Sir Ian	Osborne, C.	Ward, Dame Irene (Tynemouth)
Horsbrugh, Rt. Hon. Dame Florence	Page, R. G.	Watkinson, Rt. Hon. Harold
Howard, John (Test)	Partridge, E.	Webbe, Sir H.
Hughes Hallett, Vice-Admiral J.	Peel, W. J.	Webster, David
Hughes-Young, M. H. C.	Peyton, J. W. W.	Whltelaw, W. S. I.
Hurd, Sir Anthony	Pickthorn, Sir Kenneth	Williams, Paul (Sunderland, S.)
Hutchison, Michael Clark(E'b'gh, S.)	Pike, Miss Mervyn	Williams, R. Dudley (Exeter)
Hyde, Montgomery	Pilkington, Capt. R. A.	Wills, Sir Gerald (Bridgwater)
Hylton-Foster, Rt. Hon. Sir Henry	Pitman, I. J.	Wilson, Geoffrey (Truro)
lremonger, T. L.	Pott, H. P.	Woollam, John Victor
Jenkins, Robert (Dulwich)	Powell, J. Enoch
Jennings, Sir Roland (Hallam)	Price, David (Eastleigh)
Johnson, Eric (Blackley)	Price, Henry (Lewisham, W.)	TELLERS FOR THE NOES:
Keegan, D.	Prior-Palmer, Brig. O. L.	Mr. Bryan and
Kerby, Capt. H. B.	Ramsden, J. E.	Mr. Chichester-Clark.

Amendment proposed: In page 14, line 27, at end insert:

(4) In sections two hundred and fourteen and two hundred and fifteen of the Income Tax Act, 1952 (which refer respectively to a person taking charge of widower's or widow's children or acting as his or her housekeeper, and to a relative taking charge of an unmarried person's young brother or sister), for the

references to sixty pounds (which indicate the amount of the relief in each case) there shall be substituted references to seventy-five pounds.—(Mr. H. Wilson.)

Question put, That those words be there inserted:—

The Committee divided: Ayes 175, Noes 213.

Division No. 111.]	AYES	[7.22 p.m.
Alnsley, J. W.	Brockway, A. F.	Craddock, George (Bradford, S.)
Albu, A. H.	Broughton, Dr. A. D. D.	Cronin, J. D.
Allaun, Frank (Salford, E.)	Brown, Rt. Hon. George (Belper)	Grossman, R. H. S.
Allen, Arthur (Bosworth)	Brown, Thomas (Ince)	Davies, Ernest (Enfield, E.)
Allen, Scholefteld (Crewe)	Burke, W. A,	Davies, Harold (Leek)
Awbery, S. S.	Burton, Miss F. E.	Davies, Stephen (Merthyr)
Bacon, Miss Alice	Butler, Herbert (Hackney, C.)	Deer, G.
Bence, C. R. (Dunbartonshire, E.)	Carmichael, J.	Delargy, H. J.
Benson, Sir George	Castle, Mrs. B. A.	Diamond, John
Blackburn, F.	Champion, A. J.	Ede, Rt. Hon. J. C.
Blenkinsop, A.	Chapman, W. D.	Edelman, M.
Blyton, W. R.	Chetwynd, G. R.	Edwards, Rt. Hn. John (Brighouse)
Boardman, H.	Cliffe, Michael	Edwards, Rt. Hn. Ness (Caerphilly)
Bottomley, Rt. Hon. A. G.	Coldrick, W.	Edwards, W. J. (Stepney)
Bowden, H. W. (Leicester, S W)	Collick, P. H. (Birkenhead)	Evans, Albert (Islington, S.W.)
Bowles, F. G.	Corbel, Mrs. Freda	Fernyhough, E.
Fletcher, Eric	Lee, Miss Jennie (Cannock)	Reynolds, G. W.
Forman, J. C.	Lindgren, G. S.	Rhodes, H.
Fraser, Thomas (Hamilton)	Lipton, Marcus	Roberts, Goronwy (Caernarvon)
Gibson, C. W.	Mahon, Dr. J. Dickson	Robinson, Kenneth (St. Pancras, N.)
Gooch, E. G.	McAlister, Mrs. Mary	Rogers, George (Kensington, N.)
Greenwood, Anthony	McInnes, J.	Ross, William
Grenfell, Rt. Hon. D. R.	McKay, John (Wallsend)	Hoyle, C.
Grey, C. F.	MoLeavy, Frank	Short, E. W.
Griffiths, David (Rother Valley)	MacPherson, Malcolm (Stirling)	Silverman, Julius (Aston)
Griffiths, Fit. Hon. James (Lianelly)	Mahon, Simon	Silverman, Sydney (Nelson)
Griffiths, William (Exchange)	Mann, Mrs. Jean.	Simmons, C. J. (Brierley Hill)
Hale, Leslie	Marquand, Rt. Hon. H. A.	Slater, J. (Sedgefield)
Hall, Rt. Hn. Glenvil (Colne Valley)	Mason, Roy	Smith, Ellis (Stoke, S.)
Hamilton, W. W.	Mayhew, C. P.	Snow, J. W.
Hannan, W.	Monslow, W.	Sorensen, R. W.
Hastings, S.	Moody, A. S.	Spriggs, Leslie
Hayman, F. H.	Morris, Percy (Swansea, W.)	Stones, W. (Consett)
Healoy, Denis	Mort, D. L.	Strauss, Rt. Hon. George (Vauxhall)
Henderson, Rt. Hn. A. (Rwly Regis)	Moss, R.	Summerskill, Rt. Hon. E.
Herbison, Miss M.	Moyle, A.	Sylvester, G. O.
Hewitson, Capt. M.	Mulley, F. W.	Taylor, Bernard (Mansfield)
Hobson, C. R. (Keighley)	O'Brien, Sir Thomas	Taylor, John (West Lothian)
Holman, P.	Oliver, G. H.	Thomas, Iorwerth (Rhondda, W.)
Houghton, Douglas	Oram, A. E.	Thomson, George (Dundee, E.)
Hughes, Cledwyn (Anglesey)	Orbach, M.	Thornton, E.
Hughes, Emrys (S. Ayrshire)	Oswald, T.	Tomney, F.
Hughes, Hector (Aberdeen, N.)	Owen, W. J.	Viant, S. P.
Hunter, A. E.	Padley, W. E.	Watkins, T. E.
Hynd, H. (Acorington)	Palmer, A. M. F.	Weitzman, D.
Hynd, J. B. (Attercliffe)	Parker, J.	Wells, William (Walsall, N.)
Irving, Sydney (Dartford)	Paton, John	Wheeldon, W. E.
dancer, B.	Pearson, A.	White, Henry (Derbyshire, N.E.)
Jay, Rt. Hon. D. P. T.	Peart, T. F.	Wilkins, W. A.
Jeger, George (Goole)	Pentland, N.	Willey, Frederick
Jager, Mrs. Lena(Holbn & St. Pncs, S.)	Plummer, Sir Leslie	Williams, Rt. Hon. T. (Don Valley)
Jones, R t. Hon. A. Creech (Wakefield)	Popplewell, E.	Willis, Eustace (Edinburgh, E.)
Jones, Jack (Rotherham)	Prentice, R. E.	Wilson, Rt. Hon. Harold (Huyton)
Jones, J. ldwal (Wrexham)	Probert, A. R.	Winterbottom, Richard
Kenyon, C.	Pursey, Cmdr. H.	Woof, R. E.
Key, Rt. Hon. C. W.	Rankin, John	Yates, V. (Ladywood)
King, Dr. H. M.	Redhead, E. C.	Zilliacus, K.
Lawson, G. M.	Reeves, J.	TELLERS FOR THE AYES:
Lee, Frederick (Newton)	Reid, William	Mr. Holmes and Mr. J. T. Price
NOES
Agnew, Sir Peter	Conant, Maj. Sir Roger	Gresham Cooke, R.
Aitken, W. T.	Cooke, Robert	Grimond, J.
Amory, Fit. Hn. Heathcoat (Tiverton)	Cordeaux, Lt.-Col. J. K.	Grosvenor, Lt.-Col. R. G.
Anstruther-Gray, Major Sir William	Corfield, F. V.	Gurden, Harold
Arbuthnot, John	Craddock, Beresford (Speithorne)	Hall, John (Wycombe)
Armstrong, C. W.	Crosthwalte-Eyre, Col. O. E.	Hare, Rt. Hon. J. H.
Ashton, H.	Crowder, Sir John (Finohley)	Harris, Reader (Heston)
Atkins, H. E.	Cunningham, Knox	Harrison, A. B. C. (Maldon)
Baldock, Lt.-Cmdr. J. M.	Dance, J. C. G.	Harrison, Col. J. H. (Eye)
Baldwin, Sir Archer	Davidson, Viscountess	Harvey, John (Walthamstow, E.)
Barber, Anthony	Davies, Rt. Hn. Clement(Montgomery)	Heald, Rt. Hon. Sir Lionel
Barlow, Sir John	D'Avigdor-Goldsmid, Sir Henry	Heath, Rt. Hon. E. R. G.
Barter, John	de Ferranti, Basil	Henderson-Stewart, Sir James
Batsford, Brian	Doughty, C. J. A.	Hicks-Beach, Maj. W. W.
Beamish, Col. Tufton	du Cann, E. D. L.	Hill, Mrs. E. (Wythenshawe)
Bell, Philip (Bolton, E.)	Dugdale, Rt. Hn. Sir T.(Richmond)	Hill, John (S. Norfolk)
Bevins, J. R. (Toxteth)	Duncan, Sir James	Hirst, Geoffrey
Biggs-Davison, J. A.	Eden, J. B. (Bournemouth, West)	Holland-Martin, C. J.
Bingham, R. M.	Elliott, R. W.(Ne'castleuponTyne, N.)	Holt, A. F.
Birch, Rt. Hon. Nigel	Emmet, Hon. Mrs. Evelyn	Hornby, R. P.
Bishop, F. P.	Errington, Sir Eric	Horsbrugh, Rt. Hon. Dame Florence
Black, Sir Cyril	Erroll, F. J.	Howard, John (Test)
Body, R. F.	Fell, A.	Hughes Hallett, Vice-Admiral J.
Bowen, E. R. (Cardigan)	Fisher, Nigel	Hughes-Young, M. H. C.
Boyd-Carpenter, Rt. Hon. J. A.	Fletcher-Cooke, C.	Hurd, Sir Anthony
Boyle, Sir Edward	Fort, R.	Hutchison Michael Clark (E'b'gh, S.)
Braine, B. R.	Freeth, Denzil	Hylton-Foster, Rt. Hon. Sir Harry
Brewis, John	Galbraith, Hon. T. G. D.	Iremonger, T. L.
Browne, J. Nixon (Cralgton)	Gimmans, Lady	Jenkins, Robert (Dulwich)
Bryan, P.	George, J. C. (Pollok)	Jennings, Sir Roland (Hallam)
Burden, F. F. A.	Glover, D.	Johnson, Eric (Blackley)
Butler, Fit. Hn. R. A. (Saffron Walden)	Glyn, Col. Richard H.	Keegan, D.
Campbell, Sir David	Godber, J. B.	Kerby, Capt. H. B.
Carr, Robert	Goodhart, Philip	Kerr, Sir Hamilton
Cary, Sir Robert	Gough, C. F. H.	Kirk, P. M.
Channon, H. P. G.	Gower, H. R.	Lambton, Viscount
Chichester-Clark, R.	Graham, Sir Fergus	Lancaster, Col. C. G.
Clarke, Brig. Terence (Portsmth, W.)	Grant, Rt. Hon. W. (Woodside)	Langford-Holt, J. A.
Cole, Norman	Green, A.	Leavey, J. A.

Legge-Bourke, Maj. E. A. H.	Osborne, C.	Studholme, Sir Henry
Legh, Hon. Peter (Petersfield)	Page, R. G.	Summers, Sir Spencer
Lindsay, Hon. James (Devon, N.)	Partridge, E.	Taylor, Sir Charles (Eastbourne)
Lindsay, Martin (Solihull)	Peel, W. J.	Taylor, William (Bradford, N.)
LInstead, Sir H. N.	Peyton, J. W. W.	Teeling, W.
Lloyd, Maj. Sir Guy (Renfrew, E.)	Piokthorn, Sir Kenneth	Temple, John M.
Longden, Gilbert	Pike, Miss Mervyn	Thomas, Leslie (Canterbury)
Levey', Walter H.	Pilkington, Capt. R. A.	Thorneycroft, Rt. Hon. P.
Lucas, P. B. (Brantford & Chiswick)	Pitman, I. J.	Turner, H. F. L.
Lucas-Tooth, Sir Hugh	Pott, H. P.	Turton, Rt. Hon. R. H.
Macdonald, Sir Peter	Powell, J. Enoch	Tweedsmuir, Lady
McLaughlin, Mrs. P.	Price, David (Eastleigh)	Vane, W. M. F.
Maitland, Cdr. J. F. W. (Hornoastle)	Price, Henry (Lewisham, W.)	Vaughan-Morgan, J. K.
Maitland, Hon. Patrick (Lanark)	Prior-Palmer, Brig. 0. L.	Vickers, Miss Joan
Markham, Major Sir Frank	Rarnsden, J. E.	Vosper, Rt. Hon. D. F.
Marlowe, A. A. H.	Redmayne, M.	Wade, D. W.
Marples, Rt. Hon. A. E.	Rees-Davies, W. R.	Wakefield, Edward (Derbyshire, W.)
Marshall, Douglas	Remnant, Hon. P.	Walker-Smith, Rt. Hon. Derek
Mathew, R.	Ridsdale, J. E.	Wall, Patrick
Mawby, R. L.	Robinson, Sir Roland (Blackpool, S.)	Ward, Rt. Hon. G. R. (Worcester)
Maydon, Lt.-Comdr, S. L. C.	Roper, Sir Harold	Ward, Dame Irene (Tynemouth)
Medlioott, Sir Frank	Ropner, Col. Sir Leonard	Watkinson, Rt. Hon. Harold
Wilson, Rt. Hon. Hugh	Russell, R. S.	Webbe, Sir H.
Morrison, John (Salisbury)	Sharpies, R. C.	Webster, David
Mott. Radclyffe, Sir Charles	Shepherd, William	Whitelaw, W. S. I.
Nairn, D. L. S.	Simon, J. E. S. (Middlesbrough, W.)	Williams, Paul (Sunderland, S.)
Heave, Airey	Spearman, Sir Alexander	Williams, R. Dudley (Exeter)
Nicholson, Sir Godfrey (Farnham)	Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)	Wills, Sir Gerald (Bridgwater)
Nicolson, N. (B'n'm'th, E. & Chr'ch)	Stanley, Capt. Hon. Richard	Wilson, Geoffrey (Truro)
Noble, Michael (Argyll)	Stevens, Geoffrey	Wooilam, John Victor
Nugent, Richard	Steward, Harold (Stockport, S.)	TELLERS FOR THE NOES:
Oakshott, H. D.	Steward, Sir William (Woolwich, W.)	Mr. Brooman-White and
Ormsby-Gore, Rt. Hon. W. D.	Stoddart-Scott, Col. Sir Malcolm	Mr. Finlay.

Mr. Houghton

I beg to move, in page 14, line 28, to leave out from "In" to "section".

I think that it might be for the convenience of the Committee if we considered with this Amendment the Amendments in page 14, line 29, after "1952", insert: (Relief for small incomes), references to three hundred and fifty pounds shall be substituted in all those places for references to three hundred pounds (the income limit for the full relief)"; and in page 14, line 30, leave out "five" and insert "fifty".

I wish to apologise to the Financial Secretary for the clumsy reference which I made to him a few moments ago. I do that now because I have a feeling that before I finish speaking on this Amendment I shall be really angry with him.

Mr. Simon

I would say, before the hon. Gentleman gets really angry, that it was very kind of him to apologise, but it was quite unnecessary because it was perfectly obvious that it was a slip and and I certainly took no offence, as I think he knows.

Mr. Houghton

We are taking our last stand on the Amendments to this Clause. This is a small yet important Amendment which, if the debate last year is anything to go by, would cost very little. In the OFFICIAL REPORT of 17th June, 1958, the hon. and learned Member said that the cost of this Amendment, which is exactly the same as the one moved a year ago, would be £750,000, which he added, …is a substantial sum."—[OFFICIAL REPORT, 17th June, 1958; Vol 589, c. 932.] In the context of this debate it is the merest chicken feed, and with the reinforcement, which I hope I see on the benches opposite, including that of the hon. Lady the Member for Tynemouth (Dame Irene Ward), I hope that we can wring some concession from the Financial Secretary at the end of this debate.

The purpose of the Amendment is to lift the limit of incomes for small incomes relief from £300 to £350. Small incomes relief provides that where a person not qualifying for age exemption or relief has a total income not exceeding £300, the benefit of, the two-ninths earned income relief shall be granted on unearned income. This relief was first introduced in 1952. The limit of income was then £250. It was raised to £300 in 1955 and has remained at that figure ever since.

This relief was introduced, if I remember rightly, by the Lord Privy Seal. It was designed to give some relief to people living on small fixed incomes, widows receiving annuities, maiden ladies who had been left modest incomes by their parents, and those who had been compelled prematurely to retire on health grounds and were unable to take up any other occupation. These were the people who were compelled to live on small fixed incomes but who were not old enough to qualify either for age exemption or for age relief.

As the Committee knows, exemption is granted to a person at 65 years and over where the total income from all sources is not more than £275, and, in the case of a married couple, if either of them is over 65, where the total income from all sources is not more than £440. That is age exemption. That is total exemption from tax if their total incomes are within the limits that I have mentioned.

Then there is age relief which enables a taxpayer over 65 or a married couple one of whom is over 65 to get the benefit of the two-ninths earned income relief on unearned income if the total income is not more than £800 a year. There are escalator provisions for marginal relief. Those who claim small incomes relief are outside the scope of either age exemption or age relief. It is noticeable that the income ceiling for small incomes relief has not moved upwards in sympathy with the upward movement of both the age exemption and age relief. It seems that the time has come when this income ceiling should be placed a little higher, and our proposal of an uplift of £50 is very modest indeed.

I emphasise again that in these cases it is not a question of granting exemption from tax. It is only that the benefit of earned income relief is given on income which otherwise would be treated as unearned income—annuities, interest from banks and other modest dividends which these people receive. When the Lord Privy Seal introduced this relief, I think that he did so with the general assent of the House and with the sympathy of everyone who heard his plea for those who were perhaps the worst victims of inflation, the fall in the value of money—those who had no means of protecting themselves from the fall in the purchasing power of their modest incomes.

I had the honour to move a similar Amendment last year. The Financial Secretary replied to that debate in very pleasant terms, as he always does. No hon. Member rejects so much in such a charming way. I should not mind on this occasion if he were a little short and gruff if at the end be conceded what the Amendment asks.

Looking at the OFFICIAL REPORT of a year ago I see that the Financial Secretary said: By this Amendment we would not be helping people in the very poorest circumstances. No one with an income of under £300 would be helped. It is primarily those with incomes between £300 and £350, and to a lesser extent in the band who get marginal relief running up to £397, as in the case of a single man with purely investment income."—[OFFICIAL REPORT, 17th June, 1958; Vol. 589, c. 932–3.] Here again we have the old problem of how to give relief to the poorest without giving some relief to those who are not quite so poor, but I stress that in this case the ceiling was lifted to £300 in 1955 and, unless I am very much mistaken, there was an increase in the ceiling of income for age relief given only last year. I am not sure whether at the same time an improvement was made in the age exemption but I believe it was. I have so many notes at my side that it is not always easy to find the correct note on the spur of the moment.

The Committee must bear in mind that the companion reliefs of age exemption and age relief have both been moved upwards. The age relief ceiling has been moved upwards twice, first to £700 and then to £800, without any change in the ceiling for small incomes relief. I sincerely hope, therefore, that the Financial Secretary will make the concession today. My right hon. Friend the Member for Huyton (Mr. H. Wilson) draws my attention to the fact that the increase in the age exemption ceiling for a single person last year was from £250 to £275.

Even at this time in the debate our imaginations are still lively enough for us to picture in our minds the plight of these people. They have had a wonderful champion in the hon. Lady the Member for Tynemouth. Other hon. Members have championed this cause, but she has done so especially, and she has done it with courage, with great determination, and sometimes with ruthlessness. I look forward to hearing what she says about the Amendment.

If it is conceded, I will grant that there is no party capital to be claimed for it. It is a responsibility on the Committee as a whole. It is a small enough thing to ask. This is the final Amendment on the Clause. Other reliefs have been improved. Last year the Financial Secretary said that this relief could not be considered in isolation. Of course, nothing can be considered in isolation in matters of this kind, but there are times when it is right and proper to distinguish one relief from another, as indeed the Chancellor has at times distinguished between this and other reliefs. I, therefore, hope that the Financial Secretary will tell us that his right hon. Friend has authorised him to make the concession.

7.45 p.m.

Dame Irene Ward (Tynemouth)

I always feel that I want to respond to the hon. Member for Sowerby (Mr. Houghton), but I must be very quick on this occasion because we have had a long debate on the Amendments. I feel that I have been rather restrained in the debate, because I thought that many of the claims were very reasonable, and it was only the general pattern of my right hon. Friend's Budget which prevented me from arguing in support of some of them. I think that my hon. and learned Friend the Financial Secretary is well aware how much I should welcome this concession.

Mr. Sydney Silverman (Nelson and Colne)

The hon. Lady could show that in the Division Lobby.

Dame Irene Ward

There is no point in talking about what will happen in the Division Lobby. The hon. Member has stimulated me to say that I noticed the generosity of the hon. Member for Sowerby in that he made it plain from the beginning that the concessions which have been given in favour of what I call the small fixed income groups started with a Conservative Chancellor of the Exchequer, and year by year we have increased those concessions. For that I am grateful.

Mr. Silverman

If the hon. Lady will permit me, I will intervene only so far as to say that my muttered interjection was not meant in any unkindly sense. She said that her hon. and learned Friend knew how much she was in revolt. It occurred to me that if she wanted him to know how much she was in revolt, the Division Lobby was the place for him to find out.

Dame Irene Ward

I am grateful to the hon. Member for that intervention, although, if I may say so, I do not think that my answer is in conflict with his mutterings. His muttering was directed towards suggesting that I might go into the Division Lobby with the Labour Party. It has only made the point a little clearer and wasted a little more time.

As I was saying, the hon. Member for Sowerby made it clear that all the concessions in respect of the small fixed income groups within the range of the argument have been made by the Conservative Party. I cannot describe myself as an importunate widow and nobody has ever described me as an importunate spinster, but I must tell my hon. and learned Friend that it would give a great many of my hon. Friends and myself great pleasure if this concession were made. I recognise, however, that from time to time I have to allow other people to have a few benefits and that, certainly in political and national life, one cannot be unduly selfish.

In considering the situation of these people whose case I try to put and whom I try to cherish—because there are so few interested in speaking for them—I would say that if I had to choose between what has been done for them by the Labour Party and what has been done for them by my party, I should unhesitatingly choose my party, because even if we do not get the concession today we may get it in the next Budget.

Mr. H. Hynd (Accrington)

Under a Labour Government.

Dame Irene Ward

After long experience of the House of Commons, I have learned that although one does not always win the battle straight away, the time generally comes when one does win it. May I add that I am grateful for the references which the hon. Member for Sowerby made to me?

I hope that we shall have a favourable reply to the Amendment. If we do not, I still back my own party, because I know that under our political philosophy these people in whom I am deeply interested are much more likely to benefit than they are under the administration of the Labour Party. That is all I have to say. I hope that my hon. and learned Friend will be nice and give us this concession.

Mr. Ede

My right hon. and hon. Friends and myself were very disappointed when we were told that the last Amendment would cost too much. We were told last year that the suggestion contained in the present Amendment would have cost about £750,000. I suggest to the hon. and learned Gentleman that he has given about £750,000 away to the brewers and that on Report he should remove Clause 5 from the Bill. Then these people could have the very small remission for which my hon. Friend the Member for Sowerby (Mr. Houghton) has asked.

A secret message appears to have passed between the brewers and the Treasury. No one had heard that the brewers wanted this money. When he had to defend the position, the Economic Secretary said that the brewers had asked for it. Everyone knows that when the party opposite is in power a mere whisper from the brewers has the most tremendous effect forthwith. The first thing that the Tory Party did when it was returned to power was to give the brewers freedom.

I suggest to the hon. and learned Gentleman that he should explain to the brewers that he wants this £750,000 to devote to these people in very impecunious circumstances. Whenever the brewers reach the same circumstances, they can rest assured that the hon. and learned Gentleman will not turn a deaf ear to any pleas which they may make. There is no trouble this time about the money. The question is the willingness to recognise where relief is needed most.

Mr. Simon

If the right hon. Member for South Shields (Mr. Ede) will forgive me, I do not think that I will follow him in discussing the position of brewers in relation to this Amendment, except that when I deal with the cost of it I must say that the right hon. Gentleman is under a misapprehension in thinking that there has been any remission of tax, either of £5 million or £750,000, to the brewers. I think that that was pointed out—I was not here—in the debate on Clause 5, dealing with the monopoly value.

It must not be thought that there is a fund out of which this £750,000, which the Amendment would cost, can be readily found. Nevertheless, it must be obvious to the Committee that, although £750,000 is a substantial sum and not one of which one should talk lightly, the cost in this case cannot be in any way the conclusive argument.

If I am bound to advise the Committee to reject the Amendment, as I feel I am, the argument is quite another one. If I have to reject the appeal made by the hon. Member for Sowerby (Mr. Houghton) and that of my hon. Friend the Member for Tynemouth (Dame Irene Ward), who has been such a valiant and active spokesman for the sort of people who would be the beneficiaries under this Amendment, I am conscious that the arguments I make on the other side are arid ones related to the shape of the fiscal system. Nor do I for a moment minimise the force and relevance of the arguments which the hon. Members advanced.

The Amendment would help those persons under 65 years of age whose income is between £300 and £350. Undoubtedly, a substantial number of those persons are in difficult circumstances. I am thinking of widows and persons who have had to retire prematurely through ill-health, and so on, living on small investment incomes. On the other hand, it is only right to recognise that in this group are many others who are not in those circumstances. One example is a young person just starting out on his ordinary career who has a small investment income, for example, something he has inherited or which has been bequeathed to him. Although the group who would benefit undoubtedly includes some needy people who could well do with the assistance, it is not a group consisting of the most needy, because the most needy earn under £300 and have been the beneficiaries of this relief in the past since its institution in 1952 and its increase in 1955. Nor are they necessarily exclusively people of the class which the hon. Member for Sowerby and my hon. Friend very rightly have in mind.

The hon. Member for Sowerby reminded us that this relief was instituted in 1952. Without making any sort of party point, I think that the reasons given by my hon. Friend are valid. The relief was raised in 1955 from £250 to £300 because of the increase in the personal allowances in that year. Of all the allowances, this is essentially the one which should go with the personal allowances.

The reason why it was raised in 1955 was that the raising of the personal allowances in 1955 meant that £309 of the income of a married couple became exempt. Under those circumstances, there was a clear case for raising this relief from £250 to £300. The married person's relief is till £240, so that the exemption point is still £309. Therefore, it would create an anomaly to raise this relief to £350 as proposed by the Amendment.

I am conscious that that is an arid argument compared with the considerations advanced by the hon. Member for Sowerby and my hon. Friend. Nevertheless, it is a valid argument and it is one that should compel the Committee to vote against the Amendment. I could not help calling to mind the illiterate film star who thought that letters "y-e-s" spelt "Mink" and I could not help thinking that there is very little mink in the life of a Financial Secretary. He spends most of the time saying "No". He says "No" to his colleagues and, unfortunately, "No" to the Committee, however agreeably Amendments are moved.

It is my duty, once again, to advise the Committee to reject the Amendment. We all look forward to the time when this relief can be increased at the same time as the personal allowances can be improved. Nor is there any reason, if things continue as they have in these past years, why that should not happen. I am bound to tell the Committee that, as by a recent vote of the Committee the personal allowances remain the same, this is not the time to accept the Amendment.

8.0 p.m.

Mr. Houghton

That reply is very disappointing. I am grateful to the hon. Member for Tynemouth (Dame Irene Ward) for her contribution to the debate. Everyone will understand if she feels unable to support the Amendment in the Lobby. We fully understand that overtures made from time to time from one side of the Committee to another to enter the opposing Lobby are rarely responded to, because we do not do business in that way. No one will accuse the hon. Lady of lacking in courage. At present, she is fairly content, I think, with the Budget and all its works and will be prepared to leave this battle to be fought another day. I am sorry about that. I had hoped that she would feel rather strongly about it now.

The Financial Secretary began, I thought, by almost destroying the basis upon which the relief was introduced. When the relief was introduced in 1952 it applied then, as it does today, to what, I imagine, are the comparatively rare cases where a relatively young person starting out on life's work has unearned income, and whose total income will still be below the ceiling applicable to this relief.

It could happen, probably almost momentarily, before such a person had entered full earning capacity, but had the Lord Privy Seal, when Chancellor, felt that it was desirable or necessary to protect the relief from that sort of case he would not have had any difficulty in introducing some qualification to that end. He did not. I should imagine that he thought that, as the number of cases would be so small, it was not worth bothering about. Therefore, the hon. and learned Gentleman should not undermine, as he did, the basis upon which the relief was first introduced by general assent of the Committee and of the House.

The relationship between one set of personal reliefs and another is, admittedly, always a difficulty. "When father says turn, we all turn "—but, until he does, no one can turn at all, because everything must depend on something else. That seems to be the mischief of a good deal of this legislation. It seems impossible for the Committee to make a small concession or remedy a relatively small grievance without stringing the thing out over the whole field of personal reliefs. And then the Financial Secretary says," Oh, this is hopeless. To meet a comprehensive demand would entail the loss of far too much revenue." So we go round in circles.

What the Financial Secretary has done has been to refer us back to the matters that we were discussing earlier—and to some matters that we have not raised at all—as reasons for his not being able to move on this small relief without introducing anomalies. Sometimes, it is worth while saying, "To the devil with anomalies." They are not all that sacred; they are not all that sancrosanct. On occasion, one can make a relief without following it logically into other ranges of relief and taxation.

It is, of course, easier to distinguish between concessions given to old age and the normal liability to tax of a person who is not old. If differences between the tax liability of old people and not so old people were today regarded as anomalies, some adjustments would not have been made either in age relief or age exemption—and particularly in age exemption, because the income of the married couple which is completely exempt from tax under age exemption is not exempt in the hands of a married couple one of whom is not 65. That has been justified on the grounds of a concession to old age.

This concession would be made largely—I should say predominantly—to persons in indifferent health, in difficult circumstances, who are having to make do on very inadequate resources—the kind of genteel poverty that is so distressing to witness. These are the people who have been used to comforts and to a standard of life somewhat higher—in many cases, much higher—than they are now able to enjoy.

They are a class apart. They are not part of the earning community. They are not found among those who can supplement their investment income by earnings. Many of them will be between 60 and 65—over the pension age for women—but will not qualify for age exemption until both reach the age of 65. All these conciderations would be reliefs were this Amendment accepted.

I shall not get angry, I am only very disappointed that the hon. and learned Gentleman has not been able to meet us in the last of a long string of Amendments. I sometimes wonder what is the meaning of the term "parliamentary government". One goes through these processes hour by hour and day by day, but rarely ever can the House or Committee make its will effective. 1 am sure that if it were left to hon. Members on both sides, who had listened to the debate, to decide whether or not this small concession should be given, we should, without doubt, get it.

But the customary discipline is imposed on right hon. and hon. Gentlemen opposite, and none can break away from it—on either side, so it seems—to assert Parliament's predominant will and power to give this concession to some of the helpless members of our community. As long as we endure this in the name of parliamentary government it is a challenge to our system, to our honesty and to our courage, and we have to defend it before the people whom we ask to believe in parliamentary government.

Question put, That the words proposed to be left out stand part of the Clause:

The Committee divided: Ayes 212. Noes 177.

Division No. 112.]	AYES	[8.10 p.m.
Agnew, Sir Peter	Cary, Sir Robert	Glyn, Col. Richard H.
Aitken, W. T.	Channon, H. P. G.	GOdber, J. B.
Amory, Rt. Hn. Heathcoat (Tiverton)	Clarke, Brig. Terence (Portsmth, W.)	Goodhart, Philip
Anstruther-Gray, Major Sir William	Conant, Maj. Sir Roger	Gough, C. F. H.
Arbuthnot, John	Cooke, Robert	Gower, H. R.
Armstrong, C. W.	Cordeaux, Lt.-Col. J. K.	Graham, Sir Fergus
Ashton, H.	Garfield, F. V.	Grant, Rt. Hon. W. (Woodside)
Atkins, H. E.	Craddock, Beresford (Spelthorne)	Green, A.
Baldock, Lt.-Cmdr. J. M.	Crosthwaite-Eyre, Col. 0. E.	Gresham Cooke, R.
Baldwin, Sir Archer	Crowder, Sir John (Finchley)	Grimond, J.
Barber, Anthony	Cunningham, Knox	Gurden, Harold
Barlow, Sir John	Dance, J. C. G.	Hall, John (Wycombe)
Barter, John	Davidson, Viscountess	Harris, Reader (Heston)
Batsford, Brian	D'Avigdor-Goldsmid, Sir Henry	Harrison, A. B. C. (Maldon)
Beamish, Col. Tufton	de Ferranti, Basil	Harrison, Col. J. H. (Eye)
Bovine, J. R. (Toxteth)	Doughty, C. J. A.	Harvey, SirArthur Vere (Macclesf'd)
Biggs-Davison, J. A.	du Cann, E. D. L.	Harvey, John (Walthamstow, E.)
Bingham, R. M.	Dugdale, Rt. Hn. Sir T. (Richmond)	Heald, Rt. Hon. Sir Lionel
Bishop, F. P.	Duncan, Sir James	Heath, Rt. Hon. E. R. G.
Black, Sir Cyril	Eden, J. B. (Bournemouth, West)	Henderson, John (Cathcart)
Body, R. F.	Eillott, R.W.(Ne'castle upon Tyne.N.)	Henderson-Stewart, Sir James
Bonham Carter, Mark	Emmet, Hon. Mrs. Evelyn	Hicks-Beach, Maj. W. W.
Bowen, E. R. (Cardigan)	Errington, Sir Eric	Hill, Mrs. E. (Wythenehawe)
Boyd-Carpenter, Rt. Hon. J. A.	Erroll, F. J.	Hirst, Geoffrey
Boyle, Sir Edward	Fell, A.	Holland-Martin, C. J.
Braine, B. R.	Finlay, Graeme	Holt, A. F.
Brewis, John	Fisher, Nigel	Hornhy, R. P.
Bromley-Davenport, Lt.-Col. W. H.	Fletcher-Cooke, C.	Horsbrugh, Rt. Hon. Dame Florence
Brooman-White, R. C.	Fort, R.	Howard, Hon. Greville (St. Ives)
Bryan, P.	Freeth, Denzil	Howard, John (Test)
Burden, F. F. A.	Galbraith, Hon. T. G. D.	Hughes Hallett, Vice-Admiral J.
Butler, Rt. Hn.R.A.(Saffron Walden)	Gammans, Lady	Hughes-Young, M. H. C.
Campbell, Sir David	George, J. C. (Pollok)	Hurd, Sir Anthony
Carr, Robert	Glover, D.	Hutchison, Michael Clark(E'b'gh, S.)
Hylton-Foster, Rt. Hon. Sir Harry	Neave, Airey	Steward, Harold (Stockport, S.)
Iremonger, T. L.	Nicholson, Sir Godfrey (Farnham)	Steward, Sir William (Woolwich, W.)
Jenkins, Robert (Dulwich)	N icolson, N. (B'n'm'th, E. & Chr'oh)	Stoddart-Scott, Col. Sir Malcolm
Jennings, Sir Roland (Hallam)	Noble, Michael (Argyll)	Studholme, Sir Henry
Johnson, Eric (Blackley)	Nugent, Richard	Summers, Sir Spencer
Keegan, D.	Oakshott, H. D.	Taylor, Sir Charles (Eastbourne)
Kerby, Capt. H. B.	Ormsby-Gore, Rt. Hon. W. D.	Taylor, William (Bradford, N,)
Kerr, Sir Hamilton	Osborne, C.	Teeling, W.
Kirk, P. M.	Page, R. G.	Temple, John M.
Lambton, Viscount	Partridge, E.	Thomas, Leslie (Canterbury)
Lancaster, Col. C. G.	Peel, W. J.	Thompson, R. (Croydon, S.)
Langford-Holt, J. A.	Peyton, J. W. W.	Thorneycroft, Rt. Hon. P.
Leavey, J. A.	Pickthorn, Sir Kenneth	Turner, H. F. L.
Legge-Bourke, Maj. E. A. H.	Pike, Miss Mervyn	Turton, Rt. Hon. R. H.
Legh, Hon. Peter (Petersfield)	Pilkington, Capt. R. A.	Tweedsmuir, Lady
Lindsay, Hon. James (Devon, N.)	Pitman, I. J.	Vane, W. M. F.
Lindsay, Martin (Solihull)	Pitt, Miss E. M.	Vaughan-Morgan, J. K.
Linstead, Sir H. N.	Pott, H. P.	Vickers, Miss Joan
Lloyd, Maj. Sir Guy (Renfrew, E.)	Powell, J. Enoch	Vosper, Rt. Hon. D. F.
Longden, Gilbert	Price, David (Eastleigh)	Wade, D. W.
Loveys, Walter H.	Price, Henry (Lewisham, W.)	Wakefield, Edward (Derbyshire, W.)
Lucas, P. B. (Brentford & Chiswick)	Prior-Palmer, Brig. O. L.	Walker-Smith, Rt. Hon. Derek
Lucas-Tooth, Sir Hugh	Ramsden, J. E.	Wall, Patrick
Macdonald, Sir Peter	Rawlinson, Peter	Ward, Rt. Hon. G. R. (Worcester)
McLaughlin, Mrs. P.	Redmayne, M.	Ward, Dame Irene (Tynemouth)
Maitland, Cdr.J. F. W. (Horncastle)	Rees-Davies, W. R.	Webbe, Sir H.
Maitland, Hon. Patrick (Lanark)	Remnant, Hon. P.	Webster, David
Markham, Major Sir Frank	Ridsdale, J. E.	Whitelaw, W. S. I.
Marlowe, A. A. H.	Roper, Sir Harold	Williams, Paul (Sunderland, S.)
Marples, Rt. Hon. A. E.	Ropner, Col. Sir Leonard	Williams, R. Dudley (Exeter)
Marshall, Douglas	Russell, R. S.	Wills, Sir Gerald (Bridgwater)
Mathew, R.	Sharpies, R. C.	Wilson, Geoffrey (Truro)
Mawby, R. L.	Shepherd, William	Wolrige-Gordon, Patrick
Maydon, Lt.-Comdr. S. L. C.	Simon, J. E. S. (Middlesbrough, W.)	Woollam, John Victor
Medlicott, Sir Frank	Spearman, Sir Alexander
Molson, Rt. Hon. Hugh	Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)	TELLERS FOR THE AYES
Mott-Radclyffe, Sir Charles	Stanley, Capt. Hon. Richard	Mr. Cbichester-Clark and
Nairn, D. L. S.	Stevens, Geoffrey	Mr. J. E. B. Hill.
NOES
Ainsley, J. W.	Edwards, Rt. Hon. Ness (Caerphilly)	Kenyon, C.
Albu, A. H.	Edwards, W. J. (Stepney)	Key, Rt. Hon. C. W.
Allaun, Frank (Salford, E.)	Evans, Albert (Islington, S.W.)	King, Dr. H. M.
Allen, Arthur (Bosworth)	Evans. Edward (Lowestoft)	Lawson, G. M.
Allen, Scholefield (Crewe)	Fernyhough, E.	Lee, Frederick (Newton)
Awbery, S. S.	Fletcher, Eric	Lee, Miss Jennie (Cannock)
Bacon, Miss Alice	Forman, J. C.	Lindgren, G. S.
Bence, C. R. (Dunbartonshire, E.)	Fraser, Thomas (Hamilton)	Lipton, Marcus
Benson, Sir George	Gibson, C. W.	Mahon, Dr. J. Dickson
Blackburn, F.	Gooch, E. G.	McAlister, Mrs. Mary
Blenkinsop, A.	Gordon Walker, Rt. Hon. P. C.	McCann, J.
Blyton, W. R.	Greenwood, Anthony	MacGoll, J, E.
Boardman, H.	Grenfell, Rt. Hon. D. R.	McInnes, J.
Bottomley, Rt. Hon. A. G.	Grey, C. F.	McKay, John (Wallsend)
Bowden, H. W. (Leicester, S.W.)	Griffiths, David (Rother Valley)	McLeavy, Frank
Bowles, F. G.	Griffiths, Rt. Hon. James (LianellY)	MacPherson, Malcolm (Stirling)
Braddock, Mrs. Elizabeth	Griffiths, William (Exchange)	Mahon, Simon
Brockway, A. F.	Hale, Leslie	Mann, Mrs. Jean
Broughton, Dr. A. D. D.	Hall, Rt. Hn. Gienvil (Caine Valley)	Marquand, Rt. Hon. H. A.
Brown, Rt. Hon. George (Belper)	Hamilton, W. W.	Mason, Roy
Brown, Thomas (Ince)	Hannan, W.	Mayhew, C. P.
Burke, W. A.	Hastings, S.	Monslow, W.
Burton, Miss F. E.	Hayman, F. H.	Moody, A. S.
Butler, Herbert (Hackney, C.)	Healey, Denis	Morris, Percy (Swansea, W.)
Carmichael, J.	Henderson, Rt. Hn. A. (Rwly Regis)	Mort, D. L.
Castle, Mrs. B. A.	Herbison, Miss M.	Moss, R.
Champion, A. J.	Hewitson, Capt. M.	Moyle, A.
Chapman, W. D.	Hobson, C. R. (Keighley)	Mulley, F. W.
Chetwynd, G. R.	Holman, P.	O'Brien, Sir Thomas
Cliffe, Michael	Houghton, Douglas	Oliver, G. H.
Coldrick, W.	Hughes, Cledwyn (Anglesey)	Oram, A. E.
Collick, P. H. (Birkenhead)	Hughes, Emrys (S. Ayrshire)	Orbach, M.
Corbet, Mrs. Freda	Hughes, Hector (Aberdeen, N.)	Oswald, T.
Craddock, George (Bradford, S.)	Hunter, A. E.	Owen, W. J.
Cronin, J. D.	Hynd, H. (Accrington)	Padley, W. E.
Crossman, R. H. S.	Hynd, J. B. (Attercliffe)	Palmer, A. M. F.
Davies, Harold (Leek)	Irving, Sydney (Dartford)	Parker, J.
Davies, Stephen (Merthyr)	Danner, B.	Paton, John
Deer, G.	Jay, Rt. Hon. D. P. T.	Pearson, A.
Deiargy, H. J.	Jeger, George (Goole)	Peart, T. F.
Diamond. John	Jegar, Mrs. Lena(Holbn & St. Pncs, S.)	Pentland, N.
Ede, Rt. Hon. J. C.	Jones, Rt. Hon. A. Creech (Wakefield)	Plummer, Sir Leslie
Edelman, M.	Jones, Jack (Rotherham)	Prentice, R. E.
Edwards, Rt. Hon. John (Brighouse)	Jones, J. Idwal (Wrexham)	Price, Philips (Gloucestershire, W.)

Probert, A. R.	Skeftington, A. M.	Watkins, T. E.
Ptirsey, Cmdr. H.	Slater, J. (Sedgefield)	Wells, William (Walsall, N.)
RanPin, John	Smith, Ellis (Stoke, S.)	Wheeldon, W. E.
Redhead, E. C.	Snow, J. W.	White, Henry (Derbyshire, N.E.)
Reeves, J.	Sorensen, R. W.	Wilkins, W. A.
Reid. William	Spriggs, Leslie	Willey, Frederick
Reynolds, G. W.	Stones, W. (Consett)	Williams, Rt. Hon. T. (Don Valley)
Rhodes, H.	Summerskill, Rt. Hon. E.	Willis, Eustace (Edinburgh, E.)
Robinson, Kenneth (St. Pancras, N.)	Sylvester, G. O.	Wilson, Rt. Hon. Harold (Huyton)
Rogers, George (Kensington, N.)	Taylor, Bernard (Mansfield)	Winterbottom, Richard
Ross, William	Taylor, John (West Lothian)	Woof, R. E.
Royle, C.	Thomas, lorwerth (Rhondda, W.)	Yates, V. (Ladywood)
Short, E. W.	Thomson, George (Dundee, E.)	Zilliacus, K.
Silverman, Julius (Aston)	Thornton, E.
Silverman, Sydney (Nelson)	Tomney, F.	TELLERS FOR THE NOES:
Simmons, C. J. (Brierley Hill)	Viant, S. P.	Mr. Holmes and Mr. J. T. Price.

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