HC Deb 30 May 1962 vol 660 cc1520-47

In connection with any assessment for liability for income tax, where a person proves that he has incurred expenditure by way of fares paid on public transport in travelling between his normal residence and the place where the income is earned he shall be allowed such expenditure as an expense wholly, necessarily and exclusively incurred by him in earning such income.—[Mr. Channon]

Brought up, and read the First time.

Mr. H. P. G. Channon (Southend, West)

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

Unlike my hon. Friend the Member for Shipley (Mr. Hirst), I cannot pretend to be an old soldier in the affairs of this Committee. If anything, I am a fairly new recruit. Therefore, I am optimistic as to the fate that awaits my new Clause.

Mr. Hirst

My hon. Friend will learn.

Mr. Channon

This is, indeed, the first time I have ever dared to intervene in a discussion in Committee on the Finance Bill. I am emboldened to do so because of the deep interest felt by many people, of which my hon. Friend the Member for Eastbourne (Sir C. Taylor) has spoken. This is a matter of great concern to large sectors of the population.

As far as I know, the proposal contained in the new Clause has never been debated specifically in this Committee or the House, although a new Clause in the name of my hon. and learned Friend the Member for Hove (Mr. Marlowe) was discussed in June, 1960, and we are discussing another in his name with mine. The difference between my hon. and learned Friend's proposal in 1960 and my new Clause tonight is that he would place a limit on the amount that could be claimed as legitimate travelling expenses.

I wish briefly, in view of the lateness of the hour, to outline the case of the commuter public. There are in my constituency and in that of my hon. Friend the Member for Southend, East (Mr. McAdden), who has been an enthusiastic protagonist of the commuter's cause, many thousands of people who come up to work each day in London. Hon. Members who either live or work in London should be delighted about that, because it is surely indisputable that we do not want our big cities—not only Landon—to become even more crowded.

I understand and I hear from London Members that there is an acute shortage of housing in London. In that case, my right hon. Friend the Minister of Housing and Local Government should be delighted that everyone who works in London does not also live there, otherwise the acute shortage of accommodation would be even worse.

There is no doubt that large numbers of people, either just before or just after the war, moved out of London to live but continued to work here because they were told that they would thereby get cheap fares to work. I do not want to weary the Committee with a table of figures, but since, obviously, my constituency is the one which I know best, I should like to give one brief example of the type of effect that that had upon people who travel to work each day.

In 1938, the yearly season ticket rate from Southend to Fenchurch Street was £24 19s. These figures will concern my hon. Friends, because they will be typical of many other constituencies. In 1946, a yearly season ticket cost £34 4s., and by October, 1950, the figure had risen to £44 11s. Under the temporary order of the Transport Tribunal this year, to be introduced, I believe, with effect from 3rd June, the cost is now to be £93 12s. It can be claimed with justification that this more than doubling of the fare during the past eleven years has become a serious problem for those who travel to work from constituencies like mine. One of my hon. Friends exclaims "Oh." Does he disagree with me?

No one would pretend that people whose railway fares have doubled in the last 11 years have not a serious problem indeed, and it is a problem which they cannot escape, and there seems no ground to hope that in future this will not be further increased. I think it is very clear that the fares paid by people who have to travel to work day by day have shot up astronomically.

There may be hon. Members opposite who think they ought to subsidise railway fares to help with this problem. I am not one of those who believe the railways should be a social service, and I do not blame Dr. Beeching for putting fares up if he thinks it necessary in the interests of the railways, because it is his job to make the railways pay—a difficult enough job it must be, and always will be. I think the problem is completely different, because equity in taxation is placed fairly and squarely on my right hon. and learned Friend the Chancellor.

On the last occasion this Committee discussed a similar proposal by my hon. and learned Friend the Member for Hove (Mr. Marlowe) there had been a long discussion on the nature of business expenses and what should or should not be allowed to rank as business expenses. I think I am right in saying, though I say so with some trepidation in the presence of the hon. Member for Sowerby (Mr. Houghton), that the Inland Revenue allows any expenses which are wholly, necessarily and exclusively incurred by the claimant in his business.

Mr. Douglas Houghton (Sowerby)

In the performance of his office.

Mr. Channon

I am most grateful to the hon. Gentleman. He knows these technicalities so well and I do not know them as well yet.

I know it has been said that these railway season tickets to work are not such expenses, but I must say that in logic I completely fail to understand this argument, because I do not believe the Inland Revenue or any hon. Member imagine that people travel to London day by day, frequently in overcrowded and uncomfortable conditions, just for the fun of it. They travel because they have to work there, and if they did not work in London they would not come, and if they did come it would be no part of my case that they should be allowed to claim the expense.

My right hon. and learned Friend has introduced into his Budget this year a speculative gains tax, not just for revenue purposes, as he himself has said, but because he thought it just and equitable that such gains should be taxed. I suggest to my right hon. and learned Friend and to the Economic Secretary that the discontent there is in the country about business expenses in general is that some people get away with a great deal and some people have their expenses rigorously scrutinised and have a very difficult time. This may or may not be a feeling which is justified, but I am convinced that there is no reason whatever in logic why a managing director of a firm may be picked up by a car with a chauffeur and taken to his office and have that treated as an allowable expense while my constituents who have to travel in difficult circumstances to London day by day to work do not.

My hon. and learned Friend in the 1960 debate on a similar Clause to this drew attention to the fact that it was in relation to public transport. I should have thought my right hon. Friend the Minister of Transport—and I hope my right hon. Friends will take the point—would be grateful that in this new Clause my hon. Friends and I do not encourage even more private cars to come to London than do come at present. Of course, that would increase the cost of the proposal enormously.

The difference between my new Clause and the new Clause of my hon. and learned Friend the Member for Hove is that his would place a limit of £104 a year, or £2 a week, upon such expenses. My purpose is to draw attention to the principle, and I think that if the Committee accepts the argument for the principle it will also agree in logic that there should be no limit, provided the expenses can be shown genuinely to have been incurred in the way I have outlined. I recognise that for revenue purposes it may be impracticable all at once to adopt the proposals I have put forward, in which case I would be prepared to adopt as a first stage the proposal of my hon and learned Friend the Member for Hove.

I will not make more than a passing reference to the Amendment in the name of the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith), but I would ask why the hon. Gentleman placed it on the Order Paper when on the last occasion that we debated the matter he put down an Amendment in exactly the terms of the new Clause which I have moved tonight. However, the hon. Gentleman was not present on either occasion.

I think the whole Committee would join with me in saying what I personally feel about the absence of the hon. Member for Orpington (Mr. Lubbock), and of any other hon. Member of the Liberal Party who has in the past laid claim to support commuters and the travelling public, that after tonight no member of the Liberal Party can say that they have any real interest in the matter.

Mr. Paul Williams (Sunderland, South)

Is my hon. Friend aware that on this occasion there is complete unanimity among the members of the Liberal Party?

Mr. Channon

I do not want to be drawn any further on that subject.

I would point out that any travelling expenses that I propose should be exempted would have to be not only wholly and exclusively incurred but also necessarily incurred, in which case I should not think that the travel of the office boy would be an allowable expense. Indeed it would not, and under my proposed Clause it would never become one.

Before I sit down I wish briefly to deal with two other points. It will be no good my hon. Friend saying that it is a new principle.

Sir Spencer Summers (Aylesbury)

My hon. Friend laid great stress on "necessarily incurred" in this context. Will he say how he deals with the distance from work that it would be necessary for that person to live?

Mr. Channon

It varies very much indeed, but if someone is at the moment genuinely going to a place to work day after day then it should be allowed.

Sir S. Summers

Surely it could be argued that it was necessary for such a person to live nearer if he wished to claim the expense?

Mr. Channon

My hon. Friend may take that view, but I think it is different from that of my right hon. Friend the Minister for Housing and Local Government and others. With respect, I do not think that my hon. Friend is on a good point there.

As I was saying, it will be no good my hon. Friend the Economic Secretary saying that this is a new principle and cannot be accepted on those grounds, because the hon. Member for Sowerby said earlier that there was a clear precedent in the Finance Act, 1942, later embodied in Section 159 of the Income Tax Act, 1952, under which a small allowance was given to a person incurring extra travelling costs because …his place of work or his residence has changed through circumstances connected with the war… I noticed the other day that one of my hon. Friends suggested that this allowance should be abolished. I do not share that point of view. Indeed, I think that it should be considerably expanded.

Mr. Houghton

Has the hon. Gentleman read paragraph 237 of the final Report of the Radcliffe Committee?

Mr. Channon

I have in my hand the Report of the Royal Commission on Taxation of Profits, and I was about to invite the attention of the Committee to paragraphs 236 and 237 of that Report, because, as the hon. Member for Sowerby says, the Royal Commission recommended that there should not be the allowance that I propose this evening. It is foolish for an hon. Member to set himself up against a distinguished Royal Commission. I would refer the hon. Gentleman in particular, and the Committee as a whole, all the members of which, I am sure, are seized with the point, not only to paragraphs 236 and 237 of the Report, but also to paragraph 240. I will quote from paragraph 240 for the benefit of the hon. Member for Sowerby.

Mr. Callaghan

He knows all about it.

11.45 p.m.

Mr. Channon

Then I will quote it for the benefit of my hon. Friend the Economic Secretary: Cases like these show that there is often a very narrow dividing line between the expenses of travelling in the course of a job (which are deductible) and the expenses of travelling to and from a job (which are not). A man whose employment takes him between, say, office and factory or between two factories can deduct his travel expenses; so he can, if his employment takes him from home for one or more nights. On the other hand, theoretically, if he went from home to the office one day and to the factory on another, he would not be allowed the expenses of travel on either day. If anyone can defend that as logical or fair taxation in the 1960s, I shall be very surprised to hear it. I am sure that my hon. Friend the Financial Secretary, if he takes the surprising course of resisting my new Clause, will do so on quite different arguments.

In his last speech on the subject, my hon. and learned Friend the Member for Hove drew attention to the fact that, if this rule were changed, those who drew retirement pensions and were limited by the earnings rule would have a further disincentive to taking a job in that most of the small amounts they were allowed to earn could be eaten up in travelling expenses. I quite appreciate that acceptance of the principle of the new Clause would be both difficult and expensive. Obviously, there would have to be a lower limit; otherwise, we should have days wasted on a few pennies and shillings. There might have to be an upper limit on the ground of cost. I hope that my hon. Friend the Economic Secretary, if he has to reject the Clause, will not do so upon narrow theoretical grounds but will deal with the principle of it. There are many thousands of people who travel to work each day, unpleasant and expensive as that may be, and they are completely at the mercy of Dr. Beeching.

Mr. Callaghan

At the mercy of the Government.

Mr. Channon

I am glad to hear these interruptions in my speech. I hope that the hon. Member for Cardiff, South-East will support me, though, having regard to the attitude taken by his hon. Friend the Member for Sowerby last time, I rather doubt it.

Mr. Denis Howell (Birmingham, Small Heath)

If the travelling public want to take themselves out of the mercy of Dr. Beeching and buy a car, then the hon. Gentleman wishes to exclude them automatically from the benefit he proposes.

Mr. Channon

For precisely the reason I gave a few minutes ago, if the hon. Member had followed me. It seems to me to be absolutely futile to argue that we should have even more cars on the roads than we have already. Perhaps it is all right in Birmingham, but it is certainly not all right in London.

No matter how high the fares may go—and they have risen sharply in recent years—my constituents, and the constituents of many hon. Members, have to go on paying these fares unless they are prepared to take the agonising decision of either changing their whole home life or changing their present excellent jobs and finding that there are not, perhaps, good equivalent jobs in the neighbourhood.

As Members of Parliament, we are in a particularly difficult situation. It is continually pointed out to me in my constituency that we have free travel either by public transport or by private car when we go from our constituencies to the House of Commons. No doubt, that is wholly, necessarily and exclusively incurred in being a Member of Parliament. But I assure the Economic Secretary that the expenses of these daily travellers is equally so.

I ask my hon. Friend not to underestimate people's feelings and their wish to share in the rising standing of living. It is true, of course, that the first interest of people is that their cost of living should remain steady. My hon. Friend may say that he has overwhelming grounds for saying that my scheme, or even a modification of it, is impossible; but they will have to be completely compelling, and the cost would have to be enormous, before I could take that view.

At the time when the Government have bravely brought in the Transport Bill effectively to reorganise the railway system, I ask my hon. Friend not to forget the people who travel on the railways at ever increasing cost—and the people who travel on them more than anyone else are the daily commuters to work. Even if he can make no concession, perhaps he can use his influence to persuade the B. T. C. to do something for these people, who are completely at the mercy of Dr. Beeching and rail fares and have no alternative but to go on paying ever increasing costs. It is in the hope of doing something to help these commuters, or at least of ventilating their case in this Committee, that I have moved this Clause.

Mr. Stephen McAdden (Southend, East)

I am delighted to have the opportunity of following my hon. Friend the Member for Southend, West (Mr. Channon). It is true that he is not an old soldier in this Committee, but the principle of his Clause is, for it has been put down in previous years. Unfortunately, there is validity in the point made by my hon. Friend the Member for Eastbourne (Sir C. Taylor) that it is regrettable that a matter of such con cern should fall to be discussed at such a late hour. The last occasion on which this arose, in 1960, was in the small hours of the morning, when hardly any one was present.

There are rather more present tonight, but many of those who profess to take an interest in the subject are not to be found. It was stated in my constituency two weeks ago that the principle of the Clause was the official policy of the Liberal Party, but not one Liberal has bothered to come to this debate.

It is important to appreciate that the arguments which might have been advanced with validity against the Clause in former times do not hold now. It has been argued that the question of where a person lives in relation to his work is a matter of personal choice, and if he finds it inconvenient or expensive to travel twenty miles to work, he should move nearer. That argument does not hold good today.

Mr. Callaghan

Not under the Rent Act.

Mr. McAdden

Whether it be due to the Rent Act or not, I do not mind the hon. Member making a debating point of it, but the fact remains that it is not so easy to live near one's employment as it was. I am glad to have the support of the Opposition Front Bench in that.

This principle has been resisted in the past by the trade union movement, which was frightened of the effect on trade unionists already enjoying the benefit of free travel. In the last twelve months, however, the T U C. has had a change of heart and has agreed to support the principle. I am delighted. I hope that the hon. Member for Cardiff, South-East (Mr. Callaghan) will make a fiery speech in support of the principle. I am sure he would like to be in line with trade union thinking on this matter.

I hope that the Chancellor will also pay attention to the illogical way in which we treat travel to and from work. On the Underground, I see notices advertising vacancies. They state that the people working on the Underground can have free travel both on and off duty. If this is not a permitted expense for the purpose of earning a living, then presumably it is an emolument of office.

If it is an emolument of office, do the Income Tax authorities gross up for the purposes of taxation the emoluments involved in free travel on and off duty? If they do not, why should there be this disparity of treatment between people employed on London Underground and those who live in my constituency and who do not enjoy these benefits and privileges? These are matters which should be considered by my right hon. and learned Friend. Those who have to travel long distances to attend their place of employment have a much stronger case for claiming these as legitimate expenses than those already recognised in the use of luncheon vouchers for free meals.

Mr. Leslie Spriggs (St. Helens)

Does the hon. Member for Southend, East (Mr. McAdden) appreciate that if the Income Tax inspectors take any more from the railwaymen by not allowing them free travel many railwaymen will have nothing left?

Mr. McAdden

I am not suggesting that the Income Tax inspectors should take more from the railwaymen. I am only pointing out the illogicality of the treatment of these forms of employment. If the wages of railwaymen are being kept down by this concealed subsidy of free travel on and off duty, I would prefer it to be abolished and the railwaymen paid better wages but paying their own fares. If the Chancellor can treat one section of the public in that way, let him treat all members of the public in the same way.

Hon. Members opposite know that in the building trade, for example, the Income Tax authorities allow men to claim travel expenses at the rate of 4d. a mile from the employment exchange nearest their home to where they work. That is done at the discretion of the Income Tax authorities. Why should there be this preferential treatment for building trade workers and not the chap who happens to be a bank clerk?

My hon. Friend the Member for Southend, West pointed out that the new Clause was restricted to public transport and the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) is anxious that we should widen its scope. We are concerned only with public transport, because if the new Clause were extended to cover cars—and the hon. Member prefers travelling in cars to travelling in public transport —it would be of great benefit to my right hon. Friend the Minister of Transport, and he needs some help from time to time.

Parking on the Embankment has recently been reduced or stopped. A man interviewed on television was asked why he drove his car to London every day and then left it parked on the Embankment all day long. He said that the reason was that he lived at West Ham. But there is a perfectly good train service from West Ham which could put him down at Blackfriars, the Temple, or Charing Cross, and there is no need for him to use a car. The only reason, as everybody knows, is that one can find all sorts of arguments to convince the Income Tax inspector that one's car is required for the purposes of one's business and not just for getting one from home to one's place of employment. We all know that these "fiddles" go on and that there is no secret about them. Therefore, I am sure that much of the traffic which comes into London and other great cities would be prevented by the granting of this concession.

If my right hon. and learned Friend says that the expense would be very great and that the Treasury cannot afford it and that we have not suggested other ways of raising the revenue which would be lost, that is not the point. If it is fair and just that people should be entitled to these things, the Treasury must devise some other ways of raising money. If the Treasury is short of ideas, I should be happy and delighted to offer some suggestions. The Economic Secretary will remember that only a couple of days ago I made some very valuable suggestions to him, from which I hope that he will profit, of ways in which revenue might be raised. I am sure that people would prefer money to be raised in that direction than by seeking to place the insufferable burden of a high cost of transport on people who have to travel to where they earn their livelihoods when it is Government policy to get people away from the large industrial centres.

For those reasons, and those advanced by my hon. Friend the Member for Southend, West, I hope that it will not be thought that this is a matter which concerns merely the great County Borough of Southend. This is a matter which concerns all those who have large numbers of people living outside our industrial centres. I hope that a great deal of consideration will be given to this question, and that we shall not be written off with the excuse that it will cost a lot of money, because if a thing is unjust we should not take money from it in this way. We should find some other way of getting it. There is no justification for saying that because it will mean the loss of a lot of money to stop it we should go on doing it. I support my hon. Friend, and I hope that the Chancellor will give earnest consideration to this proposal.

12 m.

Mr. Julian Ridsdale (Harwich)

I am afraid that the Committee is running rather late, like British Railways, but I hope not to detain the Committee for too long. I welcome the opportunity which this new Clause gives for raising the problem of railway commuters who are a little further away from London than are the constituents of my hon. Friends.

The commuters to whom I am referring are those who live 70 miles from London. My hon. Friend the Member for Barry (Mr. Gower) may laugh, but he does not understand the intense feelings of some of these commuters who have had their railway fares increased by no less than 100 per cent. in the last five years. This is a considerable increase for professional and small business men, and I welcome this opportunity to ask whether anything can be done to help them.

I have been told that to agree to the proposals in this new Clause would cost £120 million. If this is so, then obviously in the content of this Budget this proposal is a non-runner. But are the Government aware of the feedings of these travellers? A few years ago they were told by the British Transport Commission that cheap and reasonable fares were available for them. The fact is, however, that in the last two or three years their fares have been increased by 100 per cent. These people sold their houses in London and went to live in new houses seventy miles away in north-east Essex. They are not now able to repurchase their old houses because house prices have risen considerably in London. As a result, they find themselves in an extremely difficult situation.

I suggest that a better way of dealing with this is for the Government or the British Transport Commission to give long distance travellers a rebate of, say, 5 per cent. up to 50 miles, and 10 per cent. up to 70 miles. It is in the interests of the housing problem in London to encourage commuting, but the British Transport Commission seems to do everything possible to stop such travellers. Indeed, the Commission seems to be acting—

The Deputy-Chairman

Order. On this new Clause we are not discussing the British Transport Commission. We are discussing a tax rebate for travelling expenses.

Mr. Ridsdale

I appreciate that, Sir Robert. I was putting forward a possible alternative which has been proposed by the Seaside Resorts Committee. I accept your Ruling, but I plead with the Government to press for some alternative arrangements if they do not think that this new Clause is acceptable.

Mr. John Biggs-Davison (Chigwell)

I shall be brief, as the hour was late and has now become early and the case is clear. If it was not clear before the new Clause was moved, it was certainly made clear by the time my hon. Friend and constituent the hon. Member for Southend, West (Mr. Channon) sat down having made a persuasive speech which has been followed by others almost as convincing. I must confess that I had a moment of anguished doubt about the validity of this new Clause when I was told by my hon. Friend for the other Southend constituency, the hon. Member for Southend, East (Mr. McAdden), that it embodied the official policy of the Liberal Party. [HON. MEMBERS: Where are they? "] I notice that they are not here this morning and therefore I presume that the policy of the Liberal Party has changed.

The argument adduced by my hon. Friends has been built, quite properly, on the experience and difficulties of their constituents. Those difficulties apply to my constituents also. They are looking forward to yet another swingeing increase in fares which is now upon them. As has been pointed out, they travel in congested conditions which make one wonder if they ought not to be paid to travel in such conditions.

My right hon. and learned Friend the Chancellor is in some difficulty, but I hope that the words to which he is so courteously and attentively listening at this moment will help him to keep in mind the plight of the commuting public who play such a vital part in the life of the country and that their plight will be in his mind in the years to come.

Sir C. Taylor

I am not quite sure that this new Clause is worded rightly, but it is not for back benchers to teach the Government how to word new Clauses for the Finance Bill. I think the intention of the Clause has been correctly stated.

Hon. Members of this House get free travel, not only between this House and their constituencies, but between this House and their homes. They are allowed free rail travel. I understand that they are also allowed expenses for their cars when they are used to travel between this House and their homes. If that is so, and I believe it is, we ought either to apply a self-denying ordinance to ourselves or to give the same facilities to every man engaged in work and business in any job throughout the country. I know of young accountants who travel a short distance from their homes to their offices and then they go to Eastbourne or Letchworth or wherever they are doing a job because they are not allowed travelling expenses between their homes and places of work. They therefore have to make a short journey to their offices and then go to their place of work. That shows the stupidity of the present arrangement.

Many private firms and public companies send out buses to collect their work people from all over the countryside. They do not get charged expenses for that. That is another good argument for this Clause. We were told at the end of the war and subsequently that London was becoming overcrowded. More and more flats and houses had to be built, but they were very expensive and were not available immediately after the war. So a great many people moved out to the nearer suburbs and even to places such as Eastbourne and Brighton, which are a reasonable distance to travel to work in London. They moved because London was overcrowded.

They moved out to what was then reasonably-priced accommodation in Brighton, Eastbourne, Hastings, and other places but, since then, the cost of their season tickets has gone up and up. They did not move there at the request of the Government, but it was certainly suggested that London was becoming overcrowded with both motor cars and people, and they now find it impossible to travel to London daily to their work. They have been fooled, because their expenses are now so high that they can no longer afford to make that journey.

My right hon. and learned Friend will probably say that if this Clause were to be accepted it would cost £100 million or £150 million, but that is not the relevant point. As I said at the beginning, we, as Members of Parliament get free travel between this House and our homes. We set an example to the country, and if, as Members of Parliament, we get that free travel between our place of work and our homes, then so should all the other people who commute to London from places like Eastbourne, Brighton and Hastings.

Mr. Deedes

Whatever my right hon. and learned Friend says in reply, there is one aspect of this question to which I am quite certain he will, have to give increasing attention. There may be a strong element of injustice in an arrangement which permits some people to make the journey to their place of business by motor car while others have to travel to their work by train, but more important is the strong and growing element of congestion and inefficiency in a system which encourages people to use their motor cars and discourages them from using public transport. A well-informed report on the country's transport situation stresses the future need at least to maintain the public transport we now have and, if anything, to improve it. In the view of many, the motor car cannot and will not do much more to relieve the problem of getting commuters in and out of London, but will aggravate it.

The new Clause does not simply affect the pocket of the daily commuter. It touches the much wider question of the movement of population from home to work and back again. Sooner or later, if we are to avoid the most disagreeable forms of physical control, we must turn our minds to a fiscal solution, and it is that sort of fiscal solution that the new Clause provides. I hope that my right hon. and learned Friend will not dispose of it without appreciating the long-range possibility that lies ahead.

Mr. Callaghan

I was interested to hear the hon. Member for Eastbourne (Sir C. Taylor) advance the view that we get remuneration for travelling between our homes and Westminster. That is true, and to that extent we are distinguished—and it is a not very palatable distinction—but before the hon. Member spends all the money he gets from the Fees Office, I warn him that he had better remember that the payment will be returned to the Public Departments section of the Inland Revenue and be chargeable to tax, because that sum is taxable. If any employer of people living in Southend cared to contribute towards the cost of their travelling expenses he would be free to do so, and, of course, that sum would be taxable in the hands of the employee.

12.15 a.m.

One solution to this growing problem would be for employers, who are now finding it difficult to get some staff in London, to pay some of their travelling expenses in the same way as they are supplying luncheon vouchers.

Mr. McAdden

While what the hon. Member for Cardiff, South-East (Mr. Callaghan) said may be broadly true in some cases, it is certainly not true of the building trade in which 4d. a mile is given and which is recognised by the Inland Revenue as being not liable for tax.

Mr. Callaghan

I understand that that is so, but it is not for me to make a case for the Inland Revenue. That matter should be directed to the Chancellor, and I know that the hon. Member for Southend, East (Mr. McAdden) has raised it with his right hon. and learned Friend. In this connection, however—if I might whisper a word in the Chancellor's ear—I understand that the reason for the difference is that office workers have a fixed point of employment while those employed in the building industry have not, for they shift from one site to another and there is, therefore, a difference in the type of employment.

I have considerable sympathy for people who find themselves in a difficult position regarding travelling to and from work. However, my sympathy applies to many, but to not all of them, because if someone deliberately chooses to live in a salubrious neighbourhood like Southend or Brighton—I do not wish to be unfair; both are nice places —they must take what is coming to them if fares go up. They have, after all, made a free choice.

I am sympathetic to the second generation who have no real freedom of movement and who are obliged, for employment reasons, to come to London. They find it extremely difficult to pay their travelling expenses and it certainly would not be fair to say to them "You chose to live there. If you do not like it go back to Southend and try to find a job there."

I was glad to hear the realistic remarks of the hon. Member for Ashford (Mr. Deedes), who said—and he has said this on previous occasions—that southeast England is becoming a vast industrial sewer. Indeed, we have seen its character change over the last 30 years.

Mr. Deedes indicated dissent.

Mr. Callaghan

I see that the hon. Member for Ashford disclaims authorship of that phrase, in which case I will gladly take responsibility for it. We may tinker with the problem, but we really need a proper system of industrial planning. The ruthlessness which reflects so much on our civilisation concerns this separation of a man's place of work with the place where he lives.

We have had a great deal of these difficulties in South Wales. Since 1926, when the pits were closed during the General Strike, it;has been traditional for many miners to travel long distances —30 or 40 miles—to the pits in West Wales, and this has resulted in the breaking up of many desirable community elements. In due course we shall have to face the question of how we are to try to get some social integration between the place of home and the place of work and restore a real community sense. However, that is going far wider than the proposed new Clause.

We are dealing with a vital problem, and while the proposal under discussion would not solve it, it would help a number of people who are in great difficulty. The real solution is a much deeper one. If hon. Gentlemen opposite wish to defeat the Government tonight it is in their power to do so. When I was asked to take part in this discussion I wondered whether I was taking part in a serious debate or a charade.

Is this a sham fight or is it not? If hon. Members want the new Cause they know very well that they can defeat the Government if they wish. Before I declare what I shall do, I should like to know whether hon. Members opposite will go into the Lobbies tonight. If they do, we shall see something most spectacular which we have not seen before during these debates. I do not think that an hon. Member is entitled to chide us on this side of the Committee if he is not prepared to carry his fighting speech to a conclusion. I shall wait to see what that conclusion will be in the few moments remaining to us.

Mr. Robert Carr (Mitcham)

Most of my hon. Friends who have spoken represent constituents who live much further from London than do my constituents. It may be said that people who live 50 miles, 60 miles or 70 miles from London have gone to live farther out than is strictly necessary, but in the conditions of a great city like London that could not be said about those who live in my constituency, a mere 13 miles or so from the centre of London.

I am well aware, however, that the increases in fares in recent years is a considerable cause of anxiety and, to those on a narrowly balanced budget, a cause of hardship to people living even that distance away. Whether or not there is a practical method of dealing with this problem in the context of the present economic situation, I strongly support the point made by my hon. Friend the Member for Ashford (Mr. Deedes) that there is a major economic and social problem here. It is not good enough merely to dismiss this, as I realise the Chancellor may have to dismiss it tonight, on the ground of the cost being impossible to bear this year. The economic and social problems involved in this subject must be given other and deeper consideration.

In looking at this question of what is or is not allowable as expenses, the Chancellor must endeavour to obtain greater fairness than there is at present. Otherwise it is not tolerable to go on saying to people that they must go on indefinitely paying higher and higher fares to travel in worse and worse conditions.

Mr. Marcus Worsley (Keighley)

I should like to emphasise that there are hon. Members on this side of the Committee who do not agree with this proposed new Clause.

Mr. Channon


Mr. Worsley

I emphasise that the Conservative Party has not been wholly taken over by commuter interests. The effect inevitably of any such concession as is proposed, and I hope that my right hon. and learned Friend will resist it, will be in the nature of a subsidy for the commuter.

Mr. McAdden


Mr. Worsley

Inevitably so. The cost has been variously given up to £150 million and hon. Members surely will not suggest that this money will be handed over by the Chancellor without compensating taxation.

Mr. McAdden

My hon. Friend is suggesting that this is a subsidy and presupposes that the commuter is not today paying economic fares for his transport. If a railway cannot run on commuter business it might as well go out of business.

Mr. Worsley

Whether the commuter pays an economic price or not is not the point. The proposition in the Clause is that the cost of travel should be an allowable expense. This means that the Chancellor will receive less money from Income Tax. If he is to spend the same money he will need to obtain it elsewhere and my constituents, who are intelligent enough to live in a place where they can walk or bicycle to work will be penalised.

Mr. Gilbert Longden (Hertfordshire, South-West)

In reply to the hon. Member for Cardiff, South-East (Mr. Callaghan), whether or not we choose to divide against the Government this evening, it must be said that this has been a subject which is well worth raising because it affects millions of people. I am amazed that only six Members of the Labour Party have been in the Committee while we have debated this subject. Although five of them have put down an Amendment to the Clause, not one of them is present, and although we are told that this is part of the Liberal programme, not a single Liberal Member has been here.

This whole matter arises from the total failure of the massive and expensive apparatus of town and country planning to bring the worker near his work. I am prompted to support this Clause because we Members of Parliament are not only allowed to set off the cost of our travel between our homes and our place of work but we are actually repaid because of it. Why, therefore, should not these millions of people who have to travel up to London to work at tremendous inconvenience and discomfort be allowed to set off the cost of so doing against their tax?

I cannot believe that this proposal would cost £150 million, although no doubt we shall be told by the Economic Secretary when he replies. I ask my right hon. and learned Friend the Chancellor to consider the matter favourably, if not this year, in future Budgets.

Mr. Barber

As my hon. Friends the Members for Southend, West (Mr. Channon) and Ashford (Mr. Deedes) have said, the issue raised in these new Clauses is one of very great concern to many people. Reference was made by my hon. Friend the Member for Southend, West and also by my hon. Friend the Member for Harwich (Mr. Ridsdale) to certain aspects of the policies of the British Transport Commission. I should be out of order, in view of what you said, Sir Robert, if I were to pursue that point. I would only say that I have no doubt that my right hon. Friend the Minister of Transport will be taking note of what has been said in the course of this debate.

Like my hon. Friend the Member for Hertfordshire, South-West (Mr. Longden), I have been astonished that not a single Member of the Liberal Party has been present throughout the whole of the debate, not even—if I may be a little more specific—the hon. Member for Orpington. I can only assume that he is travelling between his place of work and his home. Whatever views the Liberal Party may have on this matter —and I thought they had expressed a firm view, but I may be wrong—it is really surprising that not one has stayed to hear the arguments on a matter of such importance.

My hon. Friend the Member for Hertfordshire, South-West passed certain strictures on the Labour Party on the lack of numbers here this evening; but perhaps I may express my gratitude to the three hon. Members on the Opposition Front Bench for the courteous way in which they have listened and to the one hon. Member who has taken part in the debate.

Mr. Callaghan

The hon. Member has referred to us in terms with which I cannot disagree. I must say, however, that there have been many occasions during these debates when the Government benches have been practically empty though we have raised questions which we thought were equally important about personal allowances, affecting many millions of people in this country. I do not think the hon. Gentleman will score many party points in that way. There have been many occasions when I would have liked some help from hon. Members opposite if only they had been here.

Mr. Barber

I am sure that if the hon. Gentleman will change his policies he will get a lot of help.

The Clauses raise questions both of administration and of equity. As has been pointed out by one or two hon. Members, we have the advantage that the matters which we are considering were also considered by the Royal Commission. The Commission came down decisively against any such allowance as is suggested in these new Clauses.

12.30 a.m.

My hon. Friend the Member for Southend, West referred to the general question of business expenses. There has, I know, of late been a lot of criticism of the extent to which some taxpayers claim expenses to be set off against their profits or their income. The basic difficulty is so to restrict the existing legal criteria as to exclude unwarranted expenses claims without at the same time excluding claims which, on grounds of common sense, are manifestly reasonable and should be allowed.

My hon. Friend referred to the legal position. It is clear that the only expenses which are allowed in the case of people assessed under Schedule E is expenditure wholly, exclusively and necessarily incurred in the performance of the duties of an office or employment. This is not merely a decision taken by the Inland Revenue, as my hon. Friend seemed at one time to suggest. It is a decision which has been confirmed by the courts. I refer, of course, to the decision that travelling between one's home and place of work is not an allowable expense.

I am sure that the whole Committee will agree with the Royal Commission that in logic, the claim would fail on the ground that profits are made or remuneration earned by the work done at the place of work, and that the cost of getting to and from the place is not a charge upon those moneys. My hon. Friends are saying that there are wider considerations which make it desirable to breach the ordinary principles. The Royal Commission had no doubt that this should not be done. I should, however, like to examine the considerations which my hon. Friends have put forward.

Consider, first, the case of those who work in the large cities. Most hon. Members who have spoken have had the City of London in mind. Some people are able to choose whether they live in the city itself or in the country, with all the additional expense of travelling to and fro. Other people, while they may have some choice as to where they live, have oniy a limited choice because of the shortage of accommodation or, indeed, because of the cost of accommodation in built-up areas.

It would obviously be impossible for the Inland Revenue—or, indeed, for anybody else—to distinguish between these two categories of people. Yet nobody. I should have thought, would deny that in many cases the man who chooses to live in the country, or in a London suburb for that matter, is able to live more cheaply than if he were living in the centre of the city. Frequently he is financially better off, and this financial advantage exists whether he voluntarily chooses the area where he lives or whether he can find a suitable house only in that area. As the Royal Commission recognsed, there is a large element of personal choice in the decision where to live.

Even outside the big cities, the experience of other hon. Members will be much the same as mine. In my constituency, for example, people have come to me in the hope that I might intercede with the local council to enable them to move from an old council house in the centre of the town to a better one on one of the newer estates outside the town. These are not professional people or white-collar workers but are men who simply prefer to live in a more congenial area, and perhaps from the viewpoint of their families in a more healthy area, and are prepared to shoulder the extra cost of travelling. When moving from that category of person to the middle-income groups and even further up the income scale, there is frequently a considerable element of choice involved in where a person lives.

I cannot believe that it would be right in principle to give a special tax allowance in respect of travelling to and from work to somebody who has chosen to live a considerable distance away. It must be accepted that it would be quite impossible from a practical point of view to distinguish those cases where there is genuinely no element of choice.

There is, as has been pointed out, one exception to the general rule—under the Finance Act, 1942, dealing with the special circumstances of the war and the post-war years. It was referred to by my hon. Friend the Member for Southend, West. I should point out to my hon. Friend that the Inland Revenue has had the greatest difficulty in administering that Section, and as, I think, my hon. Friend knows, the Royal Commission did advise that it should be repealed. It follows that it would be impossible to devise a relief which would be both fair and practicable, and, of course, almost everybody is involved in some cost in getting to and from his place of work.

I must in frankness tell the Committee that, quite apart from the insuperable administrative difficulties which I do not think anybody would deny, I do not think that it would be right in principle to give this special tax allowance, and I would remind the Committee—because I think it is important and it has not been read out yet—of what the Royal Commission said, after referring to the basic rules about expenses allowed for tax purposes. It went on to say this, and it is highly relevant to the matter we are discussing: We think that this argument is supported by the wider consideration"— this is under the heading, "Travel between home and work"— that (a)as virtually every earner has some cost to meet in getting to and from work, an allowance would be claimed for nearly every earned income, and (b) the amount of the allowance would vary very much as between one taxpayer and another, according to the distance between his home and his place of work. Now a large element of personal choice enters into his decision where he will live and where he will work. One man may live further from his work for the sake of lower living costs or other advantages for himself and his family, another may live nearer but at a higher cost in other respects. Since the tax system does not take account of the variations in living costs and other advantages, it seems to us undoubtedly the better rule that it should refuse any allowance for the particular cost of travel from home to work, the significance of which is so much bound up with these other factors.

Mr. Channon

Since my hon. Friend has quoted the Royal Commission, and I quoted a passage from its Report to help me, will my hon. Friend say how he reconciles that with paragraph 240, which I quoted?

Mr. Barber

Yes. What the Royal Commission was saying in the first few lines which my hon. Friend quotes from paragraph 240 was that it is sometimes, as a question of fact, difficult to decide whether a person is travelling from his home to his place of work or whether he is travelling on the duties with which his business is concerned. I think one example was given in the course of this debate, namely that building workers who may have to travel from site to site, and there are other instances of men who, for example, travel around repairing lifts, and so on. It must be a question of fact in each case. There will be, as the Royal Commission was saying, borderline cases.

I do not wish to appear to be facetious, because I recognise that this is a very important matter, but I hope I may be allowed to make just one further quotation, and this is from an article by Mr. George Schwartz in The Sunday Timesof 8th April. This is what he write: Fares are a sore point at the moment with the British public which after centuries of endurance has got tired of paying the full cost of everything it gets. The correspondence in the papers testifies to the revolt against this old-fashioned economic discipline. Thus it is urged that people who come to work in London from outside should be given some relief for the cost of travel possibly by allowing the cost as a deduction from taxable income. This at once provokes the claim that people who live and work in London should be given some relief because of the higher cost of living in London. So there is a case for subsidising people who travel into London and those who don't have to travel into London, lending force to the old saying, 'Distance is no object.' I do not take that too seriously—

Mr. J. A. Leavey (Heywood and Royton)

It is even worse than that, is it not, because the commuting service is a subsidised service? It is one of the services which do not pay. Therefore, in a large number of cases those who use the commuter service already get subsidies.

Mr. Barber

I am afraid that my knowledge is not sufficiently specialised to answer that question.

There are two other matters to which I wish briefly to refer. The first is that both Clauses would, as has been pointed out, limit the allowance to fares paid on public transport. I appreciate from what my hon. Friend the Member for Southend, East (Mr. McAdden) said that what my hon. Friends are trying to do is to limit the extent of the claims that would be made. I will not go into this in detail because, obviously, there are two different views on the matter. I would only express the doubt whether it would be fair to proceed in this way.

Even though some of my hon. Friends may take a different view from that which was put forward by the Royal Commission—and, after all, it was a conclusive view—I would ask them to consider very seriously whether, even if the view which I have expressed is wrong, it would really be right this year to select this form of expenditure for tax relief. My hon. Friend the Member for Southend, East seemed to think, from the way in which he presented his case, that the question of cost was really of little relevance. Now I should say in all frankness to the Committee that it really is impossible to give any precise estimate of the cost. But it would certainly run into many tens of millions, and I think that the best I can do in order to give the Committee some idea of how the cost would work out, is to mention that to give all wage and salary earners an allowance of 10s. a week for travelling to and from work would cost something in the region of £150 million a year. Even if my hon. Friend thinks that as an average for the country as a whole 10s. is too much and if one says 5s. per head a week, it still comes to £75 million a year.

To sum up—I believe it is right in these matters to be perfectly frank—it seems to me to be wrong in principle to give a tax allowance for travelling to and from work when the individual is able to choose his place of residence, and it is not practicable to provide for those other cases where a man has no choice.

I believe that the very firm conclusion reached by the Royal Commission is the right one. But even if it were wrong, I am sure that my hon. Friends will agree that the very considerable cost of the new Clause is not something which my right hon. and learned Friend could contemplate this year. Therefore, even though my hon. Friends may disagree with the principles which I have enunciated, I hope that on the narrower ground of cost they will take the responsible view and will not press the Motion.

Mr. Channon

I must say that I am deeply disappointed with the speech of my hon. Friend from Yorkshire and, indeed, with the intervention by my hon. Friend the Member for Heywood and Royton (Mr. Leavey) from Lancashire. However, I am very grateful to my hon. Friend for his long, careful and clear reply. I should think that the Committee would feel that his last point is perhaps the one which should weigh most. I am horrified to think that a tax relief of even 10s. a week per head of the travelling population would cost as much as £150 million a year.

Although I feel that in equity our case is very clear, I am sure my hon. Friends would agree with me—this has always been my belief—that it is paramount to ensure that the cost of living remains steady for our constituents. I hope that my hon. Friend will bring the matter to the attention of his right hon. Friend the Minister of Transport, as he intimated he would do in the early stages of his speech, and will give consideration to the view put forward by my hon. Friend the Member for Ashford (Mr. Deedes).

In view of the fact that the concession would cost £150 million a year, I must say, speaking for myself, that I really cannot ask my hon. Friends to divide the Committee on the issue at this stage. However, I hope that the views put forward will be very carefully considered by the Minister of Transport. I think that they are relevant not only in respect of this new Clause but also in the wider aspects put forward by my hon. Friend the Member for Ashford and the hon. Member for Cardiff, South-East (Mr. Callaghan).

In these circumstances and in the hope that consideration will be given to the matter, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

12.45 a.m.

Mr. Selwyn Lloyd

I beg to move, That the Chairman do report progress and ask leave to sit again. I am sorry that we have had to keep the Committee here so late this evening, but I think that it was necessary for us to make a certain amount of progress with the new Clauses and reach a certain point in our consideration of them. I think that we have now reached a point at which we might postpone our further consideration to another day.

Mr. Callaghan

I find myself often in agreement at this time of night with the Chancellor, and this is no exception. I feel that I should support his Motion on several grounds. We have got through about half of the new Clauses left to us. It is late. I think that I should, on the whole, like to prevent civil war from breaking out among the Government's supporters. This seems to be a very desirable objective. [HON. MEMBERS: "Why?"] I will tell the Chancellor why. I rather agree with Lenin here. I support the Government now rather as the rope supports the hanging man. The longer the Government stay in office, the more sick and tired the electors will become of them. Therefore, I hope that they will stay there for a bit longer yet, and, in the interests of achieving that and of preventing civil war which might destroy the Government, I am happy to support the Motion.

Question put and agreed to.

Committee report Progress; to sit again this day.