HC Deb 20 June 1961 vol 642 cc1205-34

(1) In subsection (1) (a) of section two hundred and twelve of the Act of 1952 (amounts of relief in respect of children) for the reference to one hundred pounds there shall be substituted a reference to one hundred and ten pounds.

(2) This section shall not be deemed to have required any change in the amounts deducted or repaid under section one hundred and fifty-seven (Pay as you earn) of the Act of 1952 before the twenty-second day of June, nineteen hundred and sixty-one.—[Mr. Houghton.]

Brought up, and read the First time.

Mr. Houghton

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

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

It may be for the convenience of the Committee if we take with this new Clause those in the name of the right hon. Member for Huyton (Mr. H. Wilson)—(Incapacitated child over the age of sixteen years)—and—(Increase of relief for claimant depending on services of a daughter)—and that in the name of the hon. Member for Nottingham, South (Mr. W. Clark)—(Children).

Mr. Houghton

It will be convenient, as you say, Mr. Williams, to take these new Clauses together.

I must not be taken as endorsing the proposal contained in the new Clause in the name of the hon. Member for Nottingham, South (Mr. W. Clark). It introduces a new principle into child relief which we on this side of the Committee would find it difficult to accept, quite apart from the administrative difficulties, which I assure the hon. Gentleman are very considerable indeed. Therefore, my remarks will relate to the other three new Clauses.

The first one that I have moved proposes to increase the lowest tier of child allowances from £100 to £110. I suppose that right away I shall be in conflict with the hon. Member for Kidderminster (Mr. Nabarro), who, in remarks made a few moments ago, suggested that in terms of Income Tax relief we were valuing children too high or wives too low, whichever way he likes to put it.

Mr. Nabarro

I protest at once. We are not valuing children too highly. Emphatically, we are under-valuing the most priceless asset—a wife.

5.0 p.m.

Mr. Houghton

I am sure that the Committee is grateful to the hon. Member for making his position even more clear than it was before.

I suggest, however, that it is not suitable to look at reliefs for a wife and for children as if they were related on terms of equality or of independent valuation. One has to look at the child relief as being for the second dependant of the taxpayer. The first child is the second dependant, the second child is the third dependant, and so on. So that an escalator is provided in the structure of child relief for children of different ages.

The new Clause relates only to the child under the age of 11. It does not propose to change the reliefs for children over that age. The hon. Member for Kidderminster gave his figures from memory and he may be forgiven for being slightly mistaken in the relief for the child between the ages of 12 and 15. It is £125.

Mr. Nabarro

That was a slip of the tongue. It should, of course, be £125, as the hon. Member points out.

Mr. Houghton

I make that correction only so that we can get the structure clear in our minds. It is £110, £125 and £150, the last of these being confined to children over 16 who are undergoing full-time education.

We know that in recent years, the child reliefs have been substantially increased. Since 1951, the child allowance for a child under 11 has been increased by 40 per cent., from £70 to £100. For a child between 12 and 16, the increase has been 80 per cent., from £70 to £125.

Mr. Nabarro

It is not quite 80 per cent.

Mr. Houghton

For the over-16s, it has been over 100 per cent., from £70 to £150. I am dealing with approximations. These are spectacular increases, but we think that an adjustment should now be made in the lower tier of child relief, because it is there that the smallest percentage increase has taken place.

In the context of this Finance Bill, we know that we cannot ask for the moon. We can ask for only a very small slice of the moon, and even then we get turned down. One word whose meaning the Opposition have really learned is "perseverance". This is the thirteenth Finance Bill on which I have tried to secure improvements and reliefs. All I have to show for these thirteen Finance Bills is a doubling of the penalty on an obscure misdemeanour in the tax law which I got last year.

I do not suppose that anybody has suffered either the lower penalty or the higher one since, and I do not hand that achievement down to posterity as being any particular contribution to social welfare. I am trying to do a bit now, but there sits the Financial Secretary with his brief prepared and his instructions. I know that I am knocking my head against a brick wall, but in the House of Commons one has to go on doing it.

I believe that years ago, one of my late hon. Friends who was the Member for Leigh, Lancashire, moved a new Clause concerning housekeeper relief or dependent relative allowance year after year and at long last somthing happened. I do not suppose that I shall be able to persevere long enough to achieve some of the things I have been moving in the last thirteen years. Our proposed improvement in the child relief is a modest one. We know that only modest improvements are possible, if any at all, this year. That is why we have left out children who already qualify for relief of £125 and £150, respectively.

The position of the child in our community has become of increasing importance in recent years. The whole nation has realised more than it did in generations past the priceless asset that we have in our young people, the men and women of tomorrow. In all our welfare arrangements and in our tax allowances, increasing emphasis has been put on the welfare of children and provision has been made for parents to take better care of them.

The hon. Member for Kidderminster referred to the increases in child allowance which have been given in recent years. It is true that in 1952, when we had a flat-rate child allowance of £70 for all children irrespective of age, it was put up to £85, and in 1955, again, the flat-rate allowance of £85 was put up to another flat rate of £100. Then, in 1957, the differential was introduced of higher allowances for older children.

It is the turn of the younger children now to have some slight benefit having regard to their exclusion from the Chancellor's bounty in 1957. In that year, the allowance for the younger child was left where it was. It was the allowances for the older children that were improved. The £100 allowance which we now have for the younger child was in operation in 1957 and had been since 1955. So that no improvement in the child allowance for the youngest child has been made since 1955.

The amount of tax relief that this proposal would bring to the parents is obviously small, but the total cost, as in all these things, would be relatively high. I am not sure what it would be. It might be £8 million. Having witnessed the fate of Amendments to the Bill costing much less than £8 million, I fear that that alone may be regarded by the Chancellor as disqualifying the new Clause from his favourable consideration this year.

I shall not digress on the general background to the budgetary position this year—I did that in moving the last set of new Clauses—and I shall not examine the current economic situation, which is obviously causing anxiety all round. What I do say, however, is that there is something radically wrong either with the Chancellor's budgetary strategy or with his treatment of the House of Commons if we have to go through the long and tedious hours on the Finance Bill with no concession whatever.

There has been one concession. The horticultural lobby, in formidable force on the benches opposite, intimidated the Chancellor into giving way, but it cost him only a few hundred thousand pounds. Our proposal to exempt the poor country folk from having to pay additional tax on the paraffin for their lamps, their cookers, their hurricane lamps and things like that, was rejected because it would cost £4 million. Therefore, all that there is to show for the tedious trundling of the Finance Bill through the Committee of the House is a slight concession to the horticularal lobby, concentrated, as it is, in particular constituencies where the full force of electoral influence could be brought to bear.

The Temporary Chairman

I took the hon. Gentleman at his word when he said that he would not digress. I am sure that he wants to keep his word.

Mr. Houghton

You may rely on my word absolutely, Mr. Williams. I have concluded that most relevant digression.

If, out of an above-the-line surplus of £506 million, which is estimated for in the Bill, the Chancellor has not left himself room to manoeuvre, then I think that he is treating this Committee very badly. I should have thought that any Chancellor of the Exchequer would hold something in reserve in order to test the feeling of the Committee and to see what impressed it most among a selection of candidates for additional reliefs. But it is not to be. When we made no headway on age exemption, that seemed to set the keynote of our discussions on the new Clauses.

I will pass from the straight child relief or the lower tier of child allowance to the incapacitated child who is dealt with in the new Clause entitled—(Incapacitated child over the age of sixteen years.) This is a matter which has been before the Committee on previous occasions. What we propose is based on the recommendation of the Royal Commission on the Taxation of Profits and Income, in paragraph 193 of its second Report. We discussed this matter in 1954, 1956, 1957, 1958, 1959 and 1960. This suggests that it has had a good airing in recent years. But we still persevere with it.

What the new Clause proposes to do is to give to a parent of a totally incapacitated child the same tax relief as applies to a child over the age of 16 who is undergoing full-time education. Up to the age of 16 an incapacitated child is covered for child allowance in the same way as a normal child. The condition of undergoing full-time education applies only at the age of 16. Beyond that age the child allowance of £150 to the parent is dependent on the child undergoing full-time education. But we think that in the case of a totally incapacitated child the burden on the parent justifies some relief to him corresponding witch the relief in respect of a normal child who stays at school after the age of 16.

In the past, Treasury Ministers have argued two points against this proposal. The first is that an incapacitated child over 16 is in the nature of a dependent relative and that, since the allowance for a dependent relative is very much smaller than the allowance of £150 proposed in the new Clause, it would be difficult to give this relief in respect of an incapacitated without consequential claims that allowances for dependent relatives should be increased. I do not accept that argument, nor did the Royal Commission.

5.15 p.m.

The next argument advanced against our proposal is that a child over 16 years is entitled to National Assistance in his own right irrespective of the means of the parent and that National Assistance payments might be made to a totally incapacitated child over 16 even though his father is a Surtax payer. There is no family means test, no means test of the parent, to enable a child in this condition to qualify for a National Assistance payment in his own right. I fully accept that. But, as I have argued on previous occasions, I doubt whether to say to a parent, "Your son or daughter can go to the National Assistance Board and get assistance" is any answer to his point that some tax relief should be given in respect of such children.

I know that at the age of 16 a child would normally get 32s. a week from the Assistance Board and, at the age of 18, 38s. plus a share of the family rent up to a maximum of 15s. At the age of 21, the normal allowance would be 49s. 6d. a week. These grants would be lower if the child had any income in his own right apart from the Assistance payments. They are not taxable, so that the parent cannot complain that an Assistance payment to his child would increase his own tax burden.

However, I submit to the Committee what I think is a well understood distaste of parents who are taxpayers at the idea of their children going to the Assistance Board. Rightly or wrongly, they do not feel that Assistance payments are intended far their children, having regard to their own family circumstances. I think that that feeling should not be despised or even criticised. It is a natural feeling which any of us in this Committee would have in similar circumstances. I think that it would be regarded as proper that some tax relief should be given rather than that application for help should be made to the Assistance Board.

If the Chancellor of the Exchequer looked favourably on this idea, it would be possible so to draft the position that a parent could have one or the other but not both—not a tax relief and his child go to the National Assistance Board. From the point of view of the grand account of the nation, it does not really matter whether the help comes from the Assistance Board or through the medium of taxation relief. We are frequently too rigid in our attitude to the position of the Exchequer in the background of all these things. I know that it is tidy to keep everything in its proper compartment, but, looking at the matter logically and generally, I think that relief can be given by way of taxation as an alternative to relief through the Assistance Board.

Of course, in certain circumstances, a child may wish to have financial independence up to a point even though it comes from the Assistance Board. The tax relief is to the parent, not to the child. I understand that difference, too. But this is a recommendation of the Royal Commission which has not so far been accepted by the Government. I know that we are tempted to quote recommendations of a Royal Commission when they suit our purpose and to leave them aside when they do not.

Mr. Nabarro

Hear, hear.

Mr. Houghton

But the Chancellor of the Exchequer, like the Financial Secretary, has been just as guilty as any hon. Member on this side in quoting Royal Commissions in his favour. I therefore hope that after so many discussions on this subject we may get a rather more favourable response this time. I know that I have said nothing new. What I have said has been said before either by me or by some of my hon. Friends on previous occasions.

Mr. Nabarro

It is still very good.

Mr. Houghton

I am much obliged to the hon. Gentleman. Praise from him is praise indeed. The Financial Secretary may have nothing new to say in reply, although I wish it were conceivable that he had.

Finally, I pass to the third of the proposed new Clauses—Increase of relief for claimant depending on services of a daughter—in the name of my right hon. Friend the Member for Huyton (Mr. H. Wilson) and other hon. Friends, which has nothing to do with child relief. It concerns the services of a daughter. This is an obscure relief in the tax code and I think that in these days very few taxpayers indeed are able to avail themselves of it. It is a special relief to a taxpayer who himself is incapacitated and who relies on the services of a daughter for care and attention. The relief given is tax on £40. We propose that it should become £50.

The amount of relief was raised from £25 to £40 in 1953, after remaining at £25 for thirty-three years, which shows that there is no very strong lobby of incapacitated fathers in this House who are dependent upon the services of a daughter; otherwise, more would have been heard of the demand for improvement in this relief much earlier than 1953.

It was in 1953 that my hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine) moved this improvement from £25 to £40, and the Chancellor accepted it. But the Financial Secretary will, no doubt, tell the Committee that something has happened since then. The Royal Commission Report came out after that, and the Financial Secretary is going to lean as heavily on the Report of the Royal Commission as he will lean on the Dispatch Box to say that the Royal Commission did not like this relief. It said that there was no justification for it. It recommended instead a special allowance for gravely disabled taxpayers themselves, irrespective of whether they depended upon the services of a daughter. But that is another recommendation of the Royal Commission that the Government have not accepted.

I know that the Royal Commission said that this allowance in respect of the services of a daughter was capricious and anomalous because it was quite accidental whether a taxpayer had a daughter who could render this service. Admittedly the relief does depend on having a daughter who can render this service, in just the same way that housekeeper relief depends on being able to get a housekeeper to look after one's children.

Under one of the housekeeper reliefs it is necessary to have a female relative as a housekeeper, and if one cannot persuade a niece or a cousin or some other member of the family to be a housekeeper one does not qualify for housekeeper relief under that provision. We know that these reliefs are anomalous in the sense that it depends on whether the conditions exist which qualify a person for them. One might almost say that it is accidental as to whether or not one is totally incapacitated. Certainly the misfortunes of life are themselves capricious; we have to deal with them when we meet them, and this relief is one of those occasions.

I do not think it is good administration for the Financial Secretary to say that, having regard to the Report of the Royal Commission, this relief is now virtually obsolete. If he is going to say that this relief is obsolete, like the 10s. paid to the 10s.-widow, and that therefore there is no case for doing any more about it, I think that the Committee should take a hand in exercising cautionary discipline on the hon. Gentleman. This relief is in existence. The relief is given subject to one having the qualifications for it. It is given to a few people who deserve it if they qualify, and we think that it should now be increased slightly.

There is one thing that the Chancellor cannot say about this third proposed new Clause. He cannot say that it will wreck his Budget. He cannot say that the economy will come unstuck. He cannot say that the surplus above the line will be reduced below £500 million, because it will not under this proposal. It is a relief which will cost him only a matter of scores of thousands. Why, I would almost expect him to have the money on him now. For him to take refuge in all the patter about pressure on home demand, budgetary strategy and all the rest of it would be very unworthy of the Chancellor or the Financial Secretary, who is to reply.

It may be, if rumour is any guide, that this may be one of the last occasions on which the hon. Gentleman will have the opportunity of coming to favourable terms with the Committee on a Finance Bill. Whatever else he may do in the Parliamentary or political field in the future, he will not have the opportunity—at least, not as Financial Secretary—of pleasing the Committee as I am sure he would do if he were able to concede at least one, or possibly two, of these proposed new Clauses.

I have done my best in very difficult circumstances, and I hope that it has made some impression on the Financial Secretary, although I very much doubt it But I hope that hon. Members opposite who have stayed to listen will one day use their influence in the 1922 Committee on behalf of these new Clauses and others which we are trying to get the Chancellor to accept.

Mr. William Clark (Nottingham, South)

It is always a pleasure to follow the hon. Member for Sowerby (Mr. Houghton), and I think he is to be congratulated on making the same speech for thirteen consecutive years. I only wish that after having made the same speech for thirteen years I could put it across with the same fervour as he has done.

I was rather disappointed to learn that the hon. Gentleman does not look favourably on the proposed Clause standing in my name—(Children)—and that he spoke about administrative difficulties. I should have thought that with his great experience of Revenue matters, the hon. Gentleman would have found it easy administratively to put all these personal allowances on a graduated scale, being a percentage of gross income of taxpayers. That is done through P.A.Y.E. machinery covering the working population of the country so far as earned income relief is conerned.

Mr. Houghton

I am sorry to intervene, but the hon. Gentleman will realise that gross income is not known until the end of the tax year. Yet allowances for children have to be given in the coding during the year. This would lead to many end-of-year adjustments of child relief. Indeed, that is the reason why in 1957 the then Chancellor adopted the present graduated method and not the one recommended by the Royal Commission.

Mr. Clark

I accept that, but nevertheless income relief is not known in its entirety until the end of the year, until the income of the individual is known.

There is one inherent difficulty in our tax system. It so happens that this year I put down a proposed Clause dealing with child allowances, but what I am about to say relates to the wife's allowance and other allowances. It seems wrong that we should have a graduated taxation system—earned income relief is graduated—yet the allowances that are given are on a kind of poll-tax basis. For example, there is £100 for a wife irrespective of one's income. There is £100 for a child under 11 irrespective of one's income. Whilst I do not expect the Financial Secretary to make any adjustment of the child allowance this year, in future years the whole range of our allowances should be reconsidered.

5.30 p.m.

If we take the average income throughout the country as £750-odd a year, the child allowance at £100 is roughly 12½ per cent. I should have thought it was logical, if a taxpayer earning £800 a year can keep a child for £100, to consider what happens to a taxpayer who is earning £1,600 a year. Is it logical to say that it costs him only £100 a year to keep that same child?

I wish to put this matter forward this year so that in future years we may look at the whole range of allowances, child allowance, dependant allowance, and so on. It may be that my hon. Friend the Financial Secretary will say, "Quite obviously this year we cannot afford it; next year it will be very difficult," that no doubt the Royal Commission said something about it but that he does not think the idea a good one at all.

I think it is quite true to say that the higher a person's income the more it costs him to keep a child. This works through the whole range of allowances. I cannot see why the Revenue cannot give a graduated allowance for these various things. It may be that as far as children are concerned it should be restricted. I have put in a maximum of £180 in my proposed new Clause. That figure may be wrong and the 12½ per cent. may be wrong.

Mr. Mitchison rose

Mr. Clark

If the hon. and learned Gentleman will allow me to finish what I am saying, I will gladly give way to him.

As far as children are concerned, if the Revenue wishes to restrict the allowance, that would be understandable. Take the cost of education of children. I believe I am right in saying that the education of a child throughout the country, from primary to secondary school, costs the State, on average, something of the order of £80 a year. It may be that the Revenue could consider whether, for example, an allowance should be given to the parent who does not take advantage of the State scheme of education. After all, he is paying rates and taxes and he is, in fact, saving the taxpayer money.

Mr. Mitchison

I am much obliged to the hon. Gentleman for giving way. I wonder whether, in considering the advantages of a graduated system, he has thought of having the graduation the other way round, so that the person who has the least income gets the highest allowance?

Mr. Clark

That is a valid point, but I think that it is also perfectly valid to say that since the advent of a Conservative Government in this country many taxpayers on low incomes have been exempted from taxation altogether owing to the progressive reduction in taxation that has been made and the increased allowances that have been given. Quite obviously—and I think that the hon. and learned Member realises this—we cannot give a fiscal relief to someone who does not pay tax.

Mr. Nabarro

As a matter of historical fact, the number of Income Tax payers at the moment is the highest in our history. The yield of Income Tax estimated at £2,700 million for 1961–62 is also the highest in our history. I think that these two facts rather militate against my hon. Friend's argument.

Mr. Clark

With great respect to my hon. Friend, that is only half the story. I am sure that my hon. Friend the Financial Secretary will be able to give us the figures. If we take a man who was earning £9 a week in 1951 and look at the tax that he was paying at that time, and then see what that £9 a week man is earning today, it will be clearly seen that under a Conservative Administration less direct taxation is being paid. It may be that, because of the increase in incomes generally since 1951, more people have come into the tax bracket, but, with great respect to my hon. Friend, I suggest that that does not necessarily militate agains my argument. Progressively since 1951 we have not only reduced taxation but have increased personal allowances.

Mr. Harold Wilson (Huyton)

The hon. Member for Kidderminster (Mr. Nabarro) made the first of the two points which I would have put to the hon. Gentleman. There are now more people paying Income Tax than there were in 1951, but, surely, the hon. Gentleman realises—and if he does not he had better look up the debate on Second Reading—that, of course, the man who was earning £9 in 1951 would, if he were still getting £9 today, be doing very badly indeed. The cost of living has risen so much in the interval that, even allowing for any increase in real wages, he must have had a very big increase in wages in order to keep pace and this must carry him into a high rate of taxation. Before the hon. Gentleman wastes the time of the Committee with this fantastic argument he should have a look at the figures given during the Second Reading debate when I took the case, I think, of the £12-a-week man, the man about whom the Prime Minister had been talking, and showed, on the cost of living and with the tax remissions, that he would be paying now only a very small amount less in tax than he was paying in 1951. One has to add to that the whole of the poll tax, which utterly destroys the hon. Gentleman's argument.

Mr. Clark

I was present throughout the whole of the right hon. Gentleman's speech on Second Reading, to which I listened with great interest. I regret that he thinks that I am wasting the time of the Committee, but, nevertheless, I still maintain that the Conservative Government have reduced taxation. I accept, of course, that incomes have gone up generally and that more people are paying Income Tax, but we cannot get away from the fact—and here I do not apologise at all if any hon. Member thinks that I am wasting the time of the Committee—that the standard of living of the taxpayer is very much higher today than it was in 1951. That is the crux of the argument.

I will, if I may, get back to my original argument which is, apparently, looked upon with very much disfavour by hon. Members opposite. However, I trust that my hon. Friend the Financial Secretary will look upon it more favourably. I wish to reiterate that these allowances should be more graduated. It costs more to keep a child if one's income is higher. Even if, probably, my hon. Friend cannot do anything this year, I hope he will be able to say that the Revenue will look at the matter very seriously not only in the context of child allowances but in the context of allowances generally, the wife's allowance, the dependant's allowance and so on, so that in future years we may get a more equitable allocation of relief for these people.

Dr. Horace King (Southampton, Itchen)

I will not follow the hon. Member for Nottingham, South (Mr. W. Clark) in all that he has said in the debate, although I hope that my hon. and right hon. Friends on the Opposition Front Bench will take up some of his arguments. May I pick up two of the points he made? First, he paid rather grudging tribute to my hon. Friend the Member for Sowerby (Mr. Houghton) for having made the same kind of speech for some thirteen years. That, at least, is a tribute to my hon. Friend's consistency. We on these benches would also like to pay tribute to my hon. Friend's ability and sincerity, and if he has had to make the same pleas for thirteen years then the fault does not lie with him but with the Treasury Bench. The things for which he asks are, I believe, right and good things.

I hope that the Treasury will take no notice of the plea of the hon. Member for Nottingham, South that allowances should be on a graduated basis. The whole case against the poll tax is that it falls most heavily on those who can least afford to pay it. The reverse is true of allowances. The flat-rate allowances benefit most those who need them most. To increase allowances which are paid to people according to their income would mean that the increase would be given to people who did not need it. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) was right when he said that if there was to be any graduation it should be a graduation in reverse. The greatest allowance should be given to those with the least income.

I do not wish to enter into the general debate. I want to make a very human appeal to the Chancellor in support of the proposed new Clause—(Incapacitated child over the age of sixteen years). This is the new Clause which would treat the incapacitated child for Income Tax relief purposes as the Treasury already treats the university child.

This is the stage in the passage of the Finance Bill when the Chancellor can forget for a moment that he is Chancellor and show in this Committee some of the qualities of warm-heartedness and kindness which we know that he possesses as a human being outside. The proposals we make in this series of new Clauses do not affect the grand strategy of his Budget and the Finance Bill, much as we disapprove of the whole conception of the Finance Bill. As my hon. Friend the Member for Sowerby said, the Chancellor could give us all we ask for—particularly, what I am asking for now—at very little cost indeed.

Some of us have been pressing now, for nearly seven years, for relief of the kind which would be provided for by the new Clause relating to incapacitated children. I have turned up the records and I find that in 1954, 1956, 1957 and 1958, we pressed the claims of the parent who bears the crass of having to care for a child who is totally incapacitated, mentally or physically.

We have achieved something in the long struggle. The Minister of Pensions and National Insurance has done some good in this matter, as he has done in so many others. There used to be a gap in the family allowance for the incapacitated child between the ages of 15 and 16, when the child moved on to another system altogether. The Minister of Pensions has closed that gap. We want to close the Treasury gap between the incapacitated child and the able child at university and give to the parent who has to look after the incapacitated child over the age of 16, the child who has to be constantly cared for, the Income Tax relief which a parent receives for a child who does not need to be constantly cared for but who goes to university.

I pay what is almost an annual tribute to the mothers and fathers of Britain who care for spastic children, for epileptic children, for mentally defective children and for totally crippled children. I am delighted to know that they are now banding together in associations where they can share their problems, give each other advice and help and make joint representations at both local and national level. They have, at any rate, removed some of the shame which they had in their minds because they felt that having an incapacitated child was some sort of reflection on them. That is not true at all, of course. Their devotion is beyond description and beyond praise. I imagine that every hon. Member has friends who take care of children who will go through life utterly unable to fend for themselves.

If incapacitated children receive education in special schools, they qualify for Income Tax relief, but not all of them can go to special schools. We have not enough special schools in the country for any except the totally blind and the totally deaf. We are only beginning to understand the nature of spasticity and the folly of equating it with mental deficiency. We used to think that, because a child could not get a message from the brain to the muscles because there was a blockage along the way, there was no brain there. We are beginning to discover that many a spastic child, if only he could break down the barrier which exists between the brain and muscular activity, would show that he had a brain which could be educated. We have achieved a good deal during the last few years in learning how to educate children who used to be regarded, even as late as ten or fifteen years ago, as totally ineducable.

Some parents insist on keeping their incapacitated children at home. They are a little afraid of the special school. They are very much afraid of the occupation centre where we congregate children who cannot profit even by special school education. When parents do overcome that barrier of reserve and send their children to the special schools and occupation centres, many of their fears prove to be utterly unfounded. But, still, many do not send their children there. Moreover, the special schools and other schools which we have for incapacitated children usually do not take children after they reach 16 years of age.

We still have not begun to tackle the problem of caring as a State for the incapacitated child beyond the age of 16. We accept responsibility for him in the special school up to the age of 16, but we then neglect him and make no provision for him, ignoring the fact that he will be a special adult all his life and will need some kind of sheltered occupation or special provision.

If a lad goes to university or college or undergoes professional training, the parent has the allowance we are discussing, the £150 to which the hon. Member for Kidderminster (Mr. Nabarro) referred earlier in the debate. On the other hand, if a man's son is utterly unable to work, utterly unable to earn a penny, utterly unable to profit by any kind of education after the age of 16 even if it be there, there is no such allowance. I am thinking of the child who is, for instance, deaf, blind and dumb, the child who is deaf and spastic or the child who is blind and spastic. Those of us who love children find it difficult not to be emotional about the cases of which we know in our own experience. I think, also, of those who suffer from grave epilepsy such as the man I knew who, at the age of 25, was still being conducted wherever he went by a loyal and devoted parent because his epilepsy was so grave that it might come on at any moment. I say "grave epilepsy" because wonderful things are being achieved now for epileptics. If a child is in one of the categories to which I refer, if he is utterly dependent upon his parents, the Income Tax relief which his parents receive is relief for a dependent relative, which is about half the amount which a parent receives for a child at university.

5.45 p.m.

If anyone should have the tax relief provided for under the principal Act for children over the age of 16, the first people in queue ought to be those for whom I am pleading now.

Mr. Nabarro

Without prejudice to National Assistance relief in addition?

Dr. King

Certainly, without prejudice to National Assistance. Such children cost more in every possible way than normal children. Often, they have to be fed and clothed—literally fed and clothed—all their lives. The university lad, when he finishes his university career, may repay some of the financial burden which his parents have borne on his behalf, but children in the group of which I am now speaking can never repay except in the affection and sublime trust which they pour back on the parents who sacrifice so much for them. It seems almost as if the incapacitated child knows intuitively the affection which his parents lavish on him.

We hear a great deal about the need for good mothers, good parents and good homes. I have often said that, if the mothers of normal children would accept their responsibilities as do the parents of incapacitated children, ours would indeed be a much finer Britain. The mother and father who have the good fortune to have a normal child born to them ought to get down on their knees and thank God for the opportunity of doing all they can as parents. The parents of incapacitated children could quite easily be bitter at the misfortune which has come to them, but they shoulder their responsibility with a magnificence which is beyond description.

I hope that the Minister will at least accept the new Clause providing for relief in respect of incapacitated children over the age of 16, even if he accepts no other of the human Clauses which we propose. If he does, he will be paying tribute, at little cost to his Department, to some of the nations greatest citizens—the parents of incapacitated children.

I realise that the Treasury is not likely to be moved by human arguments alone and, therefore, I put this economic argument: if a parent of the sort of child I have described abdicates his responsibility, we have to accept that as a State. And if the State accepts that responsibility, then the cost is enormous—anything from £8 to £12 a week, putting it at its lowest. The State should, therefore, be happy to recognise that the devotion of these parents saves the State a lot of money, and the Economic Secretary should now say that he will, at last—after about seven years—be more than willing to accept the new Clause which would treat the parents of incapacitated children as it treats the parents of university children.

The Financial Secretary to the Treasury (Sir Edward Boyle)

The hon. Member for Sowerby (Mr. Houghton) when moving these new Clauses, sounded a little depressed about the result of his work of the past thirteen years. But I urge him, if ever he feels in a mood of depression about his career, to read the biography of Joseph Cooper who gained fame with a picture of sheep in snow at the age of 25 and who then went on painting pictures of sheep and cattle in the Cumbrian Hills, generally in snow, for the next seventy-five years until he died in 1901. His career would seem a remarkable example of pertinacity.

I am sure that the whole Committee is also glad to have had the hon. Member for Kidderminster (Mr. Nabarro) in such good voice this afternoon. He is no doubt limbering up for another new Clause about which he hopes to catch your eye, Sir William.

Regarding the new Clause—(increase of relief in respect of children not over the age of eleven)—which proposes an increase of £10 in the lowest tier of the child allowance, that is to say, for children not yet over 11 years of age, it is worth remembering, first of all, that the present Government have increased the amount of the child allowance no less than three times during their period of office. There were all-round increases from £70 to £85 in 1952 and to £100 in 1955. In 1957 the allowance for older children was again raised. This time it was made a differential allowance and raised to £125 for children over 11 and to £150 for children over 16 who were receiving full-time education at school or university, or who were undergoing full time training as apprentices for at least a two-year period. In 1957, of course, the child allowance was made allowable for Surtax as well as Income Tax.

As I said when winding up the debate on Second Reading, I think that this increased differential child allowance has proved a timely concession for the family man, at a time when more and more children are staying on at secondary schools beyond the statutory school-leaving age. But we must recognise that the further improvement at the bottom tier, of the £100 allowance, suggested this evening by hon. Gentlemen opposite, would cost as much as £15 million in a full year.

My right hon. and learned Friend the Chancellor cannot accept this proposal on the grounds of cost. I do not want to go at length into the general arguments, because the Committee is well aware that my right hon. and learned Friend regards his prospective revenue surplus of £500 million as fundamental to his Budget strategy this year and has come to the conclusion that he cannot this year afford any significant reduction of direct taxation. But I can assure hon. Members that when a further general relaxation of taxation becomes possible, the whole field will be reviewed and the claims of the main personal allowances—for married and single persons—and the claims of the child allowance will be taken into account, along with all the other claims.

My hon. Friend the Member for Kidderminster raised the question of the relative improvement in the child allowance and wife's allowance. My hon. Friend appears to be out of the Chamber at present, but I can claim to be relatively neutral on this point. I thought, at one moment, that my hon. Friend seemed to be getting close to saying that wives cost more as they grow older. I can assure my hon. Friend that my right hon. and learned Friend the Chancellor will, of course, consider the claims of all the allowances in future years, as and when a reduction of general taxation becomes possible.

Mr. Nabarro

I regret that I was absent for a moment. I am appealing to the Chancellor, in the next twelve months, to review all these allowances for Income Tax purposes in order to rationalise them. Does not the Financial Secretary realise that we have got to the position, as a result of the brilliant exposition of the hon. Member for Sowerby (Mr. Houghton), where a child up to 11 has an allowance of £100, a child between 12 and 15 has an allowance of £125, a child over 16—in full-time education—has £150, and where there is an allowance of £75 for a dependent relative, £75 for a housekeeper and £40 for the services of a daughter? Against that, there is only a £100 allowance in respect of the "missus". Surely these allowances have got entirely out of balance with one another and should be rationalised.

Sir E. Boyle

If my hon. Friend will read what I was saying in tomorrow's OFFICIAL REPORT he will see that I gave an assurance that my right hon. and learned Friend will look at the whole field of personal allowances in the future.

In the case of the new Clause in the name of the hon. Member for Nottingham, South (Mr. W. Clark), the cost of the extra relief there proposed would be as much as £48 million in a full year, and it therefore rules out serious consideration of that proposal this year. There are also some serious objections, in principle, to the proposal that we should make the Income Tax child allowances vary within limits according to the size of the parental incomes.

It is true that my hon. Friend's proposal is in line with the second Report of the Royal Commission. But one should remember that since the publication of that Report we introduced in 1957 the three-tier system of child allowances and, as I have reminded the Committee, made these allowances allowable for Surtax as well as for Income Tax. Both these steps were taken to ease the position of the family man.

If we were to accept the principle of my hon. Friend's new Clause we should be suggesting that people with incomes over £800 deserve bigger tax allowances than people with lower incomes because they tend to spend more on their children. If that line of reasoning were accepted it seems obvious—quite apart from any moral considerations—that we could hardly stop there. There would, obviously, be demands that other personal allowances should also be put on a sliding scale—personal allowances to married men, for instance, in respect of wives—and the further the process spread the more costly to the Exchequer it would become.

The second new Clause, on which an impressive speech was made in support by the hon. Member for Southampton, Itchen (Dr. King), proposes that the child allowance of £150 should be given in place of the dependent relative's allowance if a taxpayer has an incapacitated child between the ages of 16 and 21. I replied to a similar Clause during our debates last year, and I fear that I must this evening repeat some of the arguments I used on that occasion.

We all agree—and there is no dispute here—that the incapacitated child, like any other, is its parent's responsibility until the age of 16. Fortunately, a great deal more is done today by the community for incapacitated children. While I was at the Ministry of Education one of my special responsibilities, like my predecessor and my successor, was the work of the special schools, and I appreciate how much more is done today for children who are handicapped, blind, deaf, spastic or otherwise disabled.

6.0 p.m.

Once an incapacitated child reaches the age of 16, I can only repeat to the Committee the view of the Government that the child is more suitably helped through the system of social services than by way of tax reliefs. As the Committee is well aware, when the child of 16 or over is unable to work, the social services provide for maintenance grants through the National Assistance Board, irrespective of the means of the parents. These grants are kept in line with changes in the cost of living and, through them, an incapacitated child without income or capital of his own can obtain a basic income in his own right.

Furthermore, the fact that the incapacitated child was receiving a grant from the National Assistance Board would not affect the parent's right to claim the dependent relative allowance for the child and, since the grant from the National Assistance Board does not rank as income for tax purposes, a parent whose child had no income other than the grant could still claim the full dependent relative allowance of £75. I still hold to the view that I expressed last year, that direct provision of this kind is the best way of mitigating the hardship over the whole field, whether we are dealing with incapacitated children over 16 or incapacitated adults—and that is what is achieved by the provision of National Assistance.

Dr. King

As the hon. Gentleman says, he is using the argument that he used in a similar debate last year. He points out that the incapacitated child, when 16, is in receipt of something from the State. That is true, but so is the university student. There is hardly a university student today who is not receiving from the State, in the form of a university grant, at least three times what the incapacitated child gets from the State because of his incapacity. Why should not the parent of such a child receive the Income Tax relief that the parent of the university student gets?

Sir E. Boyle

In answer to that, I can only repeat what I said before, that I think that the big decision we have to make in this case is whether the incapacitated child over 16 should be dealt with primarily as a child or in a way rather more analogous to the incapacitated adult. I recognise that the Committee is divided on this but, rightly or wrongly, we think that the best way—and I shall come to a further reason in a moment—to deal with the child of over school age is to deal with him, as it were, like anyone else who is incapacitated—that the best thing to do is to treat him through our system of social services.

There is another objection to the new Clause. There would be little justification in logic for giving an allowance of £150 for an incapacitated child between the ages of 16 and 21 while keeping the allowance for other dependent relatives at the level of a maximum of £75. Surely, if one type of dependent relative, the incapacitated child, ranks for £150, there would inevitably be a demand that bigger allowances should be given for all dependent relatives, whatever the degree of relationship.

In fairness to the hon. Member for Sowerby, who always thinks his proposals through very clearly, I know that he said last year that the Opposition would not try to generalise this concession. But, in my view, the demand for its extension would be bound to arise, and I wonder whether in logic, or even in equity, the case of the incapacitated child is really distinguishable from the rest. For instance, the cost of looking after an adult relative suffering from a serious illness may be just as heavy as, or even heavier than, the cost of looking after a seriously incapacitated child between the ages of 16 and 21. If we were to accept this present proposal, I believe that it would be difficult to resist claims for an all-round increase in dependent relative allowance, which would cost a good deal of money.

Indeed, I cannot see that the present differentiation between the incapacitated child and the student or apprentice is really unreasonable. The period of study or training in one of our many types of institutions for further education is surely no more than an extension, for a few years, of the period in which a child could rightly look primarily to his parents for maintenance. I know that the National Union of Students, and the diehard supporters of the majority Report of the Anderson Committee, would disagree with me very strongly there, but I still believe it to be broadly true.

The case of the incapacitated child is, surely, a different one. I cannot see anything unreasonable about treating the incapacitated child from the age of 16 onwards in the same way as an incapacitated adult—

Dr. King

Surely the incapacitated child is having an extended childhood which lasts all its life. The Minister is arguing that the university student is having a kind of extended childhood in relation to parental responsibility. Our whole case is that the incapacitated child is still a child even at 21.

Sir E. Boyle

In a way, I could put the same point with equal fairness the other way round. The child who on leaving school goes on to an institution of further education is just postponing his earning capacity for a few years in a very desirable way, but it is obvious that when the incapacitated child leaves school he is seriously incapacitated and, from the point of view of getting on in the world, is in the same position then as he will be all his life. From that point of view, again, I should have thought it reasonable to treat that child from the age of 16 in the same way as an incapacitated adult.

It is extremely distasteful to have to talk about this subject in these terms, but when we come to decide whether we should have some special relief, or should deal with incapacitated children of over 16 through the medium of the social services, it is quite an important decision to take. Having considered it several times, I must confess that I believe that the Government are right in the view they take. I believe that if the Committee were to accept this new Clause we should be breaking up this continuity of treatment which would lead to the creation of a new anomaly between the treatment of one class of dependent relative and another which really would be hard to justify.

I come, finally, to the last of this group of new Clauses, which proposes to increase from £40 to £50 the daughter's services allowance. This, as the hon. Member for Sowerby said, is an allowance of £40 that can be claimed by a taxpayer who, because of his old age or infirmity, is compelled to call on the services of his daughter resident with or maintained by him.

This allowance, as the Committee is aware, was the subject of pretty severe criticism by the Royal Commission in its 1954 Report. It held that the allowance for daughter's services depends on the combination of such special circumstances that it cannot really be justified; and suggested in its Report that the allowance should disappear, or else that the scheme for Income Tax allowances to taxpayers who are incapacitated ought to be so much extended that this special allowance would not be necessary.

The suggestion that there should be a special disablement allowance has been discussed frequently in Finance Bill debates in recent years. We debated it in 1959, and, again, I replied to a similar debate last year; and I notice that the Opposition have put down new Clauses on the same point this year which are not selected. Rightly or wrongly, for the same reasons that we have argued in the past, the Government have never felt able to accept that proposal. The Government think that the right way to deal with the problem of disability is through our nation-wide system of social services rather than through some special form of tax reliefs. So even at its present level, the daughter's services allowance is something of an anomaly in our present tax system. It is the only allowance dependent on the disability of the taxpayer and, as the Royal Commission fairly pointed out, it is capricious, in that it depends on the taxpayer having a daughter available to look after him.

Successive Chancellors have never been able to accept the suggestion that the allowance should be withdrawn altogether, but, equally, they have held the view—and my right hon. and learned Friend still holds it—that we should not increase an allowance which is something of an anomaly in our present tax system and which has been so criticised by the Royal Commission. It was for this reason last year that the present Lord Amory increased the housekeeper and dependent relative allowances from £60 to £75, but he left the daughter's services allowance at £40. My right hon. and learned Friend feels that this was a practical compromise solution, not, perhaps, quite right in strict logic but a reasonable compromise solution. The same reasons which influenced Lord Amory have decided my right hon. and learned Friend against making any increase in this allowance this year.

I have, I fear, spoken to the Committee at some length, because these are all important points which we have been considering, but for all these reasons, while the Government are firm in the belief that they have nothing whatsoever to be ashamed of in their record of increased tax allowances since 1951—and I would say to my hon. Friend the Member for Nottingham, South that if he takes the advice of the right hon. Member for Huyton (Mr. H. Wilson) and looks up the figures whch he quoted on Second Reading he may also care to look up some of my figures as well, which I gave later on in that debate—they cannot advise the Committee to accept any of the new Clauses.

Mr. Mitchison

Treasury logic is, in many ways, remarkable. I sometimes disagree with the premises. I rarely disagree with the dealings after the premises have been stated, except on one point: it always seems to work out the same way. Whatever the anomalies are, less but not more concessions are to be made, and whatever concessions are to be made, it is only logical that they should be as small as possible. I cannot think that that is quite the right way of looking at this kind of problem.

I will not develop what my hon. Friend the Member for Sowerby (Mr. Houghton) said about the child allowance, but I suspect that there must be something a little wrong when someone with experience and understanding in this field has to press for so long so many different Chancellors of the Exchequer in the same sense.

Turning from that, I come to the incapacitated child. There seemed to me to be a little confusion here. What we are considering is an Income Tax concession to the parent of the incapacitated child. I do not regard that as quite the same thing as help which is given to the child, whether in a money form or in any other form. As my hon. Friend the Member for Southampton, Itchen (Dr. King) pointed out in a speech which I personally found most moving, it takes a very great deal of the love and attention of the parent to attend a child like this.

We have all of us known in our constituencies the most heart-rending cases of this sort of trouble, and I simply feel that, when it comes to taxation logically, even in Treasury logic, there is a case for recognising the actual use of time in that way, and that this is a type of matter in which, perhaps, it is not altogether wrong to let the heart run away far a little, and to consider what these parents are having to do—something which, as we all know, no one but a parent can do, something which takes part of the parents' life and much of their development as people, something given, in the fullest sense of the word. I do not think that we can quite rule that out even in the extremes of fiscal logic.

I should like to make a suggestion. I have not the expert knowledge of my hon. Friend, nor, of course, the expert knowledge which is available to and is held by many Treasury Ministers, but when I listen to these debates, especially on this sort of allowance, I do not think that there are cases in which the Treasury ought to avail itself of some form of independent advice. The National Insurance Advisory Committee is doing some very useful service. I am not suggesting that a body of that sort could in any way take the place of the Chancellor of the day. It is for him, of course, to make the final fiscal decision, but when it is a question of removing anomalies, when there are questions of the incidence of taxation as compared with questions of social benefits and social help in one form or another, when all that arises, it does seem to me to be the kind of thing which could usefully be considered by a standing commission.

6.15 p.m.

I suppose I must say that I am speaking for myself. So I am, but I have made a few inquiries, and I do not think my right hon. and hon. Friends would object. The Royal Commission did most valuable work. We may agree or disagree with this or that recommendation; we may find that there has been a development one way or another; but it was a Royal Commission within a very wide field indeed, and it naturally and properly took time. A standing committee or commission would have a much smaller field, but I should have thought that within that field it might be able to render useful advice to the Chancellor of the day within the limits I have been trying to indicate, and do so more or less regularly. It is a question for consideration whether it ought to have the power to tender advice on its own, or whether, as, no doubt, would anyhow normally be the case, it should answer questions put to it as the National Insurance Committee does.

Turning from that comparatively peaceful suggestion to the ardours of Parliamentary warfare, we do not propose to divide on the first of these Clauses, not because we do not feel strongly about it, but out of regard for the time of the Committee, and because, as my hon. Friend indicated, we have expressed our opinions on this matter so many times before. They have not

changed in the least, but we think it is sufficient to say that, and, having said it, to divide on the Second Clause; and I do not think I can do better than to sum up our views about it by saying, for the reasons indicated by my hon. Friend the Member for Southampton, Itchen.

Question, That the Clause be read a Second time, put and negatived.