HC Deb 03 July 1962 vol 662 cc295-336

As Amended (in Committee and on re-committal), further considered.


(1) Where the total income of an indvidual includes, or would, but for this section, include any sum chargeable to tax under Schedule A in respect of a house of which the individual is both owner and occupier, that sum shall be disregarded for all the purposes of the Income Tax Acts other than surtax or the furnishing of information:

Provided that this subsection shall not apply to any individual in respect of more than one house in any year of assessment.

(2) For the purposes of this section "house" includes any residence or dwelling and 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.

(3) The enactments relating to income tax, and in particular Part III of the Act of 1952, shall have effect as if subsections (1) and (2) of this section were contained in the said Part III between sections ninety-two and ninety-three.

(4) 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 Income Tax Act, 1952, before the twenty-second day of June, nineteen hundred and sixty-two. — [Mr. J. T. Price.]

Brought up, and read the First time.

4.8 p.m.

Mr. J. T. Price (Westhoughton)

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

Mr. Speaker

I think that it would be for the convenience of the House if we were to discuss this new Clause together with the new Clause in the name of the right hon. Member for Orkney and Shetland (Mr. Grimond), "Abolition of Schedule A income tax", and the new Clause in the name of the hon. Member for Ashfield (Mr. Warbey), Rent allowance", neither of which is, strictly, selected.

Mr. Price

The new Clause which I have moved deals with a matter of very great public controversy which has been discussed throughout the country for some years and has often engaged the attention of the House. It seeks to relieve owner-occupiers of domestic dwelling-houses of a form of taxation which is probably one of the most unpopular taxes that has been levied by the House in the domestic field. I refer to Schedule A, which under our present legislation levies tax at the standard rate on the net value of a dwelling-house under the provisions of the Income Tax Acts.

I do not wish to weary the House unduly by going through all the arguments for and against which have been so frequently ventilated here and elsewhere, but, to give the matter its right perspective, I think that I ought to say at once that my hon. Friends and I have made some progress. We are not claiming that we have always been completely consistent, but any party which refuses to retain an open and flexible mind on matters which, by their very nature, are complex, is not a party to which I should wish to belong. Therefore, I make no apology for saying at the outset that we in the Labour Party are prepared to support this important amendment of the law, which would completely remove Schedule A tax from all domestic dwelling houses.

The question of principle is, of course, relatively simple. The question of administration and the implications for the tax gatherer and the executive responsible for running the Treasury are complex. Perhaps I may deal, first, with the relatively simple matter of principle and say that I have long been convinced that the principle underlying this tax— the principle that it is possible for Parliament to levy a notional tax on a notional earning or advantage— is not one which ought to be supported in a modern Parliament. It is quite illogical.

Whether the merits can be sustained or not, it lies as a responsibility for the Government to defend if they can defend it. In logic, it seems ridiculous and absurd— this has been said so much more eloquently on other occasions by other hon. Members—

Mr. Gerald Nabarro (Kidderminster)

Hear, hear.

Mr. Price

I am glad to see the hon. Member here. If he will be tolerant and patient he may, for once in his life, agree with what I am about to say.

It seems irrational that Parliament should continue to defend the idea that one can levy a large tax and place a penalty upon a citizen merely because he has been prudent or provident enough to invest his savings in a house to provide a home for himself and his family, that one can levy a serious tax on the net rateable value assessed on a man's dwelling-house, for which he has paid often by way of mortgage, whilst, at the same time, so many other forms of property in which money may be invested escape 'taxation, except perhaps Purchase Tax. For instance, a man may decide to buy a grand piano or even a saxophone, or a mink coat, or any of the many other articles which a man or his wife may like.

Furthermore, it has often been contended, and I think with great force, that this idea of a notional tax involves levying not only Schedule A tax, but something much more important and inequitable. It involves the principle of double taxation. After all, every owner of a dwelling-house is subjected to very substantial local taxation in the form of local rates which, unhappily, are always going up. Therefore, with the conceivable exception of Schedule B, which only covers a very narrow band of taxpayers and yields about £ 150,000 a year in revenue, this is the only case on record, even including the enactments which we have passed, in which this form of notional taxation is levied and which involves double taxation on the citizens involved.

4.15 p.m.

The extent of this tax is further aggravated by the numbers of people involved in paying it, and by the fact that very soon under the provisions of the Rating and Valuation Act, 1961, on the Standing Committee of which I had the honour to serve for some months, we shall be facing a situation in which all domestic dwelling-houses will be re-rated on the basis of their present-day values as compared with the 1939 values which form the basis of assessment at present.

This is a most serious and anxious prospect for anybody who owns a house in which he lives as a domestic dwelling. It is freely admitted by responsible Ministers of the Crown, with whom I have debated these matters in Standing Committee when the Measure was going through the House last year, that under the Rating and Valuation Act rateable values are likely to increase by anything from 200 per cent. to 300 per cent. I am not concerned with the rate poundage, which may admittedly be adjusted in certain directions, but I am concerned with the rateable value because the rateable value assessed by local authorities will form the basis of Schedule A liability under the new legislation.

If I am wrong in this, hon. Members will have an opportunity of putting me right later, but perhaps I ought to anticipate any possible criticism of what I am now saying, I hope with a proper sense of responsibility and with no desire to make any exaggerated or irresponsible statements. It is expected by the Minister of Housing and Local Government, whose responsibility this is on the narrow sector of rateable values, that it may inflict great hardship in increased rates on certain people. A cushion has been built into that legislation, because for five years it is possible for the Minister of Housing and Local Government to issue an Order in which the new rates will be abated by certain percentages.

But, so far as I am advised— if I am not fully up-to-date on this I will willingly concede the point if I am wrong — there is no provision in the Rating and Valuation Act which will provide the Chancellor of the Exchequer, his associates and officials with the machinery by which the liability for Schedule A will be reduced as compared with what it is now.

Mr. A. R. Wise (Rugby)

I believe that I am correct in stating that it has already been declared that the new rating assessments and valuations will have nothing whatever to do with Schedule A.

Mr. Price

I am obliged to the hon. Gentleman for his information. Naturally, if this is correct I should prefer to have it from the Treasury Bench and not from unofficial quarters. If the Chancellor cares to make a statement I shall be grateful.

Nevertheless, whatever the figures are and whatever the new liability might be, I contend that the tax can no longer be defended in principle, because it places an inequitable levy on those who own their own houses.

Mr. Donald Wade (Huddersfield, West)

I think that I may be able to help the hon. Gentleman if I quote from a statement made by the Chancellor of the Exchequer on 20th June last year: 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."— [OFFICIAL REPORT, 20th June, 1961; Vol. 642, c. 1356.]

The Chancellor of the Exchequer (Mr. Selwyn Lloyd)

Perhaps I may be allowed just to supplement that and to remind the hon. Gentleman of what I said in my Budget speech, that We will not seek to use the new rating valuations for Schedule A purposes so far as these owner-occupiers of residential property are concerned."— [OFFICIAL REPORT, 9th April, 1962; Vol. 657, c. 978.]

Mr. Price

I am, of course, obliged to the right hon. and learned Gentleman for restating what he put on record, but it is a strange thing that, in the absence of legislation, there is a widespread impression abroad among associations of owner-occupiers throughout the country that this will take place. If it does not take place, I for one shall be relieved, because it would further aggravate the injustice against which I am now pleading, and which I am pleading should be removed as a matter of principle.

Mr. G. R. Mitchison (Kettering)

Is not this a question of using assessments which have been made for another purpose? Is it not the case that there is no provision in the Income Tax legislation for using pre-war valuations which were specifically provided for in the case of rates and assessments for rates?

Mr. Price

Again, I am much obliged, because that was my understanding of the position. The provision is not there. The only code our citizens have to refer back to is the code embodied in Measures on the Statute Book.

It is all right to hear Ministerial statements, but as a matter of working practice it is much better to have this matter cleared up by legislation. Perhaps there is no need to labour that point any longer, for we have heard so many arguments in speeches about it from both sides of the House, speeches favourable to the annulment of Schedule A tax, and speeches why it should not be annulled. I need not go into them now.

To get into proper perspective what it is I am arguing— as briefly as possible, I hope— it is important to remember that when this matter was debated on the Finance Bill last year, 1961, a proposal was sponsored by a number of hon. Gentlemen on that side of the House to remove the tax. It was defeated on a Division which took place at two o'clock in the morning. I do not think any Ministerial reply was made to the debate on that occasion. There was a good deal of cross-party and cross-bench debate going on and I do not think that any definite reply was made.

Mr. Nabarro

I moved a new Clause last year and a Division took place at 2.7 a.m., as reported in c. 1393 of HANSARD for 20th June, 1961. A detailed answer to my plea was made by my right hon. and learned Friend the Chancellor in a quite lengthy speech, the report of which begins at c. 1352. The hon. Gentleman has not done his homework.

Mr. Price

I thought that I was being very fair to the hon. Member. I did not want to refer to anybody—

Mr. Nabarro

The hon. Member may quote me. I do not mind.

Mr. Price

A desultory debate went on but, nevertheless, a specific announcement was not made by the Government about it. They were not favourable at the time, of course. Perhaps the hon. Gentleman will allow me to make my speech in my own way. He will, no doubt, get an opportunity to catch Mr. Speaker's eye and put me right later if I am wrong.

I do not want to delay the House any more than I need to, but I should like to quote a statement by the previous Chancellor of the Exchequer, Lord Amory, now High Commissioner for Canada. This takes us back to 21st June, 1960. He said: 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.] That was a sort of cautious, favourable statement, I would have thought, to come from the then Chancellor of the Exchequer. It did give rise to a good deal of feeling in the House— favourable feeling at the time, on both sides of the House; and hon. Members, particularly hon. Members on the Government side, did not hesitate to go round their constituencies telling to the electors that the Government were taking a favourable view of this and that very soon something would be done about it. Here we come, year after year, making the same plea, but nothing is done about it. The time has come for hon. Members to say definitely and go on record whether they are for or against giving this relief.

It will, no doubt, be argued in reply to what I am saying that there are 61 million people who are owner-occupiers, out of a total of about 13 million householders. Approximately half the house property is owner-occupied property. It will no doubt be argued that many of the owner-occupiers get reliefs in the form of maintenance allowances for painting and decorating and doing running repairs. Theoretically, they are entitled. to them, but, in practice, as the hon. Gentleman the Member for Kidderminster (Mr. Nabarro) pointed out on a former occasion, out of the 6½ million owner-occupiers, only 9 per cent., or about 600,000 ever claim any allowance at all.

A great many owner-occupiers are not occupying palatial mansions. There is a margin of people who awn large houses, and I freely admit that they would be brought within the scope of the relief which I propose in the new Clause, but I am concerned with the greatest good of the great majority of people Who are now paying this tax and are having to pay it, in my view, unfairly. Only about 9 per cent. of them are claiming the allowance.

It will be stated that many others are buying their houses on mortgages and that where a mortgage is payable an allowance is made for mortgage interest. It is quite true that an allowance is made for mortgage interest, but it is also true that the tax is still paid merely to be offset against liability which occurs under mortgage interest either to a building society or a bank.

The hon. Member for Kidderminster will forgive me for drawing attention to something Which I think may not have occurred even to his fertile mind, but it certainly is often forgotten that the great majority of owner-occupiers are occupying houses with a rateable value of not more than £ 40 or £ 50, and the great majority are in economic circumstances in which they have to be their own handymen and do their own painting and decorating and their own running repairs, because the cost of employing workmen at commercial rates is quite prohibitive for them.

I hope that the Chancellor will address his mind to this and will tell us: how does a man who does his own repairs charge for it to get the allowance? He does not charge for it, and the answer is that he does not claim at all. Only a few people are getting the relief to which they are technically entitled. To claim that a man is being fairly taxed when he is paying local taxation in the form of rates as well as Schedule A is stretching the hand of logic a long way, because the owner-occupier is even in a relatively unfavourable position compared with the landlord who owns domestic property as a commercial proposition. Where money is invested in property not for owner-occupation, according to my advice the landlord is able to offset rates and other charges on the property as running expenses on that property when he is being assessed for taxation.

4.30 p.m.

This state of the law, which places the owner-occupier at a disadvantage relatively to the landlord of property which is let out to rent, is a state of affairs which can no longer be rationally defended. I am fully aware that at this stage of the Finance Bill time is pressing because there are many others items to be dealt with, and I must come to the end of my general observations and say to the Chancellor that in view of the favourable statements which have been made by his predecessors on other occasions, and by many of his political supporters on public occasions outside the House, we ought to have a clear indication whether it is the Government's intention to deal with this problem by accepting the new Clause which my hon. Friends and I have placed on the Notice Paper, or whether they intend to leave this bone of contention until a time when it is more politically convenient to them.

This may not be a strong debating point. I am concerned to keep to what I regard as the redress of an injustice, and if the right hon. and learned Gentleman and his colleagues in the Government think that they will play about with this issue for another two years in order to put a very nice juicy titbit in the shop window before the next General Election, we shall regard that as not very creditable. If the case is established, as I believe it has been established in general terms, for relieving taxpayers of this impost which affects about 6½ million people, it ought to be done now when we are trying to balance this matter, which has to be balanced with other priorities.

We have established a case for relief from this taxation. I freely admit that on former occasions it was suggested by my hon. Friends in the Labour Party that this relief ought to be limited to perhaps the first £ 15 or some such figure. But in asking for the support of hon. Members on both sides of the House, we feel that instead of trying to separate a few people who occupy larger premises from a general body of people in the smaller rated premises of £ 40 to £ 80 rateable value, we ought to go the whole hog and wipe out the tax altogether.

I hope that hon. Members will support the new Clause.

Mr. Nabarro

I rise to oppose the Clause. I divided the House against the Government on the abolition of Schedule A Income Tax on owner-occupied houses in 1960. I divided the House again against the Government in 1961 on exactly the same issue.

Sir William Robson Brown (Esher)

My hon. Friend was not alone.

Mr. Nabarro

If my hon. Friend the Member for Esher (Sir W. Robson Brown) wishes to interrupt, I will give way to him.

Sir W. Robson Brown

I said that my hon. Friend was not alone.

Mr. Nabarro

But my hon. Friend was not with me on either of two occasions.

I am delighted that this year the Chancellor has agreed to do what I asked him to do last year— to abolish Schedule A Income Tax outright on owner-occupied houses. He has abolished it outright in that it would be abolished on owner-occupied houses without any qualification as to annual value, although not outright in the sense of length of time. Those are different applications of the same word. I am happy that my right hon. and learned Friend has decided to implement abolition next year, and I shall support him in the Lobby this evening for a variety of what I conceive to be very logical reasons.

The first reason is that there are a large number of maintenance relief claims current and applicable in the present year which are based on a five-year average. I tried to put this point to my right hon. and learned Friend in the Budget debate last April. Many owner-occupiers have substantial sums in hand in respect of expenditure already incurred for the maintenance of their properties, which they are holding in order to maintain a maximum relief in their five-year average. It would be neither equitable, nor fair to abolish Schedule A Income Tax without due notice to those men and women, for they would largely be robbed of the preserves of their own diligence during the last few years in ordering and arranging their financial affairs in such a way as not to attract Schedule A Income Tax on their properties.

It is no good the hon. Member for Sowerby (Mr. Houghton) shaking his head. I am one of the select few in the nation. I have never paid a penny of Income Tax Schedule A in my life since I owned a house, which is a matter of sixteen years, because I am clever enough to arrange my financial affairs in such a way as not to attract any Schedule A Income Tax liability.

But there are very few people who can arrange their affairs in that way, because it is excessively complicated and excessively difficult, and I could not do it by myself. I employ a qualified accountant to do it for me, and the fees which he charges me for carrying out the computation to relieve me of Income Tax Schedule A are in due course charged against my maintenance relief claim, admitted by the Inland Revenue.

My right hon. and learned Friend in his benevolence therefore pays my accountant's fees for me.

Mr. J. T. Price

We all understand that the hon. Member is the most modest man in the House. But does he not realise that he is just indulging in a piece of specious special pleading to get out of the situation that last year he moved a new Clause, almost in identical terms with that which I have just read to the House, and now he is opposing it, for all kinds of tactical reasons which do not bear examination? He is not opposing it on a matter of principle.

Mr. Nabarro

We are no longer in Committee. I allowed the hon. Member to intervene, as he allowed me to intervene once. But the difference between our interventions is that mine was short and his was lengthy.

These are not specious reasons. So far I have quoted only one reason which prompts me to believe that abolition next year will be quite satisfactory. The second reason, which I believe is more powerful, concerns the rating revaluation of domestic hereditaments, in 1963, which is long overdue and, in my judgment, inescapable.

Hon. Members opposite who are honest with themselves and with their constituents know very well that rating revaluation has been deferred so long only because of the physical and clerical difficulties of carrying through a revaluation of domestic hereditaments in respect of about 13 million dwellings. It has not been done since 1936 and it has gravely unbalanced the whole rating structure. It is long overdue that it should be tackled and it is inescapable that it will lead to the doubling or more of revaluation for domestic dwelling-houses.

In these circumstances, I believe that it is not unreasonsable that my right hon. and learned Friend should cause to coincide as far as possible in the same financial year the increased rating valuation of domestic dwellings with partially offsetting against it the diminution in taxes paid on account of the withdrawal of Income Tax Schedule A. It is not an unreasonable proposition and the fact that it will be done in 1963, in the fourth year of this Parliament, does not necessarily make it an electoral issue.

It has been suggested that the Chancellor rustled up a statement on the Budget that Schedule A would be abolished next year because of the result of the Orpington by-election. I think that that is nonsense. It would have been done, anyway. It may be a political decision, but not related to a by-election.

Mr. William Warbey (Ashfield)

Only a General Election.

Mr. Nabarro

No, not a General Election, but inescapably there will be a General Election before 1964.

I thought that what was written inLloyds Bank Review,which reached me and every other hon. Member this morning, in the article "Some Reflections on the Budget", stressed and underlined the point which I am now endeavouring to make on Schedule A. It reads: Mr. Lloyd indicated that he would have done something this year but for the fact that he was not prepared to forgo the tax involved, about £ 50 million, but he hoped to be able to exempt owner-occupied houses from income tax under Schedule A. It should be noted that as a development of fiscal law the proposal has nothing to commend it. It is purely a political decision to encourage house ownership. That would be a very reasonable and not ungenerous interpretation of why my right hon. and learned Friend is doing it.

4.45 p.m.

The fact thatLloyds Bank Reviewhappens to coincide with my own philosophy in this matter is not a remarkable feature of what I am saying, because a few months before the Lloyds Bank Reviewwas published I wrote: Politically, I believe there is a very strong case indeed for total abolition of the imposition of Income Tax Schedule A' on owner-occupiers. The Tory Party states, as a first article of its faith, the private ownership of houses and the creation of a property-owning democracy.' It is quite inimical to that philosophy, in my judgment, that the Chancellor of the Exchequer should continue to place this heavy tax, in the form of Income Tax Schedule A' on those thrifty and deserving citizens who, over the years, have put together enough money to buy their own homes, and who seek by all means to maintain them in good order and condition. That is why I shall persist in my efforts in the House of Commons to secure the removal of this iniquitous form of taxation".

Mr. Herbert Butler (Hackney, Central)

Except today.

Mr. Nabarro

I wrote that last January and the Chancellor announced the abolition of Schedule A in his Budget speech. It will take effect, very properly in my judgment, next year and I am quite prepared next year to vote against the Chancellor if he does not do it. But this year he has made me the promise to do it and that, in my view, is adequate.

Mr. Warbey

The hon. Member keeps talking about the possibility of the Chancellor carrying out his promise next year. He knows very well that the Chancellor has made it quite clear that he will probably not carry out the promise in full next year, if he is still Chancellor.

Mr. Nabarro

Of course he will be.

Mr. Warbey

The Chancellor himself said that it is probable that he will have to make the reduction in stages. If, next year, the right hon. and learned Gentleman comes forward with only a partial reduction, will the hon. Member vote against it?

Mr. Nabarro

I do not believe that my right hon. and learned Friend has ever said that he intends to carry out this measure in stages. No doubt he will be answering in a few moments. He is listening carefully to me and making copious notes upon what I am saying. I am sorry to involve him in this additional, wearisome burden, but no doubt he will answer. I made my statement in the magazinePropertyin January this year. It was a precursor to the Chancellor's Budget statement.

I want to deal with the hon. Member for Westhoughton (Mr. J. T. Price). For a fancy piece of humbuggery I have rarely heard the equal in the House of the speech which he has just made. The hon. Member sat on the benches opposite in 1960 and again in 1961 and watched some of his colleagues going into the Lobby with me against the Government to vote for the abolition of Income Tax Schedule A. He uttered not a word in either debate.

The whole of the Labour Party, with the exception of one or two who had the gumption to oppose their own Whips, abstained and remained quiescent. I will give the hon. Member the figures. I always do my homework first. On 22nd June, 1960, I was the first Teller in a Division against the Government. There were 19 Members voting against the Government— nine Tories, five Liberals and five Labour.

Mr. Wise

How many of those five Labour Members have been thrown out of the party since?

Mr. Nabarro

I do not think that any have been thrown out. I will read the roll of honour. They were the right hon. Member for Bassetlaw (Mr. Bellenger), the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith), the hon. Member for Swindon (Mr. F. Noel-Baker), the hon. Member for Faversham (Mr. P. Wells) and, finally, the hon. Member for West Stirlingshire (Mr. W. Baxter). Yes, I am sorry, the last-named hon. Member has been chucked out, but he did pay his subscription, I understand.

The second vote against the Government on this same matter was on 20th June, 1961. On that occasion 17 Members voted against the Government. Again, I was the first Teller. There were 13 Tories, three Liberals, the other three Liberals were missing—

Mr. Wade

The hon. Member is getting on to rather dangerous ground. He will recollect that a few years ago he voted, either by design or by mistake, against a new Clause on this very subject moved by myself. He is well aware of that.

Mr. Nabarro

I will deal with that in a moment. The shadow Liberal Chancellor of the Exchequer should not be so impetuous. He has not done his homework.

As I was saying, on 20th June, 1961, 17 Members voted against-13 Tories, three Liberals, and the Labour roll of honour was a single Member, the hon. Member for Birmingham, Ladywood (Mr. V. Yates). What humbuggery it will be today if the whole Labour Party goes into the Lobby to support the abolition of Income Tax Schedule A.

Mr. J. T. Price

The hon. Member is simply trying to talk his way out of this.

Mr. Nabarro

What humbuggery it will be when the only Labour purpose will be to try to embarrass the Chancellor of the Exchequer.

I turn to the hon. Member for Huddersfield, West (Mr. Wade), the Liberal shadow Chancellor. In 1959, he moved a new Clause to the Finance Bill shortly before the General Election of that year. It will be recalled that the Chancellor in that year had reduced the standard rate of Income Tax by 9d. and in addition, as a special election gambit, had taken 2d. off a pint of beer.

Speaking in the debate on the new Clause moved by the hon. Member, I said that I would have preferred the £ 40 million loss of revenue from the 2d. off a pint of beer to have been applied to the abolition of Schedule A, but, as we had voted to take the 2d. off a pint of beer before that new Clause to abolish Schedule A could have been selected, it followed that I could not have the £ 40 million twice. As the 2d. had come off the pint of beer it could not be applied again three weeks later to abolition of Schedule A.

The hon. Member has flogged that dead donkey for so long. He has written about it four times inLiberal Newsand sent to the Liberal candidate in Kidderminster saying, Attack your Member on this". Now he seeks to rob my Tory friend the Chancellor of the credit justly due to him for his enterprising and objective measure in abolishing Income Tax Schedule A, which may well redress the balance of Orpington, in the longer term. It will certainly have important political implications as well as being just. For these good reasons, and with the eye of the Patronage Secretary upon me, I shall go into the Lobby this afternoon with my right hon. and learned Friend.

Mr. Wade

I do not propose to follow the hon. Member for Kidderminster (Mr. Nabarro) as he wrestles with his conscience, or perhaps hopes for the future.

Mr. J. T. Price

Or just wrestles.

Mr. Wade

Or perhaps merely wrestles.

Mr. Speaker indicated that the new Clause "Abolition of Schedule A Income Tax" may be discussed with the new Clause which is before the House. Before referring to it, I make a brief comment about the Budget statement of the Chancellor. There seems to be a growing practice on the part of Chancellors of the Exchequer, when introducing a somewhat dull or unpopular Budget, to make forecasts about possible reliefs to be granted next year or in years to come. I am not sure that this policy of mortgaging the future is very wise. In the first place, there is no certainty that it will be the same Chancellor next year or that the promise will be carried out. Furthermore, long before the relief is granted those likely to benefit from it have probably discounted any benefits they will receive. I shall not pursue that further, but merely make that observation by way of preface.

I think that I have taken part in all the debates on Schedule A in recent years. I have heard the Treasury case for maintaining this tax put year by year and I have heard it supported by that vigorous upholder of the Establishment in the realm of taxation. I am referring to the hon. Member for Sowerby (Mr. Houghton), who, no doubt, will regard it as a compliment that I refer to him as an upholder of the Establishment. It now looks as if Schedule A is on its way out. Whether those who have spoken in favour of it and those who have voted against its abolition will now fight a rearguard action to maintain it, remains to be seen. I appreciate that there are reasonable arguments in favour of this tax, but none of those arguments affects my conviction that it is a tax which might well be dispensed with.

Reference bas been made to the speech of the Chancellor in the debate last year. I recollect that speech very well. I have already quoted from it, but perhaps I can help the hon. Member for Westhoughton (Mr. J. T. Price) in one respect. I agree with him that the Chancellor did not make a clear pronouncement. I think that it would be a fair summary of what he said to say that he considered it inappropriate to reach any decision or even to debate the matter until 1963 when Parliament will be faced with the problem of new valuations. I think that that is a fair summary of what he said on 20th June, last year, as reported in column 1356 of HANSARD. Apparently for reasons which can we can only surmise, the Chancellor has had second thoughts.

Mr. J. T. Price

I am obliged to the hon. Member for making something clear which I failed to make clear when I was addressing the House a short time ago. I intended to say, but perhaps I did not say it in the best form of words, that the Chancellor did not make any clear statement. I may have said that he did not make any statement at all, but I agree that he made that statement. It was so unclear, indefinite and inconclusive, however, that I did not regard it as meaning anything at all.

Mr. Selwyn Lloyd

On the question of clarity, I should point out that I said: I would have thought that the proper course would be to deal with the matter in connection with the 1963 revaluation."— [OFFICIAL REPORT, 20th June, 1961; Vol. 642, c. 1356.] I think that was specific.

Mr. Wade

I do not want to argue this at great length. The Chancellor said: We shall require special 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."— [OFFICIAL REPORT, 20th June, 1961; Vol. 642, c. 1356.] I think it a fair summary to say that he thought it preferable to wait until 1963, but apparently there have been some second thoughts and he has now indicated that it is his intention to remove Schedule A either wholly or in part, to reduce or to abolish it.

I do not think that the Government's policy on this subject is very clear or consistent. All we appear to know is that at some time in the future the Government are to repeal this tax in whole or in part. Therefore, it would not serve a very useful purpose to go over the whole ground again, the objections to taxing "notional income" and the many anomalies that arise therefrom. I merely repeat my criticism of Schedule A that it is antiquated, illogical and administratively wasteful. It is wasteful in time and money both for those who collect it and those who are called upon to pay it.

The practical question now, however, is whether it should be abandoned completely or only in part. When I say completely, I mean on all property and regardless of the amount of the assessment. I must make it clear that I am a total abolitionist concerning this tax. I mean by that the tax on all property, partly because of the anomalies and partly because I think its abolition would go some way towards a simplification of our taxation. It is true that several years ago I moved a new Clause on similar lines to that which has now been moved from the Opposition benches, but I regarded that as a first step and I have always advocated total abolition.

Mr. Philip N. Hocking (Coventry. South)

Does the hon. Member mean on commercial property as well?

Mr. Wade

If the hon. Member will bear with me, he will find that I am about to deal precisely with that point because I think that there is some misunderstanding. I recognise that those who advocate the complete scrapping of Schedule A tax must justify this course and that I Shall endeavour to do. One has to consider what it will involve and who will be affected. Broadly, there are three classes of taxpayers who suffer Schedule A. First, there are the owner-occupiers of business premises. That concerns the point just raised by the hon. Member for Coventry, South (Mr. Hocking). They receive the annual demand for Schedule A based on the net annual value, but when computing income for Schedule D purposes they are entitled to show the Schedule A payment as an expense. Therefore, if Schedule A were abolished it would merely have the effect of increasing the Schedule D liability.

I calculate that the net amount of tax will remain the same unless, perhaps, the business is running at a loss. I am not sure that it is altogether fair that a man should pay on notional income when his business is running at a loss. Broadly speaking, if Schedule A tax is abolished, the position will be the same.

5.0 p.m.

The second class is the landlord, He suffers tax on income from rents partly under Schedule A and partly under Schedule D. He is liable under Schedule D under the heading of excess rents. I have deliberately included in the new Clause to which I am speaking a reference to Sections 175 and 176 of the Income Tax Act, 1952 in order to make clear that, in my view, the landlord will continue to be liable for tax on rents notwithstanding the abolition of Schedule A tax. In other words, the abolition of Schedule A will not relieve the landlord from tax in respect of rents. It might even bring in some additional revenue.

At present, the landlord has the advantage of the statutory allowance even if he spends nothing on repairs. One consequence of the Rent Act is that the amount of statutory allowance has been increased. For the good landlord. this makes no difference. The good landlord will spend more than enough to provide a set-off against his Schedule A liability. The bad landlord who spends nothing at all on maintenance and repairs gains. It may well be that, under the present system, the Treasury is losing money compared with what would happen if Schedule A tax were abolished.

There are other relevant circumstances. For example, a landlord may form a company and transfer the property to the company, paying himself for managing the property. In this case, the remuneration may cancel out altogether both the Schedule A liability and the Schedule D liability, but he will then have to pay under Schedule E. I stress this because I wish to make clear that, in one way or another, rents are taxed. Similarly, I do not think that there will be any gain for the large property-owning company if Schedule A tax is abolished. It is possible that the large property-owning company may even lose as a result of the abolition of the statutory allowance. I think that we may dismiss the question of the business owner-occupier, the property-owning company and the individual landlord.

The third category is the residential owner-occupier. These are the people primarily affected. As the hon. Member for Kidderminster has pointed out, not of all them pay. I suggest that those who do pay fall into four classes. First, there are those who through sheer ignorance of their rights or reluctance to fill up forms pay although they need not do so. I do not know how many there are. I think that there are a good many, in spite of the publicity which has been given to ways of relieving oneself from liability.

Secondly, there are those whose liability is very small, who feel that it is not worth the trouble, who do not understand the making of a maintenance claim and who do not think it worth the expense of obtaining professional advice.

Thirdly, there are those who cannot afford any substantial expenditure on repairs and decorations sufficient to offset their Schedule A liability. For instance, newly-married couples who have saved up enough to buy a house, perhaps a new house, may not be able to spend much during the first five years. Older people who have saved up enough to buy a house on retirement may not be able to spend much on the house itself once they have bought it. I do not know how many come into this category, though I think that there are more than the hon. Member for Kidderminster realises.

Lastly, there are the "do-it-yourself" owner-occupiers, those who carry out their own repairs, painting and decorating. As hon. Members know, if an owner does the work himself, he may not include the cost of the work done in his claim for maintenance allowance.

Mr. Nabarro

That is quite wrong. He may not include the cost of his own labour, but he may include the cost of the materials used and the tools. The way lie gets round the labour problem is to employ his wife to do it for him and charge it to him, the income derived therefrom being then assessed under Schedule D or Schedule E, as the case may be. The hon. Gentleman should know that.

Mr. Wade

I had precisely that point in mind, though I must say that I think that what the hon. Gentleman is suggesting would by the general public be called a wangle.

Mr. Nabarro

On a point of order, Mr. Deputy-Speaker. Would you cause the hon. Member to withdraw the allegation that I am a wangler? What I have said is clearly laid out as instructions, with the blessing of the Treasury, in a document entitled, "Income Tax— Schedule A", issued by the Board of Inland Revenue, No. 99A. Will the hon. Gentleman now withdraw the allegation that I am a wangler?

Mr. Wade

Is the hon. Gentleman suggesting that the husband should carry out the work himself and then make a statement to the Revenue that the work has been done by his wife?

Mr. Nabarro

Certainly not. I never tell the Inland Revenue falsehoods. That is the first tenet of my faith. The hon. Gentleman did not listen. The owner of the house gets his wife to do the work and submit an invoice to him. If the wife is the owner, she employs her husband to do the work and the husband submits an invoice to the wife. That is how the matter is dealt with.

Mr. Douglas Houghton (Sowerby)

Suppose the wife cannot paint.

Mr. Nabarro

That has nothing to do with it.

Mr. Wade

I think that we might go on with this indefinitely.

Mr. Nabarro

Will the hon. Gentleman withdraw "wangle"?

Mr. Wade

I do not think that it is an unparliamentary word.

Mr. Nabarro

Of course—

Mr. Deputy-Speaker (Sir William Anstruther-Gray)

Order. The word which I heard used was used in debate. Lt is not unparliamentary to use that word in general debate.

Mr. Wade

I am much obliged, Mr. Deputy-Speaker.

I do not wish to detain the House much longer on the subject of husband and wife, but this is an important aspect of the matter. The present state of affairs is anomalous and certain aspects of it are an encouragement to the clever boys— I am not specifying who the clever boys are—

Mr. J. T. Price

The "wide" boys.

Mr. Wade

I am not referring to the hon. Member for Kidderminster. I am referring to "wide" boys in general. I know that there are some husbands who are not prepared to sit back and make their wives do the painting and decorating merely in order to gain a little on tax.

The position may be summarised as follows. Those who pay the tax are, mainly, those who are ignorant of the law and the least well off among owner-occupiers, newly-weds and others who cannot afford to spend a great deal to cover their maintenance allowance, and the "do-it-yourself" owners.

Mr. Houghton

The hon. Gentleman must not overlook the very large number of owner-occupiers who pay no Income Tax at all because they have wives and children and their allowances exceed their taxable liabilities. There are very many people who are not interested in Schedule A, maintenance claims, or anything else.

Mr. Wade

There are, nevertheless, many people with comparatively modest means who do, in fact, pay tax under Schedule A.

Two paints emerge. First, it is primarily the owner-occupiers who suffer from the tax, and, if we were to abolish it altogether, it would be primarily owner-occupiers— not all of them, but some— who would benefit. Secondly, partial removal, whatever scheme one may think up, would, in my opinion, introduce new anomalies perhaps as great as those which now exist.

I therefore think that the proper course to take is to make a clean sweep of this tax altogether. After all, it is an antiquated tax. When Addington's Property and Income Tax Act, 1803, was put on the Statute Book, circumstances were very different. One of the main sources of income was income from property. This is not so today. Times have changed. I admit that one of the arguments of substance against this proposition is that we might not be fair to those who rent property.

Last year, in the debate, I suggested that a partial answer to that would be to grant relief on the first £ 15 or £ 25 of all invested income, but that is not a complete answer. I recognise that when a Chancellor introduces some relief it is always possible for someone to say, "This is not absolutely fair. Everyone is not being treated equitably." This is one of the occupational hazards of Chancellors of the Exchequer, but I do not think that it is sufficient to lead one to oppose the abolition of this tax.

I have not said very much about the new Clause which has been moved by the hon. Member for Westhoughton. In my view, it is only a step, but I would be prepared to support and vote for it only as a step towards total abolition. After all, we have heard all the arguments that can be deployed one way or the other. The issue is clear, and we ought to be able to make up our minds by now. The issue is whether we are in favour of abolition or not, and I am in favour of abolition.

5.15 p.m.

Mr. Warbey

I wish to speak in support of the new Clause "Rent Allowance", standing in my name and the names of other hon. Members, proposing an Income Tax relief in respect of amount; paid in rent. Before I do so, I should like to say a few words about the new Clause which has been moved by my hon. Friend the Member for Westhoughton (Mr. J. T. Price) and the discussion which has taken place so far on it. I do so because, in my submission, the principles underlying the case for the concession in regard to Schedule A apply equally in regard to persons who are paying rent.

The hon. Member for Kidderminster (Mr. Nabarro) made a valiant attempt to brazen away the illogical and hypocritical position in which he has placed himself this year, and in which the Chancellor of the Exchequer is placed by refusing to accept the new Clause. The hon. Member for Kidderminster knows, in the first place, that the Chancellor, in his Budget speech, gave a very specific pledge to get rid of this Schedule A tax in due course. He knows, secondly, that the Chancellor did not give a pledge to abolish it outright next year, but indicated that he will probably abolish it by stages. Nevertheless, the hon. Member for Kidderminster, who, apparently, no longer finds it profitable to make attacks on his own Front Bench, possibly in view of the imminence of a General Election, is finding all kinds of very poor reasons indeed for justifying the position in which the Chancellor has landed him.

The Chancellor has to provide a good and sufficient reason for saying why it is to be possible to abolish or reduce this tax next year when it is not possible to do it this year. The hon. Member for Kidderminster produced a quite fantastic argument about people who make arrangements to gain relief from this tax by means of the five-year assessment of their payments for repairs and maintenance. He knows very well, of course, that the giving of one year's notice will make very little difference to this position. He did not think about it last year when he went into the Division Lobby in support of his own proposal.

One year's notice makes very little difference to the position, which has to be established over five years. To deal with that position completely, one has to give five years' notice. In any case, there is no reason at all why, when this tax is abolished for the future, it should not still be possible— in fact, I think it should be eminently reasonable— to enable persons who have delayed their claims for relief under Schedule A for refunds of Schedule A payments under the five year arrangements still to be able to make claims for the refund of the tax they paid in previous years. Therefore, there is nothing whatever in the hon. Member's argument on that score.

Mr. Nabarro

When I see the terms of the Chancellor's legislation next year. I shall move the appropriate Amendments relating to the terminal allowances, which is the proper and technical description of what the hon. Gentleman is expressing in lay terms.

Mr. Warbey

In other words, there is no difficulty about this problem at all, and no reason why it should not be dealt with this year rather than wait until next year. There is no reason whatever for giving people advance notice of the abolition of this tax.

The next argument advanced by the Chancellor and supported by the hon. Member for Kidderminster is that it is desirable to co-ordinate the abolition or reduction of Schedule A with the timing of the revaluation for rating purposes. The Chancellor has already admitted that the assessment for Schedule A purposes is not pegged to the assessment for rating purposes. There is no reason to link the two together, or why he should not make a change at any time he likes.

There is no reason for waiting until next year for that purpose.

Therefore, we are left with the only supposition which is possible— that the reason both for making the change and for deferring the time of the change is political, and I say that without any sense of criticism, because my own reason for changing my attitude to this question of the abolition of Schedule A tax is political in the broadest sense of the term. In other words, I accept the arguments of the hon. Member for Kidderminster and of my hon. Friend the Member for Sowerby(Mr. Houghton) that in logic there is no case for abolishing this tax purely on fiscal grounds.

Here I must venture to disagree with my hon. Friend the Member for Westhoughton, because it appears to me to be completely sound sense to say that persons who own houses are enjoying not merely a notional income, but a practical addition to their income as a result of the fact that they are not having to pay rent, and, therefore, are gaining an addition to their disposable income.

Mr. J. T. Price

If my hon. Friend does not see the logical fallacy in his reasoning, will he explain to the House how he would deal with a person who invests money in a motor car and does not pay bus fares, but enjoys the amenities of a motor car; or a person who invests money in a very expensive fur coat for his wife, or some other elegant article of value? Would he explain how any sort of fiscal argument exists there? Surely it is purely a matter of common sense.

Mr. Warbey

In the last resort one knows that fiscal arguments are commonsense arguments. They answer themselves. Here we must compare the situation of two broad classes of persons— persons who are living in houses which they have bought and persons who are living in houses for which they pay rent. The disposable income of a person living in a house which he has bought is larger than the diposable income of a person living in a house for which he pays rent. Therefore, that additional disposable income is properly the subject of taxation in relation to the person who has to pay rent. I stress the words, "in relation to the person who has to pay rent".

This brings me to my own new Clause, "Rent allowance". The basic case for abolishing Schedule A is that under present social and economic conditions, to a large extent created by the present Government, the cost of providing a roof over one's head for oneself and one's family, whether one does it by means of buying a house or renting a house, has become intolerably high for the majority of people. We all know that it has become much too high. We all know why it has become much too high. It has become much too high as a result of the activities of money lenders, property owners, property syndicates, speculative builders, and landlords, who have all been encouraged in their activities by the policies of the Government.

The Government, through their Rent Act, deliberately encouraged the increase in the general level of rents. Through the creeping decontrol which has been allowed under the Rent Act, the Government are progressively removing any protection that hitherto existed against extortionate rents. By their general economic policy the Government have encouraged excessively high interest rates, and have, therefore, deliberately contributed to the high cost of mortgages and to the high cost of building new houses, and, therefore, to the high level of rents.

These are matters of Government policy. They have created an intolerable situation for large numbers of people. The house owner who is buying his house on a mortgage has to pay on the average about £ 4 10s. to £ 5 10s. a week in mortgage repayments, comprising repayment of capital and interest. On 1st April theObservergave figures to show how these rates had risen. Taking the London area, for a typical three-bedroomed house the monthly repayments in the last quarter of 1959 were £ 16 16s. In the last quarter of 1961 they had risen to £ 22 9s. a month. This was taking the rate of interest on mortgage repayments at 5½ per cent. In the meantime, the average interest charge on building society or local authority loans has risen to 6½ per cent. or 6¾ per cent. or even 7 per cent. Therefore, in practice many people in the London area have to pay about £ 5 10s. a week to provide a house for themselves and their families.

Some hon. Members opposite might not consider that to be an unreasonable sum. Whether or not it is reasonable depends on the total income of the household. I remember that in my young days there used to be books of advice available to married couples on how they should conduct their affairs, how they should draw up their household budgets, and the amount that they should set aside to spend on rent. The advice given in those books was that it was not reasonable to spend on rent more than about one-sixth of one's income.

At present, there are some countries in which rents are considered to be unreasonable if they exceed one-tenth of a person's income. In this country we have gradually adopted new and more extortionate standards. When the subject is discussed nowadays it is common to talk about people paying one-quarter of their income in rent. In practice, many people have to pay as much as one-third of their income in rent. This is fantastic and intolerable and something must be done to redress the situation.

If one took the more reasonable standard of one-sixth of income, it would mean that, in practice, nobody ought to undertake the liability of home ownership, unless he had an income of at least £ 27 a week. If he lived in the London area, he ought to have an income of at least £ 33 a week. How many people have an income in excess of £ 33 a week? The answer is about 10 per cent. of the population. What are the other nine-tenths expected to do? They are expected to look for rented accommodation. What happens when they try to get rented accommodation? As a result of the operation of the Rent Act, rented accommodation has gone up tremendously in value.

My hon. Friend the Member for Salford, East (Mr. Frank Allaun), who is unable to take part in this debate, was kind enough to supply me with some figures for typical low-standard property in the Salford area. These are houses which have none of the standard amenities or which lack most of them. They are without baths, have outside toilets or sometimes shared toilets, and probably do not even provide a proper roof over one's head because it leaks.

5.30 p.m.

Prior to the Rent Act, the average rent of these houses was 9s. 6d. a week. After that Act came into force, the permitted rents went up to 19s. a week. Gradually, even these houses are becoming decontrolled as the present tenants either leave them or die. Then the landlords are able to raise the rents to a much higher level. The rent of a typical decontrolled house of this character is 50s. In other words, the rent has quintupled as a result of the Rent Act introduced by the Chief Secretary to the Treasury, who was responsible for the fantastic statement that people who could not afford to pay the high rents charged in big cities should go outside them and find somewhere on the outskirts to live. I wonder what advice the right hon. Gentleman would give to people living in the London area who find that they cannot find anywhere tolerable for a family to live in for 50s. a week, or even 60s. or 70s. They are lucky if they can get a place to live in for £ 5 or £ 6 a week.

According to last October's figures, the average income of a male worker is still only £ 15 6s. 10d. a week. Sixty per cent. of the male workers do not get as much as the average income. In other words, about two-thirds of the male householders are earning less than £ 15 a week, yet the majority of them are being called upon to pay rents substantially in excess of one-fifth or even one-quarter of their income.

The situation of people in council houses is not very much better. It will gradually get worse under the Government, because their policy is to encourage councils gradually to increase their rents to the economic cost of the provision of a new council house. As a result of the Government's policy of high interest rates and of allowing land prices to rise to fantastic levels, the average cost of the weekly repayment on a three-bedroom council house is £ 3 5s. a week. By any reasonable standard— and the standard which I take is one-sixth of one's income for rent— that means that no one is in a position to pay the economic rent of a present-day council house unless he has an income of at least £ 1,000 a year, which the majority of people do not have, or anything like it.

Finally, I wish to deal with the situation of women householders, of whom there is a considerable number. I said earlier that the average weekly earnings of the male worker are £ 15 6s. 10d. a week, according to the last census in October, 1961. At the same date, the average earnings of women workers were £ 7 14s. 6d. a week. It is fantastic how we still exploit the women workers. This £ 7 14s. 6d. is for full-time work and is not very much more than half the average weekly earnings of male workers.

The other day a widow drawing the widow's pension of 10s. a week came to my "surgery", in my constituency. She was a full-time worker in a factory canteen drawing a wage of £ 5 2s. a week. Therefore, her total income was £ 5 12s. Out of this she had to pay rent of 22s. a week. After paying the insurance contribution and Income Tax, she is left with £ 4 a week for all her necessities of life. She came to me to complain not that she was being exploited by the factory owners in whose canteen she was employed, in that she was receiving just over £ 5 a week for doing a full week's work, but that she had to pay 2s. a week Income Tax.

Mr. Deputy-Speaker

Order. The hon. Gentleman is straying rather far from the new Clause.

Mr. Warbey

I was led into going beyond the scope of the new Clause, Mr. Deputy-Speaker, but I am coming to the point of the proposed new Clauses.

This woman complained not that she had to pay 22s. a week for the two or three rooms in which she lived, but that she had to pay Income Tax. It is intolerable that a woman in those circumstances should have to pay Income Tax. It is intolerable that people with even larger incomes paying larger rents should have to pay the amounts of Income Tax which they pay.

The time has come to apply to Income Tax the principle which we apply to claims which can be made under the Legal Aid and Advice Act. Under that Measure, people obtain a financial contribution to their legal costs if they can show that their net disposable income is below a certain figure. In the calculation of that net disposable income, rent and mortgage repayments are deducted from the total income. This is a proper way of assessing a person's ability to pay.

In assessing a man's ability to pay Income Tax, we should also take account of what he has to pay in mortgage repayments or in rent. This is a perfectly reasonable proposition, which, perhaps, would not be necessary in a well-ordered society, namely, in the society in which there was reasonable equality in the general level of incomes and in which the cost of providing a roof over one's head was restricted to a reasonable proposition of one's income. Neither of those conditions holds good in our present society.

The cost of providing the most basic necessity of life second to bread, namely, shelter, is being determined as a result of the policy of right hon. Gentlemen opposite by the higgling of the market. So long as those are the conditions under which people are compelled to provide house room for their families, the moneylenders, speculators, landlords, property syndicates, and so on, should make a contribution through the taxes which they pay to relieving the tax liability of the people who are enduring these intolerable conditions.

Mr. Selwyn Lloyd

There have been many debates in the past on Schedule A, and we have had a fairly lengthy recapitulation of one or two of them this afternoon. I shall not go into the general reasons against making a concession on Schedule A in respect of owner-occupied residential property. I set them out last year without endorsing them. I made it quite clear then that I thought this was a matter to be dealt with in connection with the 1963 revaluations, and I pointed out in Committee last year that legislation would be required to enable the new valuations to be used for Schedule A purposes.

I think that I made the Government's intentions quite clear in the course of my Budget speech. I will quote what I said then. Therefore, although I intend that this matter shall be dealt with in the 1963 Finance Bill, as I have said before, it is right to say this now. We will not seek to use the new rating valuations for Schedule A purposes so far as these owner-occupiers of residential property are concerned. On the contrary, for the reasons which I have set out, we will make proposals for bringing this tax on them to an end. I cannot say now whether this will be done in a single operation in one year. It will mean giving up about £ 50 million a year. Whether we can manage to get to that position in one year will depend on revenue considerations. But Schedule A for owner-occupiers of residential property will go."— [OFFICIAL REPORT, 9th April, 1962; Vol. 657, c. 978.] The reasons for that decision were these. I think that it is generally accepted that pre-war values have greatly increased and that Schedule A, on current values, would involve much too heavy a burden. The point about maintenance expenses was raised by my hon. Friend, but I think that basically the view expressed by the hon. Member for Westhoughton (Mr. J. T. Price) was that a social purpose would be served in giving this assistance to the owner-occupier; the social ground was the reason for the proposal. I do not think that assisting owner-occupation in this way necessarily involves the implication, as suggested by the hon. Member for Ashfield (Mr. Warbey), that it should also apply to an ordinary domestic outgoing like rent.

It has been said that, the decision having been announced that this tax is to be brought to an end, why not do so this year? In the speech to which I referred in June, 1961, I made it perfectly clear that we were not going to do it this year. The reason, of course, is one of priorities, and also the fact that the hon. Gentleman's new Clause would cost £ 34 million this year rising to something under £ 50 million in a full year, which is very much the same as the cost of the new Clause of the hon. Member for Huddersfield, West (Mr. Wade), and, in addition, the new Clause of the hon. Member for Ashfield would cost a further £ 100 million a year. Therefore, on the ground of cost and priority it is not possible for this to be done this year.

It has been said that if the Government are not going to do it this year. why give notice of it? I think that that was a fair thing to do. I do not think that it can be described as electioneering. If one had been electioneering I think that one could have saved it up. I made clear that we were not going to use the new rating valuations. It was right to make that clear. I think that it is necessary to make some further clarifications, because there are people who have to consider appealing against their assessments. I think it was right to remove the impression given by the hon. Member for Westhoughton that we had not said when we were going to get rid of this tax. I am grateful for the way in which he put the case, because it enables me to make clear that it is out intention to bring this tax to an end.

Mr. Nabarro:Jolly good.

Mr. Lloyd

The third point was that there were very considerable administrative complications which required a certain amount of discussion and planning. I think uncertainty would be a very bad background for that discussion and planning. I think that it is much better against a clear declaration of intent. There is the further point, that the whole code of taxation of rents and other income from real property will also have to be reviewed at the same time. I think that it is better to have that review against a clear statement of intention. That is the Government's position. I have promised that we would legislate.

5.45 p.m.

The question of timing and whether the tax should go in one year is a matter for further consideration. The question of costs and administrative difficulties must enter into the calculations, but there are obvious advantages in doing it as soon as possible in one bite.

Mr. Callaghan

There is still some dubiety in my mind [Interruption.] The hon. Member for Kidderminster (Mr. Nabarro) made a long speech and expressed himself very fully. Perhaps he would allow me to speak without interruption.

Is Schedule A as a whole to be abolished, or is the Chancellor going to exempt the owner-occupier? Is he to make assessments of property and exempt that property occupied by owners, or is the whole process of assessment to disappear whether the property is occupied by its owner or not?

Mr. Lloyd

I have said that it is for the owner-occupier of residential property that the tax would go. I also said that the code of taxation of rents and other incomes from real property would also have to be reviewed. Therefore, I am not in a position today to answer the hon. Gentleman's question. It may be and it may not be. It is a matter which will have to be very much considered in relation to Schedule A owner-occupiers. It is very much better for us to consider that against the background of a clear statement of indication that we are doing away with the tax on the owner-occupier. There is obviously an advantage in doing that as soon as possible and in one bite.

I will not say more now than that there will be legislation to bring this tax finally to an end. It will be a complete end of the tax for the owner-occupier of residential property. Whether that can be done in one year or not, I am not able to say. Whether we can get to that position in one year will depend mainly on revenue considerations. I do not think that the administrative complications would necessarily be decisive, although there are administrative complications. That is the clear intention of the Government.

So far as this year is concerned, and as I stated quite clearly last year, on the grounds of expense and priorities I cannot accept the new Clause.

Mr. Callaghan

I am obliged to the Chancellor for answering my question. There is an important decision to be taken now, as to whether this taxation is to disappear. He has a choice that he can make. He can go on levying assessments and exempt the man who occupies his own house, or he can abolish the tax altogether. As I understand him, he has not made up his mind. The Chancellor seems to be a little anxious to get this point quite clear. Let me, on his behalf, say that it makes no difference to his intention to rid the Schedule A owner-occupier of the payment of this tax. I say that readily for him because he is so anxious that it should be said. I repeat that whatever the Chancellor decides to do he can, of course, exempt the Schedule A owner-occupier. But I ask him to think very carefully before he gets rid of the structure of the Schedule A tax. It has a great many advantages which he may want to use for a number of purposes in the future. In saying that, let me repeat once again that it is possible to preserve the structure of the tax but to exempt the owner-occupier. I do not want to see the baby thrown away with the bath water.

In pursuing his objective, I ask the Chancellor to consider whether he ought not to retain the structure of the tax itself. As my hon. Friend the Member for Ashfield, Mr. Warbey, said, there is no logical fiscal reason for the abolition of this system of taxation. The Chancellor can choose, as a political matter— as he has done— to exempt a certain number of people from payment of it, and it is within his power and that of the House to decide that certain groups of taxpayers should not pay it. But to destroy the structure of the tax itself, as distinct from exempting owner-occupiers, would lead us along a fiscal path which any Chancellor should be careful of treading.

I want to make it quite clear that, in a matter of taxation of income from all sources, whether notional or not, a Chancellor should think carefully before he destroys the structure of the tax. That is quite different, however, from exempting certain groups, which he has said that he intends to do. I am glad to hear that he has not decided at this stage to throw the structure of the tax away, and I hope that he will bring us some very convincing reasons if he decides to abolish it altogether.

He may say eventually that what would be left would be such small beer in relation to the owner occupier's position that he would be right in getting rid of the tax altogether and abolishing the whole structure. But he or his successors might regret that if he did, because they might have found it useful for quite different purposes for levying taxation in future.

My hon. Friends have speculated on the reason why the right hon. and learned Gentleman has announced this decision now. Of course, we understand that it was not for any purpose connected with by-elections. He has told us so, and after all it was in any case so unsuccessful that he would not want to claim that he had done it for that purpose, since it brought him no return except that of my hon. Friend the Member for Middlesbrough West (Dr. Bray) to this House.

I have discussed the reason for the introduction of the speculative gains tax. It means that all those accountants who have been servicing the hon. Member for Kidderminster (Mr. Nabarro) on his maintenance claims are not likely to lose his custom. Now that the new tax has been instituted the hon. Member will be able to retain their services. They will be able to advise him on how to avoid the capital gains tax, and I am sure that he will have another very substantial field in which to exercise his ingenuity in avoiding the payment of his taxation. That is about the best reason I have heard so far for the speculative gains tax, which has no other significance— certainly not from the revenue or social points of view.

I thought that the right hon. and learned Gentleman's argument for not abolishing the Schedule A tax this year was a little difficult to understand. He is raising £ 50 million on lollipops in a full year. He is to carry out his decision on Schedule A by instalments, and he has a margin of taxation in hand. As we all know, on 1st January next he is divesting himself of about £ 83 million of revenue that he would otherwise have got from the Surtax payers, and the Schedule A taxpayer can quite easily understand that his turn in the queue might have come much earlier if the Chancellor had not preferred Mayfair to Orpington. But because he did prefer Mayfair to Orpington, he rid the Surtax payers of their liability and then, in response to the despairing cry from Orpington. decided that the Schedule A taxpayers had better come next.

When the right hon. and learned Gentleman talks of priorities, let us be quite clear about what he means. His priorities are the Surtax payers and the limited companies, and then he descends to the smaller P.A.Y.E. taxpayer, who is last in the queue. But, of course, as we get nearer the General Election the P.A.Y.E. taxpayer will be raised higher in the queue.

Later, I shall be producing more evidence to show how the P.A.Y.E. taxpayer has been penalised by sucessive Chancellors in the last ten years. The right hon. and learned Gentleman has thrown a sop to a group of them to indicate that they may get something better before the election. I am sure that he will keep his promise to rid them of some part of this tax. But if he introduces his proposals in the next Finance Bill, the relief cannot become effective until the 1st January, 1964. No one will have a penny of relief before then. Indeed, they may not get much then. That will depend on what else the Chancellor has to do.

In view of the combination of circumstances, it is difficult to rid our minds— no matter what the Chancellor may know to be the truth of the matters— of the suspicion that he has done this purely for electoral reasons because the fortunes of the Government were taking such a battering during the by-elections. I do not think that he will succeed. I think the Government are on their way out in any case and that the people are in the mood to regard bribes as bribes and not to accept them any longer. I do not believe this will affect their considerations of the general record of the Government.

The Chancellor mistakes the mood and temper of the people if he believes— he says he does not believe it— that a bribe of this sort is likely to recover the fortunes of the Conservative Party. The malaise of the Conservative Party goes far deeper than the abolition or promise of aboliton of Schedule A. He might just as well have given the taxpayers the penny now as well as the bun, have accepted our Clause and so have gone on with the task this year.

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

The House divided:Ayes 195, Noes 250.

Division No. 230.] AYES [5.57 p.m.
Abse, Leo Bence, Cyril Bowles, Frank
Ainsley, William Bennett, J. (Glasgow, Bridgeton) Boyden, James
Albu, Austen Benson, Sir George Braddock, Mrs. E. M.
Allaun, Frank (Salford, E.) Blackburn, F. Bray, Dr. Jeremy
Allen, Scholefield (Crewe) Blyton, William Brockway, A. Fenner
Awbery, Stan Boardman, H. Brown, Rt. Hon. George (Belper)
Bacon, Miss Alice Bowden, Rt. Hn. H.W. (Leics.S.W.) Brown, Thomas (Ince)
Baxter, William (Stirlingshire, W.) Bowen, Roderic (Cardigan) Butler, Herbert (Hackney, C.)
Butler, Mrs. Joyce (Wood Green) Hynd, John (Attercliffe) Popplewell, Ernest
Callaghan, James Irving, Sydney (Dartford) Prentice, R. E.
Chapman, Donald Janner, Sir Barnett Price, J. T. (Westhoughton)
Cliffe, Michael Jay, Rt. Hon. Douglas Proctor, W. T.
Collick, Percy Jeger, George Pursey, Cmdr. Harry
Craddock, George (Bradford, S.) Jenkins, Roy (Stechford) Randall, Harry
Cronln, John Johnson, Carol (Lewisham, S.) Rankin, John
Croaland, Anthony Jones, Dan (Burnley) Reid, William
Cullen, Mrs. Alice Jones, Elwyn (West Ham, S.) Rhodes, H.
Dalyell, Tam Jones, Jack (Rotherham) Roberts, Albert (Normanton)
Darling, George Jones, J. Idwal (Wrexham) Robertson, John (Paisley)
Davies, G. Elfed (Rhondda, E.) Jones, T. W. (Merioneth) Robinson, Kenneth (St. Pancras, N.)
Davies, Ifor (Gower) Kelley, Richard Ross, William
Deer, George Key, Rt. Hon. C. W. Royle, Charles (Salford, West)
Delargy, Hugh King, Dr. Horace Seymour, Leslie
Dempsey, James Lawson, George Shinwell, Rt. Hon. E.
Diamond, John Ledger, Ron Short, Edward
Dodds, Norman Lee, Frederick (Newton) Silverman, Julius (Aston)
Donnelly, Desmond Lee, Miss Jennie (Cannock) Silverman, Sydney (Nelson)
Driberg, Tom Lever, L. M. (Ardwick) Skeffington, Arthur
Dugdale, Rt. Hon. John Lewis, Arthur (West Ham, N.) Slater, Mrs. Harriet (Stoke, N.)
Ede, Rt. Hon. C. Lipton, Marcus Slater, Joseph (Sedgefield)
Edwards, Rt. Hon. Ness (Caerphilly) Loughlin, Charles Small, William
Edwards, Robert (Bilston) Lubbock. Eric Smith, Ellis (Stoke, S.)
Edwards, Walter (Stepney) Moban, Dr. J. Dickson Sorensen, R. W.
Evans, Albert McCann, John Soskice, Rt. Hon. Sir Frank
Fernyhough, E. MacColl, James Spriggs, Leslie
Fitch, Alan Mcinnes, James Stewart, Michael (Fulham)
Fletcher, Eric Mckay, John(Wallsend) stones, william
Strauss, Rt. Hn. G. R. (Vauxhall)
Foot, Dingle (Ipswich) Mackle, John(Enfiled, East) Stross, Dr. Barnett(Stoke-on-Trent, C.)
Foot, Michael (Ebbw Vale) McLeavy, Frank Taverne, D.
Forman, J. C. MacMillan, Malcolm(Western Isles) Taylor, Bernard(Mansfield)
Fraser, Thomas (Hamilton) MacPherson, Malcolm(Striling) Thompson, Dr. Alan (Dunfermline)
Gaitskell, Rt. Hon. Hugh Mallalieu, E. L.(Brigg) Thornton, Ernest
Galpern, Sir Myer Manuel, Archie Thorpe, Jeremy
Ginsburg, David Mapp, Charles Timmons, John
Cordon Walker, Rt. Hon. P. C. Marsh, Richerd Tomney Frank
Griffiths, David (Rother Valley) Mason, Roy Wade, Donald
Griffiths, Rt. Hn. James (Llanelly) Mayhew, Christopher Warbey, William
Grimond, Rt. Hon. J. Mendelson, J. J. Watkins, Tudor
Hale, Leslie (Oldham, w.) Millan, Bruce Weitzman David
Hall, Rt. Hn. Glenvil (Colne Valley) Milne, Edward Wells, Percy(Faversham)
Hamilton, William (West Fife) Mitchison, G. R. Wells, William (Walsall, N.)
Hannan, William Monslow, Walter White, Mrs. Elrene
Harper, Joseph Moody, A. S. Wigg, George
Hayman, F. H. Moyle, Arthur Wilkins W A
Henderson, Rt. Hn. Arthur(RwlyRegis) Mulley, Frederick Willey, Frederick
Herbison, Miss Margaret Neal, Harold Williams D. J. (Neath)
Hilton, A. V. Noel-Baker, Francis (Swindon) Williams, LI. (Abertillery)
Holman, Percy Oliver, G. H. Williams, W. R. (Openshaw)
Hooson, H. E. Owen, Will Willis, E. G. (Edinburgh, E.)
Houghton, Douglas Pannell, Charles (Leeds, W.) Winterbottom, R. E.
Howell, Charles A. (Perry Barr) Parglter, G. A. Woof, Robert
Hoy, James H. Parkin, B. T. Zllliacus, K.
Hughes, Emrys (S. Ayrshire) Paton, John
Hughes, Hector (Aberdeen, N.) Pavitt, Laurence TELLERS FOR THE AYES:
Hunter, A E. Pearson, Arthur (Pontypridd) Mr. Charles Grey and
Hynd, H. (Accrlngton) Pentland, Norman Mr. Redhead.
Agnew, Sir Peter Box, Donald Corfield, F. V.
Allason, James Boyd-Carpenter, Rt. Hon. John Costain, A. P.
Amery, Rt. Hon. Julian Boyle, Sir Edward Coulson, Michael
Arbuthnot, John Brewis, John Craddock, Sir Beresford
Balniel, Lord Brooke, Rt, Hon. Henry Critchley, Julian
Barber, Anthony Brown, Alan (Tottenham) Cunningham, Knox
Barlow, Sir John Browne, Percy (Torrington) Curran, Charles
Batsford, Brian Buck, Antony Currie, G. B. H.
Baxter, Sir Beverley (Southgate) Bullard, Denys Dance, James
Beamish, Col. Sir Tufton Burden, F. A. d'Avigdor-Goldsmid, Sir Henry
Bell, Ronald Butcher, Sir Herbert de Ferranti, Basil
Bennett, F. M. (Torquay) Campbell, Sir David (Belfast, S.) Donaldson, Cmdr. C. E. M.
Bennett, Dr. Reginald (Cos A Fhm) Campbell, Gordon (Moray & Nairn) Doughty, Charles
Berkeley, Humphry Carr, Compton (Barons Court) du Cann, Edward
Bevins, Rt. Hon. Reginald Carr, Robert (Mitcham) Duncan, Sir James
Bidgood, John C. Channon, H. P. G. Eden, John
Biffen, John Chataway, Christopher Elliot, Capt. Walter (Carshalton)
Biggs-Davison, John Clark, Henry (Antrim, N.) Emery, Peter
Birch, Rt. Hon. Nigel Clark, William (Nottingham, S.) Emmet, Hon. Mrs. Evelyn
Bishop, F. P. Cole, Norman Erroll, Rt. Hon. P. J.
Black, Sir Cyril Cooke, Robert Farey-Jones, F. W.
Bossom, Clive Cordeaux, Lt.-Col. J. K. Farr, John
Bourne-Arton, A. Cordle, John Fell, Anthony
Finlay, Graeme Legge-Bourke, Sir Harry Ridley, Hon. Nicholas
Fisher, Nigel Lewis, Kenneth (Rutland) Robertson, Sir D. (C'thn's & S'th'ld)
Fletcher-Cooke, Charles Lilley, F. J. P. Robinson, Rt. Hn. Sir R. (B'pool,S.)
Foster, John Litchfield, Capt. John Robson Brown, Sir William
Fraser, Hn. Hugh (Stafford & Stone) Lloyd, Rt. Hon. Selwyn (Wirral) Rodgers, John (Sevenoaks)
Fraser, Ian (Plymouth, Sutton) Longbottom, Charles Roots, William
Galbraith, Hon. T. G. D. Longden, Gilbert Russell, Ronald
Gammans, Lady Loveys, Walter H. Sandys, Rt. Hon, Duncan
Gardner, Edward Lucas, Sir Jocelyn Seymour, Leslie
Gilmour, Sir John Lucas-Tooth, Sir Hugh Sharpies, Richard
Glover, Sir Douglas McAdden, Sir Stephen Shaw, M.
Glyn, Dr. Alan (Clapham) McLaren, Martin Shepherd, William
Glyn, Sir Richard (Dorset, N.) Maclean, Sir Fitzroy(Bute& N.Ayrs.) Smith, Dudley (Br'ntf'd & Chiswlck)
Gower, Raymond McLean, Neil (Inverness) Smithers, Peter
Green, Alan Macleod, Rt. Hn. Iain (Enfield, W.) Spearman, Sir Alexander
Grosvenor, Lt.-Col. R. G. MacLeod, John (Ross & Cromarty) Stanley, Hon. Richard
Hall, John (Wycombe) McMaster, Stanley R. Stevens, Geoffrey
Hamilton, Michael (Wellingborough) Macmillan, Maurice (Halifax) Stodart, J. A.
Harris, Frederic (Croydon, N.W.) Maddan, Martin Moddart-scott, Col. air Malcolm
Harris, Reader (Heston) Maginnis, John E. Storey, Sir Samuel
Harrison, Brian (Maldon) Maitland, Sir John Studholme, Sir Henry
Harrison, Col. Sir Harwood (Eye) Manningham-Buller, Rt. Hn. Sir R. Summers, Sir Spencer
Harvey, John (Walthamstow, E.) Markham, Major Sir Frank Talbot, John E.
Harvie Anderson, Miss Marlowe, Anthony Tapsell, Peter
Hastings, Stephen Marshall, Douglas Taylor, Sir Charles (Eastbourne)
Hay, John Marten, Nell Taylor Edwin(Bolton,E.)
Heald, Rt. Hon. Sir Lionel Mathew, Robert (Honiton) Taylor, Frank (M'ch'st'r, Moss Side)
Henderson, John (Cathcart) Matthews, Gordon (Meriden) Teeling, Sir William
Hendry, Forbes Maudling, Rt. Hon. Reginald Thomas, Leslie (Canterbury)
Hicks Beach, Maj. w. Mawby, Ray Thomas, Peter (Conway)
Hiley, Joseph Maxwell-Hyslop, R. J. Thompson Kenneth (Walton)
Hill, Mrs. Eveline (Wythenshawe) Maydon, Lt.-Cmdr. S. L. C. Thompson, Richerd(Croydon, S.)
Hill, J. E. B. (S. Norfolk) Mills, Stratton Tiley, Arthur (Bradford, W.)
Hirst, Geoffrey Miscampbell, Norman Touche, Rt. Hon. Sir Gorden
Hobson, Sir John Montgomery, Fergus Turner, Colin
Hocking, Philip N. Morgan, William Turton, Rt. Hon. R. H.
Holland, Philip Nabarro, Gerald Tweedsmuir, Lady
van Straubenzee, W. R.
Hope, Rt. Hon. Lord John Neave, Airey Vaughan-Morgan, Rt. Hon. Sir John
Hopkins, Alan Nicholson, Sir Godfrey Vickers, Miss John
Hornby, R. P. Noble, Michael Wakefield, Sir Wavell
Howard, Hon. G. R. (St. Ives) Nugent, Rt. Hon. Sir Richard Walker, David
Hughes Hallett, Vice-Admiral John Oakshott, Sir Hendrie Walker, Peter
Hughes-Young, Michael Orr, Capt. L. P. S. Walker-Smith, Rt. Hon. Sir Derek
Hulbert, Sir Norman Osborn, John (Hallam) Wall, Patrick
Irvine, Bryant Godman (Rye) Page, John (Harrow, West) Ward Dame Irene
Jackson, John Page, Graham (Crosby) Watkinson, Rt. Hon. Harold
James, David Panned, Norman (Klrkdale) Webster, David
Jenkins, Robert (Dulwich) Pearson, Frank (Clitheroe) Wells, John (Maidstone)
Johnson, Dr. Donald (Carlisle) Peyton, John Whitelaw, William
Johnson Eric (Blackley) Pickthorn, Sir Kenneth Williams, Dudley (Exeter)
Pike, Miss Mervyn Williams, Paul(Sunderland,S.)
Jones, Rt. Hn. Aubrey (Hall Green) Pitman, Sir James Wills Sir Gerald (Bridgwater)
Kerans, Cdr. J. S. Pitt, Miss Edith Wilson, Geoffrey(Truro)
Kerby, Capt. Henry Powell, Rt. Hon. J. Enoch Wise, A. R.
Kerr, Sir Hamilton Price, David (Eastieigh) Woodhouse, C. M.
Kershaw, Anthony Profumo, Rt. Hon. John Woollam, John
Kimball, Marcus Proudfoot, Wilfred Yates, William (The Wrekin)
Kirk, Peter Pym, Francis
Lagden, Godfrey Quennell, Miss J. M. TELLERS FOR THE NOES:
Lancaster, Col. C. G. Redmayne, Rt. Hon. Martin Mr. Chichester-Clark and
Langford-Holt, Sir John Rees-Davies, W. R. Mr. Rees.
Leather, Sir Edwin Renton, David


The table in section two hundred and twenty (reduced rate relief) of the Income Tax Act, 1952, shall have effect with the substitution of the figure "£ 100" for the figure "£ 60" wherever that figure occurs.— [Mr. Callaghan.]

Brought up, and read the First time.

Mr. Callaghan

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

Mr. Deputy-Speaker (Sir William Anstruther-Gray)

It will be possible to discuss with this new Clause the new Clause— Further reduced rate relief.

Mr. Callaghan

This new Clause has the effect of increasing the amount of the reduced rate relief which an Income Tax payer can secure on his income, from £ 60 to £ 100. It is part of the campaign which I am running this year to try to get the people of this country to force the Chancellor to do for the P.A.Y.E. taxpayer what he has promised to do for the Schedule A taxpayer. It is part of the campaign to redress the balance of taxation which has swung so heavily against the P.A.Y.E. taxpayer during the decade of Conservative rule.

It is for those reasons that I want to give the Financial Secretary, if he is to reply, the opportunity of sitting on the penitential stool and telling us why the P.A.Y.E. taxpayer has been allowed to get into the position which he has, and whether it has been a deliberate act of Government policy and not just an accident to discriminate against the P.A.Y.E. taxpayer, as the Government have done over the last few years.

In the earlier stages of the Bill, I moved a series of Amendments and new Clauses to increase the personal allowance and to increase the children's allowance. They all failed, and I therefore knew that there was no point in putting down for fresh consideration what had been rejected by the Chancellor. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) therefore drafted another Amendment which would have the effect of increasing the reduced rate relief for those who paid tax. This is not my ideal way of approaching it, nor, I think, is it his. The Clause does not have the effect of increasing the allowances solely in the group I want to help. It increases them for everyone, including those who have had a substantial amount of largesse from the Chancellor in the last few years.

I cannot prevent this as the Clause is drafted. It is, as far as I am concerned, another shot in the battle that I am conducting. With my hon. Friends I intend to conduct this battle in the future, and as far as I can see it is making a good deal of progress as P.A.Y.E. taxpayers become more aware that the scales of taxation have swung badly against them in the last few years.

On previous occasions I have made comparisons between the amount of tax paid by various groups, and I must repeat some of them. The amount of additional relief I am proposing for a taxpayer would vary according to his income, and it cannot begin to take effect unless the man is liable to tax. This is a difficulty in the way of the Clause, but I do not mind that for purposes of illustration. It will begin to take effect, for example, for a family man with three children under 16 if his income is between £ 15 and £ 17 a week. For a family man with two children aged between 11 and 16 it will begin to take effect if his income is between £ 13 and £ 15 a week.

It really begins to bite on those who need the extra— a family man with one child under eleven whose income is as small as £ 10 a week. At between £ 10 and £ 12 a week he would get the benefit proposed by the Clause. No one would argue that people at this level should not be entitled to first and early consideration by the Chancellor. They should get the extra and in my view it has been a deliberate act of policy that they have been omitted from the great benefits that other groups have secured in recent years.

The late Hugh Dalton first introduced the idea of reduced rate relief—

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