HC Deb 05 November 1962 vol 666 cc739-57

10.12 p.m.

The Chief Secretary to the Treasury and Paymaster-General (Mr. John Boyd-Carpenter)

I beg to move, That the Post-War Credit (Income Tax) Amendment Regulations 1962, a draft of which was laid before this House on 30th October, be approved. The purpose of this Motion is to obtain the authority of the House for putting into operation the proposal in respect of post-war credits which my right hon. Friend the Chancellor of the Exchequer announced at the Lord Mayor's dinner to the bankers and merchants of the City of London on 3rd October. The purpose is to expedite the repayment of post-war credits by reducing the age at which one becomes entitled to them from 63 to 60 in the case of men and from 58 to 55 in respect of women. That should provide for the immediate payment of credits to some 700,000 people at a total cost, including accrued interest, of approximately £42 million.

As I gather from the hon. Member for Cardiff, South-East (Mr. Callaghan), this proposal has a certain human appeal. When my right hon. Friend made his announcement at the Mansion House, sitting near me there was a very distinguished head of a great civic authority in the provinces. When my right hon. Friend made the announcement, I heard this distinguished civic head say, in a happy tone, "I will get mine." I think that that is the reaction of a considerable number of people.

Of course these post-war credits have given rise to a good deal of ill-feeling and misunderstanding, and now that it is possible without, in my right hon. Friend's judgment, damage to the economy to speed up the repayment of them, I am sure that hon. Members will feel that it is right to enable people to obtain the money which after all is theirs.

As hon. Members will see from looking at the Regulations, the repayment includes for the first time a repayment to the building societies. This has not been done before, but it is proposed that 60 per cent. of the amount to which the building societies are entitled, that is to say, approximately £1½ million, shall be repaid to them. The selection of the figure of 60 per cent. is based on the fact that, as closely as we can calculate, by the end of the year about 60 per cent. of the amount due to individuals will have been repaid.

It is indeed something of a curiosity that building societies alone of corporate bodies should have post-war credits. As hon. Members who follow these things will appreciate, that derives from the method of taxing building societies and, in particular, the use of the composite rate which has a relationship to what the individual people who have lent money to building societies would have paid if they had paid the tax themselves. Consequently, when the personal allowances were reduced by the Finance Act, 1941, and the post-war credits created in lieu of them, building societies also became entitled to them.

So far they have not had any repayment, but we fed that in present circumstances it is right that they should share in the repayment, and it will undoubtedly be the case that this sum of £1½ million, though small in relation to the general level of building society transactions, will be a help to them in their extremely important work in connection with housing.

If the House, as I hope it will, approves these Regulations before midnight tonight, they will be brought into operation tomorrow. There will, in any event, be in post offices tomorrow a new type of claim form appropriate to this repayment, and, subject to Parliament approving the Regulations, I hope that members of the public who are entitled to repayment will obtain these claim forms as quickly as possible from post offices, and having completed them send them in accordance with the directions on the forms to the tax office concerned.

If holders of credits do so fairly quickly, it is our hope that the majority of them will have been repaid by Christmas. Although it is not for me to suggest the directions in which the money obtained should be expended, no doubt hon. Members will feel that the Christmas season is a particularly appropriate one in which to have a little more cash available, it being of course for the individual to decide whether or not he lays it out on dutiable commodities.

With that explanation, I hope that the House will feel that in these circumstances it is right to speed up the repayment of what is after all the money of the people concerned. This is quite a substantial matter. The figure of £42 million compares with £17 million which is the annual level of repayment on the present basis, and this is therefore quite a substantial move forward in the repayment of these credits. I hope that the House will be prepared to approve the Regulations.

10.20 p.m.

Mr. Douglas Houghton (Sowerby)

Of course the House will approve these draft Regulations, and I have no doubt that it will do so before midnight. But I think that we can spare a few moments to consider some aspects of this further instalment of the repayment of postwar credits which are worthy of attention. This is part of the measures taken by the Chancellor of the Exchequer to stimulate the economy.

As the right hon. Gentleman has explained, approximately £42 million of additional purchasing power is to be released to about 700,000 people. On previous occasions the Chancellor of the day, when releasing post-war credits, has acted under considerable pressure, and on one or two occasions after a display of some ill feeling by hon. Members on both sides of the House at the slow rate of repayment of these credits. So, on previous occasions, in releasing post-war credits the Chancellor has fervently hoped that the people who got the money would save it.

Now, however, he hopes that the people who will get the money will spend it, and in order to encourage them the more to do so he will speed up the work of the Inland Revenue in order to ensure that the recipients will receive the money at the time of greatest temptation to spend it, namely, just before Christmas.

This new release of post-war credits more nearly fulfils the anticipation of the inventor of post-war credits, J. M. Keynes, than any previous one. He, we remember, called them deposits. They were deposits of deferred pay, and it is interesting to read again the original book that Keynes wrote, on How To Pay For The War. On page 46 we find the very circumstances in which the Chancellor is now quite voluntarily releasing more post-war credits. Keynes says: The appropriate time for the ultimate release of the deposits will have arrived at the onset of the first post-war slump … Instead of demand being in execess of supply, we shall have a capacity to produce in excess of current demand. Thus the system of deferment will be twice blessed; and will do almost as much good hereafter in preventing deflation and unemployment as it does now in preventing inflation and the exhaustion of scarce resources. He goes on to describe the very circumstances in which we are discussing this new release.

Some of the things he had in mind have not been fulfilled. He thought that the repayment of the post-war credits would not be unduly delayed. Whether or not they have been is a matter of opinion, but they have certainly been long delayed. Again, he wanted them to bear interest at the rate of 2½ per cent. right from the beginning Interest was not added until 1959. It took us thirteen years to do that. Furthermore, Keynes had in mind that the post-war credits would be released in a variety of personal circumstances of hardship and of special need. It took a long time to get hardship acknowledged as a qualification for claiming repayment of postwar credits. In fact, it took thirteen years to have repayment extended to various hardship categories.

At any rate, we are getting on. Out of the original amount of £765 million of post-war credits, £316 million have been paid off, and these Regulations will release a further £42 million. It is estimated, however, that by the end of March there will still be £268 million of post-war credits left, and 8¾ million people interested in them. It is a lot of money and a lot of people, so that we may be pretty sure that, notwithstanding the open hand of the Chancellor at the moment, he will be hearing more about post-war credits.

From time to time we have had discussions in the House about whether age is a suitable and a justifiable basis for qualification for the repayment of postwar credits. There is nothing in the idea of repaying debts by reference to age rather than to the length of time the debt has been owed; except I think there was some merit in the move made by the late Hugh Dalton when he first fixed the retirement age for men and women as a suitable basis on which to repay post-war credits. It seemed suitable then that the credits should be a kind of retirement gratuity when men reached the age of 65 and women 60, when most of them retired and had to face life on a smaller income. At that point the repayment of post-war credits was very acceptable to those concerned.

No doubt many of us think repayment should have been made to widows irrespective of age, although we were a long time admitting widows for repayment unless they had reached the age of 60. But there is no doubt that we have liberalised the repayment of post-war credits over the years. Whatever argument there may be for and against age as a criterion, it has now become traditional and it is probably as acceptable as any other basis for the repayment of this money.

There are one or two points I wish to make in this connection. On previous occasions the release of post-war credits has always been reserved until the Chancellor could review his general financial strategy for the year. The announcements about the release of postwar credits have been made only at Budget time. On several occasions I pressed the Chancellor to use the Regulations and to repay post-war credits at a time other than Budget time. But we heard from Government spokesmen that it was desirable that the Chancellor should see the whole picture and be able to review the perspective of the national economy and the financial position of the country before deciding on the repayment. I remember that the present Minister of Education argued very persuasively that although the Regulations existed and could be used at any time, it was still desirable to keep the repayment of post-war credits in line with the general financial and economic policy.

That now seems to have gone by the board. Not only have we an announcement of the repayment of post-war credits at a time other than Budget time, but we find the announcement is not even made in the House of Commons. It is made at a dinner at the Mansion House. That is how we first knew of the repayments. I think that any previous Chancellor would have jealously ob- served the tradition of making such an announcement in this House and he might have taken a lot of persuading to make it at a season of the year other than that of the general review. But orthodoxy has gone by the board on two counts in relation to post-war credits. From a number of points of view this time of the year happens to be very convenient as an occasion on which to take this step. In the past my complaint was that when the repayment of postwar credits was piled on top of other Budget changes it led to the extra work thrust on the Inland Revenue becoming very heavy. They were struggling with re-coding for tax purposes at the same time as they were trying to repay a million post-war credits.

Since no one wishes to wait unduly long for the money after the announcement has been made, there has always been heavy pressure on the Inland Revenue to do the job within about three months of the Chancellor's announcement. This job can be done at this season of the year more conveniently than in the high summer when staffs have gone through a heavy winter. I am sure that the Chancellor will be obliged to all concerned if this work is completed by Christmas, as I am sure there is every reason to hope it will be.

I seem to have read somewhere, but cannot check it, that the Chancellor made some observation about this release being the limit possible administratively at the present time. That seems to suggest that he would have gone further than the proposals in the draft Regulations had the machinery of the Department been able to cope with a bigger load. Had he reduced the age by four years or five years instead of three, quite clearly the numbers involved would have been very much greater. I wonder whether it is a fact that the release of post-war credits has been restricted for administrative reasons or whether this represents the limit of what the Chancellor regards as appropriate in present economic circumstances. I sincerely hope that the Chancellor is not being restrained by administrative difficulties in making available the maximum additional purchasing power that the economy may need.

If he is in difficulties with repayment of more post-war credits, I can make another suggestion to him. If he wants to release more purchasing power without a lasting commitment, which is one of the attractions of release of post-war credits—the Chancellor said this afternoon it did not make a lasting commitment—the suggestion I make is to give all retirement pensioners and those on social payments a Christmas box of £5 apiece.

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

Order. I am hesitant to interrupt the hon. Member, but we must confine our debate to the Instrument that is before us.

Mr. Houghton

Yes, Mr. Deputy-Speaker, I am obliged to you for drawing my attention to that. On previous occasions we had difficulty on this very point. I had always understood that it was possible to complain of what the draft Instrument did not do, or what was left out of the draft Instrument, but I am of course fully conscious that he could not put a Christmas box for retirement pensioners into this draft Instrument. I have given the Minister the germ of an idea of what might be done to supplement the release of post-war credits if still more purchasing power should be released without lasting commitment. I think I can leave the matter there.

The House will approve these Regulations. As far as they go they are welcome. I hope they are not being held back for administrative reasons. If they are, it shows that the Chancellor should get the Inland Revenue into better shape to respond to these exceptional and urgent calls. I can well understand that may be an inhibiting factor, not only in this connection but in connection with other matters the Chancellor may have in mind. I draw his attention to that possibility, but nevertheless express the hope that this work may be expeditiously done and that all those who are to get these post-war credits will be made happy by Christmas.

10.35 p.m.

Mr. Donald Wade (Huddersfield, West)

I welcome these Regulations as far as they go and have only one or two brief comments on make on them. I am sure that those who will become entitled—men at 60 and women at 55— will be glad to receive their post-war credits after having waited so long for them, but I think that even this step will not entirely remove the feeling that the whole post-war credit operation is something in the nature of a confidence trick on the taxpayer.

It is true, as the hon. Member for Sowerby (Mr. Houghton) said, that the idea of post-war credits was put forward by Keynes and was intended to help to pay for the war, but it was also intended that repayment should be made after the war and that interest should be paid. Over twenty years have elapsed, but until 1959 no interest was paid. This widespread feeling, therefore, that post-war credits should have been paid off by now is understandable. Turning to the procedure of these Regulations, I hope that it will work smoothly and that those who need the money will get it before Christmas.

Before we finally part with this Statutory Instrument, I should like to know whether any consideration has been given to some form of funding. We have gone over all that ground before, and there are certain objections, but I think that it would be possible to convert all the remainder of the post-war credits into some form of savings bonds with a fixed rate of interest. I think that the rate of interest would have to be the current rate, and I suggest that the bonds should be cashable on six months' notice. I do not think that that would have an inflationary effect. Many people, having been granted that right and having been handed savings bonds in place of these post-war credits, would be content to leave them as an investment, and having regard to the long period of twenty years which has elapsed, that would not be unreasonable.

My second query is about building societies. I understand that about £2½ million is owing to the building societies in the form of post-war credits. As the Minister said, no previous payment has been made to them. I am told that the interest which they have lost on this money retained by the Government up to the year 1959 is about £1½| million, and the benefit of this has been lost to those who invest in building societies and to those who borrow from them. Having regard to that, it seems that there is some case for paying off the building societies altogether. If not, I am told that there is a strong desire for a specific date to be given as to when the remainder will be paid. I am therefore asking the Minister whether he will give a definite date when the remainder of the money owing to the building societies will be paid.

10.38 p.m.

Mr. A. E. Hunter (Feltham)

I intervene very briefly to say a few words on these Regulations. As one of the hon. Members who has been pressing the Government for some years to repay postwar credits, I welcome the Regulations, which will lower the age of repayment to 55 for women and 60 for men. These people have been waiting for twenty-one years. I hope that the Government will take further steps before long to lower the age.

We should bear in mind the loss of purchasing power to the holders of postwar credits. The money was deducted from their salaries and wages from 1941 until the end of the war, and in the twenty-one years since then, the value of money has dropped enormously. Interest has been paid only from 1959. I think that it should have been paid from 1941. But I very much hope that the Government will take steps again to lower the age as soon as possible.

The women concerned in these Regulations were 35 and the men were 40 when the credits were deducted from their wages and salaries. There are many people of 55 and 56, and women of 50, who have been waiting for over twenty years. So while welcoming these Regulations, I express the hope that the Government will lower the ages of repayment still further at an early date, because people should not have had to wait over twenty years for repayment of this debt. The Government should bear these points in mind.

10.41 p.m.

Mr. J. T. Price (Westhoughton)

Like my hon. Friend the Member for Feltham (Mr. Hunter), I too have pursued a succession of Chancellors over a number of years on this matter, and therefore I cannot object to the approval of these Regulations. I cannot, however, refrain from rising for a few minutes to mention two other points—one political and one administrative.

I can assure the right hon. Gentleman the Chief Secretary to the Treasury that he is in no danger of going to midnight before he gets his Regulations, and I would be the last person in the world to stand between those who want their money and the Chancellor's willingness to pay it to them. Nevertheless there are one or two things which can be said, and the first is this. Unlike my hon. Friend the Member for Sowerby (Mr. Houghton), I take a rather more pragmatic view of these matters than he does. I am not labouring under the disability of having been a tax officer. He knows that I say that without any malice or disrespect to him.

I never regard any argument advanced in this House on the ground of administrative convenience as valid where questions of principle are involved. Nevertheless, tonight the right hon. Gentleman has told us simply and shortly that this is a proposal to reduce the age from 63 to 60, and this, I take it, is about as much as the tax machine can stand at the moment, not in terms of money but in terms of manpower to carry out the job. I think that I shall be strictly in order in putting this point because, after all, every Parliamentary proposal and device is motivated by something or other.

We are told tonight—at least, I assume from the speech made at the Mansion House by the right hon. Gentleman's right hon. Friend some time ago and embodied in these Regulations —that the intention was to put forward the Regulations as one factor to stimulate the economy, to give the British public to whom this £400 million is owing a bit of extra spending money for Christmas to stimulate the economy. It is very nice for those who are entitled to it, and good luck to them. I have been pressing the Chancellor to let more of this money go for some years now. But I do not think this is the main purpose at all.

I have been looking at a number of developments in political life in recent weeks and I am beginning to wonder what is going to happen to the £400 million surplus above the line for which the Chancellor budgeted in his last Budget. I take it that the £140 million tax surplus has already been allocated. Last Thursday there was an announcement that £35 million was going to be released for improving agricultural grants. Today we have had an announcement from the Chancellor that £60 million, or an even larger sum, is going to be released in reduction of Purchase Tax on motor cars. Tonight we have the announcement, which we all welcome in spite of my somewhat, I hope not sour, but critical remarks, that a further £42 million is going to be released to 700,000 taxpayers to whom credits are outstanding, bringing the age down to 60.

All these seem to me to be carefully calculated proposals in a campaign to dress the shop window for the next General Election. I may be ungenerous in saying that. but I have been in the House a few years and I know how the machine ticks over. When it does not tick over, I think I know why it does not. It would be a little naive of the Opposition if we did not at this stage say that, while we accept the right hon. Gentleman's advice that the machine could not cope with more than a marginal number of people between 60 and 63 because of the other work which falls upon it, we imagine that it is not administrative convenience which causes him to stop at the age of 60. He wants to allow himself extra rope so that he may make a further announcement at some time before the next election so that another batch of people—the people of Orpington and the like—will receive a bonus and, therefore, ostensibly, will be brought back into the Tory fold. Perhaps that is a polemical point, and I will leave it there.

I come now to what has always seemed to me to be a strange paradox. Every Treasury Minister has always resisted the payment of these moneys, for all kinds of economic reasons, except to very limited groups of elderly people. What has never been satisfactorily explained is that, while we limit it to, at present, 63 for men and 58 for women, there has never been any such age limit in respect of the payment of post-war credits to those who inherit property on the death of a creditor in this category. It does not matter whether a person is 63, 55, 40 or any age; if he dies and leaves his post-war credits, his successors can have the down payment of them, however young or old they may be. I have never understood this. I do not want to prolong the debate unduly, but I should welcome an explanation of that discrepancy.

On many occasions, I have noticed, and have brought to the attention of Treasury Ministers, notably the right hon. Gentleman who is now the Minister of Education, the fact that, when post-war credits are payable either on survival or on the holder attaining the age at which they are due for repayment, there is often a calculation in which a deduction is made for tax adjustments which are assumed to have been payable by the creditor at the time when the credits were put into cold storage. In other words, if the creditor at the end of the war ceased to be an Income Tax payer because he was out of work or his wages were less than such as to bring him within the taxable category, after twenty years the Treasury still makes a complicated calculation and deducts assumed taxation payable on a balance struck with the year following the building up of the credits.

The right hon. Gentlemen's predecessor admitted this to me in private conversation, but perhaps I should not refer to that further. I believe that he understands the point. The ordinary lay person does not keep filing systems and dossiers of letters and documents such as those which are kept by the learned gentlemen in the Treasury. He is in no position to challenge or controvert anything in the calculation which is presented to him at the time when his post-war credits come to be paid in such circumstances.

It would be welcome information to the House if we could have an assurance that Ministers will be prepared to forget about these marginal items, because no normal taxpayer is in a position to produce a document to say whether the calculations are right. After all the critical things I have said, I welcome this limited measure of repayment and I hope that it may be increased in the near future.

10.50 p.m.

Mr. Boyd-Carpenter

I am glad that the Regulations have been generally welcomed and that I can reply briefly to the points which have been made without breaking what I might call the Cinderella rule.

The hon. Member for Sowerby (Mr. Houghton) raised the question of the announcement. Naturally, if the House had been sitting, my right hon. Friend the Chancellor of the Exchequer would have made the announcement to Parliament. At the beginning of October, however, the House was not sitting. I am sure that the House will feel that, my right hon. Friend having made up his mind on the point, the sensible thing was to announce it at the time and let everybody concerned know how they stood. The Lord Mayor's dinner to the bankers was a convenient opportunity and my right hon. Friend therefore took it.

The three years' entitlements involved in the Regulations, and to which the hon. Member for Sowerby referred, represent the order of size of payment which my right hon. Friend feels can properly be made in present circumstances. It so happens that it is about the largest amount that can, conveniently and expeditiously to the public, be handled at one time. The basis of the decision, however, is that this is an appropriate amount.

As I said earlier, the principle that applies here is that, people's money having been withheld from them by successive Governments on the ground that faster payments would produce inflation, When the situation arises in which it is possible to expedite those repayments, the House would, I am sure, think it right to expedite them.

The hon. Member for Huddersfield, West (Mr. Wade) raised again the question of why these credits were not converted into savings bonds. He will recall that there was a long discussion on this matter on the 1959 Bill, and I have nothing to add to what the former Chancellor of the Exchequer then said. The practical point—which, as the hon. Member for Sowerby has reminded us, was in mind when the credits were created—is that it is right for the Government of the day to be able to control the rate of their release in accordance with the developments of the economic situation, and such purpose would be inconsistent with what the hon. Member suggested. The same point covers his suggestion that a date should be set for the repayment of the balance of the amount due to the building societies. That, again, would be contrary to the original purpose of the credits and to the way in which they have been worked.

The hon. Member for Feltham (Mr. Hunter) has been vigorous in calling for the repayment of post-war credits, but I should probably not only be out of order, but also beyond what the House would consider reasonable, to start talking about further Regulations when trying to secure approval for the present ones.

I will not follow the hon. Member for Westhoughton (Mr. J. T. Price) in his ingenious speculations, nor, indeed, should I be in order in following him in other matters of financial moment to which he made glancing and adroit references. The hon. Member, however, asked two questions. The first was why credits were paid to executors on the death of the holder whatever the age of the holder at death. That has been the position only since 1959. Thinking back, the main reason was as follows. Great inconvenience and expense had been caused in the winding-up of small estates. Because a man had died some years under the age of 65, the executors could not wind up the estate because there was this money owing to it, to be repaid only at the date at which the deceased would have reached the age of 65. That was a very practical reason, and I think that a good deal of hardship, particularly in the case of small estates, was being caused.

The other point, if I understood the right hon. Gentleman aright—I apologise if I did not—related to the question of where the post-war credit turns out on repayment not to be of the amount which the holder expected. In all the cases of that sort which I have seen— and there have been a certain number— that has arisen because in the relevant year in which the credit was earned the person concerned did not pay the full amount of tax due.

This is not an attempt after all these years to claw back long-drawn-out tax liabilities. On the other hand, the essence of the post-war credit is that it is the repayment of the extra tax paid by the taxpayer because of the withdrawal of the personal allowances, and if, in fact, the taxpayer did not pay that extra tax, it would really, I think, be rather a nonsense and rather inequitable to the rest of the community to repay him tax Which he had never paid. That, in the oases I have seen, has been the reason, not always understood, but I think, as I explain it to the House, reasonable for this particular matter.

Mr. J. T. Price

It may be a very narrow point, but whatever the intention is, the practice is to claw back the money. I am here concerned with results, not with intentions. If in such a case the post-war credits are paid to a widow, who thus succeeds to her husband's post-war credits earlier than she would have done had be not died, then marginal tax is clawed back by that operation.

My complaint is—I have made it to previous Treasury Ministers—that nobody at a distance of fifteen or twenty years or perhaps a longer period in the future is in a position to refute or even argue about a calculation which may be made by Treasury officials introducing a new factor of a claw-back of an amount which is assumed to be outstanding. It is inequitable. Surety the basis of British law and British equity between citizens is that where a matter of dispute arises the parties to the dispute shall be in possession of the relevant facts and the evidence on which the decision rests. One day someone will challenge this, and I think that if it were challenged the Treasury would be in serious difficulties.

Mr. Boyd-Carpenter

I do not agree. What the hon. Gentleman is saying is that we should, because of the passage of time, repay tax which on the evidence before us was never paid. I cannot believe that that is a proposition which would commend itself to the House.

Mr. G. R. Mitchison (Kettering)

May I put a point to the right hon. Gentleman? I do not usually take much part in these debates, but I have had a number of these constituency cases—and I am sure that other hon. Members have, too—and I have always felt that the unfairnesses lie in this. The taxpayer gets a certificate showing a given amount repayable. He keeps that certificate. So far as I know, nobody ever takes any step to correct it until the amount actually falls due for repayment. He is then told, "But the certificate is incomplete. There was a set-off, as it were, that accrued some time ago, and as a result of that this debt is reduced."

It seems to me not to matter very much whether one treats it as one debt reduced or as one debt and another debt set off against it. What is unfair about it, I should have thought, is that as a matter of practice the taxpayer has no means of refuting the charge. He does not as a rule understand what it is about.

As has been pointed out already, any papers connected with it are almost certain to have disappeared. It may be perfectly correct—one assumes that it probably is—but it certainly creates a great feeling of unfairness, and it is because of that feeling of unfairness that tax and revenue debts of over six years' standing are not pressed—and there is statutory sanction for that—and it is for the same reason that ordinary civil debts have always been allowed to be subject to the statutory limitation, periods being six years in most cases and, as the right hon. Gentleman knows, rather less in others.

Those are debts which are much older than that. There is the same general objection, the same unfairness, created by it. I should have thought that it was a very great mistake—apart from the rights of the matter—to press these claims and cause far more feeling of injustice that it could be worth to the Revenue.

Mr. Boyd-Carpenter

I take the point of the hon. and learned Member for Kettering (Mr. Mitchison), although I think that he overstated it in one respect. I understand that in some cases amended certificates have been issued where the error has been discovered. However, I will deal with the more difficult case in which he suggested that an amended certificate had not been issued.

It is perfectly true that were this a claim for tax not paid, then—I speak subject to his correction—in the absence of fraud or concealment, where there is no time limit, the claim could not be pursued; but this is not such a claim. This is a case where it is the taxpayer who is claiming against the Revenue for the repayment of the tax paid by him. Therefore, while I fully appreciate the difficulties for both sides in dealing with matters as long-standing as this, this is a case where it is the taxpayer who is claiming the repayment of money paid in tax. It would be wrong, if the evidence in the possession of the Revenue was that the tax was not paid, either wholly or in part, for it to pay to that person by way of repayment on his claim money which was not paid in tax in the first place at all. I am sure that the hon. and learned Member will agree with that.

Sir Spencer Summers (Aylesbury)

While accepting the logic and reasonableness of my right hon. Friend's case, will he address himself to the point that if people were not led to expect that they would get the full amount there would not be the same feeling of injustice? Can he look into the matter to see whether it is possible to advise post-war credit holders who have not yet been paid of the accuracy of their claim for the full amount, for if they were told in advance, the problem would disappear?

Mr. Boyd-Carpenter

I agree with my hon. Friend about the disappointment— not to use a stronger word—which arises. If one has a piece of paper which says that a certain figure is due and one then gets a smaller sum, one would be less or more than human—I am not sure which way round it is—if one were not disappointed. I know from past recollections that some of the certificates were reissued, but at this stage I cannot charge my memory as to the difficulties of carrying that process further. However, I will promise to look into it to see whether something can be done, but on the clear understanding that I am not making any commitment, because it may not be possible.

Mr. Mitchison

The right hon. Gentleman said that he thought that he had satisfied me, but he has not. These certificates were issued because at the time it was the view of the Revenue that that amount of money was owing to the taxpayer. Subsequently, for some reason or other, something else has intervened and it is no longer thought to be owing to the taxpayer. If the right hon. Gentleman is to rest on the distinction between a reduced debt and the set-off of two separate debts, this is more the latter than the former, but surely it is quite the wrong sort of ground to rest on.

For years people have thought that they would be repaid by the Treasury a certain amount of money. That is the way they look at it and that is why there has always been this feeling about post-war credits—"The Government are keeping back my money". Technically, that may not be the right way of doing it, but surely the amount of ill-feeling created is quite disproportionate to any saving when the Revenue waits until the moment the repayment becomes due and then says that ten or twenty or thirty years ago there was a counter-item on the other side.

I beg the right hon. Gentleman to reconsider this matter and to consult his right hon. Friend the Chancellor of the Exchequer about it and see whether it is really necessary to go on creating this kind of bad feeling—and I think well-founded bad feeling—in respect of old debts which would have been forgiven long ago under ordinary Income Tax procedure or under the ordinary provisions of the law.

Mr. Boyd-Carpenter

I agree that ill-feeling arises, though I agree with my hon. Friend the Member for Aylesbury (Sir S. Summers) that it arises more from the shock of not realising what the position is than from the merits of the matter. I have undertaken to see whether anything can be done to reduce the number of cases in Which that happens in future, but on the issue itself I am quite dear that the line we have taken is right.

Consider the extreme case where no tax has been paid. Suppose that in the great confusion and difficulty of that time—and I am talking not about administration during peace time, but under bombardment—a certificate had been issued to someone who paid no tax. It would be nonsense, whether twenty years had passed or not, to pay him a sum of money on the basis of repayment of tax that he had never paid, and I would have thought that any responsible Minister must reject that, but on the point of trying to prevent the shock and surprise, as I have said, I think that both the hon. and learned Member for Kettering and my hon. Friend the Member for Aylesbury have something.

Mr. Houghton

Will the right hon. Gentleman look at the record of the long discussion that we had on this troublesome matter on an earlier occasion? I then asked that the Inland Revenue should endeavour to notify all persons concerned of arrears standing against them which would eventually be deducted from post-war credits when they came to be repaid so that any argument about whether the tax arrear was valid or not could be conducted while memories were green and not leave it to their widows to settle the problem with the Inland Revenue when the time came. I believe that some undertaking of that kind was given so that at least the shock of getting the tax arrears notified so late in the day would be avoided.

It was advanced at that time that there were all sorts of problems standing in the way—and the Comptroller and Auditor General might be one of them —if there were a proposal to repay a tax which had not been paid, but there is no reason why, at this stage, these arrears should be notified only when the taxpayer is claiming his post-war credits. Let us do it in advance of that. Get all this clear with the taxpayers concerned. If there are any disputes, get them settled so that later, when post-war credits come to be repaid, people will not be expecting more than they actually receive.

Mr. Boyd-Carpenter

I have undertaken to look into that, but the hon. Gentleman will understand that we probably shall not get very far with it until the present operation covered by the Regulations has been carried through. However, without any commitment, I will certainly look into it.

Question put and agreed to.

Resolved, That the Post-War Credit (Income Tax) Amendment Regulations 1962, a draft of which was laid before this House on 30th October, be approved.