HC Deb 04 July 1961 vol 643 cc1319-29

Amendment proposed, In page 21, line 21, leave out "with" and insert "three months after"—instead thereof.—[Mr. H. Wilson.]

Question put, That "with" stand part of the Bill:—

The House divided: Ayes 238, Noes 185.

Division No. 241.] AYES [6.55 p.m.
Agnew, Sir Peter Allason, James Atkins, Humphery
Aitken, W. T. Arbuthnot, John Barber, Anthony
Allan, Robert (Paddington, S.) Ashton, Sir Hubert Barlow, sir john
Barter, John Harris, Frederic (Croydon, N.W.) Page, John (Harrow, West)
Bell, Ronald Harris, Reader (Heston) Page, Graham (Crosby)
Bennett, F. M. (Torquay) Harvey, John (Walthamstow, E.) Partridge, E.
Berkeley, Humphry Harvie Anderson, Miss Pearson, Frank (Clitheroe)
Bidgood, John C. Heald, Rt. Hon. Sir Lionel Peel, John
Bingham, R. M. Henderson, John (Cathcart) Peyton, John
Birch, Rt. Hon. Nigel Henderson-Stewart, Sir James Pickthorn, Sir Kenneth
Bishop, F. P. Hicks Beach, Maj. W. Pilkington, Sir Richard
Black, Sir Cyril Hiley, Joseph Pitman, Sir James
Bourne-Arton, A. Hill, Dr. Rt. Hon. Charles (Luton) Pitt, Miss Edith
Box, Donald Hill, Mrs. Eveline (Wythenshawe) Pott, Percivall
Boyd-Carpenter, Rt. Hon. John Hill, J. E. B. (S. Norfolk) Price, David (Eastleigh)
Boyle, Sir Edward Hinchingbrooke, Viscount Proudfoot, Wilfred
Brewis, John Hirst, Geoffrey Quennell, Miss J. M.
Brooke, Rt. Hon. Henry Hobson, John Redmayne, Rt. Hon. Martin
Brooman-White, R. Hocking, Philip N. Rees, Hugh
Bryan, Paul Holland, Philip Rees-Davies, W. R.
Buck, Antony Hollingworth, John Renton, David
Bullard, Denys Hopkins, Alan Ridley, Hon. Nicholas
Burden, F. A. Hornsby-Smith, Rt. Hon. Patricia Ridsdale, Julian
Butler, Rt.Hn.R.A.(Saffron Walden) Howard, John (Southampton, Test) Robson Brown, Sir William
Campbell, Sir David (Belfast, S.) Hughes-Young, Michael Roots, William
Campbell, Gordon (Moray & Nairn) Hulbert, Sir Norman Ropner, Col. Sir Leonard
Cary, Sir Robert Hutchison, Michael Clark Royle, Anthony (Richmond, Surrey)
Channon, H. P. G. Iremonger, T. L. Russell, Ronald
Chataway, Christopher Jackson, John Scott-Hopkins, James
Chichester-Clark, R. James, David Seymour, Leslie
Clark, Henry (Antrim, N.) Jenkins, Robert (Dulwich) Shaw, M.
Clark, William (Nottingham, S.) Jennings, J. C. Skeet, T. H. H.
Clarke, Brig. Terence (Portsmth, W.) Johnson, Dr. Donald (Carlisle) Smith, Dudley (Br'ntf'rd & Chiswick)
Cleaver, Leonard Johnson, Eric (Blackley) Smithers, Peter
Cole, Norman Johnson Smith, Geoffrey Spearman, Sir Alexander
Cooper, A. E. Kaberry, Sir Donald Speir, Rupert
Cooper-Key, Sir Neill Kershaw, Anthony Stevens, Geoffrey
Cordeaux, L.t.-Col. J. K. Lagden, Godfrey Stoddart-Scott, Col. Sir Malcolm
Corfield, F. V. Leather, E. H. C. Storey, Sir Samuel
Costain, A. P. Leavey, J. A. Studholme, Sir Henry
Courtney, Cdr. Anthony Leburn, Gilmour Summers, Sir Spencer (Aylesbury)
Craddock, Sir Beresford Lewis, Kenneth (Rutland) Talbot, John E.
Critchley, Julian Lindsay, Martin Tapsell, Peter
Cunningham, Knox Litchfield, Capt. John Taylor, Edwin (Bolton, E.)
Curran, Charles Lloyd, Rt. Hon. Selwyn (Wirral) Teeling, William
Currie, G. B. H. Longden, Gilbert Temple, John M.
Dalkeith, Earl of Loveys, Walter H. Thatcher, Mrs. Margaret
d'Avlgdor-Goldsmid, Sir Henry Low, Rt. Hon. Sir Toby Thomas, Leslie (Canterbury)
Deedes, W. F. Lucas, Sir Jocelyn Thomas, Peter (Conway)
Donaldson, Cmdr. C. E. M. Lucas-Tooth, Sir Hugh Thompson, Kenneth (Walton)
Doughty, Charles McAdden, Stephen Thornton-Kemsley, Sir Colin
du Cann, Edward MacArthur, Ian Tiley, Arthur (Bradford, W.)
Duncan, Sir James McLaughlin, Mrs. Patricia Turner, Colin
Eden, John Maclay, Rt. Hon. John Turton, Rt. Hon. R. H.
Elliot, Capt. Walter (Carshalton) Maclean,SirFitzroy (Bute &N. Ayrs.) Tweedsmuir, Lady
Elliott, R.W.(Nwcstle-upon-Tyne,N.) Macleod, Rt. Hn. Iain (Enfield, W.) van Straubenzee, W. R.
Emery, Peter MacLeod, John (Ross & Cromarty) Vaughan-Morgan, Rt. Hon. Sir John
Erroll, Rt. Hon. F. J. McMaster, Stanley R. Vosper, Rt. Hon. Dennis
Farey-Jones, F. W. Maddan, Martin Wakefield, Edward (Derbyshire, W.)
Farr, John Maginnis, John E. Wakefield, Sir Waved (St. M'lebone)
Fisher, Nigel Maitland, Sir John Walder, David
Fletcher-Cooke, Charles Markham, Major Sir Frank Walker, Peter
Forrest, George Marshall, Douglas Walker-Smith, Rt. Hon. Sir Derek
Foster, John Marten, Neil Wall, Patrick
Fraser, Ian (Plymouth, Sutton) Mathew, Robert (Honiton) Ward, Dame Irene
Freeth, Denzil Matthews, Gordon (Meriden) Webster, David
Gammans, Lady Mawby, Ray Wells, John (Maidstone)
Gardner, Edward Maxwelt-Hyslop, R. J. Whitelaw, William
Glover, Sir Douglas Maydon, Lt.-Cmdr. S. L. C. Williams, Dudley (Exeter)
Glyn, Dr. Alan (Clapham) Mills, Stratum Williams, Paul (Sunderland, S.)
Glyn, Sir Richard (Dorset, N.) Montgomery, Fergus Wills, Sir Gerald (Bridgwater)
Godber, J. B. More, Jasper (Ludlow) Wilson, Geoffrey (Truro)
Goodhart, Philip Morgan, William Woodhouse, C. M.
Cower, Raymond Nabarro, Gerald Woodnutt, Mark
Grant, Rt. Hon. William Nicholls, Sir Harmar Woollam, John
Green, Alan Nicholson, Sir Godfrey Worsley, Marcus
Grimston, Sir Robert Noble, Michael
Grosvenor, Lt.-Col. R. G. Nugent, 8ir Richard TELLERS FOR THE AYES:
Gurden, Harold Oakshott, Sir Hendrie Colonel Sir H. Harrison and
Hall, John (Wycombe) Osborn, John (Hallam) Mr. Finlay.
Hamilton, Michael (Wellingborough) Osborne, Sir Cyril (Louth)
NOES
Ainsley, William Bacon, Miss Alice Blyton, William
Albu, Austen Baxter, William (Stirlingshire, W.) Boardman, H.
Allen, Scholefield (Crewe) Bence, Cyril Bowden, Herbert W. (Leics, S.W.)
Awbery, Stan Benson, Sir George Bowles, Frank
Boyden, James Hynd, John (Attercliffe) Roberts, Albert (Normanton)
Braddock, Mrs. E. M. Irvine, A. J. (Edge Hill) Roberts, Goronwy (Caernarvon)
Brockway, A. Fenner Jay, Rt. Hon. Douglas Robertson, John (Paisley)
Brown, Alan (Tottenham) Jenkins, Roy (Stechford) Robinson, Kenneth (St. Pancras, N.)
Brown, Rt. Hon. George (Belper) Johnson, Carol (Lewisham, S.) Rogers, G. H. R. (Kensington, N.)
Butler, Herbert (Hackney, C.) Jones, Dan (Burnley) Ross, William
Butler, Mrs. Joyce (Wood Green) Jones, Jack (Rotherham) Royle, Charles (Salford, West)
Callaghan, James Jones, J. Idwal (Wrexham) Shinwell, Rt. Hon. E.
Castle, Mrs. Barbara Jones, T. W. (Merioneth) Short, Edward
Chetwynd, George Kelley, Richard Silverman, Julius (Aston)
Cliffe, Michael Kenyon, Clifford Silverman, Sydney (Nelson)
Cronin, John Key, Rt. Hon. C. W. Skeffington, Arthur
Crosland, Anthony King, Dr. Horace Slater, Mrs. Harriet (Stoke, N.)
Crossman, R. H. S. Lawson, George Slater, Joseph (Sedgefield)
Cullen, Mrs. Alice Ledger, Ron Small, William
Davies, G. Elfed (Rhondda, E.) Lee, Frederick (Newton) Smith, Ellis (Stoke, S.)
Davies, Harold (Leek) Lee, Miss Jennie (Cannock) Sorensen, R. W.
Davies, S. O. (Merthyr) Lewis, Arthur (West Ham, N.) Spriggs, Leslie
de Freitas, Geoffrey Lipton, Marcus Steele, Thomas
Delargy, Hugh Loughlin, Charles Stewart, Michael (Fulham)
Diamond, John Mabon, Dr. J. Dickson Stones, William
Dodds, Norman McCann, John stross,Dr.Barnett(Stoke-on-Trent,C.)
Dugdale, Rt. Hon. John MacColl, James Swain, Thomas
Ede, Rt. Hon. C. Mclnnes, James Swingler, Stephen
Edwards, Rt. Hon. Ness(Caerphilly) McKay, John (Wallsend) Symonds, J. B.
Edwards, Walter (Stepney) Mackie, John (Enfield, East) Taylor, Bernard (Mansfield)
Evans, Albert McLeavy, Frank Taylor, John (West Lothian)
Fitch, Alan MacPherson, Malcolm (Stirling) Thomas, Iorwerth (Rhondda, W.)
Fletcher, Eric Mallalieu, J.P.W.(Huddersfield,E.) Thompson, Dr. Alan (Dunfermline)
Fraser, Thomas (Hamilton) Manuel, A. c. Thomson, G. M. (Dundee, E.)
Gaitskell, Rt. Hon. Hugh Mapp, Charles Thornton, Ernest
Galpern, Sir Myer Marsh, Richard Timmons, John
George, LadyMeganLloyd(Crmrthn) Mendelson, J. J. Tomney, Frank
Ginsburg, David Milne, Edward J. Ungoed-Thomas, Sir Lynn
Gordon Walker, Rt. Hon. P. C. Mitchison, G. R. Wade, Donald
Gourlay, Harry Monslow, Walter Wainwright, Edwin
Greenwood, Anthony Moody, A. S. Warbey, William
Grey, Charles Mort, D. L. Watkins, Tudor
Griffiths, Rt. Hon. James(Llanelly) Moyle, Arthur Weitzman, David
Griffiths, W. (Exchange) Mulley, Frederick Wells, William (Walsall, N.)
Grimond, J. Neal, Harold White, Mrs. Eirene
Hale, Leslie (Oldham, W.) Noel-Baker, Francis (Swindon) Whitlock, William
Hall, Rt. Hn. Glenvil (Colne Valley) Oliver, G. H. Wilkins, W. A.
Hamilton, William (West Fife) Oram, A. E. Willey, Frederick
Hannan, William Owen, Will Williams, D. J. (Neath)
Hart, Mrs. Judith Padley, W. E. Williams, Ll. (Abertillery)
Hayman, F. H. Pannell, Charles (Leeds, W.) Williams, W. R. (Openshaw)
Healey, Denis Parker, John Williams, W. T. (Warrington)
Hilton, A. V. Parkin, B. T. Willis, E. G. (Edinburgh, E.)
Holman, Percy Pavitt, Laurence Wilson, Rt. Hon. Harold (Huyton)
Holt, Arthur Pearson, Arthur (Pontypridd) Winterbottom, R. E.
Houghton, Douglas Pentland, Norman Woodburn, Rt. Hon. A.
Howell, Charles A. (Perry Barr) Popplewell, Ernest Woof, Robert
Howell, Denis (Small Heath) Prentice, R. E. Zilliacus, K.
Hoy, James H. Price, J. T. (Westhoughton)
Hughes, Cledwyn (Anglesey) Probert, Arthur TELLERS FOR THE NOES:
Hughes, Emrys (S. Ayrshire) Randall, Harry Mr. Redhead and
Hunter, A. E. Rankin, John Dr. Broughton.
Hynd, H. (Accrington) Reynolds, G. W.
Mr. Selwyn Lloyd

I beg to move, in page 21, line 34, to leave out from "week" to the end of line 39.

I think that all subsequent Government Amendments to this Clause, to Clause 34 and to the Fifth Schedule deal with the same matter. Perhaps what I say now may be taken to refer to them all.

When in Committee we discussed the position of Northern Ireland in relation to the employers' surcharge, I made clear that I accepted from the beginning that the Exchequer would derive no benefit from the surcharge in Northern Ireland if it were imposed. The question between us, therefore, was not one of prin- ciple but of administration, whether it was simpler to insist that the surcharge be collected in Northern Ireland and then refunded in some way by the Northern Ireland Government or whether it was better to exclude Northern Ireland altogether from the compass of the surcharge. I undertook to look further into the administrative problem in consultation with the Government of Northern Ireland. I said that, if there were no great administrative difficulty involved, I thought I could meet the point of view expressed by my hon. Friends.

Consultations have been held. It is clear that it is not impossible to exclude Northern Ireland from the scope of the surcharge. I do not pretend that it will be a wholly satisfactory arrangement. I think that some employers and employees, as well as the Ministries concerned, may find themselves put to a certain amount of trouble and inconvenience if the surcharge is imposed. The Government of Northern Ireland, after due consideration of what is involved, prefer, on the whole, that we should proceed on the basis of the total exclusion of Northern Ireland rather than by the method I proposed originally. In the circumstances, I propose that the matter should be dealt with in that way, and I have accordingly put down the necessary Amendments. I hope that the House will accept them.

Mr. Mitchison

I say only that I regret that the form of the Money Resolution and the rules of order do not allow us to exclude other places where there is grave unemployment.

Hon. Members

Hear, hear.

Amendment agreed to.

Further Amendments made: In page 22, line 6, leave out from beginning to "shall".

In page 22, line 9, leave out paragraph (b).—[Mr. Selwyn Lloyd.]

Mr. Jasper More (Ludlow)

I beg to move, in page 22, line 12, at the end to insert: and (c) shall be treated for the purpose of subsection (2) of section three hundred and seventy-seven of the Income Tax Act, 1952, as though they were contributions paid by the employer under the National Insurance Act". The object of the Amendment is to remove what might appear to be an unfortunate discrimination against that limited class of employers who are not entitled to make the ordinary deductions open to a trader under Schedule D. Those who have to employ their staff under Schedule A have to reclaim their expenses by a maintenance claim spread over five years, and this, of course, includes the wages of maintenance staff. The contributions which such employers pay under the National Insurance Acts, as I under stand it, are put on an equal footing with those of all other employers under the provisions of the Income Tax Acts, that is to say, they may be deducted in the year in which they are paid.

Clause 27 gives power to my right hon. and learned Friend to collect surcharges from all employers, but it seems to make no provision for putting all employers on a footing of equality in respect of the surcharge as they are in respect of contributions. I am grateful to my right hon. and learned Friend for writing to me on this matter. I think he appreciates the point I make, that the result is that those who employ estate maintenance staff and who have to make claims under Schedule A will have the surcharges spread over five years instead of being able to deduct them in the first year as ordinary traders do.

The legislation in this Clause is in the form of a power for the right hon. and learned Gentleman, and it gives him a certain latitude. Under subsection (2) of the Clause, he can choose the person in respect of whom the surcharges are to be paid, and he may fix different rates. I want to ask him, in the first place, for a clarification, for it has been publicly stated, I think I am right in saying, by a member of the Government that it is probable that this power would not, at any rate in the present year, be used in relation to agricultural workers.

The first point on which I would ask for clarification is whether this could be taken to include those other two classes of employees who are intimately associated with agriculture; namely, those who are employed in the maintenance of agricultural buildings and those who are employed by those who operate their woodlands under Schedule B. If my right hon. and learned Friend is unable to give me that assurance, I ask him to accept this Amendment, which has the object of bringing the Schedule A employers, if I may so call them, on to a basis of equality. It means treating them on the same footing as contributions under the Income Tax Acts instead of on the same footing as wages.

I suggest to my right hon. and learned Friend that what I am putting forward is both logical and just, and I express the hope that if he cannot give the assurance for which I ask he will accept the Amendment.

Sir E. Boyle

I do not think I can give the assurance for which my hon. Friend the Member for Ludlow (Mr. More) asks, because that relates to the broad policy of Clause 27, and on that I cannot add to what has been said by my right hon. and learned Friend the Chancellor and other Ministers since the Finance Bill was first published.

I should, however, like to clear up one specific point raised in my hon. Friend's Amendment. I know that this matter has caused some concern, and I hope that what I say tonight might possibly be of some help. As I understand it, the purpose of the Amendment is that, by treating payments of surcharges like the payments of National Insurance contributions, it will give relief for surcharges paid for the tax year in which they were paid, and thus not merely accelerate relief to estate owners for surcharges paid in respect of estate staff, but also give relief to employers of domestic labour for any surcharges which they have paid.

What I would say in reply to the Amendment is that, in general, it seems to me quite logical and really essential for the whole scheme of Clause 27 that payments of surcharges should be treated for tax purposes in the same way as the wages of the staff to whom they relate. That is indeed the effect of Clause 27 and of the Fifth Schedule as drafted. I think there is clearly no justification for giving relief to domestic employers for their surcharge payments if Clause 27 is put into action. After all, a domestic employer, not being a person trading for profit, gets no tax relief on the wages he pays his housekeeper or gardener, and there is no reason why he should get tax relief for the surcharge.

I know the anxiety which my hon. Friend expresses in the case of estate owners. There are two possible grounds which could be adduced for accelerating relief to estate owners. First, there is the point that in the Bill, as drafted, he obtains relief more slowly than a trading employer; and, secondly, that the surcharges are less favourably treated than National Insurance contributions.

On the first point, that under the Bill the estate owner obtains relief more slowly, it seems to me that there is very little merit in the proposal that we should single out surcharges for exceptional treatment as compared with the other outgoings of the estate owner. In this year's Finance Bill, we have not put in a Clause relating particularly to estate owners, but we had one in last year's Finance Bill. I cannot feel that there is a case for singling out this surcharge for exceptional treatment.

7.15 p.m.

On the second point, it is true that National Insurance contributions paid by non-trading employers receive more favourable treatment than wages. This follows the decision by Mr. Dalton—now Lord Dalton—in the 1946 Budget that all contributions to the National Insurance scheme, by whomsoever they might be made, would be treated as due deductions for Income Tax purposes.

As a counterpart to this proposal, all income benefits were to be assessed for Income Tax. I am not going into the merits of that decision now, though I am relieved to see that my hon. Friend the Member for Tynemouth (Dame Irene Ward) is not in her place, so that I can get a clear run for what I have to say. There is something in the argument for giving relief for these contributions, because, broadly speaking, these contributions go to provide benefits which are taxable; but this argument could not be used with regard to the surcharges, because they do not provide any taxable benefits.

We are not now discussing the whole object of Clause 27, but this is, after all, one of the economic regulators which, if put into force, would be designed to affect the level of purchasing power in the economy, and we are not dealing with any forms of financing of taxable benefits. This is, for this year, a surcharge on National Insurance stamps. For these reasons, I do not think it is reasonable to suggest that we should in this Bill provide for accelerating relief to estate owners, though I quite understand the anxieties which my hon. Friend expresses. He has put his case, both in correspondence and again tonight, with exemplary fairness, but I cannot advise the House to accept the Amendment. I hope that my hon. Friend will not press it, and I assure him that in all our legislation affecting tax regulators and anything else my right hon. and learned Friend will bear in mind not only the impact of this legislation on those who trade, but on estate owners and on people whose assets are in other forms as well.

Mr. More

I should like to thank my hon. Friend the Financial Secretary for replying in a way which brings it home to us that very careful consideration has been given to this matter. My right hon. and learned Friend the Chancellor in his Budget speech made it clear that the method of levying the surcharges might be reviewed from year to year, and I only ask that the points I have put forward might be kept in consideration. I therefore beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendments made: In line 14, leave out "of the United Kingdom".

In line 19, leave out "paragraph (a) of".

In line 43, leave out subsection (7).

In page 23, line 2, leave out from "'contribution'" to end of line 4 and insert: except where the context otherwise requires, means a contribution (other than a graduated contribution under the National Insurance Act, 1959) payable under the National Insurance Acts".

In line 7, leave out from "contributions" to end of line 8.

In line 12, leave out from "1957" to end of line 15.

In page 23, leave out lines 21 to 26.

In line 30, leave out "in their application to Great Britain".

In line 31, leave out from "1946" to end of line 33.—[Mr. Selwyn Lloyd.]