HC Deb 20 June 1961 vol 642 cc1323-95

(1) Where the total income of an individual includes or would but for this section, include any sum under Part III of the Income Tax Act, 1952, in respect of a house or tenement of which the said individual is both owner and occupier, the sum aforesaid shall, subject to the provisions of this section, be disregarded, for all the purposes of the Income Tax Acts other than the furnishing of information.

(2) No individual shall be exempted from assessment under Schedule A by virtue of this section in respect of more than one house or tenement in any year of assessment.

(3) For the purposes of this section, a house owned by a married woman living with her husband and occupied by them shall be deemed to be owned and occupied by the husband.—[Mr. Nabarro.]

Brought up, and read the First time.

Mr. Nabarro

I beg to move, That the Clause be read a Second time.

The Temporary Chairman (Sir Samuel Storey)

I think it would be for the convenience of the Committee if with this Clause we also discussed the proposed Clause—(Abolition of Schedule A income tax).

Mr. Nabarro

That Clause, Sir Samuel, in the name of six Liberal Members has substantially the same effect as the Clause which I am moving, which is in the names of nineteen of my hon. Friends and myself, and to debate the two Clauses together is, therefore, a matter of great convenience.

This is the third successive year that a Clause along these lines has been moved from the Conservative side of the Committee, and there is little doubt from the public and Parliamentary reactions to what has been said on earlier occasions that there is very widespread support in the country and substantial support in the House of Commons for an attack on Schedule A on owner-occupied houses—not on any other category, for reasons which I will explain in a moment. Therefore, my new Clause is devoted only to the principle of abolishing Schedule A on owner-occupied houses.

Last year the then Chancellor of the Exchequer was considered by many of my hon. Friends and myself, notably the supporters of my Clause this evening, to have made sympathetic noises in response to the new Clause that I then moved. I quote Lord Amory, as he now is, speaking on 21st June, 1960: I would sum up by saying that I think that there are strong arguments both for and against relief from Schedule A for owner-occupiers. I have owned to a personal inclination to regard the arguments for some relief at a practicable time as meriting very serious consideration."—[OFFICIAL REPORT, 21st June, 1960; Vol. 625, c. 267.] I read that to my son, aged 14, and he replied, "Circumlocution, daddy"—

Sir Colin Thornton-Kemsley (North Angus and Mearns)

A chip of the old block!

Mr. Nabarro

—for saying in about fifty words what the Chancellor could have said in about four words, but certainly leading my hon. Friends and myself to believe that something might be done in this Budget.

The right hon. Member for Huyton (Mr. H. Wilson) will recall the passages which followed during the course of his speech, directly after the then Chancellor spoke. He pointed to the present Lord Amory and said, "But you will not be there next year." A very prophetic fellow is the right hon. Gentleman. And, of course, a change of Chancellors inevitably means a change of emphasis in succeeding Budgets. What was held out as a vague promise to my hon. Friends last year has fallen by the wayside.

The Labour Party's position in this matter was clearly defined last year. Members of the Labour Party believe that relief for owner-occupiers should be given up to a maximum of £15 per annum. They support the principle whereby the smaller owner-occupied houses are relieved of Schedule A tax but whereby those of a larger size are not so relieved. I could not support, nor could my hon. Friends support, that view. We believe that the alleviation should be given to all owner-occupied houses, irrespective of size.

I object to the continuance of this form of taxation on three grounds: first, the inherent illogicality of the tax; secondly, that it is fiscally inequitable; thirdly, that it is grossly contrary to Conservative philosophy. First, the illogical basis of the tax. This is a tax on a notional income from owner-occupied houses so as to bring them into line with houses that are let and actually producing income.

As far as I am aware save only for the insignificant exception of the Schedule B tax which raises only £150,000 a year, there is no other known case of tax being levied on a notional income. It is therefore not an exaggeration to say that this tax is levied on an illogical and a quite exceptional basis. That point was put powerfully to the Royal Commission and reported in Cmd. 9474 in these words: The witnesses who objected to the charging of tax on the owner-occupiers of dwelling-houses did so on the grounds (1) that notional income is not a fit subject for taxations; and (2) that it is inequitable to tax the beneficial enjoyment of a right of occupation of real property when the income which could, by parity of reasoning, be attributed to the owners of other forms of property (e.g., motor cars) goes untaxed. Carrying that a stage further and putting it into more homely language, it seems to me that if one taxes a notional income from a house it would be equally valid to tax Mr. Smith, for example, on washing that Mrs. Smith might take in and the income derived from it but which she does not take in. It might be equally logical also to say to a man who is unemployed and in receipt of unemployment benefit, "We will tax you on £15 of wages that you might have earned if you were in employment." [HON. MEMBERS: "No."] Oh, yes, they are entirely notional considerations.

I believe that only actual income should be taxed and that no notional income should in any circumstances attract tax. Further, the 6½ million owner-occupiers of houses in this country resent most largely the payment of this Schedule A tax because they feel that the proceeds which the Revenue derives from it—not relatively very much—are in large measure being devoted to subsidising council houses, often with occupants who are much better off financially than people paying for their own houses.

10.45 p.m.

Mr. Houghton

I thought that the hypothetical cases which the hon. Gentleman quoted on the taxation of notional income were extremely weak. He will know that benefits in kind, the benefit of occupation of a flat or of other amenities in the case of directors or executives in receipt of over £2,000 a year are taxable under the Finance Act, 1948. The hon. Gentleman will also know that beneficial occupation is also taxable where a landlord lets a house for below the market rental and that he may be taxed on notional receipts from that house.

Mr. Nabarro

No. I do not agree with the hon. Gentleman at all. As I have said—I think this will bear examination by those who are informed in taxation matters of this kind—notional income is not normally a proper subject for taxation, and that is the objection in principle, against the continued levying of Income Tax Schedule A.

But in fiscal terms, I said, it is certainly inequitable. I declared last year that I personally dislike Schedule A very much indeed. I contracted out of paying it some years ago. I have encouraged other people who are owner-occupiers to contract out of it. I have endeavoured to give the widest possible publicity to machinations which will legally result in Schedule A tax not being paid by owner-occupiers of houses.

The figures are quite startling in this regard. There are 6,600,000 owner-occupiers of houses in this country. Only 600,000 of them, or 9 per cent., submitted in the tax year 1960–61 claims for maintenance relief notwithstanding that over 6 million owner-occupiers probably repaired their houses at least as well as the 600,000 who submitted claims. On grounds of ignorance, or because they were too idle, or for some other reason unknown to us, they failed to submit claims for maintenance relief.

The result of that is that the Chancellor of the Exchequer is collecting Income Tax Schedule A from 6 million owner-occupiers this year simply because they are not fully informed as to how they can avoid paying the tax. [HON. MEMBERS: "No."] Well, the hon. Gentleman has made fourteen speeches today so far—

Mr. Houghton

I am going to make another.

Mr. Nabarro

Probably. I have no objection to his making an indefinite number, but I have not sat in my place listening to his fourteen speeches and shouting interruptions at him. I have listened painfully to a lot of matter on taxation questions with which I fundamentally disagree. But I have let him say it.

I am now declaring, and declaring with wide support in the Committee and outside, that nine out of ten people are paying Schedule A tax as owner-occupiers simply because they are not fully instructed and informed as to how to avoid paying that tax. That is a statement which is widely supported, and I believe it to be true.

I appealed to the last Chancellor of the Exchequer and I appeal to the present Chancellor of the Exchequer to do a little better than present inspectors of taxes in the Inland Revenue practice by sending out a notice in the tiniest print and in the most obscure language telling owner-occupiers how they can claim relief from Schedule A tax. Of course, what the Chancellor should do is enclose with every assessment a colourful and explicit notice in the simpest terms saying, "The Chancellor of the Exchequer informs you that you need not pay this tax if only you will submit a maintenance relief claim in appropriate form."

Were I Chancellor I should encourage people not to pay this tax in view of the inequitable character of it. I think that it is highly immoral for the Chancellor of the Exchequer to collect taxes on a basis of misconception. For if those people were fully informed they would not be paying tax at all.

Mr. Diamond

The hon. Gentleman bases so much of his case on a totally incorrect fact, because the explanation is that most, if not all, the 6 million, if they did compute such claims, would find no claim would lie, because of the allowance they are already given.

Mr. Nabarro

That is not so. The hon. Gentleman who has just made a lengthy speech on complex company tax matters has not apparently taken the trouble fully to inform himself on this matter. Of course, Schedule A assessments are based on pre-war values. The fact is that repairs have increased enormously in price since pre-war days, and it is generally the case that the amount spent on the maintenance of a dwelling-house is vastly in excess of the statutory deduction. That was brought out clearly in the Royal Commission's Report. Evidently the hon. Member has failed to read the appropriate passages of it. I commend to him paragraphs 827, 828, and the several paragraphs following, on Schedule A tax for dwelling-houses.

The Chancellor of the Exchequer, in my view, is behaving immorally in a tax sense in collecting this substantial sum of money from people who pay it under a misconception. It is fiscal prostitution. He is living immorally on earnings from Schedule A owner-occupiers and he ought to be appropriately ashamed of himself for doing so. Of course, making a Schedule A maintenance claim is often a complex matter. This is one of the reasons—and I address the hon. Member for Gloucester (Mr. Diamond)—why a large number of owner-occupiers do not make the claim.

It is often complicated to work out the five-year average to avoid paying the Schedule A tax. I confess that I cannot do it myself. On 6th April, the first day of every new tax year, I send a letter to my accountants saying, "Will you please inform me of the sum of money I should spend on the maintenance of my property this year in order to negative any liability to Schedule A tax?".

Mr. H. Wilson

The hon. Member has confirmed the point that is at the back of the minds of many of us. Is it not a fact that one of the major reasons why so small a proportion of owner-occupiers are able to claim this relief is not only that they have no accountants but that they do not have the money, either, to spend that amount on the repair and maintenance of their homes to be able to offset the effective Schedule A? The hon. Member presumably has.

Mr. Nabarro

I do not think that is a fair comment at all. There are very large numbers of owner-occupiers who maintain their property normally. After I confessed in Committee a year ago tomorrow that I paid no Schedule A tax, I was flooded the next morning with requests from national newspapers to write articles for them showing how I avoided paying this tax. I wrote an article in the Daily Mail forty-eight hours later on how not to pay the tax. Since then I have received in the last twelve months hundreds of letters from people of modest means living in semi-detached houses in London and elsewhere asking me how it is done. I tell them. They give me their assessment value and I have given them in many instances the approximate sum that they should spend annually to avoid the tax, and that is not the excessive amount suggested by the right hon. Member for Huyton. Repainting the house inside and out every third year should cover a large part of the tax.

But I am not to be detracted on this point. The fact is that the Inland Revenue apparently will not publicise in a concise form all those groups of repairs which rank for Schedule A relief. It could be done very simply. They fall under twenty headings. Each one of them is a subject which costs the owner-occupier quite a sum of money over the year for repairs and I suggest to the Chancellor that if he wants to resist the new Clause the least he should do is widely to publicise the reliefs in terms similar to those which I shall give to the Committee and which are easily understood.

As to the first group, of course most owner-occupiers insure their house against fire. Premiums rank against Schedule A relief, along with premiums for insurance against storm, tempest and flooding. The accountancy fees for the preparation of the claim rank for relief under Schedule A. That is the answer to the right hon. Member for Huyton who said that people could not afford to employ accountants. The whole cost of employing an accountant to compile the Schedule A relief claim is chargeable against the tax and is allowable. [An HON. MEMBER: "If one has to pay it."] It is no good saying "If one has to pay it": 6 million people are paying it unnecessarily.

Mr. James Callaghan (Cardiff, South-East)

Does not the hon. Gentleman understand that there are very few taxpayers who employ accountants? If they employed them, they would have to pay them. If they paid them, they would be allowed only so much of the fees as deductible at the standard rate from tax, and so there would still be a net cost to the taxpayers.

Mr. Nabarro

There is a net cost, but the preparation of a Schedule A claim by an average local accountant might cost a couple of guineas—once a year—for an ordinary owner-occupier. He is allowed 7s. 9d. in the pound of that, as part of his maintenance relief claim for it, and it will count year by year as part of the five-year average.

I am now going to make my speech. I do not propose to give way again every ten seconds.

The average owner-occupier just does not know that his accountancy fees are admissible. I believe that the Inland Revenue should tell him. All legal fees incurred in fighting cases before the district commissioners are similarly chargeable against maintenance relief. One has to pay the solicitor, but one charges it back to the Inland Revenue and thence to the Chancellor of the Exchequer.

Also allowable axe: all decorations, internal and external; all plumbing and water supply and drainage system; repairs to all electrical equipment which is part of the structure of the building; all roofing repairs; all gates and fences and garden walls; all re-scarifying and re-gravelling or surfacing of entrance drives and paths; all repairs of drains, downspouts, gutters, tiling and roofing; all repairs to floors, wooden, tiled, concrete or otherwise; all repairs to sinks, draining boards, taps, including new washers; all nails, screws, bolts and sundry accessories for repairs; all fireplace repairs, stoves, firebricks and stool-bottoms; all repairs to boilers, calorifiers, tanks, water and central heating pipes; fixed radiators and similar appliances—I am pleased to see that the Chancellor is checking each of these items closely—all repairs to door-locks and doors; all repairs to lavatory pans and basins; all repairs to hard tennis courts.

I am pleased to admit that I have a hard tennis court in my garden. I send every year for the contractor who installed it to come and re-surface it and paint the white lines on it again. That is all admitted against a Schedule A maintenance claim. [Interruption.] Certainly it ought to be, and indeed it is. I will produce these receipted bills to right hon. Gentlemen opposite showing this to be so. The hon. Member for Sowerby (Mr. Houghton) is learning points. He should have known it a long time ago—

Mr. Houghton


Mr. Nabarro

I cannot give way again.

Mr. Houghton


Mr. Nabarro

Well, I am a generous fellow.

Mr. Houghton

I knew all that and quite a good deal more. If the hon. Gentleman likes to employ his wife to do some of these internal decorations in the home he can charge what he pays her for the work so long as it is reasonable and in line with contemporary rates which a skilled worker would earn.

11.0 p.m.

Mr. Nabarro

I have already enumerated sixteen headings. I will read the seventeenth to the hon. Gentleman verbatim: Your wife or son or daughter's labour for maintenance provided that—

Mr. Houghton


Mr. Nabarro

—there is a receipted bill. When I said to the hon. Member for Sowerby that he was learning something, it was because he was nodding his head in vigorous disagreement when I mentioned repairing and painting white lines on a hard tennis court which, evidently, he did not know.

Hon. Members

He does not play tennis.

Mr. Nabarro

That is the answer.

The twentieth item is windows, including glass, putty, window accessories and sash cords.

The twenty-first item is anything else you can get away with.

Mr. Callaghan


Mr. Nabarro

It is not monstrous at all. I believe it to be the duty of every owner-occupier to spend his time getting away with every single item of maintenance relief he can at the expense of the Inland Revenue.

Mr. Callaghan

Typical Tory philosophy.

Mr. Nabarro

No. It is not a typical Tory philosophy. The law provides that maintenance relief shall be granted within certain statutory provisions. The Chancellor of the Exchequer has not properly publicised the groups for which reliefs are available. I want him to print these reliefs in the form I have given and see that they are distributed with every assessment for Schedule A in order that the nine out of ten people who are owner-occupiers shall make proper claims.

Mr. Callaghan

The hon. Gentleman ought to be ashamed of yourself.

The Temporary Chairman

Order. The hon. Member must not interrupt unless the other hon. Member gives way.

Mr. Nabarro

I was about to quote from the Daily Telegraph of 7th April, 1960: Dodgers. The hunt is up against the naughty tax-dodger. Just as naughty in their way are the Commissioners of Inland Revenue. When is the hunt going to be up against them?

Mr. Callaghan

Prince of dodgers.

Mr. Nabarro

As Mr. Nabarro pointed out in his excellent article, Schedule A is 'an illicit collection by the Inland Revenue.'

Mr. Callaghan

"Anything else you can get away with."

Mr. Nabarro

It is a tax levied not really upon those who own houses but upon those who, owning houses, are too naive or too busy or too careless to wriggle out of it. For every successful tax dodger there must be hundreds of thousands of poor dopes who, from sheer fright, ignorance, confusion or form-blindness, are paying far more tax than they ought. This should be remembered. I very much approve of those words. It is the fact, as demonstrated by Parliamentary Answers from the Chancellor of the Exchequer, that nine out of ten owner-occupiers are paying this tax largely because maintenance relief is not being claimed.

I cannot bring it home to every taxpayer in the same way as the Chancellor of the Exchequer can, because I do not post a letter once a year or more to every taxpayer in the country. If I did I could include advice along the lines I have mentioned.

Finally there is the political case, resting on Conservative Party philosophy and policy.

Mr. H. Wilson

On a point of order, Sir Samuel. Before the hon. Gentleman drags his speech down to an even lower level, I ask whether it is in order, when he is nominally moving a new Clause, the purpose of which is a removal of a tax, for him to spend all this time making the strongest possible case for the tightening up of the rules, which are obviously so much abused.

The Temporary Chairman

That is not a point of order.

Mr. Nabarro

I am grateful to you, Sir Samuel, for your protection against these bogus points of order.

Mr. Houghton

On a point of Order, Sir Samuel. If I heard aright, you said that the point raised by my hon. Friend the Member for Huyton (Mr. H. Wilson) was not a point of order. I respectfully submit to you that it was a point of order, and that it was for you to rule whether the hon. Member for Kidderminster (Mr. Nabarro) was keeping within the rules of order in devoting so much of his speech in favour of increased allowances for repairs or some such provision, and saying nothing about the purpose of the new Clause, which is the total abolition of Income Tax assessment on owner-occupiers.

Mr. H. Wilson

Further to that point of order, Sir Samuel. I am not sure that my hon. Friend the Member for Sowerby (Mr. Houghton) has exactly got my point. I was not suggesting that the hon. Member for Kidderminster was making a case for further generosity by the Treasury in the matter of the repairs allowance. I said that he was making the strongest possible case for less remissions and less generosity by the Treasury. For that to be enacted would mean imposing a charge on the taxpayers. I am sure that you would be the first to rule that any suggestion for legislation for imposing such a charge would be out of order.

The Temporary Chairman

It does not appear to me that the hon. Member for Kidderminster was out of order. He was not proposing a charge which is not provided for.

Mr. Nabarro

I was saying, when I was interrupted by these bogus points of order, that it is strictly in consonance with Conservative philosophy, which has been preached by all my hon. Friends and myself for the last ten years, that we invest in a property-owning democracy. We say that everybody should be encouraged to own their own house. A great deal has been done by the Conservative Party towards that end. Building controls have been swept away.

Mr. H. Wilson

What about mortgage rates?

Mr. Nabarro

The standard rate of Income Tax has been reduced over the years from 9s. 6d. to 7s. 9d. in the pound, and up to 100 per cent. mortgages have been granted. Interest rates currently are at about 7 per cent. Of course, the right hon. Member for Huyton, when he talks about interest rates, always conveniently forgets to observe that the mortgage interest—

The Temporary Chairman

Order. I think that the hon. Member is getting away from the new Clause.

Mr. Nabarro

—the mortgage interest is chargeable against the Income Tax liability, and is thus reduced by 7s. 9d. in the pound. There is now only Schedule A Income Tax left, and I suggest to the Chancellor, in view of the impending very heavy increase in rating valuations for houses in 1963, that the convenient time to abolish Income Tax Schedule A would be this year or next year. [An HON. MEMBER: "What about the year after?"] No, not the year after, because the effect of abolition would be twelve months removed from the legislation point.

I do not believe that this form of taxation is logical. It is grossly uneconomic to collect. It is fiscally inequitable. It is anathema to the great majority of my Conservative friends and myself, and as to 90 per cent. it is collected from persons who, were they fully informed as to how to avoid paying it, would be paying practically nothing under Schedule A, as owner-occupiers of houses.

On all those grounds I believe that serious consideration should be given this year to the total withdrawal of Schedule A Income Tax for owner-occupiers, at a cost of about £34 million, calculated from the Chancellor's own figures, given in Parliamentary Answers—£44 million being the gross yield, less £10 million paid back in maintenance relief, giving a net figure of £34 million. That £34 million would not be available to the Chancellor if only Schedule A taxpayers, as owner-occupiers, were a little more intelligent in the application of their maintenance relief claims.

The Temporary Chairman

Mr. Wade.

Mr. William Ross (Kilmarnock)

On a point of order. I did not hear the hon. Member for Kidderminster (Mr. Nabarro) move his new Clause.

The Temporary Chairman

The hon. Member started his speech by moving the new Clause.

Mr. Ross

He did not.

The Temporary Chairman

The hon. Member will please not contradict me. I distinctly heard him move the new Clause.

Mr. Donald Wade (Huddersfield, West)

At the outset I should make it clear that I cannot associate myself with all the observations made by the hon. Member for Kidderminster (Mr. Nabarro). I am concerned with what appears on the Notice Paper. You have indicated, Sir Samuel, that the new Clause—(Abolition of Schedule A income tax)—may be discussed with the new Clause which has been moved by the hon. Member for Kidderminster. The object of the new Clause in the names of my right hon. and learned Friend, my hon. Friends and myself is to achieve the total abolition of Schedule A tax.

There is not a fundamental difference between this and the proposals put forward by the hon. Member for Kidderminster. If Schedule A were abolished the landlords would pay tax on the net rents which they receive. They would be relieved from a considerable amount of inconvenience in paying tax under different Schedules, but the material position would be the same for them. Therefore, whether we advocate the total abolition or abolition in respect of owner-occupiers, the subject is primarily one of owner-occupiers. The new Clause which the hon. Member for Kidderminster has put forward is a step towards total abolition. For that reason I should be prepared to support it and vote for it in the Division Lobby.

But there is another reason why I should be bound to support it. It is a precise replica of a Clause which I moved in 1959. I will not take up time in chaffing the hon. Member for Kidderminster for having voted against it on that occasion, together with 230 of his hon. Friends. We have been over that ground before. I welcome converts, especially if there is evidence that that conversion will be shown in the Division Lobby.

There is not a great deal of original thought which can be brought to bear on this subject. It has been debated on numerous occasions. My colleagues and I have tabled Amendments to it each year since 1956, and have advocated the reform or abolition of Schedule A tax for many years before that. It is my belief that the upholders of the tax are fighting a rearguard action.

The hon. Member for Kidderminster put forward certain objections, and I want to suggest some variations on the same theme. I can summarise the case for the abolition of the tax on three grounds. First, it is antiquated; secondly, it is illogical and, thirdly, it is administratively wasteful—in time, money and energy both on the part of those who collect it and those who pay it.

As to antiquity, it was introduced in 1803, when conditions were entirely different. When Addington's Property and Income Tax Act of 1803 was put on the Statute Book, the benefit of property was one of the chief sources of income. It was more than income from business or from employment, that is to say, from wages or salaries. It was not unreasonable that this benefit from property should have been regarded as something to be taxed, but today the circumstances are entirely different. We have a completely different situation.

11.15 p.m.

If the Chancellor were thinking up a new tax and there were no Schedule A tax, I do not believe for a moment that it would occur to him to put a tax on this notional benefit derived from owner-occupation. It is antiquated and it is also illogical. It is illogical for several reasons. The hon. Member for Kidderminster has already referred to the idea of notional income. It is only notional income as regards certain kinds of property. If I choose to live in a caravan I do not suffer Schedule A tax. If I choose to live in a houseboat I do not suffer Schedule A tax. I understand that if I have a caravan and take off the wheels and live in it I still do not have to pay Schedule A tax unless it becomes a permanent fixture and part of the realty.

I am aware of some of the arguments put forward from the Treasury Bench. I am aware of the argument that the taxpayer who invests some capital in a house in which he lives might have invested it in an income-producing investment and therefore he ought to be taxed on the income he might have received. That is a very dangerous philosophy. One can imagine the Chancellor chasing up potential taxpayers to see if they invest their money in something which does not produce income and which, if invested otherwise, might have produced income. [An HON. MEMBER: "Mink coats."] Mink coats were referred to last year.

I also recollect Lord Amory's observations in 1959. I can give the actual quotation from the debate on 15th June, 1959, on the new Clause which I moved. He said: An owner-occupied house may not produce cash income, but it produces the equivalent in the form of freedom from rent"—[OFFICIAL REPORT, 15th June, 1959; Vol. 607. c. 64.] If he started taxing freedom from rent, the Chancellor would have to chase every tramp and every wandering gipsy. They might become liable for some notional benefit to be derived from freedom from rent. Whether in fact their income would come up to a taxpaying level, is another matter, but in theory that would be the case.

This tax is also illogical because the assessments are out of date. Many of them are many years out of date, whereas in the case of houses built more recently assessments are much more up to date.

Mr. Houghton


Mr. Wade

I think I know what the hon. Member is about to say.

Mr. Houghton

I am glad that the hon. Gentleman does. If so, he should not be saying what he is about to say. The hon. Member knows that new houses are assessed in harmony with valuations of 1936 and that a modern house, costing £4,000, may still be assessed, and is assessed, on the value of that house on 1936 values.

Mr. Wade

I am well aware of that point and if the hon. Member for Sowerby (Mr. Houghton) had allowed me to finish my sentence, I should have made that clear. I was pointing out that there are very great variations in assessments although in theory the newer houses are supposed to be based on 1936 values.

Mr. John Barter (Ealing, North)

If the hon. Member for Huddersfield, West (Mr. Wade) accepts that point, could he explain the position in which I find myself? I live about half a mile from an hon. Friend who has a house which is twice the size of mine. Incidentally, it was built before the war and mine was built after the war. My Schedule A assessment is twice the value of that of the house of my hon. Friend. If there is a Chancellor's concession, whether it has statutory authority or not, there seems to me to be no equity as between one occupier and the other.

Mr. Wade

That is a very fair illustration of the point which I was endeavouring to make. I hope that it has impressed itself clearly on the mind of the hon. Gentleman the Member for Sowerby.

Let us pursue this subject of illogicalities. I say that it is illogical that the owner-occupiers are dependent so far as their liability goes, on these maintenance claims and their ability to fill up the necessary forms. Two years ago it was stated that only one-tenth of the householders concerned make these maintenance claims. I should not go so far as the hon. Member for Kidderminster. I do not think that every owner-occupier—or even a majority—is entitled to full relief. There are many who do not, in fact, spend the required amount. Some are not in a position to do so; and then there are the young married couples who have saved enough to buy a new house if they have been fortunate enough to have found one, and in their case there is not a great deal to spend in the first five years. So, it is not true that everyone would escape the Schedule A tax merely if they knew how to fill up the form.

It is, however, a tax on ignorance and there are many people who fail to get the full benefit because they do not understand the regulations. It is illogical, also, because of the nature of the statutory allowances. Those bear very little relationship to the cost of repairs today. They are quite unrealistic. On the other hand, there are some landlords who spend nothing at all and yet get the benefit of the statutory allowances. That is one of the reasons why I should wish to see this tax abolished. Why should the man who spends nothing get this benefit? Why should he not pay tax on the net rents he receives?

All this ground, I know, has been covered in previous debates on this subject, but are there not new factors? I think that there are two. I am aware of the argument that the man who does not own a house, but who rents a house or a flat, should have some kind of similar relief to that enjoyed by the owner-occupier who is, we hope, to be relieved from Schedule A tax. One must make a distinction between the kind of taxpayer who has £2,000 or £3,000 to invest in income-bearing investments or in property, and the man with less. In the first type of case, if the man puts his money into property, then almost for certain he will pay no Schedule A tax. He will employ an accountant and spend sufficient annually to insure against Schedule A tax. But let us take the man with savings of up to, say, £500. If he puts his money into a house, and we abolish Schedule A tax he will get a benefit, but if he rents a house and puts his money into income-bearing investments, he will get, say, £25 and pay tax on it.

If I were able to move all the proposed new Clauses which the Liberal Party has tabled to this Bill, it would be found that up to £25 of income from all income-bearing investments would be relieved of tax. There would be a broad equity as between the man with savings invested and living in rented occupation and the man owning a small dwelling. That is one new factor. It answers my own concern that we should be fair to the people who rent as well as to the people who own.

There is one other important new factor, of which the Chancellor must be well aware. That is the new assessments for rating which will come into effect in 1963. There will be a substantial increase in rates for owners of dwelling-houses. There is no doubt about that. What will happen to Schedule A assessments? We cannot go on for ever on the old values. At some time assessments must be brought up to date. If they are brought up to date at the same time as the increase in rates, it will be a very hard knock for those who own their own houses. It will be very serious indeed. We have been told that Schedule A assessments have nothing to do with the new rating assessments. But sooner or later the change will come and it is essential that we should face up to this before the new rating assessments come into effect.

I do not know what Government policy is on this matter, but the combined effect of high interest rates, high land prices, Government policy in taxing building societies, and Schedule A tax, which I regard as an irritant rather than as an actual deterrent to buying a house, is to make the position of the owner-occupier more difficult. We should be told whether that is deliberately part of Government policy. If not and if it is the intention of the Chancellor to assist home buying, now is the time to abolish this irritating and unnecessary Schedule A tax. If it is to be done, let it be done now.

Mr. A. R. Wise (Rugby)

I shall, unfortunately, repeat a great deal of a speech I made on this subject last year, because the tax appears to have altered little in logicality or justice. However, I believe that it will cheer the Committee up if I say that we hope very much that we shall not have a sympathetic answer to the effect that it cannot be done this year for the inevitable reason which has been given so often by my right hon. and learned Friend's two satellites at the Dispatch Box, namely, that it runs contrary to the whole system of the Budget. It has been argued that the Budget is there to check inflation and that this relief of taxation would clearly be inflationary. I have never subscribed, and I will not subscribe, to the idea that leaving money in taxpayers' pockets is inflationary. It is not new money. The only creator of new money is a Government. The only creator of inflation, as far as I know, is Government expenditure.

I was happy to read in the Press this evening that large administrative economies are apparently contemplated. I hope that they are, because an economy of less than 1 per cent. in Government spending would cover—

Mr. H. Wilson

On a point of order. We are all most anxious to debate the present economic situation and the Chancellor's intentions in this respect, but is it in order in a debate on Schedule A to start arguing the case for a particular economy in the general level of Government expenditure?

The Chairman (Sir Gordon Touche)

That is obviously going far beyond the new Clause.

Mr. Wise

The right hon. Gentleman might be a little more generous, seeing that he has debated the economic policy of the Government every time he has spoken, irrespective of its relevance. He should allow a little latitude to this side.

Mr. H. Wilson

That is a criticism of the Chair.

Mr. Wise

The Chair, with the right hon. Gentleman's permission, is capable of looking after itself and needs no assistance from him.

This tax has been illogical from the start. At the beginning of last year I wrote to the Treasury and asked the basis on which the tax was assessed. I was not at all surprised that it took six weeks to get an answer. I was even less surprised when the answer came and said that the Treasury did not know the basis on which it was assessed.

11.30 p.m.

The hon. Member for Huddersfield, West (Mr. Wade) mentioned something about the rise in rating assessment which might have an effect on Schedule A, but it is not based on rating assessment. Indeed, if it were, it might be a little more possible to understand it. As far as I know, it is based on nothing except the whimsy of the local inspector of taxes. A tax of this kind cannot be justified. Furthermore, it is notional, as my hon. Friend the Member for Kidderminster (Mr. Nabarro) said. It is guesswork throughout.

Again, the reliefs, about which we have heard a good deal and from which I hope to derive some valuable hints, are not logical. It is true, as the hon. Member for Sowerby (Mr. Houghton) said, that a man can charge his wife's work. Why cannot he charge his own? Is that less notional?

Mr. Houghton

It is not expenditure of money.

Mr. Wise

Nor is the notional tax an expenditure of money. It is nothing in the least like it. It is just as illogical if a man cannot charge his own work on his house. That would account for a large number of the Schedule A taxpayers who make no claim. It would be only justice to allow them to make such a claim.

Another objection of mine to this tax is that if the taxpayer took the bit between his teeth, he could reduce the Treasury to such chaos by putting in his claims, whether they would be accepted or not, that the tax would be uncollectable and unprofitable. Such a tax is not a sound basis of taxation.

I shall not spend must time on my speech tonight, as a large number of hon. Members wish to speak. I am anxious to hear the fifteenth speech of the hon. Member for Sowerby—

Mr. Nabarro

I am not.

Mr. Wise

—but I urge my right hon. and learned Friend the Chancellor to try to do something about this tax. If he achieves his administrative economies, he will have the money with which he can do this job now. The sum involved is not large; it is £34 million. It is not inflationary, and it would produce a great benefit for a very large number of people.

This is the year in which, ethically, it should be done. Practically, it may be difficult. It should, however, be done two clear years before the rate revision. We have been told that the two things are not connected. Let us disconnect them as thoroughly as we can. We are told that the Schedule A will not be affected by the new rate revision. Very well, there is no need to wait for the new rate revision before doing something about Schedule A tax. It is our only tax which is based on sheer fancy, and the sooner we do without it, the better for all.

Mr. Victor Yates (Birmingham, Ladywood)

I had not intended to intervene in this debate but for the remarks that were made by my Front Bench and with which I am in total disagreement. It is a great mistake to assume that this is merely a request that people should be allowed to get away with something to which they are not entitled. Why should not the working man, who suffers from a considerable burden, who has to buy his own house and to spend large sums of his income weekly, as well as use his own labour, in trying to keep the house in a good state of repair, be able, wise enough or willing to make the claim to which he is entitled? The hon. Member for Kidderminster (Mr. Nabarro) was quite right when he said that many people do not know that they can make a claim. I think he also said that some people were probably too idle to do so. I would not agree with that, although there are probably thousands of people who cannot be bothered with asking for receipted bills and reckoning up every item of expenditure on the maintenance of their house.

I do not think it is true to say, as some of my hon. Friends have said, that many owner-occupiers have not enough money to spend to justify a claim being made. I live in a street in Birmingham where I should think the majority of the residents are owner-occupiers. As the hon. Member for Rugby (Mr. Wise) said, why should not a man's labour be taken into consideration? I can give an example of a man who works at the Austin factory. He is extremely skilled: he has built a garage on to his house, he paints and decorates the house, and must have spent many pounds on materials for which he has probably not bothered to get the bills.

I therefore think that this Clause which has been moved by the hon. Member for Kidderminster is reasonable. I do not accept the view that it is Conservative philosophy as against Socialist philosophy. I do not recognise any political philosophy in this matter. I recognise the fact that thousands of men and women have had to buy their own houses, there being no other way of getting accommodation, and that it has been too irksome for many of them to keep these records. This Clause asks for exemption in respect of one house. An owner cannot claim for more than one house. Therefore, this measure is designed to be fair to the working man who is buying his own house.

One of my hon. Friends referred to the desirability of being fair to people who rent houses. There must be thousands of people who have completely redecorated the municipal houses in which they live in Birmingham. They have spent a great deal of money in doing so, and they should receive consideration.

This is a ridiculous tax, and this Clause is very fair. The Chancellor should do as the hon. Member for Kidderminster has requested and let people know what their rights are in respect of making claims. This has nothing to do with political philosophy, and I shall go into the Lobby in support of this Clause.

Mr. Graham Page (Crosby)

The hon. Member for Birmingham, Ladywood (Mr. V. Yates) has made a powerful plea for the owner-occupier, and particularly for the owner-occupier who "does it himself." The answer of the hon. Member for Sowerby (Mr. Houghton) to my hon. Friend about this was that when a man does it himself it is not a cash expenditure. But he is not being assessed on a cash income; he is being assessed on a notional income, so for that very reason he should be allowed expenditure which is notional expenditure—his own work.

Mr. Houghton

A question was asked and I gave an answer. I did not argue the matter at all. The question was why labour put into redecoration by the owner himself was not allowable. The answer which I gave was, because it was not cost as defined in the Act.

Mr. Page

I take it, then, that I carry the hon. Gentleman with me in thinking that that sort of labour should be charged against Schedule A tax?

Mr. Houghton

I will come to that later.

Mr. Page

We have been given as the total from this tax the figure of £34 million. Of course, it sounds a large sum for the Chancellor to give away or to concede. But I do not think that those who support the abolition of Schedule A tax are called upon to say that the Chancellor does not need this money. Nor are they called upon—indeed, it would be out of order to do so—to say, if the Chancellor does need this money, the way in which he could get it from some other source.

The case against the Schedule A capital tax stands on its own. It is a bad tax. I deliberately call it a capital tax because it really is not, as far as the owner-occupier is concerned, a tax on income. It is purely a capital tax—not even a capital gains tax. It is a tax on the capital which a man has saved. If the Chancellor says that he must have this £34 million, then I say that he ought to find it from some other source.

As my hon. Friend the Member for Rugby (Mr. Wise) said just now, it is not true that the abolition of Schedule A would be inflationary. It may be said that at this time we ought not to reduce any taxation, when there is such a sickness of the £ and so on, and that we must not be inflationary by removing taxation. But Schedule A tax being a tax on savings, not a tax even on the income from savings, is a disincentive to save and is therefore in itself a cause of inflation.

What is the most common type of saving? It is, of course, the buying of one's own home through a building society mortgage. I should have thought that more was saved that way than by any other single form of saving.

Mr. Nabarro

On a point of order. I have just seen, Sir Gordon, the Patronage Secretary conferring with the shadow Chancellor. Does that suggest that some arrangement is being come to?

The Chairman

Order. That is not a point of order.

Mr. Page

The point which I was endeavouring to make when I was interrupted was that the most common form of saving is to buy one's own home through a building society mortgage. One pays the capital instalments of that mortgage out of taxed earnings. I should think that because it is so inconvenient to withdraw any money from that form of saving it is probably the greatest real way of saving. But as the savings increase by payment of the capital instalments out of taxed income, the Treasury descends upon the saver and taxes the saved capital.

This is not a tax on income because the taxpayer is not receiving any cash income from the item which is taxed. It is a notional, fictitious, imaginary income which is being taxed, not one penny of which the taxpayer sees in cash. He has to produce his 7s. 9d. out of a thin-air pound rather like a conjuror producing a rabbit out of a hat, except, of course, that the conjuror has got a hat. The taxpayer on the other hand, has no income out of which the tax money has to be produced.

11.45 p.m.

The Committee has heard these arguments on previous occasions when new Clauses such as this have been put forward in other years. The subject is becoming rather like a mother-in-law joke on the music halls, but it is no joke; it is a serious matter for the owner-occupiers who have to pay this tax, and it is a serious matter for the principles which this Government were put in office to uphold. This is hardly calculated to encourage of property-owning democracy.

Any owner-occupier who interprets that phrase "property-owning democracy" as owning one's own home finds that he is the only person who suffers double taxation in one country. He is taxed, as the owner of his house, under Schedule A. He is taxed, as the occupier of his house, in general rates. Not only is he the only person who is taxed on his capital, but he is the only person assessed twice on the same item. For a landlord, rates are an allowable deduction from his income from rents, whether the rates are paid by him or paid by his tenant, so in a way he is able to set them off against Schedule A; but the owner-occupier has to pay twice. He pays Schedule 9 and he pays his rates, and rates are not treated in his case as a necessary expenditure in order to earn his notional income.

It really is a "phoney" basis of taxation—that he might put his savings in something out of which he would earn income. That is the argument which is put forward so often to justify Schedule A tax—that he might be earning real income from his savings. He might have put his savings into a car or a caravan or a mink or a mistress, but he would not have been taxed on notional income from any of those commodities.

I ask my right hon. and learned Friend to imagine for one moment that there were no such tax as Schedule A and that he, as a Conservative Chancellor of the Exchequer, was going to impose a tax of this sort. What on earth would his Budget speech read like? What sort of Budget speech would he make in imposing a Schedule A tax on owner-occupiers for the first time? Could he deploy one single argument in favour of this tax if it were a new tax? With what sort of phrases could he, a Conservative, introduce such a tax as this? I hope that we shall hear with what sort of phrases he can announce the abolition of Schedule A.

Mr. Diamond

Anybody who knows the hon. Gentleman the Member for Crosby (Mr. Graham Page) is always glad to hear his speeches and to accept them as serious arguments, and it is because of the argument he has addressed to the Committee that I am anxious to intervene and invite him to consider the matter a little more fully and, I hope, come to the conclusion that his claim for exemption from Schedule A is misplaced.

Let us deal first of all with many of the arguments which have been put forward and which can be dealt with in one sentence only. The majority of the arguments of the hon. Gentleman the Member for Kidderminster (Mr. Nabarro) were directed to the fact that claims are not made correctly, are not properly made, are not fully made, are not sufficiently known. Those arguments are not arguments against Schedule A at all, but merely against the inadequate operation of Schedule A. One can say straight away that, if it be the case that Schedule A does not operate adequately and well, it should do, and it should be encouraged to; but that is no argument against Schedule A.

Mr. Geoffrey Wilson (Truro)

The hon. Member has the argument the wrong way round. The argument is not that Schedule A is not being properly collected but that people who are entitled to be exempted from Schedule A are not receiving their exemption because they do not understand what the exemptions are.

Mr. Diamond

I am sorry, but the hon. Member has not understood me, I can only repeat that it is no argument against Schedule A to say that it is not operating fully, accurately and fairly.

Mr. G. Wilson


Mr. Diamond

It is an argument against Schedule A to say that it is improperly based or is not valid as a method of raising taxation, but most of the arguments in the debate have been adduced to show that allegedly somebody or other does not realise that he is entitled to make a claim. I should be the first to say that in that case the widest publicity should be given to owner-occupiers being entitled to claim. If the maintenance relief claim is complicated—and I do not admit that it is—it should be simplified as far as possible so that no citizen should be called upon to pay more than the proper amount of tax.

The fact is that there is no substantial evidence that the tax is miscarrying considerably. For the sake of administrative convenience and simplicity, many people pay less than they should, and it is alleged that many pay more than they should. I do not know what the difference is, all told. It is certainly the case that many pay less than they should because the Government allow them a greater amount for repairs on their houses than they are able to incur. It is alleged that there are peope who incur larger amounts than they are allowed by the Government but do not claim for that excess because it is complicated to do so or they do not know about it. This may be the case. I can only say from my own experience as a practitioner that there are many cases where one prepares the figures and goes into the claim and one finds that the claim does not lie and therefore it is not submitted.

Mr. Harold Gurden (Birmingham, Selly Oak)

Does the hon. Member not then agree with his hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates) that the man which uses his own labour, the hard-working man who puts his own work into the house, is not entitled to claim?

Mr. Diamond

That is an entirely different point and would have to be explained more fully. I do not agree with my hon. Friend's conclusions, for reasons which would take a little longer to explain.

All I am saying is that many of the speeches in the debate which have been directed in support of the new Clause have really been directed against the way the tax operates. It is no argument to say that Schedule A does not operate smoothly and therefore we should cut it out. If it does not operate smoothly that is an argument for saying that we should improve it. There is an explanation available for all these minor cases but we should get down to the basis of all this matter.

The new Clause says that there should not be a Schedule A tax on owner-occupiers. I say that there should be, otherwise a great injustice is being done to the tenant. It is very simple. All the complaints, naturally, come from the man who has to pay. The man who is not aware, the tenant, that otherwise he would be suffering an injustice does not complain. He does not make a noise about it because he is not aware of it. We in this House are called upon to ensure that there are fair shares in the responsibility for tax-bearing.

It is well known to the Committee—it has been repeated time and time again, whichever party has occupied the Government Front Bench—as a fact with regard to Schedule A: it is a fact that the tenant pays rent and the Schedule A man, the owner-occupier, does not pay rent. [Interruption.] The hon. Gentleman opposite does not like it put that way. He says that there is a notional income. Let us deal with the simple fact. It is not notional at all. The simple fact which is not notional is that the tenant pays his rent in cash weekly, monthly or whatever it may be. That is a fact. [Interruption.] It is nothing to do with Schedule A and whether it is subsidised or not, and it is not a general case that it is subsidised. The man who has a substantial flat pays his rent, and the owner-occupier of freehold premises does not pay his rent. The hon. Gentleman will say that it is not so—

Mr. Barter

I ask the hon. Gentleman to consider that if his argument were pursued to the logical conclusion, bearing in mind that the valuations on which Schedule A is assessed are based on 1936–37 values, it would result in a revaluation for Schedule A purposes to the extent of three or four times the present values, which would result also in tax liability substantially in excess of three or four times the present values. Does he accept that as the logical conclusion of his argument?

Mr. Ross

The hon. Gentleman should preface his remarks by referring to England and Wales. The Rating and Valuation Act, 1956, brought all this into force in Scotland, and the first application of it is this year. If the hon. Gentleman wants to know the answer to his own question, he should look at the Finance Act, 1958, in which there was a special Section relating to this very problem.

Mr. Diamond

I am very happy, or unhappy, to confirm what my hon. Friend says.

The interjection by the hon. Gentleman opposite was on a par with so many of the interjections which are made. The logic is as follows: the basis of Schedule A is out of date; Schedule A assessments should be increased; Schedule A owners should be called upon to pay more Schedule A tax; therefore, let us cut out Schedule A.

It is absolutely absurd logic. All the hon. Gentleman is pointing out is that Schedule A is not sufficient. It may be that it is not sufficient; it may be that it is too much. I repeat that I want to get to the principle and get away from all the detail as to whether the assessment is right, too much or too little. If it is wrong, let it be put right. We do not have to argue that here. If it is on an earlier basis, let it be put on a 1964 basis. The hon. Gentleman will not like that because his Schedule A assessment will go up considerably.

The fundamental point is that if one removes Schedule A tax from the owner-occupier, one by that stroke imposes a gross injustice on every tenant. The owner-occupier screams because he knows that he has to pay, and he understands it. But there is something that the hon. Gentleman does not trouble to understand as a Member of Parliament. There is no party point in this. I accept what my hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates) says. The owners of houses are to be found in all income brackets. On both sides of the Committee we are delighted that people should own their own houses. There is no party point about this; all I am saying is that it is the responsibilty of every hon. Member to have regard also to the position of the tenant. The tenant pays rent, and the owner-occupier does not. To put it the other way, the owner-occupier receives a notional income which the tenant does not. Unless these two are treated fairly there is a gross injustice. If the hon. Member for Kidderminster has his way, the Schedule A man will be relieved of a responsibility which will be put on the backs of the tenants.

Mr. Wise

It is true that the tenant pays rent, but is it not true that the owner-occupier has bought his house and is, therefore, paying what he could have had as income?

12 m.

Mr. Diamond

Of course. That is the whole of the argument. The tenant pays rent. If the tenant had saved the money that the owner-occupier saved and invested in his house and had invested his elsewhere, he would have been receiving income on which he would have been paying tax. What happens with the owner-occupier is a double transaction. He receives the income and pays it back as rent and so no cheque is drawn either way.

One has to compare two men in an identical position, both with the same amount of capital, both acquiring identical houses, one on a rental basis and the other buying the freehold. The difference between the two will be a grave injustice on the tenant if the owner-occupier is relieved from Schedule A.

Mr. Graham Page

As I understand it, what the hon. Member is saying is that the Chancellor must not relieve owner-occupation from tax without also relieving tenant-occupation. The logic of that sort of argument is that one must not take the tax off beer unless one takes it off tobacco.

Mr. Diamond

I am not saying that at all. Take two people in identical circumstances with £2,000 each. One uses the money towards the equity of a house of which he buys the freehold. The other rents the identical neighbouring house and invests the £2,000 and draws income from it. He will be taxed on that income. The owner-occupier will not pay tax and there will be an injustice between the two taxpayers if the owner-occupier is relieved of his liability.

Mr. T. L. Iremonger (Ilford, North)

I follow the hon. Member's argument and admit its validity, although I am opposed to it. Would the hon. Member project it a little further? What about the man who pays £2,000 for a caravan?

Mr. Diamond

A pure technicality.

Mr. Iremonger

Injustice as between one and the other.

Mr. Diamond

The hon. Gentleman interrupted me and presumably he wants an answer. He immediately interjected from a sedentary position. If he wants an answer perhaps he will allow me to give it.

The first answer is that it is a technical point and the second is that if it is not a technical point and Schedule A should be strengthened, then let it be strengthened. I am not here to argue that Schedule A works perfectly. If it does not work perfectly let it be improved, but that is not an argument for removing the tax.

What I would say is that there might be some reduction in Schedule A in order to promote saving. If the Chancellor wants to say that he likes people saving in insurance policies and he gives them relief on their premiums and likes people saving with houses and wants to give them relief on their saving, up to a point, to encourage saving, I will be with the Chancellor. But that is a modest means towards saving and has nothing to do with the unsatisfactory way in which Schedule A works.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd)

I am not getting up now to prevent hon. Members speaking later, but I thought that it would be some help if I were to express my point of view now. I do not necessarily think it may be the last occasion on which I will intervene in this debate.

I listened with great interest to the speech of my hon. Friend the Member for Kidderminster (Mr. Nabarro), a characteristic speech, and with some sympathy to the hon. Member for Huddersfield, West (Mr. Wade). It is very difficult to say anything original on this topic but I will try to put the arguments against the Clause from my point of view. One argument against the Clause is that the Royal Commission reported against the idea, although I do not say that this is decisive.

I have the Royal Commission quoted to me on a number of occasions, but this was an occasion on which both the majority and the minority agreed against the proposal contained in the new Clause. However, I must in fairness say that they put forward their case for a rejection of this view on the grounds of fiscal principle and not of social policy, and that is an important consideration or gloss to be put upon their view.

The second argument against my hon. Friend the Member for Kidderminster is that the concession would be unfair as between taxpayers. We have 6½ million owner occupiers and 9 million tenants. If this concession were made, there would be a strong demand for a rent allowance. There is quite a strong view, honestly held, that if this concession were made it would be difficult to hold out against such an allowance. For me, in my unpleasant position as controller of the public purse, a rent allowance would mean over £100 million of itself, and we should have to add on the other cost on Schedule A, which would bring the total up to about £150 million. I must keep that sobering consideration in mind.

The other argument against my hon. Friend is that an owner-occupier already has the advantage in that he is taxed on 1936–37 values only, generally speaking. I am aware of what my hon. Friend the Member for Ealing, North (Mr. Barter) said, and I do not think that it is a completely consistent approach to the list, but an attempt has been made to keep the tone of the list in conformity with 1936–37 values. Against that, the owner-occupier may make a maintenance claim on current cost of repairs, so that he has a certain advantage in that respect.

Those are the main arguments against the proposal of my hon. Friend the Member for Kidderminster. The arguments for it are substantial. First, there is the social one, with which I do not think the hon. Member for Gloucester (Mr. Diamond) wholly disagreed. It is important to encourage house ownership, and any measure to do that is to be approved.

Then there is the idea of notional income. I must admit that I find it somewhat difficult to explain and perhaps difficult to understand. I am not prepared to admit that the idea of notional income is illogical. Certainly it is exceptional and a little difficult to understand. The Royal Commission said: The witnesses who objected to the charging of tax on the owner-occupiers of dwelling-houses did so on the grounds—

  1. (1) that notional income is not a fit subject for taxation; and
  2. (2) that it is inequitable to tax the beneficial enjoyment of a right of occupation of real property when the income which could, by parity of reasoning, be attributed to the owners of other forms of property (e.g., motor cars) goes untaxed."
My hon. Friend read that out also. His argument was adopted by other of my hon. Friends. I will read out the following passage. I am not sure whether my hon. Friend the Member for Kidderminster read it out.

Mr. Nabarro

My right hon. and learned Friend was laughing so much he did not hear what I said.

Mr. Lloyd

I certainly did not laugh during my hon. Friend's speech. I found no cause for humour in it. The Royal Commission went on: We think that the first argument ignores the principle that taxation should be adjusted to the relative capacity to pay of the different taxpayers. There can be taxable income which is not received in cash. Living accommodation is a necessity of life and a taxpayer who does not own it is obliged to rent it: consequently an owner-occupier with a given income, paying no rent, has a larger taxable capacity than a tenant with the same income out of which he must meet liability for rent. That is the argument. I am not sure that I am competent to pronounce upon it, but one of the principles of the tax system is to go on taxable capacity. That is the argument of the Royal Commission.

Another argument which my hon. Friend the Member for Kidderminster urged in favour of his proposal is that the small house owner does not know how to make the maintenance claim, and that only about 10 per cent. of them submit these claims. I am happy to tell my hon. Friend that a new leaflet is coming out in the autumn which will set out very clearly the circumstances under which people can make these maintenance claims.

Mr. Nabarro

I am delighted to hear that my right hon. and learned Friend is issuing a new leaflet. Will he arrange for a proof to be sent to me in advance, so that I may give him the benefit of my advice on publicity matters, and how we should bring home the facts to these 6 million people? The pieces of dirty, buff-coloured paper of the ordinary Inland Revenue type will not serve that purpose at all.

Mr. Lloyd

I am told that the leaflet will be very explicit and clearly printed, with all the main headings under which claims may be advanced clearly itemised. I cannot say now whether it will be possible for my hon. Friend or even all hon. Members of the Committee to have a preview of the leaflet, but I will consider the possibility. Nevertheless, it is a good thing to have this more explicit, clearly printed form. That will go some way to meet my hon. Friend's point, although I am not certain that there is as much substance in it as he thinks.

The fourth argument is that if all these maintenance claims were made the tax would yield very little. That is quite contrary to the professional advice that I have been given. Even if all the claims that could be made were made, I am advised that the tax would still yield a considerable sum. However this may be, I am trying not to be unfair about this matter. This year, wherever the balance of the argument rests, my view of the new Clause is governed by the consideration that the cost of my hon. Friend's proposal would be £43 million.

The next proposal, put forward by the hon. Member for Huddersfield, West and his hon. Friends, would cost about £47 million net, and I cannot contemplate giving up that amount of revenue this year.

Mr. Barter

My right hon. and learned Friend has referred to the fact that the cost of this proposal, this year, would be £43 million net. Two years ago it was estimated that it would cost £40 million net and last year, I think, it was estimated at £54 million net. Does not that indicate that more claims are being put in at present?

Mr. Lloyd

I do not have the figures for last year at my fingertips—I was then occupying a different position. All I can deal with is what my advisers have given me this year, and their advice is that it would cost £43 million net. I cannot contemplate giving up that amount of money this year.

Having said that—and I hope that my hon. Friends will accept the position—the question arises about the future. I would have thought that the proper course would be to deal with the matter in connection with the 1963 revaluation. The new rating valuation comes into force for England and Wales in April, 1963. We shall require specific legislation in the Finance Bill of that year to empower us to use the new valuations for Schedule A purposes, because the present Rating and Valuation Bill empowers us to use them only for rating purposes. We shall require legislation in the Finance Bill to allow us to use them for Schedule A purposes, and that is the time to have a debate on this matter. We shall then know the actual figures on current values.

I cannot now pronounce upon what will be the priorities which should have tax relief, or whether there is something in the idea, put forward by the Opposition last year, to have a relief up to a level of £15, or the idea put forward by the Commission which advised the Irish Government, which was an upper limit of £30. I cannot pronounce at this stage upon what is the right way to deal with this problem. I admit that there is a problem, and it is important to try to increase the incentives to house ownership. But it is not practical to try to come to a decision at present.

I cannot accept a proposition to give up £43 million of revenue this year. That being so, it seems logical and sensible to consider the matter when we have to legislate in connection with the new rating valuations. In the circumstances, I hope that my hon. Friends will accept the position. I submit, with great respect, that it would be unreasonable and somewhat unrealistic for those who have supported the general lines of my Budget to press the new Clause.

Mr. Houghton rose

Mr. Nabarro

Not again! The hon. Member has made about fourteen speeches today.

12.15 a.m.

Mr. Houghton

I thought it might be for the convenience of the Committee if I followed the right hon. and learned Gentleman and gave the point of view from these benches. I have no desire, any more than the Chancellor had, of bringing this debate to a premature conclusion. I am quite prepared to go on discussing this matter until breakfast time so long as the Committee thinks it profitable to do so. What I am about to say need not discourage any hon. Members on either side of the Committee from continuing the debate. Nor would it rule out the possibility that my right hon. Friend the Member for Huyton (Mr. H. Wilson) might himself wish to intervene later if the debate continues for a reasonable time. I think that is being fair all round. I hope that the murmurs of disapproval are now quietened and that we can proceed with an examination of this important matter.

I say this to my hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates). I ask him to contrast the attendance and the passion shown by hon. Members on the benches opposite on this new Clause with what we experienced earlier in this Committee when we were trying to get the smallest reliefs for old people on small incomes and others on small incomes. The age exemption for the poorest taxpayer would have cost £3¼ million, but it was rejected by the Chancellor and it received little or no support from the benches opposite.

Mr. Wise

On a point of order, Sir Gordon. Would it be possible for you to persuade the hon. Member for Sowerby (Mr. Houghton) to come somewhere near to this new Clause?

The Chairman

I think that the remarks of the hon. Member for Sowerby (Mr. Houghton) were a passing reference to a previous Amendment.

Mr. Houghton

Thank you, Sir Gordon. It was only a passing reference because I have hardly begun my speech. Since my hon. Friend the Member for Ladywood made a contribution to the debate and announced his intention of going into the Division Lobby in support of this new Clause, I thought it appropriate for me to make a few observations about what I believe to be fundamental to this debate—that we are now hearing Tory philosophy. This is political. As the hon. Member for Crosby (Mr. Graham Page) said, this is what the Tories were elected for.

Mr. Nabarro

A property-owning democracy.

Mr. Houghton

The Tories were not elected to give the aged relief. The Tories were not elected to give those on small incomes relief. They were elected to sweep away, lock, stock and barrel, Schedule A tax on owner-occupiers.

Mr. Charles Loughlin (Gloucestershire, West)

Before my hon. Friend proceeds on this—

Mr. Houghton

Let me proceed a little further, if I may, with my argument.

Mr. V. Yates

My hon. Friend the Member for Sowerby (Mr. Houghton) assumes that I am not aware of all those other humanitarian objectives, which I fully support, but that does not justify refusing to hear an argument that is distinctly in favour of assistance to the working man buying his house. [HON. MEMBERS: "Hear, hear."]

Mr. Houghton

I hope that my hon. Friend is suitably encouraged by the reception of his remarks by hon. Members on the benches opposite.

Mr. Nabarro

Cheer up.

Mr. Houghton

They are not interested in the working man buying his house. They are interested in giving Schedule A reliefs to people in the Surtax range. Will any hon. Member opposite deny that a substantial benefit would be added to the Surtax payer by this new Clause? Of course it would.

Mr. Wise rose

Mr. Houghton

I am not giving way to the hon. Member.

Mr. Wise

The hon. Member asked a question.

Mr. Houghton

I am asking a question because I know the answer.

Mr. Nabarro

The hon. Member for Sowerby is a Surtax payer himself.

Mr. Houghton

I have no objection to admitting that I am Surtax payer, but I have fought as hard as anyone against the proposals in this Bill for Surtax payers. I do so on principle and against my own interests. Before there is any comment on it, I will also tell the Committee that I am also an owner-occupier and I fight against the wholesale proposal which the hon. Member for Kidderminster (Mr. Nabarro) made.

Mr. Nabarro

Does the hon. Member pay Schedule A tax?

Mr. Houghton

Last year—[An HON. MEMBER: "Not this year? The hon. Gentleman lives in a caravan."]

Mr. Nabarro

Or a houseboat.

Mr. Houghton

I thought that this was going to be one of the most serious of our debates on the Finance Bill. This is the only proposed new Clause for which right hon. and hon. Members opposite have shown any enthusiasm, apart from one to relieve the horticultural industry from the impact of the tax on heavy oils. They should surely be prepared to listen to a reasoned case against the unreasoned and disgraceful speech of the hon. Member for Kidderminster. He does no credit to his knowledge and intelligence by engaging in the bombast and exhibitionism which he displayed when he moved this new Clause. I would tell him that the longer he is in the House, the more intolerable is his behaviour on occasion. He should treat the House and this Committee a little more seriously than when he moved this new Clause.

Mr. Nabarro

I am humiliated deeply.

Mr. Houghton

In 1959, when the Liberal Party moved a similar new Clause on the Finance Bill of that year, my right hon. and hon. Friends abstained from voting when the matter went to a Division.

Last year, as I was about to say, we decided to support a new Clause in the name of the hon. Member for Loughborough (Mr. Cronin) and other hon. Members, which was designed to give exemption to owner-occupied houses up to the first £15 of net annual value. This proposal which we made last year sought to give to the owner-occupier who had invested his savings, or his money, whether savings or not, in a house, a concession similar to that given to those with money in the Post Office Savings Bank or a trustee savings bank, where interest up to the first £15 is exempt from the incidence of Income Tax, but not Surtax. That debate was on 21st June, exactly a year ago, and that was when the then Chancellor made the statement, part of which the hon. Member for Kidderminster quoted in his speech.

Our proposal last year was, in fact, a copy from a proposal made by the Tax Commission in the Republic of Ireland, where there was a Commission similar to our Royal Commission; but, whereas our Royal Commission recommended unanimously in favour of retaining the Schedule A tax on owner-occupiers, the Irish Commission recommended that Schedule A tax on owner-occupiers should be exempt up to the first £30 of annual value of dwelling-houses. I should explain that that was only in respect of one dwelling-house of one taxpayer. In the Republic of Ireland that was a concession comparable with their own version of exemption of Post Office and trustee savings bank interest from Income Tax. Their limit is not £15, but £30. The Tax Commission in the Republic of Ireland, which has an Irish name which I cannot possibly pronounce, made a recommendation on those lines. We thought that that principle should receive the careful and favourable consideration of the Committee. That is why we supported it last year.

This year there were other matters which we decided to press upon the Chancellor more strongly than the new Clause on Schedule A which we brought up last year. In particular, we felt most strongly and deeply about additional personal reliefs to hard-pressed sections of our smaller taxpayers. Our pleas fell upon deaf ears on the benches opposite, and the Chancellor felt unable to concede them because of their cost.

There have been many irrelevancies and inaccuracies in the course of the debate so far. I shall say something about them. I do not believe that a large proportion of owner-occupiers who do not make maintenance claims fail to make them on account of ignorance. The hon. Member for Kidderminster is quite convinced that many more claims could be made to extinguish Schedule A assessments if only the taxpayers concerned knew their rights. I do not believe that. The hon. Member claims that he has publicised, as he has, the right to claim where the cost of repairs exceeds the statutory allowance when the expenditure is averaged over the preceding five years. I hope that I shall be forgiven for mentioning that I did a regular weekly broadcast from 1940 to the time I entered the House of Commons in 1949. I broadcast on this very issue time and time and time again. [Interruption.] I think that the hon. Gentleman must draw certain conclusions from that, as he must from the results of his own attempts at publicising this relief.

The truth is that only about 10 per cent. of owner-occupiers are making claims for relief at present. About 90,000 new claims are made each year, which is a very small increase in the number of claims. Having regard to the 6,000,000 owner-occupiers who make no claim at all, 90,000 a year is a very small increase in the number of claims. I do not believe that this small increase in the number of claims derives from lack of information about the rights of the taxpayer. I agree that there may be something in it, but not as much as the hon. Member for Kidderminster claims.

Another aspect which the hon. Member for Kidderminster overlooked is that not all taxpayers are in his position. He has so much money to spend that he can deploy his expenditure on his house and his tennis court in such a way as to get the maximum benefit from his Schedule A tax. I do not condemn him for that, but many taxpayers would envy the resources he has to deploy in this way. Many taxpayers have not the money to do that.

12.30 a.m.

The hon. Member should bear in mind also that since this expenditure must be averaged over five years, it takes an expenditure of £200 over five years to extinguish an assessment of £40 a year. Two hundred pounds in five years on a house of a relatively small assessment like that is a fairly high level of expenditure for the ordinary owner-occupier to undertake.

Mr. Nabarro

Yes, but the average owner-occupier paints his house, inside and outside, every four years. That is the acclaimed average. That occupies the greater part of the £200, provided that he does not do it himself. Under the existing law, he cannot charge it if he does it himself. But normal repairs to a four-bedroom semi-detached house over a period of five years would cost more than £200.

Mr. Houghton

I leave the matter by saying, as my hon. Friend the Member for Gloucester (Mr. Diamond) said, that many of the 6 million owner-occupiers do not have money to spare on inessential decorations and repairs. [Interruption.]

Mr. Loughlin

On a point of order. I heard the hon. Member for Kidderminster (Mr. Nabarro) state that I live in a council house. I wish to make it clear that I do not live in a council house.

The Temporary Chairman (Mr. W. R. Williams)

That might be so, but I do not see that it is a point of order.

Mr. Houghton

Another contributory reason for many taxpayers not being able to make a claim is the "Do-it-yourself" campaign for home decoration, which is becoming increasingly attractive to many owner-occupiers because of the rising expense of professional redecoration. There is a point there which, in any event, should receive the consideration of the Chancellor, whether some part of the assumed cost—since we are dealing with notional income, we can deal within reason with notional expenditure—should be allowed where the owner-occupier undertakes his own repairs.

An owner-occupier can, of course, charge—this deals with a point raised by my hon. Friend the Member for Ladywood—the cost of all materials used, although, at present, he cannot charge the notional cost of his labour. The difficulty about that is to assess the notional cost of an owner-occupier's own labour. In the case of a wife, evidence is usually required of an actual payment. Moreover, the taxpayer is required to include on his tax return the income that he pays to his wife. It is not so easy, however, in the case of the taxpayer himself.

Another thing that must not be overlooked is that many owner-occupiers are exempt from tax, either on account of their personal circumstances—a wife and family, for example—or on account of interest payments or mortagages, or both. A great many owner-occupiers are not liable to tax at all. It would be worth while finding out how many taxpayers are exempt altogether from Schedule A on that account.

Another factor which is worth taking into account is that there are some millions of new houses in the total of 6½ million for which the repair bills up to the present are fairly light. The occupants went into the houses in a new condition with initial repairs and decorations completed. Deterioration has not yet set in and, on the whole, their repair burden will be light for some years—at least, we hope so. That is a more fairly balanced explanation of the numbers who do not make maintenance claims than the explanation give by the hon. Member for Kidderminster, although I welcome, with him, the annoucement by the Chancellor that something clearer and more specific is to be issued in the autumn so that taxpayers should be in no doubt.

I have drawn attention in past debates to the absence of any indication to the taxpayer if he does not receive a Schedule A demand note, as many taxpayers do not, because their Schedule A assessment is worked into their Pay-as-you earn coding, it is paid along with P.A.Y.E. and there is no separate collection of Schedule A tax. But to bring this to the attention of those concerned will certainly be a great advantage.

Another factor—since we are dealing with this matter exhaustively now—is that the amount of relief which any taxpayer can get is limited by the amount of the assessment on his property. Only in the case of farm buildings can a repairs allowance exceed the assessment on the property itself. On dwelling-houses, no matter what the average expenditure may be, the maximum relief is the difference between the statutory repairs allowance and the gross Schedule A assessment. It can mean that in the case of a house assessed at £50 gross the maximum relief which a taxpayer who is paying at the lowest rate of Income Tax would get would be £30 at 1s. 9d. which would be only 52s. 6d. One can quite understand that many taxpayers, even those in the low income groups, might feel that it is scarcely worth while going to a lot of trouble to get a repayment of 52s. 6d.

Even at the maximum rate of 7s. 9d.—and the hon. Gentleman was very free indeed in quoting the standard rate in his references when, in fact, many owner-occupiers are not liable to the standard rate at all and the relief that they can get is correspondingly smaller—the amount of relief that those liable at the top rate would get in a year for an average of expenditure over the preceding five years would be £11 12s. 6d. All those factors taken into account explain why the number of claims is not larger than it is.

But if the Chancellor's leaflet is as good as we hope it will be, with or without the help of the hon. Member for Kidderminster, it should put this matter beyond any further doubt, because taxpayers will know, and if they do not claim we can assume that there are reasons other than ignorance, at all events, which are preventing them from doing so.

I had better warn hon. Members opposite that I shall be at least another half hour. I am going to deal with this matter very thoroughly indeed. Hon. Members opposite started it and I am prepared to go on with it. Therefore, hon. Members who are not disposed to stay any longer can leave. After the speeches that have been made on the benches opposite and in view of the speeches which apparently still have to be made from those benches, I think our point of view should be thoroughly and fairly put.

I think that I may leave the question of why people do not make more claims for maintenance relief. I would, however, add this observation. I think that one of the Chancellor's difficulties may be that in many cases the reliefs given as a matter of practice by the Inland Revenue are questionable in law. What does the Act say? It says that this expenditure must be for the purpose of maintaining the property in a condition to command the existing rent.

That means that the expenditure should be just as much as, and no more than, is necessary to keep the property in good repair to command its rental value. I think one could argue that that does not run to the white lines on tennis courts. I think it could be argued, in fact, that much expenditure which is admitted in practice is going rather outside the strict definition of the Act. However, I am not complaining. I am merely saying that in looking at this matter some owner-occupiers have reason to be more grateful than others for the amount of expenditure and the kind of expenditure admitted for Income Tax purposes.

I now come to the question of abolition. Abolition, as this new Clause puts it forward, is complete abolition of Schedule A assessments on owner-occupied dwelling-houses. But it restricts such exemption to one house per taxpayer. I would just ask in passing, not as a debating point but as a matter of logic, that if it is wrong to tax notional expenditure for one house, is it not equally wrong to tax notional expenditure for the second? That seems to be a weakness in the presentation of the case by the hon. Member for Kidderminster. Presumably notional income from owner-occupied business premises will continue to be taxed, though, of course, the amount of tax paid is set off against business profits. Notional income from owner-occupied business premises will continue to be taxed if the new Clause is adopted, and that, I think, must to some extent destroy the passionate opposition to the taxation of notional revenue.

As regards rents receivable by landlords for tenanted properties, as my hon. Friend the Member for Gloucester pointed out, they would continue to be taxed either under Schedule A, as at present, or under Schedule D, on actual receipts less outgoings. That is a matter that would have to be dealt with as a consequence of abolishing assessments on owner-occupied dwelling-houses.

The main case for abolition seems to rest upon two grounds. The first is that to tax notional income is wrong in principle because it is not true income and does not provide any fund out of which tax can be paid. On that I pointed out in an intervention when the hon. Member for Kidderminster was speaking that we do, in fact, tax notional income now. We tax notional income when a landlord gives beneficial occupation of a house to a relative or other person. He is not allowed to get away with an assessment of the property on the actual beneficial rent which he receives. He is taxed on the full value, irrespective of whether he receives it in rent or not. That is taxation of notional income. It is treated as a gift to the occupier, although he never receives the money.

Furthermore, under what is left of Schedule B, the taxation of the occupation of land, there is still taxation of notional income because, irrespective of whether the land is utilised or not, Income Tax is payable. I agree that that is a comparatively small matter, but I would draw attention also to the taxation of notional income under the Finance Act, 1948, in the case of all directors and executives in receipt of over £2,000 a year who receive amenities, the services of servants, the occupation of flats or other accommodation. Anything that can be translated into money value, even though it may not be convertible into cash by the taxpayer, is added back to his assessment under the Cripps changes in 1948 in order to check tax avoidance by the receipt of more and more benefits in kind.

I understand that the taxation of notional income of owner-occupiers is not peculiar to this country or to the Irish Republic. Provisions akin to it exist in tax systems in France, Finland, Austria, the Netherlands, Norway, Sweden, Denmark, and also in India, Pakistan and Ceylon. That shows that this basic need for accommodation of every citizen occupies a special position in the tax laws of these countries.

The second ground upon which the case for abolition rests is the one that have already dealt with at some length, namely, that if only all owner-occupiers knew of their rights there would be no Schedule A assessments because they would all be extinguished by maintenance claims. There can be, of course, a third argument, which is not a taxation argument but a social one, that concessions which encourage home ownership are a good thing, however illogical they may be from the point of view of taxation.

12.45 a.m.

I referred earlier to the new Clause which we proposed last year based on a recommendation made by the tax Commission in the Republic of Ireland. The Committee may be interested to know that the Government of the Republic of Ireland totally rejected the recommendations of their tax Commission. In our case the Radcliffe Commission recommended the retention of Schedule A on owner-occupiers. This new Clause seeks to upset that. In the Republic of Ireland the tax Commission recommended in the opposite sense, and the Government there rejected its proposals.

They have issued a White Paper, which, in typical Irish fashion, happens to be buff, but it is worth the while of hon. Members to study this, and if there is not a copy in the Library I shall be very happy to put one there, because, although what is done in the Republic of Ireland need not necessarily govern what we do here, it is nevertheless interesting to see that the arguments which have been used there by the Government of the Republic of Ireland follow very closely indeed the recommendations of our own Royal Commission. They deny that there is a case for abolition even up to £30 limit and they say that the owner-occupier enjoys a very real financial benefit as compared with taxpayers of equal income still subject to the inescapable burden of rent.

Here let me say that the Chancellor is perfectly right when he says that concessions given to owner-occupiers would be bound to raise the question of some relief to those who are now paying higher and higher rents as the direct result of the Rent Acts passed by hon. and right hon. Gentlemen opposite. There is not the slightest doubt that the tenant, who is paying what in many cases is now a high if not an exorbitant rent, would feel at a great disadvantage compared with the owner-occupier who will have a capital asset at the end of the day and who in the meantime is probably not paying in total as much for his house as the person in tenanted property, because many taxpayers who have taken out mortgages are, of course, receiving tax relief on the mortgage interest paid.

The Government of the Republic of Ireland mentioned this very question of the rent relief which would be quite strongly pressed if the proposed exemption were granted. They deal with the question of notional income and they deal with the question of social policy, and they suggest that home ownership is being and should continue to be encouraged by means which benefit all concerned and not only those with Income Tax liability.

We must not overlook the fact that some millions of owner-occupiers have no tax liability, and this new Clause would not benefit them in the slightest; but some of the other reliefs which we proposed earlier would have benefited them. Here we find that on the benches opposite concentration is being made on this as if it were a top priority.

Mr. Nabarro

A very important one.

Mr. Houghton

I come to the Chancellor's statement which, if I may say so, left this matter still in an unsatisfactory position. He really repeated what had been said by his predecessor last year.

The Chancellor ought to say a little more about this tax as a tax. He seemed to suggest that this is something which could not be considered this year anyhow and therefore it was scarcely worth giving real attention to the merits of the case. He listed the points in favour of the new Clause and the points against it, which would seem to be an echo of what the noble Lord, Lord Amory said last year when he stated: I would sum up by saying that I think there are strong arguments both for and against relief from Schedule A for owner-occupiers…We ought all to think over very carefully and weigh up all the arguments for and against, so that we shall avoid the risk of oversimplifying what is a much more complicated and difficult issue than appears at first sight, and so be in a position to form a considered view at an appropriate time."—[OFFICIAL REPORT, 21st June, 1960; Vol. 625, c. 267.] That was all very well as the swan song of a Chancellor giving up, but scarcely the sort of approach to be justified by a Chancellor just taking over. The right hon. and learned Gentleman should give a more positive view on whether or not he wishes to retain the tax in his fiscal armoury.

I grant the Chancellor that in 1963 it will be necessary for Parliament, the Government and everyone concerned to address themselves to the problem afresh, though it does not necessarily follow that even if Schedule A valuations have to be brought up to date the amount of tax payable by owner-occupiers under Schedule A would be higher.

The Minister of Housing and Local Government is taking powers in the Rating and Valuation Bill to abate the new valuations in different areas by differing amounts at his discretion, by Order laid on the Table of the House. It would be equally possible to have the Schedule A tax abated in order that the amount should be no higher after the new assessments than before. I mention that only to disprove the assertion made from the benches opposite that because valuations go up Schedule A tax must necessarily go up as well.

The Chancellor might find a new and more stable basis for the payment of Schedule A tax by owner-occupiers if he did not feel that it was equitable to exempt them altogether. There are various possibilities open to him. But what the right hon. and learned Gentleman has not said, any more than did his predecessor, is whether he regards it as equitable against the background of our present taxation to exempt owner-occupiers altogether on the values of all sorts of accommodation. It is important that he should say it. I draw the Committee's attention to the fact that there are 71,000 dwelling-houses assessed at more than £100 a year. Is it proposed in the new Clause that they should be totally exempt from Schedule A?

Mr. Nabarro

Why not?

Mr. Houghton

I am asking whether this proposal goes the whole way and does not limit the amount of exemption in any way.

When one looks at values it is curious to find that out of 13,230,000 dwellings assessed at present, fewer than 700,000 have a valuation of more than £50 a year. This shows how low the valuations now are. Over 12 million of the valuations are below £50 and on present valuations the amount of reliefs is correspondingly small. My conclusion is that we do not agree with the wholesale exemption of the owner-occupier from Schedule A tax. The farthest we could go was the new Clause that we tabled last year to link up savings in house ownership with savings in the Post Office and the trustee savings banks; that is, by the £15 a year. We thought that was logical. We thought that that would be fair, although a proposal corresponding to this in principle has been rejected by the Government of the Republic of Ireland.

But in the context of this Budget, and having regard to the complete rejection of all the attempts that we have made to get small reliefs for small taxpayers, we certainly could not agree, at a time when large-scale reliefs are being given to Surtax payers and no reliefs lower down, to the Chancellor giving up another £40 million of revenue for the benefit of exempting all owner-occupiers in respect of Schedule A on their houses irrespective of their value.

Mr. H. Wilson

I beg to move, That the Chairman do report Progress and ask leave to sit again. I do this, Mr. Williams, in order to find out the Government's intentions about the rest of tonight's work. It is about time this question was asked. [Interruption.] The position, as I understand it, is that the Government hope to complete the Committee stage of the Bill by seven o'clock tomorrow evening. We for our part have said that we will co-operate to that end. I do not know whether the Chancellor and his colleagues, still less those who sit behind them, have worked out what is involved in seeking to do this, nor do I think they have measured the rate of progress that we have been making towards it.

The position is that if we are to begin at a reasonable stage on the Order Paper tomorrow so that we can get through the business that is on the Order Paper before seven o'clock, which I am sure we all want to do, we have to make a great deal of progress tonight. I want to make it quite plain to the hon. Member for Kidderminster (Mr. Nabarro)—who, having made his speech, has been sitting there acting the fool ever since while my hon. Friend the Member for Sowerby (Mr. Houghton) has been trying to speak—and to his colleagues that we are not going to pull out our Amendments at 6.30 p.m. tomorrow in order to let the Chancellor get his Bill by seven o'clock. We do not intend to sit now hour after hour listening to hon. Gentlemen opposite talking on this Clause and adjourn at a reasonable hour and then tomorrow afternoon have to pull out some new Clauses to which we attach importance in order that the Chancellor can get his Bill by seven o'clock. Consequently, it is time that some serious thinking was done on the Conservative side of the Committee.

One solution might be that the idea of getting the Bill by seven o'clock tomorrow should be dropped. We have said that we will co-operate, and we will do so, but we will not co-operate to the extent of pulling out our Amendments so that Conservative back benchers can talk longer on their Amendments. It would be unreasonable to expect any Opposition to do that, and we are not going to do it.

Another solution is that some restraint should be shown in the matter of the debate, which has now been going on for two and a half hours. We do not want in any way to interfere with the rights of hon. Members opposite. They have as much right as anyone else to move Amendments to the Finance Bill. They were not slow to avail themselves of their right during the early stages of the Bill. They have had more Amendments tabled to the Bill than the official Opposition have. Over the greater part of the Committee stage of the Bill the Conservative benches have been much worse attended than have the Opposition benches. The only questions which have brought hon. Gentlemen opposite into the Committee have been directors' cars, the Surtax concession and Schedule A.

Hon. Members

And fuel oil.

Mr. Wilson

Yes, and fuel oil. Otherwise the Conservative benches have been very much depopulated.

If the Government are adamant about getting the Bill by seven o'clock tomorrow—they are perfectly entitled to ask that, and we have undertaken to co-operate—we ought to make much faster progress tonight than we look like making at the present time. If we are to start tomorrow at a point which will enable us to get through all the Amendments due to be called by seven o'clock at a reasonable speed and with a certain amount of voting, we have to get through five more new Clauses tonight.

1.0 a.m.

Some of them are very important ones. After Schedule A—and no-one underrates the importance of this Clause, apart from some hon. Members opposite who would not give an intelligent hearing to my hon. Friend—there is an important new Clause in the name of the Liberal Party—(Capital allowances). This raises the whole question of investment in British industry. It is an extremely important new Clause on which I should feel perfectly able to speak for a full hour without pausing for breath, as I did on a similar amendment three years ago.

Before that there is another new Clause—(Income tax: non-ferrous metal mines in United Kingdom). Then there is a new Clause I would hope we could go through rather quickly—(Sweets used for making wine vinegar). Then there is another important one—(Overseas Trade Corporations). I do not think much of it myself, but no doubt the hon. Member who wants to move it thinks it very important. Then there is another—(Excise duty on strengthened cider and perry).

To achieve this new Clause tonight is the absolute minimum if the Patronage Secretary is to get this Bill by seven o'clock tomorrow and to leave adequate time for debate. I have mentioned five or six new Clauses that will have to be got through tonight. I am not giving away any secrets when I tell the Committee that since 3.30 yesterday we have got through exactly five new Clauses. We are about half-way through the work we set out to do at that time. I should like to know from the Chancellor exactly how he conceives this is to be done. The eleven Socialists are perfectly capable of speaking very fully on all these Clauses.

To my mind the Schedule A debate has been pretty fully covered. The arguments have been covered. I know that there are a number of hon. Members who want to speak, because they intend to vote and they have to justify their intention to vote against the Government. Some are not going to vote but they think it important that they should demonstrate to their constituents what firm supporters they are of Schedule A abolition.

We have pretty well exhausted the arguments on this. If it is desired that we should go on, many of my hon. Friends intend to speak. So far, I have tried to restrain their desire, too much it is thought by some of them. I want to give notice to the Conservative Party that if they want to go on with this matter we are not just going to sit and listen to speeches by the hon. Member for Kidderminster and his hon. Friends. That had better be understood.

Do the Government still intend to get this Bill by seven o'clock tomorrow? If so, what do they intend to do to bring this present debate to a conclusion and what do they intend to do to get through the rest of the night's business with reasonable dispatch. We are going to play our full part in debate if hon. Gentlemen opposite intend to do the same.

Mr. Selwyn Lloyd

I am not going to attempt to add any element of controversy or comment at length on speeches made from the other side of the Committee. I think that it is quite true that there has been a measure of co-operation up to now in trying to get through this Committee stage. I do not think that we should be altogether ashamed of the fact that there should be an element of co-operation to get through the Bill reasonably.

I would hope very much that we can get the Bill by seven o'clock tomorrow and that really does mean, in my view, getting to the new Clause—(Relief for industrial use of light oils). I ask my hon. Friends and hon. Members opposite to co-operate to that end.

Mr. Iremonger

I am sure that Members on both sides of the Committee will appreciate the spirit in which my right hon. and learned Friend the Chancellor replied to the right hon. Member for Huyton (Mr. H. Wilson), and I shall certainly do all I can to assist him, but I could not pass from the Motion without saying that the mixture of arrogance and humbug which we heard would have been surprising if it had not come from the right hon. Member for Huyton.

I merely rise to say that I support my hon. Friend the Member for Kidderminster (Mr. Nabarro). I have a certain sympathy at this moment with—I think it was he—Lord Byron, who said that he liked a Parliamentary debate, particularly when it was not too late. I am sure that this one will not become any later because of my intervention.

The Temporary Chairman (Mr. W. R. Williams)

Order. We are not dealing with the new Clause but with the Motion, That the Chairman do report progress and ask leave to sit again.

Mr. Iremonger

I apologise, Mr. Williams, both to you and to the Committee. I was under a misapprehension.

Mr. Ross

We have not had a satisfactory indication from the Chancellor as to how long he thinks these proceedings will go. Many of us have been restraining ourselves not only in relation to the new Clause of the hon. Member for Kidderminster (Mr. Nabarro), but in relation to previous ones. There was a very important one about shale oil in Scotland and many of us, from the point of view of achieving that co-operation to which the right hon. and learned Gentleman referred, left undelivered speeches which would have been helpful.

Before we proceed we should have an indication from the Chancellor about the Government's intentions. How long does he think we should go on? Does he think that the Committee will sit until about seven a.m. to deal with these new Clauses and then resume later in the day? Before we withdraw the Motion and resume the other business we should have an indication from him or the Patronage Secretary about further consideration of the hon. Member for Kidderminster's new Clause. It is not good enough merely to say there has been a measure of co-operation. The co-operation has been on this side of the Committee.

Mr. Wise


Mr. Ross

What I am saying is quite true.

Mr. Wise

More time has been occupied by Members opposite than by Members on this side of the Committee.

Mr. Ross

In relation to the debate on Schedule A, that is just not true. Indeed, it is within our memories that the hon. Member for Kidderminster opened the debate at about twenty minutes to eleven.

Mr. Nabarro

To be precise, it was 10.38 p.m.

Mr. Ross

We are glad of that unusual precision from the hon. Gentleman, but we should have some precision from the Chancellor about the Government's intentions.

Mr. Selwyn Lloyd

I think that it is important, if we can, to keep an element of humour in this situation. I have listened very patiently for a considerable portinon of the Committee stage of this Bill, and some very rude things have been said about me without my taking great hurt. The best thing now is, with commonsense, to get on. I have indicated how far we should go. I think that my hon. Friends will pay some attention to what I say. I hope that the right hon. Member for Huyton (Mr. H. Wilson) will withdraw his Motion so that we can get on.

Mr. H. Wilson

I am prepared to consider withdrawing my Motion only when we get some clear indication of what the programme is for tonight. We have got no indication of this, particularly from hon. Members below the Gangway opposite. The suggestion that it is hon. Members on this side of the Committee who have been holding up the debate is thoroughly unjustified. Hon. Members opposite know that without the co-operation that we have shown throughout the proceedings on the Bill we should not have been near even Clause 25 tonight, let alone discussing new Clauses. Time and time again I have appealed to my hon. Friends not to speak, and hon. Members opposite not to rise.

For the hon. Member for Ilford, North (Mr. Iremonger) to make the statement he did was quite unjustified. His was the kind of remark which was likely to make it more difficult for me to appeal to my hon. Friends to have any restraint whatsoever in debating the Motion to report Progress. A number of my hon. Friends have sat here for two-and-a-half hours without saying a word. They are only too anxious to speak, not only on the new Clauses but also on this Motion, and they will not show restraint if more remarks are made of the kind made by the hon. Member for Ilford, North, or the hon. Member for Rugby (Mr. Wise) who complained that Members of Her Majesty's Opposition had the nerve even to speak at all.

Mr. Wise

I made no complaint. I know that nothing on earth would stop hon. Members opposite from talking if they wanted to. I was drawing attention to the fact that more time in this debate had been occupied by hon. Members opposite than by hon. Members on this side of the Committee.

Mr. Wilson

That just is not true. If the hon. Member will look at the list of hon. Members who have spoken since the beginning of the Schedule A debate he will see that a great deal more has been said from his side of the Committee. There has been one fairly lengthy speech from this side, by my hon. Friend the Member for Sowerby (Mr. Houghton) who knows about twenty times as much about Schedule A as the whole of the Government benches put together.

Mr. William Yates (The Wrekin)

That is just impudence.

Mr. Gurden

The right hon. Member for Huyton (Mr. H. Wilson) should be fair. There are several hon. Members on this side of the Committee who have not spoken in the debate, or delayed proceedings in any way on this Finance Bill. Others have spoken only for a few minutes in the whole of our debates on the Bill, and some of us wish to say a few words on this new Clause. We do not wish to keep the Committee for very long. The right hon. Member's suggestion is very unfair.

Mr. Wilson

If hon. Members opposite want to speak they had better sort things out with the Patronage Secretary.

Mr. Nabarro

On a point of order. It has nothing to do with the Patronage Secretary. Is it in order for the right hon. Gentleman to make impudent remarks about the Patronage Secretary?

The Temporary Chairman

I am getting a little anxious about many impudent remarks going about this evening. The main purpose is to get on with the debate, and I hope that hon. Members on both sides will try to do that.

Mr. Wilson

I was merely saying that it is quite in order for the hon. Member and any other hon. Members opposite who want to speak on this matter to do so, but in that case, if they object to my reference to the Patronage Secretary, they should sort out the matter with the Chancellor and consider whether they do intend to get the Bill through the Committee stage by seven o'clock tomorrow evening. The Opposition have shown remarkable co-operation, in great contrast to hon. Members opposite in 1950 and 1951 at this time in the morning. We have shown remarkable co-operation in allowing a great number of Clauses to go through without any debate. I do not think that hon. Members opposite will deny that a considerable number of quite important Clauses went through on the nod. We have also allowed one new Clause to be debated with very little comment from this side. I cannot imagine that many hon. Members opposite would agree with the proposition that we should be sitting up at two, three, four, five or six o'clock in the morning dealing with some of the important new Clauses still on the Notice Paper.

If we acquiesce in the proposition that the Chancellor should get his Bill by seven o'clock tomorrow evening it means a considerable degree of co-operation on our part—more than is reasonably called for. If hon. Members apposite want to scrap the whole arrangement to get the Bill by that time it is up to them. I do not want to be unfair. They have a right to speak. They can say that the Chancellor will not have his Bill by seven o'clock, because if this goes on and hon. Members opposite insist on their rights—as they are entitled to do—we shall insist on ours, and once we start to do that any suggestion of the Bill's getting through by seven o'clock tomorrow evening can be disregarded.

1.15 a.m.

I should like to see the Chancellor get his Bill by seven o'clock tomorrow night, but I make it absolutely plain that it will not be on the basis of my hon. Friends sitting silent while repetitive speeches are made from the benches opposite or on the basis of our withdrawing at seven o'clock tomorrow night some Clauses to which we attach considerable importance. Hon. Members opposite may have it which way they want, but I am not going to ask my hon. Friends to restrain themselves any more—and that goes for tomorrow afternoon as well—if this kind of thing goes on.

Mr. Diamond

May I ask my right hon. Friend to reconsider the matter? Is it in the best interests of the House of Commons that we should try to get all this done by seven o'clock tomorrow night? Is that not putting an impossible strain on anyone's willingness or ability to do his job, even if we sit continuously, which is not under consideration? There are five important new Clauses to be discussed tonight. I ask my right hon. Friend to bear this in mind. If every hon. Member on these back benches keeps his mouth tightly shut on all of them—it is not a matter of personal restraint but of doing one's duty to one's constituents—even if we did that and there were only speeches from our Front Bench, objection is taken to those speeches in reply to speeches of hon. Members opposite.

My right hon. Friend has done a great duty and is carrying a great weight, but objection is made time after time when he puts forward the official Opposition point of view from the Front Bench. It is absolutely unheard of that the Opposition should not be able to give the official Opposition view on Amendments and new Clauses. Although we want to co-operate as fully as possible, is not my right hon. Friend asking something which is impossible in the interests of the Committee?

Mr. H. Wilson

I want to make it clear that I stand by the undertaking I gave to the Chancellor and the Patronage Secretary that I will do everything in my power to get the Bill through by seven o'clock tomorrow night. I stand by that, but my task is being made impossible by the attitude of hon. Members opposite, and not least by some of the epithets which are thrown out by hon. Members opposite. I hope that they understand that.

What my hon. Friend the Member for Gloucester (Mr. Diamond) asked is perfectly fair. I am asking him to a certain extent to ignore feelings he must have about some of these new Clauses. It must be very galling for a trained accountant to hear some of the speeches, made from both sides of the Committee, and not to get up and say what is the position as he sees it. As far as I am concerned, I want to see the Bill go through by seven o'clock, but if the debate on the new Clause dealing with Schedule A—which will continue when I withdraw this Motion—is to go on in the same way as it has, I shall find it impossible to ask my hon. Friends to co-operate in the way I wish them to. I hope that hon. Members opposite will keep to the absolute minimum any observations they wish to make. I hope also that if any of my hon. or right hon. Friends do take part in the debate they will be given the courtesy normally given to Opposition speakers on the Finance Bill. On that understanding I should be prepared to withdraw the Motion, but if we are to have a recurrence of the kind of behaviour we had when my hon. Friend the Member for Sowerby was speaking, as far as I am concerned all bets are off and hon. Members opposite had better see what can be done with the Finance Bill.

Mr. Iremonger

In view of the rather generous things which the right hon. Gentleman has just said, I should be glad if he would allow me to say that I may possibly have seemed somewhat offensive in what I said. I am sure that the Committee will appreciate that what the hon. Member for Birmingham, Sally Oak (Mr. Gurden) said may not have appeared to him as it did to hon. Members on this side, but I will not detain the Committee. It seemed that it was something of a threat which the right hon. Gentleman the Member for Huyon (Mr. H. Wilson) was putting to us, namely, that if we did not shut up he would not help the Government to get through their business. On reflection, what I said was, perhaps, a little unfair and unjustified but perhaps the right hon. Gentleman will appreciate the provocation I was under.

Mr. H. Wilson

I will accept that in the spirit in which it was made. My complaint, and the reason why I rose to move my Motion, was not because of the number of hon. Members who wished to speak, but because of the reactions towards my hon. Friend the Member for Sowerby (Mr. Houghton) who sought quite properly to intervene in what some hon. Members opposite seemed to consider was something of a Conservative debate. It is not a Conservative debate. It is a debate for the Committee, and my hon. Friends have shown restraint.

I was more concerned with the attitude shown to my hon. Friends rather than with the number of hon. Members who wish to speak, but, if the Chancellor wants this Bill to be completed by seven o'clock tomorrow evening, we shall have to make much more rapid progress than we have made. It may come into the mind of the Patronage Secretary as to how he can bring this debate to an end. After all, he has his methods of peaceful persuasion. I have seen him use them with considerable success. Of course, there are other methods and I undertake that in any such proposal we should not lead our cohorts into a Division against him.

On the other hand, if he wants to allow full debate, then that is a matter for him and I am quite sure that the points which I have tried to make have fully entered the consciousness of all those, including the Chancellor downwards—or sideways in the case of the hon. Member for Kidderminster (Mr. Nabarro)—and I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.

Mr. F. A. Burden (Gillingham)

It would be most ungenerous not to respond to the words just spoken by the right hon. Member for Huyton (Mr. W. Wilson). I should like to say, however, that even if the hon. Member for Sowerby (Mr. Houghton) has got a little testy this evening, we all think that he has had some justification because he has had a considerable load of work to carry, and he has carried it nobly.

I intervene at this very early hour because of my extreme disappointment with the remarks made by the Chancellor when he made it perfectly clear that he has no intention whatsoever of doing anything at all this year to ease the burden, which is a very considerable one, of the Schedule A tax on owner-occupiers.

I have shown a lot of restraint over the last few years on this matter and I have not pursued it so strongly as I am prepared to do tonight because last year, in view of the circumstances of the country, one could accept what the Chancellor then said, namely, that it was not the time to do anything but that he was very seriously—I repeat, very seriously—considering the possibility of some relief this year. This year we have heard exactly the same story. I assure the Committee that in my constituency a great number of owner-occupiers find this annual tax a very serious strain on their resources.

We have all listened to the arguments over and over again. It is always possible for a Government on fiscal grounds to refuse any measure which is wholly justifiable and desirable on social grounds. If the Tory Party stands for anything, it stands for a property-owning democracy. It has introduced many measures and carried out a housing programme which has inspired many people to wish to own their houses, more than ever before in our history. I believe that the next logical step towards ensuring that people, particularly young people, have their own roofs over their heads is to abolish this tax.

I hope that when considering this the Chancellor will also look at the possibility of reducing the conveyancing costs. This is a very apposite point.

The Temporary Chairman

Order. I cannot accept that that is within the terms of the Clause.

Mr. Burden

I am sorry if I am out of order, Mr. Williams. If my right hon. and learned Friend is unable to give any relief on Schedule A this year, I hope that he will consider if there is another means by which he can give some relief. I hope that he will promise even at this late hour that he will at least go part of the way and make some concession, say up to £15.

Mr. E. Fernyhough (Jarrow)

The hon. Member for Gillingham (Mr. Burden) asked the Chancellor of the Exchequer to make a concession up to £15 if he could not go the whole way. We on this side tried to persuade the Chancellor to do that last year. If we had had the support of the hon. Member and his colleagues, that would now have been the law of the land. Why did they lack the courage to do last year what they want the Chancellor to do this year? We could have gone half way last year. Hon. Members opposite are prisoners of their own propaganda. Of course, they have gone to the electorate and said, "We believe in the abolition of Schedule A." They went to the electorate at the same time and said, "We believe that the private patient should not have to pay for medicines."

When they returned to the House of Commons, they found that the Chancellor—whether it was this one or his predecessor—was unable to meet them. They must realise that they cannot be irresponsible if they take part in British democracy. They cannot at the hustings make the kind of promises they have been making and then pretend to get all hot and bothered when the Chancellor does not meet their wishes but in the last analysis always fail to go into the Lobbies to demand from the Chancellor what they promised their constituents.

That is precisely the position tonight. [Interruption.] It is no good the hon. Member for Kidderminster (Mr. Nabarro) making his usual rude interruptions. If he does so, he will find that I can talk as long as he can. I do not wish to do that. I wish to be co-operative. I want the Chancellor to get his Bill by seven o'clock tomorrow night, but I assure the hon. Member and his colleagues that, if they make unnecessary interruptions, I was brought up in a hard school. I have suffered these attacks a long time. I hope that I know how to deal with them, but I do not want hon. Members to provoke me, because I want to get on with the Bill. We have promised our co-operation to the Chancellor and I know that the Financial Secretary wants us to get on with the Bill. So it is not for reasonable people like myself to be provoked by hon. Members like the hon. Member for Kidderminster.

1.30 a.m.

Most hon. Members opposite are victims of their own propaganda in this matter. The promises that they made irresponsibly at the General Election are now haunting them, because their constituents are following them. They are asking them what they will do about it. The hon. Member for Crosby (Mr. Graham Page), for example, wondered what the Chancellor would have done had the Schedule A tax not been in operation. The Chancellor would have done what a previous Cabinet Minister said should be done. He would treat them mean and keep them keen, which is what is being done in respect of this tax. He is treating hon. Members opposite mean. He is letting them down. He is not helping them to fulfil the magnanimous promises they made to the electorate. But he is keeping them keen.

Last year, hon. Members opposite had the chance of giving some measure of relief to the hard-pressed Schedule A taxpayers, but they lost their way. There are two Division Lobbies, and hon. Members opposite went into the wrong one. If the Conservative Party tonight is anxious and keen about this, if all those who have assured their constituents that they believe in this principle are prepared to back their principles in the Division Lobby, they can get this relief. It does not matter what the Whips say. The power is in their own hands. If they are determined to keep their promise to their constituents and that the hard-pressed Schedule A taxpayer shall be relieved of this burden, all that they have to do is to go into the right Lobby.

It is no good hon. Members opposite making speeches in their constituencies saying how much they are against this tax, what an imposition it is and how the owner-occupier is being exploited unless, in the last resort, they are prepared to use the only power that a backbench Member has, and that is to go into the Lobby in accordance with the convictions they hold. I see the hon. Member for Kidderminster nodding his head. I am sure that he will do just that. He will not lack the courage. Whatever else may be said of him, it cannot be said that he has ever failed when courage has been required to offend either the Patronage Secretary or his Front Bench in general. But he has never led a big battalion—

Mr. Nabarro

I have led the whole of the Labour Party. [An HON. MEMBER: "Never."]

Mr. Mitchison

On a point of order. May we have a cessation of these sedentary interruptions from the hon. Member for Kidderminster (Mr. Nabarro)?

The Deputy-Chairman (Major Sir William Anstruther-Gray)

Certainly, they are undesirable, but I am bound to say that in the last few minutes I thought that the debate had gone with singularly little interruption.

Mr. Nabarro

I remind the hon. Member of the occasion when the whole of the Labour Party "got fell in" behind me on the increased tobacco duty last year—a very appropriate lead, I thought.

Mr. Fernyhough

While I am grateful to my hon. and learned Friend the Member for Kettering (Mr. Mitchison) for protecting me from the somewhat malicious attacks of the hon. Member for Kidderminster, I can assure him that they are not too heavy. If they become severe, I may respond in my normal pacific manner.

We have heard a lot of talk tonight, particularly from the hon. Member for Crosby and from the hon. Member for Ilford, North (Mr. Iremonger). We have heard a lot about what the Government are doing for a property-owning democracy. We were told that if only this tax were abolished it would encourage so much more a property-owning democracy. A lot of people believed Sir Anthony Eden when he first went to the country with his battle-cry "We believe in a property-owning democracy," but there are lot of people this week who have had some bad news as a result of the Chancellor's activities. The building society interest rates are to be increased, and they will cost far more than Schedule A. If the Government would reduce for the Schedule A taxpayers the burden which the Chancellor has imposed on them by means of his financial policy, they would be doing a far better service than by trying to escape from the chains which hon. Members opposite have placed around themselves as a result of the promises which they made at the hustings.

There is one aspect which has already been mentioned and about which I feel deeply. I am not opposed to the granting of relief to Schedule A taxpayers along the lines and to the degree sought by this Clause, but I say to hon. Members opposite that there are far more tenants than there are owner-occupiers. I am the only member of my family who owns his house. I have a big mortgage, but it will be paid off eventually. But I know what happens when tenants do their own improvements. Members of my family have put in new grates; they have had the floors relaid, window sills and electric wiring renewed. They have done all those things, but not a penny piece can they claim in tax relief. They have spent the money which the landlord should have spent, because the rent which they pay is supposed to include the charges for repairs. The landlord has not done his duty. He has evaded his responsibility. The tenants themselves have kept the property in good repair, and in many case they have improved it. But not a single word do we hear from the benches opposite on behalf of these people, and there are more of these people than there are those on whose behalf this plea is being made tonight.

I say to the Financial Secretary: this may be a desirable relief, but it can be acceptable to fair-minded people only when the same measure of relief which is given to those who own their own houses is given to those who spend money on houses which are owned by somebody else. As the late Member for Ebbw Vale once said, we are not against people owning their own houses. We are against people owning other people's houses. We are not opposed to the owner-occupier, but we are opposed to the landlord who does not treat his tenant properly, who does not spend money on the property and does nothing to obtain relief for the tenant who spends money on property which does not belong to him.

The Financial Secretary is present, and I should like to say this to him. We are told that this relief would cost the Treasury about £43 million. In a year when we have doubled the charge for medical prescriptions, when we have increased the charges for teeth and spectacles and have put up the prices of welfare foods, it would be indefensible and intolerable that hon. Members opposite who supported mean attacks of that kind should go into the Lobby and ask the Chancellor to disburse £43 million in this manner.

I feel very sorry for the Financial Secretary and, indeed, for the Chancellor of the Exchequer, because the trouble with the hon. Members opposite is that they want every single item in the balance sheet to be more. They want more for roads, more for schools and more for everything, but, at the end, they want the total to be less. They want each individual item of expenditure to go up and at the same time they want total Government expenditure to go down. That cannot be done.

When the hon. Member for Crosby says that it is not his job to ask the Chancellor from where he would get the £43 million if he were to give that amount away in relief of this kind, he is not facing up to his responsibility as a Member of the House of Commons.

Mr. Graham Page

I should be out of order were I to suggest any alternative source of taxation from which this amount could be raised.

Mr. Fernyhough

I am quite sure that even, if the hon. Gentleman would have been in order in doing so, he would not have suggested an alternative way in which this revenue could be raised. The complete indifference of too many hon. Members opposite to what I would term financial probity is a measure of their irresponsibility. If we demand Government expenditure and at the same time demand tax reliefs, we surely have the obligation to point out to the Chancellor the source from which he could raise the amount of revenue which he would lose by granting those reliefs.

This new Clause would have made a greater appeal to me had it provided for the rights of tenants to be considered, because I do not believe that they are inseparable from the rights of owner-occupiers. I think that it would be very unfair if the present Chancellor or any Chancellor of whatever party gave a concession of this kind without, at the same time, giving a similar concession to tenants who carry out repairs to the property of their landlords. I would no more endorse that than I would go into Division Lobby tonight to support this Clause.

Mr. Gurden

I want to make it perfectly clear that, at some considerable sacrifice, many of us on these benches have had to forgo speaking in the debate on this new Clause. We wanted to make our contribution to the debate and to go into the facts—

Mr. Loughlin

On a point of order. May I ask you, Sir William, who has been responsible for the hon. Member having to forgo his right to speak in this debate?

The Deputy-Chairman

I do not think that that is a point of order. The hon. Member is making his speech and presenting his arguments to the Committee.

Mr. A. C. Manuel (Central Ayrshire)

Further to that point of order. The hon. Member made a definite statement to the Committee to the effect that hon. Members opposite have had to forgo making a contribution to this debate. Is there some motive behind this about which we do not know. Obviously, my right hon. Friend the Member for Huyton (Mr. H. Wilson) is not controlling what is happening on the other side of the Committee. It must be the Patronage Secretary.

1.45 a.m.

The Deputy-Chairman

Order. A point of order does not arise. There is no point of order for the Chair to deal with.

Mr. Loughlin

On a point of order. If, Sir William, the Chief Patronage Secretary is instructing Members on his side not to speak, what redress from the Chair have those Members?

The Deputy-Chairman

Order. So long as the debate is carried in an orderly fashion I am perfectly content to allow it to continue, and it is orderly.

Mr. Loughlin

On a point of order. Is there not a breach of Privilege in this matter?

The Deputy-Chairman

No. The answer, in my judgment, is that there is no breach of Privilege involved.

Mr. Gurden

I was merely trying to point out, if hon. Members opposite had had a little more patience, that I was sympathising with what the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) had to say on the Motion to report Progress. I very much agreed with everything which was said then, and I was saying that the need to curtail the debate is essential and that, therefore, I am prepared to forgo the speech which I was going to make—

Mr. Manuel

Sit down then.

Mr. Gurden

—more or less, with the exception, if I make it, of appealing once more to the Chancellor for a little more information on what he means by reconsidering, as he promised to do, this whole question in a year or so. I believe we have not had sufficient information from the Chancellor—

Mr. Manuel

The hon. Member is running away from the position.

Mr. Gurden

—to enable us to decide whether or not to go into the Division Lobby in favour of this new Clause.

I and my hon. Friends from Birmingham have a new Clause very similar to this one moved by my hon. Friend the Member for Kidderminster (Mr. Nabarro), and for that reason I think that we ought to make some comment on this new Clause. I just want to say to my right hon. and learned Friend the Chancellor that I do not doubt the sincerity of what he said, but we have heard very much the same sort of thing year after year in Finance Bill debates, and however much he may have meant what he said, it does not ring so true as we should like to think.

May I, too, take exception to the answers to the questions which we have seen month after month for the past four or five or six years? The answer given every time is that it is not possible to anticipate the Budget statement in a matter of this description. If the intention of the Government were clearly stated on Schedule A matters at any time during the year, it would not interfere in any way with the Budget statement; it would not really damage the financial position of the country; no one could take advantage of a statement that Schedule A was to be abandoned in 1963 or whichever year might be chosen. I really think that that sort of reply on such a question as this, what is to happen to Schedule A, is really not a sincere one, when all the time it is quite clearly known that there is no intention of making any alterations in Schedule A.

I should like very much to put the position of my constituency in Birmingham. We have tremendous support in the Conservative Party for the abolition of Schedule A, but if we are ever to get it, it appears that we shall have to join the Liberal Party. Certainly, neither of the other two parties is unanimous on this matter, in spite of the tremendous majority of Conservative supporters throughout the country who have made it perfectly clear to the Government and to our party that something must be done. Would my right hon. and learned Friend make clear again from the Dispatch Box what he means by speaking of dealing with the matter at a later date? I appeal to him to go a little further with his explanation.

Mr. Loughlin

I find myself in something of a dilemma in looking at this problem. I cannot think that the hon. Member for Birmingham, Selly Oak (Mr. Gurden) was quite serious when he said that there was tremendous support inside the Tory Party for the proposal moved by the hon. Member for Kidderminster (Mr. Nabarro), because it is so very simple to prove whether that support exists within the Parliamentary Conservative Party, as my hon. Friend the Member for Jarrow (Mr. Fernyhough) has pointed out. If there is tremendous support among hon. and right hon. Members opposite for this proposal, they can have it adopted tonight. I assure them that if they go into the Division Lobby and the Opposition go into the opposite Lobby they will have a majority. It is as simple as that. If they want to claim that they as the Conservative Parliamentary Party really believe that Schedule A should be abolished, there is no difficulty at all in ensuring that that will come about. They can take my word for it that there are sufficient numbers on the benches opposite now to ensure a complete majority and the capitulation of the Chancellor of the Exchequer.

My difficulty is that I see a great measure of justice in the case advanced for the abolition of the tax. I do not want to follow hon. Members opposite in their arguments for the Tory Party concept of a property-owning democracy. I am one of those people who with a limited income had the problem of buying a house when I got married, and because of the policy pursued by the Government since 1951 I have had to see a great deal of my money going in interest rates. There is an enormous number of young married men at present who, because of the housing situation created by a Tory Government, can see no possibility for many years of securing a house other than by buying one. They are faced not only with increased interest charges but also with the increased prices of houses because of the Government's failure to restrict land prices to some degree. And there is not only this problem of land prices when buying freehold but also the high leasehold charges in many cities because of the increased price of land. If the Tory Party is telling me that the way to create a property-owning democracy is to boost the cost of houses to men and women with relatively low wage rates, all I can say is that it is the greatest nonsense I know.

I do not believe that we should pursue a policy which is likely to impose additional burdens on men and women who in the face of great difficulties are buying their own homes. I am not interested in the motives of hon. Gentlemen opposite. I am not interested in the fact that the motive of the hon. Member for Kidderminster may be to secure further relief for Surtax payers. What I am concerned about is that I know that there are enormous numbers of young men and women who are trying to buy their own homes and are having this additional burden placed upon them.

I should like to see acceptance by the Government of a new Clause along the lines of that moved from the Opposition Front Bench last year. But that Clause is not at this stage before the Committee. I have the alternative of saying that I am not going to support the new Clause now before the Committee solely because it is proposed by persons with motives different from my own or of sitting down and doing nothing about it at all. That is my dilemma. I certainly have no desire to go into the Division Lobby with some hon. Members opposite.

Sir Peter Agnew (Worcestershire, South)

One cannot choose one's friends to go into the Lobby with. One chooses one's friends in the people one finds there.

Mr. Loughlin

If the Committee proceeded along those lines there would be some peculiar Divisions. I do not know how often the hon. Gentleman applies that principle to himself, how often he applies the principle of sitting on the Conservative benches and opposing the Government and then failing to go into the Division Lobby. Whether or not it applies to the hon. Gentleman, it applies to some hon. Gentlemen opposite who sometimes have courage and sometimes have not.

I do not want to go into the Division Lobby with some hon. Gentlemen opposite, but I find myself in very much the same position as my hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates)—

Mr. Fernyhough

If my hon. Friend is going to take part in a Division at all, he cannot help himself, because there will be some in one Lobby and some in another.

Mr. Loughlin

In his attempt to assist me, my hon. Friend has only created greater confusion. It might be better if he did not give such assistance.

What we have to face in looking at the problem is that the tax that we are discussing imposes an additional burden on many young people who are trying to buy their own houses. I wish that the Chancellor would give some indication that he would look at the possibility of limitation of relief along the lines suggested tonight and last year. If he does not do that, I hope to see the greatest possible revolt from the back benches opposite.

2.0 a.m.

Mr. Nabarro

I listened with great care to the comments made by the Chancellor of the Exchequer on this new Clause and feel bound to say they were almost entirely unsatisfactory. We have been very patient in this matter. We raised it first in 1959. On that occasion—I respond at once to the hon. Member for Huddersfield, West (Mr. Wade), the Liberal who taunted me that I did not vote with him then—the Schedule A Amendment—I explain this, I think, for the twentieth time—followed an Amendment which had been voted on to reduce the duty on beer and I believe that I absented myself, paired, from the hon. Member's Amendment.

Mr. Arthur Holt (Bolton, West)

The hon. Member is completely mistaken. In fact he voted against exactly the new Clause he is proposing this evening. If he is in any doubt or confusion, I invite him to consult Volume 607 of HANSARD for 15th June, column 68, where his name appears in the voting list supporting the Government and against the Clause moved by my hon. Friend the Member for Huddersfield, West (Mr. Wade).

Mr. Nabarro

I apologise. I voted with the Government on another Amendment in the same Finance Bill. I was absent, paired, on the Schedule A controversy. I obviously cannot recall every Division on every Finance Bill, but that is beside the point. What I am saying is that in 1960 we carried on this struggle. Fortunately, on that occasion I led from the Conservative side and a number of Liberals—by no means all, only half—thought fit to be present to support it.

This year we have continued the struggle. Every year we are told by the Chancellor that the matter will be further considered, that there is a good case for abolition and a good case against abolition. We know all these things from the Report of the Royal Commission. We have already weighed all the available evidence in this controversial matter. This evening the Chancellor has been able to say only that he must defer a further decision until 1963 when rating valuation will take effect. That reply is in itself inconsistent with all earlier answers given to me on this topic, because the Treasury Ministers have always averred that Schedule A was in no way related to rating valuation matters and that they could not be considered in conjunction with one another.

I very deeply regret to say to the Chancellor that I cannot accept as reasonable the assurance he has given about reconsideration two years hence. I must ask my hon. Friends who are associated with me in this new Clause to support me in the Division Lobby. I also hope that the loquacious Member for Bolton, West, who is so anxious to recall our activities in 1959, will bring all six Members of the Liberal Party into the Lobby to support me. I see only three of them in their places. No doubt the other three are absent, not paired. I hope that I shall have the support of all three political parties.

Mr. J. Grimond (Orkney and Shetland)

I very much doubt that the hon. Member for Kidderminster (Mr. Nabarro) will muster 50 per cent. of the Conservative Party in his Division Lobby. His record on this matter is so peculiar that it is very odd that he should bring it in evidence. He is on record as voting against this proposal. There is a perfectly good argument against the proposal before the Committee, but what there is no argument for is pretending that one is in favour of abolishing this tax but not voting for the new Clause.

There is a perfectly good argument for maintaining this tax and an argument for abolishing it. What we suffer from, year after year, in this Committee, is the Conservatives saying that they are against the tax but that, of course, they are bound to vote for the Government, who intend to maintain it.

This also goes on at General Elections, but now there is a new doctrine in the Conservative Party—that they intend to keep their election pledges. That is why we are faced with this ridiculous proposal to give a large subvention to the Cunard Company. There is no other reason for that than that the Conservatives promised it at the last General Election, and for this extraordinary reason they intend to go through with it.

We who have fought the Conservatives know that year after year, and at election after election, they denounce this tax but when the opportunity arises to get rid of it by voting against it they do not do so. Tonight they have an opportunity again of coming into the Lobby with us. Perhaps we can hope for

50 per cent. of them. We should be content with that. The hon. Member for Kidderminster (Mr. Nabarro) has recanted his views expressed in 1959, when he voted against this proposal. We hope that he will now, having plucked up his courage, come with us into the Lobby against the Government.

I agree with the hon. Member who said that hon. Members should join the Liberal Party. It is the only party which has at least been honest in this matter. We have always opposed this tax and have voted against it. We have not merely made easy speeches in our constituencies. The opportunity now arises to show whether the Conservatives really believe that it should be abolished or whether they merely look upon abolition as a popular thing to advocate at elections.

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 15, Noes 110.

Division No. 214.] AYES [2.7 a.m.
Bullus, Wing Commander Eric Hollingworth, John Talbot, John E.
Burden, F. A. Holt, Arthur Wise, A. R.
Cleaver, Leonard Iremonger, T. L. Yates, Victor (Ladywood)
Grimond, J. Matthews, Gordon (Meriden)
Gurden, Harold Montgomery, Fergus TELLERS FOR THE AYES:
Hocking, Philip N. Page, Graham (Crosby) Mr. Nabarro and Mr. Wade.
Agnew, Sir Peter Gibson-Watt, David Oakshott, Sir Hendrie
Allan, Robert (Paddington, S.) Glover, Sir Douglas Osborn, John (Hallam)
Barber, Anthony Green, Alan Panned, Norman (Kirkdale)
Bennett, F. M. (Torquay) Grasvenor, Lt.-Col. R. G. Pearson, Frank (Clitheroe)
Berkeley, Humphry Hamilton, Michael (Wellingborough) Percival, Ian
Bishop, F. P. Harrison, Col. Sir Harwood (Eye) Pickthorn, Sir Kenneth
Bourne-Arton, A. Hastings, Stephen Pott, Percivall
Box, Donald Hendry, Forbes Powell, Rt. Hon. J. Enoch
Boyle, Sir Edward Hiley, Joseph Price, David (Eastleigh)
Browne, Percy (Torrington) Hill, J. E. B. (S. Norfolk) Prior, J. M. L.
Bryan, Paul Holland, Philip Proudfoot, Wilfred
Buck, Antony Hopkins, Alan Pym, Francis
Campbell, Gordon (Moray & Nairn) Hornby, R. P. Redmayne, Rt. Hon. Martin
Carr, Compton (Barons Court) Hornsby-Smith, Rt. Hon. Patricia Rees, Hugh
Carr, Robert (Mitcham) Hughes Hallett, Vice-Admiral John Roberts, Sir Peter (Heeley)
Chichester-Clark, R. Hughes-Young, Michael Shaw, M.
Clark, Henry (Antrim, N.) Irvine, Bryant Godman (Rye) Shepherd, William
Cordeaux, Lt.-Col. J. K. Jackson, John Smith, Dudley (Br'ntf'rd & Chiswick)
Cordle, John Johnson, Eric (Blackley) Smithers, Peter
Corfield, F. V. Kirk, Peter Stevens, Geoffrey
Critchley, Julian Legge-Bourke, Sir Harry Steward, Harold (Stockport, S.)
Currie, G. B. H. Lewis, Kenneth (Rutland) Stodart, J. A.
Dalkeith, Earl of Litchfield, Capt. John Studholme, Sir Henry
d'Avigdor-Goldsmid, Sir Henry Lloyd, Rt. Hon. Selwyn (Wirral) Summers, Sir Spencer (Aylesbury)
Deedes, W. F. Longden, Gilbert Taylor, Edwin (Bolton, E.)
Donaldson, Cmdr. C. E. M. Loveys, Walter H. Thomas, Peter (Conway)
du Cann, Edward Lucas-Tooth, Sir Hugh Thompson, Richard (Croydon, S.)
Duncan, Sir James MacArthur, Ian Thornton-Kemsley, Sir Colin
Elliot, Capt. Walter (Carshalton) Maddan, Martin Tiley, Arthur (Bradford, W.)
Elliott, R.W. (Nwcastle-upon-Tyne, N. Marshall, Douglas Turner, Colin
Errington, Sir Eric Mawby, Ray van Straubenzee, W. R.
Farr, John Maxwell-Hyslop, R. J. Wakefield, Edward (Derbyshire, W.)
Finlay, Graeme Mills, Stratton Walder, David
Fraser, Ian (Plymouth, Sutton) More, Jasper, (Ludlow) Walker, Peter
Wall, Patrick Whitelaw, William Woodnutt, Mark
Ward, Dame Irene Wilson, Geoffrey (Truro) Worsley, Marcus
Webster, David Wolrige-Gordon, Patrick TELLERS FOR THE NOES:
Mr. Noble and Mr. Peel.
The Deputy-Chairman

The next new Clause selected is that in the name of the hon. Member for Bodmin (Mr. Marshall)—Income Tax: non-ferrous metal mines in the United Kingdom).

Mr. Douglas Marshall (Bodmin)

I do not propose to move that new Clause, Sir William.

2.15 a.m.

Mr. H. Wilson

I think it should be on the record that if the hon. Member for Bodmin (Mr. Marshall) is not moving this new Clause, which I think has a certain amount of support in all parts of the Committee, it is on the understanding that the corresponding new Clause which was to be debated with it, will be selected tomorrow. It would be useful, Sir William, if you could confirm that the new Clause—(Non-ferrous metal mines in United Kingdom: relief from profits tax) which is associated with this Clause, will be called tomorrow when the hon. Member may make what I hope will be the same speech as he would have made on this one, and other hon. Members will be able to take part in the debate which otherwise we should be having now.

The Deputy-Chairman

Yes, that new Clause is down for selection and it will be possible then to discuss this new Clause and the new Clause—(Profits tax: non-ferrous metal mines in United Kingdom)—and also new Clause—(Non-ferrous metal mines in United Kingdom: relief from income tax).