HC Deb 09 June 1964 vol 696 cc313-70

In section 13 of the Finance Act 1957 (relief for persons over sixty-five with small incomes) in subsection (1)(a)(i), as amended by section 12(7) of the Finance Act 1963, for the reference to £325 (maximum income qualifying for full relief to a single man) there shall be substituted a reference to £350, and in subsection (1)(a)(ii). as so amended, for the reference to £520 (maximum income for full relief to a married man) there shall be substituted a reference to £560; and the like substitutions shall be made in paragraph (b) of that subsection (marginal relief).—[Mr. Houghton.]

Brought up, and read the First time.

Mr. Houghton

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

The Deputy-Chairman (Sir Robert Grimston)

With this new Clause it would, I suggest, be convenient to discuss new Clause No. 4, "Income Tax: extension of relief for elderly persons with small incomes"; new Clause No. 5, "Income Tax: increase of small income relief"; and new Clause No. 6, "Income Tax: exception in respect of certain widows' pensions".

Mr. Houghton

I am much obliged, Sir Robert.

The new Clause which I have moved, new Clause No. 3, relates to age exemption, and it is designed to increase the exemption limit for single persons over 65 from £325 at present to £350 and for married couples, one of whom is over 65, from £520 to £560. I am sorry that the hon. Member for Ilford, South (Mr. Cooper) is not here, because I should have been able to tell him that I estimate the cost of this new Clause at about £2 million a year.

Associated with this new Clause is the proposal in new Clause No. 4 to bring into line with the pension age of 60 the age at which a woman can qualify for age exemption. At present, although the pension age for a woman is 60, she is in the same position as a man for this purpose and cannot qualify for age exemption until she is 65. Therefore, there is frequently a gap between 60 and 65 when a woman may have retired and is on a reduced income, but is not entitled to the benefit of age exemption until she reaches 65, which may be five years after she has retired.

New Clause No. 5, "Income tax: increase of small income relief", proposes to increase the limit of income for people under 65 who can get the benefit of small income relief from £450 to £500. I estimate that the cost would be about £1 million a year. I cannot put any cost on new Clause No. 4, "Income tax: extension of relief for elderly persons with small incomes." New Clause No. 6,"Income tax: exception in respect of certain widows' pensions ", relates to war widows' and industrial widows' pensions which it is proposed to exempt from Income Tax altogether. I will not anticipate the part which my hon. Friends may play in the debate.

On age exemption and associated reliefs, the arguments generally used against proposals to extend age exemption are fiscal or economic arguments. It is said that this is something which cannot be accommodated within the framework of budgetary policy this year. That is why similar proposals several years ago were resisted by the Government. Also, on occasion, the argument is used that if age exemption is carried too far it will aggravate the disparity between age exemption for old people and the amount of tax to be paid by younger people on similar incomes. I will deal with both these points.

I wish to dwell for a moment on the recent history of these reliefs. Small income relief remained unchanged at £300 for six years until it was increased to £400 in 1962. It was increased to its present figure of £450 only last year. Age exemption remained at £275 for a single person and £440 for a married couple for four years—from 1958 to 1961. In 1962, the limits were increased to £300 for a single person and £480 for a married couple. Last year, they were further increased to £325 for a single person and £520 for a married couple. We propose to increase them still further by amounts equal to the last increase—that is, £25 for a single person and £40 for a married couple. Similarly, with small income relief, we propose to extend the maximum income to qualify for this relief by the same amount as last year, £50—that is, from £450 to £500.

On cost, I feel that the Chancellor of the Exchequer could have accommodated an additional expenditure of £3 million on these reliefs in his Budget this year. I do not think that to have extended the relief again this year would have disturbed the balance of his Budget. Moreover, it should be borne in mind that in this Budget the right hon. Gentleman increased the indirect taxation on tobacco and alcohol. Therefore, he put additional burdens on those to whom age exemption applies and it would have been some compensation for the addition in indirect taxation as well as an additional benefit in itself had the Chancellor proposed once more to increase age exemption.

7.15 p.m.

This is one of the new Clauses to which I referred in an interjection in the speech of the hon. Member for Ilford, South, when I said that certain new Clauses would undoubtedly have found a place in a Finance Bill introduced by a Labour Chancellor this year. I think that I can say with certainty that it would.

As regards the balance between the taxation of younger people on similar incomes and the level of age exemption, we must acknowledge that this disparity exists. It is inherent in the age exemption relief and it has been there from the beginning. It is, therefore, a question of degree. How far should we carry age exemption up the scale of income without giving some corresponding relief to younger people who may be receiving similar incomes and paying tax? A person over 65 years of age on £325 a year exactly is age exempt. A single person under 65 years of age on £325 a year would be paying about £6 4s. tax a year. A married couple receiving £520 a year exactly, one of whom was aged over 65, would be age exempt, whereas a younger married couple with no children on the same income would be paying £12 12s. tax a year.

This may be thought to be unfair to the younger people, but one must bear in mind two things. The first is that the younger people, who are often quoted for the purpose of this comparison, are not, in fact, on that income at all. The average married man is getting an income of more than £520 a year. The average single person is getting more than £325 a year. Tax may be just beginning for them at this level, but in many cases their incomes rise far above it, whereas the older person gets this relief only if his total income does not exceed the limits prescribed for age exemption.

We must bear in mind the relative conditions of younger and older people at about this point in the scale of income. First, we must bear in mind the normal conditions of retirement for the older person, because we are dealing, on the whole, with retired people. Very few others who are not retired could possibly come within the scope of age exemption. For most people, retirement means that they suffer a considerable reduction in income. Frequently their incomes are halved and in many cases more than halved.

The first impact of retirement is, therefore, a drastic reduction in income. If tax must be paid on a reduced income, it is of much more significance to them than if it has to be paid on a rising income or a higher income, as in the case of younger people. A pension may not keep in step with rising prices or rising standards of living.

To the retired person on a small income taxation is a very important factor. He sees in the amount of tax that he pays most desirable and essential things going out of the window. The amount of tax may not be comparatively high, but to him or her it matters a great deal.

There is nothing more moving than some of the letters which I have had in recent days from old people telling me of the problems of retirement. Hon. and right hon. Members opposite have missed grievously the mood of many people who have supported them in the past, but who now complain bitterly about the harsh conditions under which they have to live in retirement. If the Chancellor of the Exchequer were here, I should tell him of one letter which I received from a man who, I am sure, is after his own heart. This man says: I am politically a Conservative, but with strong Socialist leanings… This is the type of person with whom the Chancellor of the Exchequer would deeply sympathise. He gives a very encouraging message to my hon. and right hon. Friends and myself, because, he says: Your work for justice is not going unnoticed by the teaming masses of workers.

That is a very comforting thought. But what he is doing is to complain very bitterly about the unfairness of taxation, direct and indirect, amongst those who are struggling to maintain their standards on a drastically reduced income.

I had another letter from a night watchman, aged 76. He is getting £3 15s. pension and £4 10s. wages, which is £8 5s. The tax which he normally pays on that total weekly income is 17s. 2d. per week. The other week, another night watchman was off sick so this night watchman did an additional night shift for which he got £1 16s. extra. That week, out of a total income, pension and wages, of £10 Is. he paid £1 14s. 2d in tax, so for the extra night shift he got 36s. and paid out nearly 8s. of it in tax. I think that we can understand the feelings of old people living on the verge of privation and trying to maintain standards and live feeling that taxation bears too harshly upon them.

I have another letter from a man who said: I have been retired 18 years. I retired on half pay and it is still half pay and now I am treated as a single man because only recently I lost my wife.

He adds: Surely it is not wrong for me to wish to remain in my own home".

Nor is it. He explains in detail the burden that rests upon him as a householder, as a widower who is now treated as a single person and who does not get the benefit, so far as I can judge, of any age exemption.

I have a letter from another man aged 72. The tenacity that many old people preserve their independence and their useful lives to the end is remarkably moving. Here is a man of 72 whose pension is £3 7s. 6d. and he is doing a part-time job for which he gets £6 14s. 4d. He says: I am now getting £10 l1s. l0d. per week and I am too old to work much longer and I expect the sack any week.

He gives me a list of his expenditure. He is trying to keep a little home of his own and it is costing him £5 9s. per week in rent, rates 7s. 6d., gas 6s., light 5s., water rate Is. 6d. There is £6 9s. 2d. gone. He has to pay 10s. a week travelling expenses and he is left with £3 12s. 8d. for food and clothing and out of that he has to pay 13s. a week tax.

Of course, he says: Why tax pensions when a man is trying to keep things going without relief and help? If a man tries to work and keep things going, why tax the pension money?

We know the classic argument against taxing the pension money—that it would mean exempting the pension of Field Marshal Lord Montgomery as well as exempting the pension for an old man like this. But there is no reason at all why consideration for these old people should not extend to higher tax reliefs. I am sure that younger people would concede to the older person such disparity in taxes between them and younger people that might result from the proposals that we are making.

In 1961, the then Economic Secretary, now Minister of State for Education and Science, replied, on 14th June, 1961, to corresponding Clauses that we put forward at that time and which were resisted by the Chancellor as being inconsistent with his budgetary policy for that year. The following year, the Government did exactly what we had asked them to do the previous year, and the next year, 1963–64, the Chancellor brought forward off his own bat proposals to extend age relief. The then Economic Secretary dwelt for quite a time on the disparity between the level of taxation between older people and younger people that I have dealt with, and he also said, as a matter of doctrine: The whole concept of a progressive Income Tax is founded on using the size of a man's income as an indication of his relative ability to contribute to the needs of the Exchequer and the economy. I cannot see anything anomalous about a situation in which an increase of income leads to an increased tax liability, no matter whether the extra income comes from a pension increase or from some other source."—[OFFICIAL REPORT, 14th June, 1961; Vol. 642. c. 586.]

We would be prepared to listen to that kind of doctrine if our system of direct taxation were fairer than it is. But when this doctrine is being applied to a small increase in the retirement pension, and when ability to pay is being related to a few shillings extra a week in pension while capital gains of hundreds of thousands and millions of pounds go tax-free, we cannot possibly defend exacting from these old people every ounce of taxation on the ground that it represents their theoretical ability to pay.

I hope that I have described to the Committee that the lives of these old people leaves them with very little ability to pay. Their reduced income, the increasing need, in many cases, to rely on outside help, the additions to their personal and domestic expenditure through the wearing out of clothing, furniture, carpets and sheets, and the need for the little luxuries that they used to have when they were at work and which, in many cases, have been long denied, are human considerations which should surely appeal to the Chancellor of the Exchequer.

They should weigh far above the arithmetic of the fiscal effect of these proposals on his revenue, unless they are of such a magnitude that he could not possibly entertain them. Even then, I would say that the Chancellor must readjust his budgetary strategy to accommodate relief of this kind needed on such profoundly moving human grounds.

I sincerely hope that it will be possible for the Financial Secretary to give some favourable response to these proposals. I shall not dwell any longer on the reduction of the age of women from 65 to 60 to qualify for age exemption. The case for that is fairly obvious. In the case of men it is related to retirement age and in the case of women it should be the same. As regards small incomes relief, it is a corresponding relief which is usually introduced alongside changes in age exemption. That does not exempt people from tax. What it does for people under 65 whose incomes are within the limits is to extend to them two-ninths relief on investment income to give the benefit of earned income relief, so to speak, of the whole of their investment and other income. That is a very modest concession that is made to people, many of them widows still under pension age. who live on arinuities or fixed incomes of one kind or another and to whom this small concession in taxation is amply justified and badly needed.

7.30 p.m.

I feel strongly on these new Clauses. I assure hon. Members opposite that they are not electioneering. In my view, they are justified in the context of the present situation. I believe that the people would welcome being asked to set themselves new social targets and a new concept of the standard of living of old people. I believe that it will be one of the marks of our civilisation, for good or ill, how we treat old people in a period of rising incomes and of a so-called affluent society. Surely, we will not tolerate seeing people threadbare, miserable, unhappy and scraping every shilling they can to live while considerable expenditure is going on in other directions which to many old people must seem absolutely unnecessary.

I hope that we get a human response from the Government. This is a matter upon which my hon. Friends must surely ask the Committee to divide if we get no satisfaction from the Financial Secretary.

Mr. R. H. Turton (Thirsk and Malton)

With a good deal of what the hon. Member for Sowerby (Mr. Houghton) has said I am in agreement, but I think that he overlooked the history. It was not until the Conservative Government attacked the problem of giving age relief for old people that anything was done to relieve them. I do not cast that against the previous Socialist Government. The social conscience had not yet been aroused to it. It was, however, the fact that in 1951 old people were paying tax at the standard rate of 9s. 6d. in the £.

As the hon. Member for Sowerby rightly admitted, we have recently done a great deal to increase the age limits. In the last two years there have been successive increases. I do not think that my right hon. Friend the Chancellor of the Exchequer has missed the mood. He has been in the difficulty that, having given a successive increase for two years, if he were to go on doing it for another year it would look at though there had to be this increase every year. I think that there is a case for altering the age limit this year. The shift of society is such that the old people are losing in the race and the young are getting such large increases in earnings as put the old at a disadvantage.

I hope that when my hon. Friend the Financial Secretary replies to the debate he will help us with the problem of what should be the relation between the growth of the economy and the increase in the age limit. If we are working on a 4 per cent. annual growth, one would expect the age limits to increase by £12 10s. a year so that every two years there would be a £25 limit increase.

I hope that we can remove this question from the arena of party politics or of dividing upon it. Our intention should be to see that the extremely fine record of helping these small income groups by tax relief is kept up to date. The time has come for the limit to be raised by the amount suggested by the hon. Member for Sowerby. If so, however, clearly it could not be done again the following year. The Government might well feel that this is the kind of thing that they would do next year rather than do it three years running.

There is a case for raising the age exemption limits this year because the economy has boomed forward so far. The factor of whether £2 million is involved need not weigh with either side. The fact that these old people have a few shillings more in their pockets each week would not make for inflation. I ask the Committee and the Government to look into the question of the taxation of people with small incomes who are over pension age. We have not dealt with this problem sufficiently clearly or taken enough trouble to inquire into the difficulties of people living on pensions who have got to an advanced age.

I should like more work to be done by a committee of inquiry into the whole position to see whether the right way of tackling the problem is, as we have done, by successive improvements in successive Budgets ever since we introduced this relief in, I think, 1958. I hope that my hon. Friend the Financial Secretary will be able either to give us a concession tonight or, alternatively, to say that he will look into the matter again before Report to see what help can be given.

Mr. J. T. Price (Westhoughton)

I am pleased that an opportunity now presents itself to have an orderly debate on the subject of new Clause No. 6, "Income tax: exception in respect of certain widows' pensions." When the Committee met a few days ago under your chairmanship, Sir Robert, you had the unpleasant duty of whistling me offside. None of us likes to endure that indignity in the House of Commons, even at the hands of such a good-natured Chairman as yourself. I ventured, however, to ventilate the matters which are set out in new Clause No. 6 during the discussion of Clause 12 of the Bill, which relates to the general levying of Income Tax.

I welcome this opportunity to spend a few moments on the question of how we treat widows in certain circumstances. I do this not from any wish to use emotional arguments or to torture the Committee with the kind of sentimentality that can sometimes surround these questions. I raise it purely as a practical question since the House of Commons has the duty of levying taxation yearly on its citizens. I want the Treasury Ministers seriously to consider the anomalies which are now created in addition to the more widespread anomalies which my hon. Friend the Member for Sowerby (Mr. Houghton) has dealt with so eloquently.

I refer, first, to the war pensioner. The House of Commons and our forerunners for many years have accepted the principle on all sides, regardless of party divisions, that a man who has suffered injury in the service of his country and who is thereby qualified for a war disability pension should receive that pension free of taxation. Whilst I have heard some of the pundits who take a theoretical view of fiscal and revenue matters argue that the House of Commons, which originally introduced this principle, made a mistake in granting tax-free pensions to our war veterans, nevertheless the House of Commons, rightly or wrongly, has accepted the principle.

It would be unnecessary for me to go over the old grounds of whether or not these pensions should be tax-free, but the anomaly that I wish to pinpoint is that which arises in the case of widows. While Parliament has freed the pensions payable to the veterans of war from taxation, as soon as the status of the pension changes and it becomes payable to the veteran's widow, very strangely and paradoxically and, I think, quite indefensibly the Treasury under existing legislation proceeds to levy taxation on the pension. That is wrong.

A man injured in war may enjoy his pension for some years at the 100 per cent. rate or some other fraction according to the degree of disability, and ultimately he may die prematurely as the result of the continuing effects of his injury. Immediately the pension becomes payable to his widow, she is confronted not only with widowhood and all the economic problems that a widow has to meet unless she has extensive private means—and at a time when her need is greatest and when she is facing the situation of a lower income for the family—with a note from the revenue officers and taxation people telling her to aggregate the pension with any other income that she has.

I do not want to labour the point. It is self-evident. I must plead some responsibility in the matter, for I have been in the House a good many years, but I am astonished, looking at the record, to find that, so far as I can trace, there has never been a debate about this most striking anomaly. Therefore, I plead very sincerely with right hon. and hon. Gentlemen who control the Treasury to give very serious thought to the anomaly and to see whether we cannot in this opulent State, this "go as you please" society, in which many people are having it pretty good, make some gesture to the people who are not having it as good as some others.

The technical expressions which are on the Notice Paper to give effect to what I want to do may need reference back to the Acts of Parliament mentioned, but I think it would be unfair and irregular if we did not in making this plea to the Treasury couple with it a similar plea on behalf of widows who have suffered misfortune through losing their husbands on the industrial front. I know that you, Sir Robert, in view of all the other matters before us, would not wish me to spend time going into the detailed provisions of the Industrial Injuries Act, 1946. But under that Act, in certain circumstances women who become widows as a result of their husbands being killed in industry are entitled as a legal right to a pension of about £200 a year. That is not very much. It is about £3 17s. 6d. a week. There are also allowances for children in certain cases.

But let me take the case of the widow who has no children. She may be middle-aged when calamity descends on the family. She finds herself with a £200 a year pension, not a pension given ex gratia by the Welfare State but one in respect of which there has been a contract of insurance, with contributions paid by the husband at a fairly high rate. There are far too many in this country, including some hon. Members I am sorry to say, who do not yet draw the necessary distinction between benefits dispensed to those in need without any contributions being paid and benefits for which a contract of insurance exists between the citizen and the State.

Just now my hon. Friend the Member for Sowerby was referring to certain aspects of National Insurance. National Insurance contributions now run at about 11s. a week for a man who is not paying the additional graduated pension contribution—about £28 a year. When he makes up his taxation return, the citizen very often cannot find out what he is paying in National Insurance contributions and what allowance is made because of the effect of P.A.Y.E. and the complicated tables which very few people understand. The citizen does not always understand that, though he pays £28 a year as his contribution, he does not receive a tax concession on that basis. Some concession is given in the P.A.Y.E. figures and the tables, but only a small part of the £28 is free of tax. But when those contributions mature in the form of a death benefit or any other benefit and are taxed in the way they are in the case of widows—I should be out of order if I sought to argue this on a wider basis in respect of other benefits—I say that that is taxation twice over, because the original contributions were not relieved of tax except to a very small extent.

7.45 p.m.

Therefore, I ask that we should consider these matters jointly. We should consider, first, the war widow, who is placed in the unfortunate and unfair position of having to aggregate any other income that she has with the pension. No one suggests that a widow could live on £4 a week in modern conditions and keep a house together. She must try to get some other source of income, and as soon as she does she finds that her pension is aggregated with the other income and taxed.

I hope I have said enough to show that this situation ought to be reviewed, particularly at a time when so many people are getting away with so much. I do not wish to expose myself to the charge of using intemperate language, but I do not think it would be wild to say that so long as this opulent society con- tinues to tolerate a situation like this it is sacrilege to press the last penny out of these unfortunate citizens who so often have to live on the borderline of poverty.

Sir Henry D'Avigdor-GoIdsmid (Walsall, South)

The hon. Member for Sowerby (Mr. Houghton), when he moved the new Clause in his characteristically moderate fashion, indicated the expense in which the taxpayers would be involved if these Clauses were to be accepted. The hon. Member for Westhoughton (Mr. J. T. Price), in a very eloquent and attractive speech, did not go as far as that. I suspect that the very modest figures mentioned by the hon. Member for Sowerby would not in any way apply to the much more far-reaching proposals of the hon. Member for Wssthoughton. If the Member for Westhoughton will forgive me, I would like to turn my attention to the other Clauses.

L sympathise enormously and agree to the full with what was said by my right hon. Friend the Member for Thirsk and Malton (Mr. Turton). This form of relief—relief for the aged with small incomes—is one that any of us with a constituency life must be continuously aware of and of the hardship behind it. This is a point which is unmistakable and appreciation of it is not limited to any party. Indeed, as my right hon. Friend was at some pains to point out, all the spade work in this has been done by this Administration and their predecessors on this side of the Committee. In this case we can certainly claim not only to have the right ideas, but to have put them into practice. What the hon. Member for Sowerby is advocating so eloquently and sincerely has already been done twice by a Conservative Chancellor of the Exchequer. Therefore, we on this side of the Committee have no cause to hang our heads in this respect.

Clearly, the most vulnerable element of the population are the old, the retired. They are the most affected by the concomitants of a growing activity. They do not join in it and they are in danger of being left behind. It is clearly our responsibility to see that they do not get left behind. Equally—and this is a fair point—if we are to make these reliefs every year three years running, it becomes a Budget "must" that every year there must be a further relief for old persons. This is a precedent which I do not think can be set up.

Those of us with some responsibility for dealing with charitable funds get very agonising questions put to us and are always in the position of seeming to be hard hearted. Here, however, on this question, we are not dealing with charitable funds, but with resources contributed to the Exchequer by taxpayers. In dealing with applicants for them—and there are innumerable classes of deserving applicants—we really have to have some order of priority. The order of priority that the old living on small incomes should get a relief was clearly established by the Chancellor of the Exchequer last year and the year before. I do not think that any injustice is being done if this year we say that there are other classes who must have a look in.

Although I see the point behind these appeals we must face the fact that if people are in the class of being taxpayers they are still above the level of those who are not. When we are dealing with this problem there is, therefore, a strong case for saying, "We agree that you have a very strong claim and that you should have full consideration. That is why we did this for you last year and the year before. At the same time, we cannot accept that this must be done every year and we cannot establish a precedent of that sort."

My hon. Friend the Financial Secretary has the unwelcome task of replying. I hope that he will take account of the words used on both sides of the Committee about the urgent consideration due to old people with small incomes. I must tell him that I shall not be transferring to the opposite Lobby if he takes the view that this is not a concession which he can make, but I would like him to say that he will think again.

Mr. H. Rhodes (Ashton-under-Lyne)

I am very proud to follow right hon. and hon. Members who have spoken in the debate, but I think that the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) will agree that being on an organisation which today receives many appeals from the most-hard-done-by members of the community is an experience that it would do a lot of people good to have. I have been associated for some time with Roehampton as a trustee and as honorary treasurer for the Roehampton Trust Fund. Every fortnight our eyes are opened as to the trends in our society. The folk who apply are the weakest in our community. Ex-Service men's dependants do not have interests as powerful as business or trade unions to bid on their behalf for what is going. It is not possible for them to make the same noise that other people make for an increased share in any improvement in the standard of living.

We have come a long way from the days when an employer used to take into consideration the pension that a man got when he paid his wages. I remember as a young man that happening on a considerable scale. It is a long time since Is. 6d. was awarded for the loss of an arm, too. But it is not a long time since we have seen reluctance to enable people disabled or bereaved to maintain a reasonable standard by keeping pace with the increased cost of living. In 1919 the second Select Committee on Pensions recommended that widows of war disabled Service men should have their tax remitted. Forty-five years is too long a time for nothing to be done about it.

My hon. Friend the Member for West-houghton (Mr. J. T. Price) put his finger on the problem when he said that it is illogical to concede to a war pensioner that his money should be tax-free and then, as soon as he dies, put it in a different category known officially as "augmented income "for his widow. We are the only major country in the Commonwealth that does not allow the widows of disabled men to draw their pensions tax-free. Canada adopted this practice a long time ago. Australia and New Zealand followed and in 1962 the concession was introduced in the Isle of Man. It was brought in some years ago by Germany and Austria. Germany lost the war, but she can treat her widows a damned sight better than we do here, and it is about time that that anomaly went.

8.0 p.m.

It is argued when Governments are replying to debates of this sort, or to representations made to them by various bodies, that the pension given to a Service man for his disablement is be- cause of his physical hurt and that in some magic way when he dies the responsibility somehow ceases. But the wife of a disabled man also suffers a physical hurt. She goes through the days when he has difficulties in his employment. After the holocaust of World War I, the economic circumstances of this country were such that it was terribly difficult for a disabled man to get a job. He was not wanted. That was the time when the wife was standing by him and when she, too, was suffering.

Hon. Members can go to Roehampton Hospital now and see the results of World War II and World War I. Every now and again, these men have to go back, especially if they were prisoners in the Burma Road episode. They are constantly going back and coming out again. They get no advancement in their jobs, because their bosses know very well that they are subject to having a lot of time off and that they cannot be relied on regularly. There is also the difficulty in that family that the wife has to visit her husband in Roehampton. A man cannot be expected to remain there absolutely secluded and cut off from society.

We have not faced up to our responsibility to our disabled and their dependants from both world wars, but particularly from the first one. It is only now and again, when consciences quicken and people are moved and feel that they can afford it that concessions of this sort are made.

I agree with the right hon. Member for Thirsk and Malton (Mr. Turton) that it is time that we got down to a humane study of this problem to see what the implications are and how to deal with it on a definite and permanent basis. I put it on record that Germany can afford to pay her war widows and not deduct tax. For one reason or another—perhaps beacuse of the fear of anomalies—we do not, and it is high time that we did. If the Government regard the pension as paid for a physical hurt and say that the character of the pension is altered when it is paid to a widow, I say that that argument is not valid.

The widow's pension is not related mathematically to the income of the household at the time of a man's death. For instance, the widow of a general gets more than the widow of a captain or a private. A widow's pension should be regarded as compensation for the loss of a husband's companionship, earning power and presence in the family. On those grounds I appeal to the Financial Secretary, if he cannot make the concession tonight, at any rate to make some effort to give us some encouragement. There is no doubt that these people—relics of two world wars as many of them are becoming—are not receiving their just due in a society which is as prosperous as ours.

Dame Irene Ward (Tynemouth)

I always have to thank the hon. Member for Sowerby (Mr. Houghton) and other hon. Members on either side of the Committee for putting this case extremely moderately and very humanly. I am always delighted to add what pressure I can on the appropriate Treasury Ministers, and I hope that some result will follow.

My right hon. Friend the Member for Thirsk and Malton (Mr. Turton) pointed out—and I am very proud to acknowledge it—that the whole basis of the new Clauses which we are now discussing emanated from a Conservative Government. I often talk very strongly to some of my Ministerial colleagues, but I always like to pay tribute to the present Minister of Defence who, as Chancellor of the Exchequer, first initiated the taxation concessions for those with small fixed incomes. On that score I found him a very good Chancellor and always extremely sympathetic.

I am bound to add that when my right hon. Friend became Minister of Defence he was not: so good at dealing with the Chancellors who succeeded him. It is one of our problems that if we get a sympathetic: Minister who is transferred to another Ministry, he does not find it so easy to continue alterations which he had instituted when he had the power to deal with taxation. However, I am always grateful to the Minister of Defence for his initiation of many of these changes to the benefit of the elderly. I listened with great interest and in complete disagreement to my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid). I thought that he was preparing a cushion for my hon. Friend the Financial Secretary, but I am now glad that I did not rise to speak earlier, for I can now deal with what my hon. Friend said. He said that we could not make a concession of this sort three years in succession. I hope that the Financial Secretary will not use that argument, for increases in the cost of living for these people go up year by year, and if we are to deal with one aspect, we must deal with the other. I think that it is fair to say that.

The cost of things which matter to the people living on small fixed incomes continually rises. If my hon. Friend the Member for Walsall, North takes the view that one cannot do everything every year, he must tell me and the Committee what he proposes to do to enable these people with limited incomes to increase them. One cannot make life fair, nor can one make life equal. Some people have more luck in life than others do, but there is one important factor in the lives of these people who live on small fixed incomes. They have no possibility of increasing their incomes, whereas young people, if they are lucky, and if they have the initiative and the brains, can go up the ladder and increase their incomes.

The problem facing the elderly who are living on small fixed incomes is how to extend their incomes to meet the ever-increasing cost of living. That is the point to which I want my hon. Friend to address himself.

The cost of heating, of electricity, of gas, and of coal rises every year.

Mr. Cyril Bence (Dunbartonshire, East)

So do rates and rents.

Dame Irene Ward

I thank the hon. Gentleman for being so enthusiastic in supporting me. Rates go up, and so do rents. How are these elderly people to meet their increased rate obligations? I do not know whether my hon. Friend the Member for Walsall, North, with his good financial brain, can tell us how to limit the rise in rates every year. I like to knock down arguments when I do not think that they are reasonable, even if they are put forward by my hon. Friends. I can deal with Ministers, because I can get at them fairly often, but I cannot always get at my hon. Friends who put forward false arguments.

My hon. Friend the Member for Walsall, North does not understand the situation as well as my right hon. Friend the Member for Thirsk and Malton does. When my right hon. Friend was at the Ministry of Pensions and National Insurance, he was a very sympathetic Minister, and he had some very good ideas, but I cannot remember which Chancellor of the Exchequer downed him. The trouble is that one cannot get at Treasury Ministers. They are encased in a sort of cocoon, and one cannot get at them. They do not have to deal with Departmental difficulties. They do not have to deal with individual people. That is the real problem, and that is why I want my hon. Friend on the Front Bench to tell me how, unless the House of Commons does something to help, the people we are talking about can increase their incomes.

My right hon. Friend the Minister of Power, in his debonair way, announced that the Chairman of the National Coal Board had decided that people can buy coal at summer prices which are considerably lower than those charged during the winter months, but, of course, the price is to rise even higher next winter. How are these people who live on limited incomes, and who have to budget carefully every week, to find the additional money to buy extra supplies of summer-priced coal, always assuming that they have somewhere to store the coal?

8.15 p.m.

The Treasury looks at the global situation of our affluent society and says that there is no problem, and, of course, the Opposition did not do so well in this respect, either. Hon. Gentlemen opposite often advocate spending tremendous sums of money. This afternoon I was not allowed to ask a supplementary question after the Chancellor of the Exchequer, I think it was, said that rates would probably rise every year. If the Opposition happened to win the election, which heaven forbid, I do not know whether rates would come down. I accept that many hon. Gentlemen opposite are as enthusiastic as I am to try to do something to help these people, but the things which they have promised will mean an annual rise in the rates, and the people living on small fixed incomes will have no chance of keeping pace with the rise.

A person is entitled to earn £15 interest a year free of tax on money deposited in a savings bank, but how can people living on small fixed incomes find that much money to tie up in the Post Office? The answer is that they cannot. The difficulty is that these old people are full of anxiety. They are straining every nerve, and economising in every way, to try to eke out their incomes. Telephone charges continually rise. Transport costs continue to go up. We cannot get a satisfactory solution to the suggestion for concessionary fares. Here is an opportunity to give these people some help. The answer which comes glibly from my Front Bench is that these people represent a limited section of the community.

One thing that I have learned from being in the House for a long time is that one must not go for too much at one time. One must just make little digs now and again, and if one can make a step forward in the appropriate direction, in the long run one does much better than talking in these great, grand, and overall terms. Here is an opportunity for the Treasury to give something. The policy of the Conservative Party is give now, so let us get on with it.

I try to be realistic. I get "fed to the teeth" with party politicians, and that goes for the other side more than for my own. They will not get down to the little details, and I am sure that that is because Treasury Ministers have to deal with big problems. I am certain that when there is a meeting between Ministers of great Departments, with responsibility for obtaining money for the things that are necessary in the national interest, these small details are put at the bottom of the agenda, and that because Ministers are tired at the end of the day they do not approach the problems facing these elderly people in a humane way.

Here is something that we could do to help the widows of men who lost their lives in the two world wars and, indeed, in industry. Quite often Prime Ministers in my time have said, "Tell the people." If we do tell the people we are often surprised at the sympathetic response we get. When the Chancellor increased the taxes on wines, drinks and cigarettes it was very irritating to those living on small fixed incomes, but I am sure that those people would far rather have rate relief, because rates have to be paid whereas one does not have to buy cigarettes or drink.

We have good, bad and indifferent people in all classes of society. We have good, bad and indifferent people in the House, whether among the Opposition or on the Government side. If a person does not pay his rates the local authority says, "We will take out an order for eviction." The private landlord does the same. No doubt they feel that it is in the interests of the general community that they should collect what is fair. But will the Treasury Minister tell us how, unless we accept some of these Amendments, these people are going to increase their incomes so as to meet the increased cost of living?

I am devoted to the present Chancellor of the Exchequer. He is a very nice man, but I wish that I could get at him more often. This is the pleasant side of having been in the House of Commons for a long time. I would not mind having a bet that when the Treasury Minister replies he will say, "Of course, my right hon. Friend will look at the implications of these new Clauses." If we look back over the years, however, we find that whenever any Treasury Minister has been hard put to it he has always said, "I will look at this." These Ministers are sympathetic when one talks to them. They are sympathetic in the human frame, but when they get into the old Treasury they forget all about that. I have just had the most fierce correspondence with the present Chancellor. When Ministers say that they will look into the matter we all think, "This is absolutely marvellous. This is a genuine chap, who will really do things. Next year something will happen." But he never does anything. That is the whole point.

Mr. Arthur Lewis (West Ham, North)

Just Tory promises.

Dame Irene Ward

It is much worse on the other side of the Committee. Let us face it. This side has been able to keep the economy reasonably sound. [Laughter.] Oh, yes. I well remember 1951. [HON. MEMBERS: "Oh."] Oh, yes. I have; been in this place for many years. I remember 1951 quite well, when there was pressure to raise retirement pensions. The Labour Government would increase the pensions only of those who had been born before a certain date, because they said that we did not have the money to do more than that.

I remember those days very well. I remember the pressure that was brought to bear, and what happened. It gave me a greatly increased majority in my division, because I did not fail to tell my constituents what was happening. Before money can be spent it has to be provided. We provide the money. All that we are arguing about is how it should be spent. The party opposite did not provide the money. That is the difference between the Opposition and ourselves.

The Chancellor has written me some nice letters, in which he has said, "I always look at these matters year by year." That is not the reaction we get from the Treasury spokesmen in the House. I have always believed that when we have made out a good case something will be done as a result in the following year. It is true that during the last few years we have had increases in the amounts of money that can be obtained without having to pay Income Tax, as my hon. Friend the Member for Walsall, South has pointed out, but we are still waiting for taxation relief for the spinster living on the housekeeper's allowance.

The last time this question was raised, when the case was well put by many hon. Members, the Chancellor said, "Of course I will look at this." A jolly good case was made out, and when I went to see my right hon. Friend face to face I thought that we had won. I came to hear the Budget speech this year and I waited for my little sop—and it never came.

That is what I object to in Ministers. When they are on a spot they speak in a sympathetic and charming way, and we think that we have made out a jolly good case and that the House has spoken for democracy. But democracy gets forgotten. It does not matter whether or not the House speaks with one voice; the Executive cannot do so. It is not interested in democracy.

My right hon. Friend the Member for Thirsk and Malton and I have fought a lot of battles together. I still have a lot of battles to win. When my right hon. Friend speaks I hope that others who have not had as much experience as he has will listen to what he says. I do not know whether I should be in order if I chanted in the House, but when I hear the Treasury Minister winding up I would love to chant—I have a singing voice, like a corncrake—"How are these people to extend their incomes to meet the difficulties of modern life in an affluent society unless we do something to help them?"

That is the theme. The Tory Party is very keen on themes, and here is a jolly good one for them. Let us have it, "How can those living on small fixed incomes, with no possibility of expanding their incomes, meet the increased rates, the increased heating costs, the increased rent and the increased transport costs?". The only prices which have gone down are for those things in which one can economise. There are some things in which one can economise but others in which it is not possible. I put this theme, "How are these people to expand their incomes?".

A long time ago I had the pleasure of introducing the first Private Member's Bill which gave the right to local authorities to pay pocket money to people who went into institutions—now known as Part III accommodation. I am glad to say that Part III accommodation has improved out of all recognition and that old people who are ill and go into such accommodation are extremely well looked after. Whenever we have increased National Assistance rates, the pocket money for these people has been increased, and I am glad that that is so.

If the people for whom we take full responsibility may always receive an addition to their pocket money, why cannot the same consideration be given to those people who try to keep their own homes going and try to be independent? These people have served the country very well in the past. But for many of them we should never have won the war. Why cannot they have the same consideration as those for whom we take full responsibility?

My hon. Friend the Treasury Minister has a lot to answer. I am looking forward to having all these new Clauses accepted.

8.30 p.m.

Miss Margaret Herbison (Lanarkshire, North)

I am sure that we all enjoyed the contribution of the hon. Lady the Member for Tynemouth (Dame Irene Ward), but some of us were aghast when in the middle of her speech she said that she was sick and tired of party politics, because at the beginning of it, in the middle of it and two-thirds of the way through it she was ramming down the throats of those on this side of the Committee her own Tory Party philosophy. I do not mind that at all, because I shall for ever try to drive home Labour Party philosophy, but I never say that I am sick and tired of party politics.

The hon. Lady was very generous. She said that she knew that there were certain hon. Members on this side of the Committee who were as enthusiastic as she was in support of the people who live on small fixed incomes. I began to wonder whether I was blind or had not read the Notice Paper properly. I looked at it again. New Clauses Nos. 3, 4 and 5 all deal with people on small fixed incomes, but I did not find the hon. Lady's name to any of them, nor did I find the name of any hon. Member opposite attached to any of these three new Clauses.

Mr. A. Lewis

Is not my hon. Friend aware that the hon. Lady will vote for the new Clauses? She does not have to put her name to them. The main point is that she intends to vote for them.

Miss Herbison

I think that it is important to make the point that all the names attached to these new Clauses are of hon. Members on the Front and back benches of this side of the Committee.

I turn to the speeches of the right hon. Member for Thirsk and Malton (Mr. Turton) and the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid). The hon. Member for Walsall, South said that there- would be no injustice at all if the Chancellor this year felt that he could do nothing to help those on small fixed incomes or to give greater relief to persons over 65 years of age who are living on small incomes. I disagree with him profoundly on that point. These people suffer just as much from the rise in the cost of living as does any worker in the country. Indeed, I feel that if we had a separate cost-of-living index for the older people we should see that the rise in the cost of living hits old people much harder than it hits younger people. If we could say that we would call a halt to the rise in the cost of living for old people, there might be some sense in what the hon. Member for Walsall, South said, but there is no sense in his claim that there would be no injustice if this year the Chancellor of the Exchequer felt that he could not accept the new Clauses.

These are the people who have worked hard all their lives. No matter how reasonable they are in their outlook, it is difficult for them to understand that a Government who cannot find £2 million or £3 million, which I understand would be the amount involved in implementing new Clause No. 3, refuse to do anything at all about capital gains. People who are already very wealthy can make £1 million overnight and not a penny goes to the Chancellor of the Exchequer.

Mr. Kenneth Lewis (Rutland and Stamford)

That is not true.

Miss Herbison

Of course it is true. If I had the time, I would give way to the hon. Gentleman, but some of his hon. Friends have spoken for so long that I will not give way, because others wish to speak. The hon. Gentleman knows full well that millions of £s have been made overnight and not a penny of Income Tax has been paid.

Mr. Lewis

Not true.

Miss Herbison

It does not matter how often the hon. Gentleman says "Not true", because there are even people on his side of the Committee who will confirm what I am saying.

Again, these reasonable old people find it difficult to understand a Government who allow such huge expense accounts to firms but refuse the modest increase for which we ask. It would turn out to be an increase in income if the new Clauses were accepted.

In new Clause No. 4 we ask that the age of women should be lowered to 60. When the age of 65 was originally chosen by the Government, was it chosen because 65 was considered to be the normal retirement age? If that is why it was chosen, the normal retirement age for women is 60. Many women are forced to retire at 60, even though they wish to continue to work. When they retire, they suffer a drastic cut in their income. They may just have the basic pension of £3 7s. 6d. a week, as it is at present, and a small occupational pension. If the retirement age is the criterion, the retirement age for women is 60, and new Clause No. 4 should be accepted.

My hon. Friends the Members for Ashton-under-Lyne (Mr. Rhodes) and Westhoughton (Mr. J. T. Price) made an excellent case for new Clause No. 6. What is the reaction of the Treasury to that new Clause?

The hon. Lady the Member for Tyne-mouth made a great song about the rise in rates. I shall be partisan now. The biggest item in the rate burden is education. The Labour Party has a policy on education which will relieve the rates of some part of that burden.

I hope that the Financial Secretary will comment on the suggestion made by the right hon. Member for Thirsk and Malton. He said that the Government were aiming at an annual increase in our national prosperity of 4 per cent. and he suggested that that might be the basis for each year raising the fixed income limit. There is a good deal in his suggestion, but before the Government decide on it I should like them first to look at the present limit to see if it is sufficiently high. That should be done before they make a decision to raise it to meet this 4 per cent. increase in our national prosperity.

We are told that the Conservative Government have raised the basic pension five or six times since taking office. I am not concerned with that, and any increase the old people receive has my support. We must decide whether £3 7s. 6d. is now sufficient for an old person to live on. The answer must be "No". That is why, although I am very much in agreement with the suggestion of the right hon. Member for Thirsk and Malton, I want the Government, before accepting it, to consider whether the present figure should be raised.

Mr. K. Lewis

I am glad to have this opportunity to comment on the remarks of the hon. Lady the Member for Lanarkshire, North (Miss Herbison), because she would not give way to me in her speech. She presumed on one point and was incorrect on another. She presumed when she said that my hon. Friends and I could not have any idea what it was like to live on a small fixed income—

Miss Herbison

I did not say that.

Mr. Lewis

If the hon. Lady will read her speech in tomorrow's OFFICIAL REPORT she will see that she did. Secondly, she said that people could make £1 million overnight.

Miss Herbison

Cannot they?

Mr. Lewis

I do not want to make too much of that, except to say that it is not correct. The present Government have brought in a capital gains tax and if people should make £1 million overnight, or within six months, they must pay tax on the money. This shows that the hon. Lady's statement was incorrect.

It is, of course, true that people make capital gains, but it must be remembered that they are providing a great deal of work for people in industry and elsewhere. In any case, many of the people employed in those industries are themselves very large holders of equity stock through unit trusts and so on and they, too, make capital gains, although on a more modest scale. Doing this is a national pastime, and the hon. Lady knows it. It is also a good thing for the economy.

Since coming to the House of Commons I have noticed that pleas are always made to Chancellors after every Budget. Each year we spend a great deal of time discussing, on the present Budget, what should be done in the next and I thought that my hon. Friend the Member for Tynemouth (Dame Irene Ward) was a little unfair to herself when she said that over the years, if one considered what Treasury Ministers had done, it would be seen that they took no notice of the representations made to them in Parliament when pleas were made by hon. Members in Finance Bill debates. My hon. Friend even applied those remarks to pleas which she had made.

8.45 p.m.

Dame Irene Ward

If my hon. Friend will forgive my saying so, it is he who is now falling into error. I never said that they never did. I paid tribute to the whole introduction by the present Government of special reliefs in respect of age. What I said was that when a Treasury Minister gets into a difficult situation he always falls back on saying that he will examine the position. If my hon. Friend likes to have a cup of coffee with me I will let him know what the present Chancellor of the Exchequer said a year or two ago, and he will find that the Minister has not taken any action at all on that.

Mr. Lewis

Nevertheless, although it is obvious that Chancellors do not meet every plea made to them, pleas have been put by many hon. Members on both sides, including the hon. Lady the Member for Lanarkshire, North, to Chancellors, who have met them in some subsequent Budget. Our record in such matters as we are now discussing is very good.

I have, however, a certain amount of sympathy with new Clause No. 5. I do not know whether my right hon. Friend is prepared to do anything about it on this occasion, but I hope that he will bear it in mind for the future. I believe that people on low incomes come into taxation at too low a level, and there is a lot to be said for taking away a certain amount of tax at least every two years. I know that we have done it in the last two years but we might well look at the possibility of doing it every year, because each year—not even every second year—wages go up.

It is important to remember that young and middle-aged people can look forward to continual increases in wages and to advancement in their jobs. That does not apply to retired people, whose only hope is either an increase in their basic pension, whether it comes from the State, or partly from the State and partly from their firm, or from the Services, or from a mixture of pension and private income. As their increases are limited, we should bear those people in mind—

Mr. Walter Monslow (Barrow-in-Furness)

Then would not the hon. Gentleman agree that what he should do is to put to the Minister exemption at a higher rate?

Mr. Lewis

I want the Minister to consider raising the level year by year. I believe that at present anyone on a pension of about £11 a week still pays about 5s. a week in tax, and I do not think that such a weekly income justifies that amount of tax.

Further, it is a little doubtful whether the return is worth the collection. The Treasury should try to assess how far this small amount is worth collecting. There is a certain amount of administration and paper work involved, and the collection of 5s. a week, even acknowledging the fact that it is collected yearly, is a doubtful exercise from a purely administrative point of view.

Many of my hon. Friends have already pointed out that we have a progressive record in this direction. I am sure that that will be recognised in the country, and that it will be acknowledged that if we are returned to office well shall continue to have a progressive record.

On the subject of the widows and the disabled who are affected by the other two Clauses, I was interested in the speech of the hon. Member for Ashton-under-Lyne (Mr. Rhodes). I consider him to be a good friend of mine, and he ought to look upon me a good friend of his, because we fought each other in a General Election and he won. I am sorry that he is not now in his place. I could not go as far as he did in dealing with the widows and the disabled. We should not get ourselves into a position where we acknowledge that the widows and the disabled are completely incapacitated for any work. We should not pay our pensions purely on the basis, as the hon. Member seemed to suggest, of some sort of compensation. There are many widows and disabled who go out and earn their living. They are to be congratulated on doing that. They make an effort and do extremely well.

I do not want to see the Government paying out pensions on top of a good earning capacity. I believe that both political parties will have to consider in the next few years where they are going on this whole social issue. This is the important social decision which must be made. We must use our financial resources in paying pensions and other social benefits on the basis of need.

Mrs. Slater

A means test.

Mr. Lewis

I did not say on the basis of means. T said on the basis of need. If we are to make the best use of the money available, and if we are to deal rightly with these people who must have help in this affluent society, we must give it where the need is greatest and not spread it so far across the board that the people who need help are not able to get sufficient of it.

Mr. Bence

Would the hon. Member care to look at the Notice Paper and read the new Clauses? We are not asking the Chancellor to give anybody a pension. We are asking Him to relieve low incomes and pensions from taxation.

Mr. Lewis

I am well aware of that. I was discussing the Clauses which deal with the widows and the disabled. I was making the point that it does not necessarily mean that because they are widows or are disabled they must be given a particular treatment if they themselves can earn money. We know that many disabled people earn good incomes, and we know that many widows earn good incomes and make progress in their jobs so as to increase those incomes.

The hon. Member for Sowerby (Mr. Houghton) said that he and the party opposite were not electioneering in putting down these new Clauses. I accept that they are not. Taking these Clauses with the second and third new Clauses, dealing with the reduction of Purchase Tax, the hon. Member can have it the way he wants. I accept that he is not electioneering on these Clauses and that he is quite prepared to find some money to meet whatever may be the cost involved in them.

The hon. Member went a good deal further when he was talking about cost, because he said that even if the cost represented a very large slice of taxation my right hon. Friend the Chancellor of the Exchequer should recast his whole taxation system to meet it. But all we get from the hon. Gentleman and his right hon. and hon. Friends is a suggestion that we should pay more to meet these three needs and, at the same time, reduce taxes by means of the measures which they proposed in their two new Clauses dealing with the Purchase Tax. This is the old argument of the last General Election. They will find the money from somewhere, but they do not say where. They will reduce taxes and, at the same time, find money for the kind of need expressed in the three Clauses that we are now discussing.

Miss Lee

The debate this evening is about whether or not it is reasonable, given the state of, Britain's economy, to ask the Government to make certain concessions to widows, the disabled and others who are having a particularly hard time.

I object to the form of reasoning used by the hon. Lady the Member for Tyne-mouth (Dame Irene Ward) because it is quite improper to talk as though individual Ministers made decisions. That kind of picture is very amusing, but we all know that, whether they be junior or senior Ministers at the Treasury or whether they be individual Departmental Ministers, decisions are collective Cabinet decisions, and if any individual Minister objects strongly to the collective decisions of his Cabinet the honourable course for him is to resign.

The question before us is, are we getting our priorities right? Once more, we hear the fallacious argument that the division of wealth in this country is just about perfect under the present Government and that, before we can consider any humane amendments, we must wait for an expansion of the national economy. I am all in favour of an expansion of our economy and I believe that it can be achieved, but, at any given time, we are entitled to look at how our nation's wealth is being spent and ask the people to judge whether or not it is in keeping with sound economics and plain fair play.

For me, the most interesting figures which have emerged from the Budget debates have been not so much those reflecting movements of wages, profits and the rest from year to year but those which, in the recollection of the Committee, were brought forth, sometimes in speeches, sometimes in answers to Questions, reflecting trends covering a number of years. We got the figures of the various trends in the 12 years ending 1962. These were given in answers from the Government's own Ministers, assisted by their civil servants, and they showed that, in those years, there was an increase in wages of 101.6 per cent. but, in the same period, there was an increase in profits of 169 per cent., there was an increase in rent and rates of rather more than 169 per cent., and that the ordinary industrial worker making his extra contribution towards National Insurance found the amounts he paid going up by as much as 190 per cent.

9.0 p.m.

We state firmly from these benches that it is manifestly unjust to allow the gap between rich and poor not to be narrowed, not to be made stationary, but actually to be increased under Conservative Governments during the past 10 or 12 years. That is precisely what has happened. A great deal of hardship could have been avoided. There is nothing financially unreasonable about our new Clauses.

The hon. Member for Rutland and Stamford (Mr. K. Lewis) said, quite properly, that a person with a wage of about £11 a week would be paying 5s. or 6s. Income Tax. But he is well aware that the lower the income the higher the proportional contribution made to the Chancellor of the Exchequer from indirect taxation. A rise in the price of bread, milk or meat means very little to those budgeting in terms of £1,000, £10,000 or £20,000 a year. But if one is budgeting in terms of a widow's pension or a disabled Service man's pension, or if one is living on a small fixed income, such increases can be terrifying.

It is, therefore, no use pretending that there is not a very sharp division between the two sides of the Committee. It is no use pretending that those living on small fixed incomes would not find it a benediction if they had no longer to worry about doctors' prescriptions. There is a certain impatience among hon. Members opposite when this subject is mentioned, because 2s. an item means very little to them. But, as has been stressed, it is the older people with no means of earning additional money who are hardest hit by this. It is the older people in the main who have to spend most on medicines, doctors' prescriptions, and so on. That is one thing with which we should deal at once. In that sense we are genuinely trying to help those living on small fixed incomes. I ask hon. Members opposite how they can at one and the same time pretend to befriend these people and not take advantage of the opportunity to deal with these matters.

Another point made by hon. Members opposite concerns the concessionary fares for old-age pensioners. All the medical evidence tells us that one thing from which many people suffer is immobility. The cost of the bus fare to get to the opposite end of the town, or even to reach the town, is such that they have to think twice before they can move. People in Glasgow, for instance, where they have cheap concessionary fares, know what they mean in terms of health and of interest in life.

Hon. Members opposite ought to know these facts as well as we do. The hon. Member for Rutland and Stamford reproached us in the opening sentence of his speech when he said that we on this side talk as though he and his colleagues do not understand the problems of ordinary poor people. Surely we are entitled to ask him with all courtesy, "Do you really understand them?"

Mr. K. Lewis

If I can answer the hon. Lady, I think that I should do so. I believe that a lot of my hon. Friends are in a similar situation to mine. I happen to have two old people myself who have a very small fixed income.

Miss Lee

With all due respect, that is an irrelevant answer. I have never made a personal attack on any political opponent of the ground that he was not compassionate in dealing with invalids and old people who came within his immediate orbit. It is a great luxury to be able to give; to those whom we love and to those close to us, but the great austere public test is, are we prepared to regard all old people as our parents and all children as our children, and are we treating all those who have suffered particular cruelties in life—those who have been wounded in the wars and in industry and those suffering from chronic bad health—as we treat those nearest and dearest to us?

My charge against the Government is that they are not doing this; that over the past decade and more they have allowed profits to rise too much in advance of wages; that they have given to the workers with one hand and taken away with the other; that they have their priorities wrong, and that they will continue to have their priorities wrong because their paymasters will not allow them to have our kind of priorities.

Therefore, I shall go into the Lobby in support of the new Clause. I will not be impressed if an hon. Member opposite here or there goes into the Lobby with us, because the judgment is not an individual speech or an individual vote but where our priorities and faith lie in dealing with these broad questions. The Government will fail us tonight for precisely the same reasons as they have failed us for more than 12 years.

Mr. James Griffiths (Llanelly)

I offer my apologies to my hon. Friends that I was not in the Committee when these new Clauses were moved, but I have listened to the speceh of my hon. Friend the Member for Cannock (Miss Lee) and others, including that of the hon. Member for Rutland and Stamford (Mr. K. Lewis), and there are one or two words that I should like to say to the Chancellor and to the Chief Secretary who, like myself, had the privilege of serving as Minister of National Insurance.

I think that in the field of social policy there is a great deal of concern about the people who are covered by these new Clauses—people on low fixed incomes—and in particular about the fact that our existing provisions under the National Insurance Act and the National Assistance Board, with its grants and allowances, are failing to discover large numbers of old people who are living in dire poverty.

There have been researches made into this matter and perhaps these figures will help us to consider at least some, if only a part, of the people with whom we are concerned—the people on low incomes. Researches have been made by very competent people who tried to ascertain what the Minister of Pensions and National Insurance so far does not know and the National Assistance Board does not know: how many elderly people there are in this country in receipt of retirement pensions under the National Insurance Act who if they went to the Assistance Board this week and it assessed their income and related their income to the present scales, would receive assistance.

In other words, they are living under the income which we have provided by our regulations under the National Assistance Act as the minimum subsistence level. There are large numbers. I do not know whether the Chancellor or the Financial Secretary would care to deny these figures, but competent observers have estimated that there are at least three-quarters of a million people in that category—old people who are living at a rate below the National Assistance rate and who are not going to the Assistance Board to ask for a grant because they feel mat it would be undignified. The last thing in the world that we should do is take away from them their dignity.

I was very glad to hear that my young friend Mr. Brian Abel Smith is one of Professor Titmuss's able team who is to make an investigation into the problem of poverty among old people. What we are asking for is a very small contribution towards this problem, but it would be a contribution and it would help at least some of them. I hope that very shortly we shall have a new Parliament and that it will deal very quickly indeed with this problem of the hundreds of thousands of old people whom we miss entirely and who are living in dire poverty.

I was glad that my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) raised the question of the disabled pensioner and, for example, the widow who receives a pension under the National Insurance Act when her husband is killed by accident at his work, or dies as a result of disease contracted whilst at work and scheduled under the Act. My hon. Friend suggested that that widow's pension should be exempt from Income Tax.

I do not object to the fact that the hon. Member for Rutland and Stamford is not now present—I have not been here myself during part of the debate—but I am not sure whether the hon. Member appreciated what he was saying. He spoke, for example, about those who receive pensions under the Warrants for disablement while in the Services and those who receive disablement pensions under the Industrial Injuries Act. The whole purpose of the scheme was to provide for payment—to use the official phrase—for loss of faculty, to be measured by a medical board, which decides that the person who is disabled, either in industry or in war, has suffered a loss of faculty—it has nothing to do with loss of earnings—and his pension is awarded at a percentage rate of the loss of faculty which he is adjudged by the board 1o have suffered. I understood the hon. Member for Rutland and Stamford to propose that all those pensions should be based on need. This would be a complete departure from everything which has been done in this direction by the House of Commons for years.

I support my hon. Friends in their new Clauses. I have been disturbed recently to find that there are several hundred—possibly more than 2,000—men who receive benefit under the Industrial Injuries Act whose benefits are so low that they have to ask for assistance. This disturbs me greatly. I had the privilege of piloting the Act through Parliament in 1945. It was the first Act in that new Parliament. It was a great departure. I know something about this subject. For the first time in the history of the country, and possibly in the history of any industrial country, we transformed the scheme, and the worker now pays a direct contribution towards it. My hon. Friends propose that some relief should be given to these people.

This debate has been about a problem which will be with us very much in the months ahead. I think it was Galbraith who said that one of the dangers of the age in which we live was that we may create a society in which there is the private affluence of some people and public squalor in the same society. There are a large number of people who are living on standards lower than those laid down by the House of Commons for the payment of National Assistance. This is one of the major social problems which must be tackled by the new House of Commons in a few months' time.

In the meantime, as a final gesture, surely it is not too much to ask the Government to accept all these new Clauses, each of which would bring relief—not a great deal, but some—to these people who are living on very low incomes and for whom life must be a terrific battle to try to make both ends meet. In that way, we would bring relief to some of these people who are having a tough time in our society.

9.15 p.m.

Mr. Bence

I am grateful to my right hon. Friend the Member for Llanelly (Mr. J. Griffiths) for taking up the point made by the hon. Member for Rutland and Stamford (Mr. K. Lewis) about the reason for granting pensions, but I was hoping that my right hon. Friend would also refer to another statement that was made by the hon. Member. I am sorry that he is not present, because I shall quote him. I do not want to misquote him, as I do not like to misquote anybody. I must, however, quote a statement by the hon. Member which I regarded as significant.

The hon. Member justified large free capital gains and capital appreciation because, he said, this meant that there was full employment. He said that this gave plenty of employment to people, and thereby he let the cat out of the bag. In our modern capitalist system of society, when we have full employment some people get capital appreciation from it and pay no taxation on it. This is one of the grave dangers to our economy. There are far too many people who are able to rake off capital appreciation arising from our scientific and technological progress and full employment.

The Chancellor of the Exchequer, who is the Chairman of the N.E.D.C., and the Prime Minister have put forward the principle that our people must be governed by a guiding light. The guiding light in respect of wage earners and others is that their wages and purchasing power can increase only in accordance with the growth of the economy. But what about the people living on fixed incomes? I have been told many times that peope living on small incomes from investments are suffering from the speculative mood in which people are buying and selling investments for capital gain and not income.

Many elderly people have told me that they suffer from what has been happening particularly in the last six years. They believe that they are suffering because people are operating for capital appreciation instead of for income out of investment because on income they have to pay tax, whereas on their capital appreciation they pay no tax. The small saver suffers considerably as a result of this. But no guiding light is given by the Chancellor in that respect.

The only guiding light is to the wage earner, who is told that he must not seek wage increases. What about the sick? What about retired people who suffer under our system of society in which we are trying to work efficiently and economically and which we are trying to improve? There is something which one has seen since 1945—indeed, since 1938—in any business or Department of State. One can see it if one reads the Reports of the Estimates Committee. Ever since I came to this House, in 1951, every Department of State and every section of business in the country has budgeted to spend more the following year. In every Estimates Committee Report one can see the trend throughout the Departments of State; if they spent £50 million last year, they will have to spend £55 million next year. All of them budget for an increase in expenditure next year because they know the graph is upwards all the time and that the value of money falls every year.

Most sections of the community can overcome the fall in the value of the unit of money by various pressures which they can exercise—by trading associations, through agreed prices, by organised trade unions, by professional organisations and so on. By all sorts of pressures in various directions they can to a certain extent maintain their material standards by overtaking by means of increases in income the fall in the value of money. People who cannot do that are those on retirement pensions and small fixed incomes. Those who, by investment in Government stocks, or in equities or other forms of investment, get a small fixed income in their old age have no power, no control. They cannot increase the real value of their money.

There is one way in which the Chancellor can help them. I would not advocate a sudden deflation in order to increase the value of money units, because that would probably lead to a calamitous situation for the country and an economic upheaval which it could not stand. I would rather have a little inflation than deflation. Nevertheless, as long as we accept a small annual infla- tion or fall in the value of money, if we agree to have a guiding light generally for salary and wage earners, we should accept a guiding light for pensioners.

The State pension can be increased and such measures as concessionary fares introduced. But people living on small incomes from investments can do nothing to recover what they are losing in terms of real value. I ask the Government to consider this because society is leaving behind a large section of the population—a section which has perhaps given our society its present standard of living.

These are the people born early this century who saw through two world wars and the difficult days between them. They have made a great contribution to the life of the nation. They showed tremendous courage in hanging on in those difficult years. Now they are in their sixties and seventies and are suffering in our affluent society to a terrible degree. This is their reward for thrift, courage and tenacity. They are being ignored in a mad scramble by every section of the community for what it can cream off in an inflationary system.

We all agree that this is a difficult situation and I hope that my right hon. and hon. Friends will divide the Committee. I hope that hon. Members opposite who feel as passionately as we do about this unfortunate section of the community who get little relief and compensation from the affluent society will come into the Lobby with us and force the Government to accept this Clause.

Mr. J. J. Mendelson (Penistone)

The hon. Member for Walsall, South (Sir H. d'Avigdor Goldsmid) invited the Financial Secretary to say "No" to the Clause. He provided his hon. Friend with an introductory basis for what he should say. He hoped that the Financial Secretary would say that these were desirable aims, but that the Government could not do anything about them this year. He added that, if the Financial Secretary said that, he would not be too disturbed and disappointed. I have known the hon. Member fighting much more fiercely for other causes that have more to do with concessions he thought desirable on certain occasions during debates on the Finance Bill, and he was then not so mild-mannered.

The Financial Secretary should understand that he has to address himself not only to a general argument, but to a particular case. I support, in particular, new Clause 6 which deals with the exemption from Income Tax of the pensions of certain widows and which has been explained with a wealth of detail and knowledge by my hon. Friend the Member for Westhoughton (Mr. J. T. Price) and my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes).

This is not an argument which can be met by some general reference to being in sympathy with what is being asked for. It will have to be answered by an explanation, which the Treasury is obliged to give, as to why this anomaly has not been put right. I hope that the Financial Secretary will not follow the advice of his hon. Friend the Member for Walsall, South, but will agree with the vast majority of hon. Members who have taken part in the debate that there is a first-rate case for exemption under new Clause 6, as under the others.

What is involved in new Clause 6 is something particularly to do with the Treasury and our system of taxation. Obviously, a debate of this kind is bound to be wide and without the historical background, which has been explained, the demands would not be properly comprehensive. There are many ways of dealing with some of the problems which have been reported to the Committee today and we well know that the Treasury may say that many of these things might be desirable, but come under the heading of pensions or compensation schemes to be dealt with by other Ministries.

The Financial Secretary will not get far if he confines himself to that argument, because, I repeat, although I wish to concentrate on this one Clause, that the background to this problem is even more important than the precise technical details. However, the hon. Gentleman has to address himself to these details, and the first essential of new Clause 6 is that it deals with those who have been injured in war or industry and who as a result are in receipt of a pension.

We know that in many of these cases the total income of the family while the head of the family in receipt of the pension is still alive is small, and that it is always a struggle for the family, even while the head of the family is still alive, and that many of the pensions are small and some very small. But it is not just the general case of the difficulty which that family faces when the breadwinner has been injured in the Armed Forces or in industry, sometimes injured early in his life and career, sometimes at a time when the continuation of his career is made quite impossible for the major part of his life.

There is now a tragic anomaly in our taxation law that although the income of the family while the husband was still alive and in receipt of a pension was small, on his death the Treasury applies an altogether different principle to his widow. As long as the recipient of the pension himself is alive, the pension does not count for taxation. It is exempted for very good, sound, moral reasons.

We know that the general principle by which the Chancellor of the Exchequer puts his Budget together has to do with the general economic situation and, nowadays, is as much a lever of economic policy as for raising revenue and disbursing public money. But it has never been denied that in addition to the economic background there is a principle of equity to which generations of hon. Members have always paid the greatest possible regard.

9.30 p.m.

This principle is involved in new Clause 6. After the recipient of a pension has died, his widow in receipt of the pension to which he was entitled or, as in many cases, only a part of the original pension, now has to pay tax. This is as unreasonable a position as anybody could contemplate, and very often the reality of the situation is even worse. I have had cases in my constituency, as I am sure other hon. Members have had in theirs, which show that from an economic point of view the period following the husband's death is a particularly difficult one for the widow. Many concessions which were allied to the husband's job cease, or are so seriously reduced that they lose their value. At a time when a widow faces many difficulties in the home, and when she may have to cope with a number of problems with which she did not have to deal before, the Treasury applies a different principle to the new recipient of the pension.

Many important arguments have been put forward today in support of these new Clauses, and I fully support them, but I think that if a case had to be made to ask the Treasury to look again at this kind of anomaly I would say that there was great force in what we are trying to do in new Clause 6. I hope that the Minister will address himself seriously to this problem, and that in spite of the encouragement in the wrong direction which he has received from the Devil's advocate in the form of the hon. Member for Walsall, North he will see the wisdom and force of our case and accept at least new Clause 6.

The Financial Secretary to the Treasury (Mr. Alan Green)

We have had quite a lengthy debate on these four new Clauses. I am not in the smallest degree complaining about that, and I think that I have been fortunate enough to be able to listen to every word of the debate. In my view the debate has been very restrained throughout, and I suspect that my answer will be equally restrained because I see no reason whatever for answering the one or two party points which were made.

I think that the intervention of the right hon. Member for Llanelly (Mr. J. Griffiths) deserves a separate reply, and the first point that I must make is that all four new Clauses relate to one form or another of Income Tax relief. One is going to be able to give relief only if the recipient is in a position to pay Income Tax. Consequently, and the right hon. Gentleman may have noticed me shaking my head while he was speaking, those undiscovered folk living below the level of National Assistance rates could not benefit from any single one of the reliefs proposed in any one of these four new Clauses. I am afraid that that has to be my answer. They are really not germane to the problem on which the right hon. Gentleman's heart is so understandably set.

New Clause No. 3 is of a more truly general character than the other three new Clauses which bear on more particular and rather separate problems. New Clause No. 3 follows, and seeks to add to, what has been properly described today as a piece of Conservative reform carried out over past years in this particular area of allowances. My hon. Friend the Member for Tynemouth (Dame Irene Ward) was good enough to point this out. She has her own way of driving Ministers to do more of what she wants, and I do not object to that either. But it is a fact that over the last several years Chancellors have done more than merely consider points of this kind; they have often acted as well. I am glad to have the chance to reinforce what my hon. Friend said about that.

Taxpayers in the over-65 band, qualifying for age exemption, receive more favourable treatment than do taxpayers under 65, as the hon. Member for Sowerby (Mr. Houghton) said. He had his way of pointing it out, and perhaps I may help the illustration by saying that if a person is below the age limit for exemption he has a personal allowance of £200 if he is single, and the effect of age exemption is, in effect, to raise that sum, for a single person over 65, to £253. There is already a differential of £53, putting it in that way, for a single person and a comparable differential for the married couple over 65. In their case the differential works out at £85 a year. The question posed by the new Clause is whether the differential in favour of the elderly is adequate in this year.

The hon. Member for Sowerby was fair enough to say—and if he does not like my paraphrase of what he said he can tell me so—

Mr. Houghton

I believe that I am right in saying that when the Chancellor last year increased the personal allowances and at the same time increased the age exemption he narrowed the disparity between the younger and the elder taxpayer and did not widen it. That was because the increase that he gave in personal allowances was higher, in proportion, than the increase in age exemption. Last year, therefore, the trend went against the old people.

Mr. Green

I think the position was held, rather than improved. The hon. Member may have a point there, but I am not sure. The point is that this differential has been built in in the past few years. Hon. Members on both sides can agree about that. The question is whether that differential should be widened in this year.

The argument in favour of that action has been persuasively put by hon. Members on both sides of the Committee tonight. Perhaps I will not please my hon. Friend the Member for Tynemouth, but I have no other position to adopt at this Box—I think that the whole Committee will understand this—than to say that my right hon. Friend is considering the question whether the differential is wide enough in this year. I cannot and shall not anticipate his decision, but there is one point that I should like to make. I have deliberately left it to the end, because I do not wish to rest a great deal of argument on it. The Clause is technically defective, because it does not provide for consequential changes in marginal relief. If anything were to be done in the spirit of the Clause its present wording would not do. I must give the Committee that technical advice.

My right hon. Friend is considering the matter. It is more than a matter of words. He not merely has sympathy with it; it is a possible development of the system of allowances that has been built up by his predecessors and himself in recent years, and I can promise the House that his consideration of it is a genuine and real one. But I am afraid that I cannot anticipate it at this Box tonight.

Dame Irene Ward

May we have an answer for Report? I just want that assurance for the record.

Mr. Green

My right hon. Friend will consider it between now and Report. I am quite willing to have that on the record.

I come to new Clause No. 4. It is not clear on the face of the wording whether the new Clause is intended to apply solely to spinsters. It could be held to apply to married women, with their husbands still alive reaching the age of 60. I am not at all clear from the wording to whom it is intended to apply—whether to the narrower definition of spinster or not. If it is to the wider definition, I must advise the Committee that it would arouse a lot of valid criticism from those whom I might call the non-beneficiaries. If the wider definition is intended by the Opposition—and I am not clear about that—then a widower who had the misfortune to lose his wife when she was 59 would not get the benefit, whereas the man whose wife had lived to 60 would get the benefit. This is not the kind of provision which we ought to incorporate into our tax system, but in any event I do not believe that in these kinds of tax relief we ought to introduce this sort of discrimination—and frankly this is a discriminatory proposal—in favour of women who would get five years' benefit in claiming this allowance.

Mr. G. R. Mitchison (Kettering)

The hon. Gentleman seems to be troubled as to the kind of woman to whom this refers. The short answer is that it refers to the same kind of woman as the kind to whom Section 13 of the Finance Act, 1957, applies. With great respect to the hon. Gentleman, I thought that that was obvious.

Mr. Green

In that case I must point out—and I can only pass on the advice which I have received—that it may well be held to apply to a married couple and not just to a single person.

Mr. Mitchison

A married couple is not a woman. It is a woman and a man.

Mr. Green

With great respect to the hon. and learned Gentleman, the greatest possible respect to him, the system of taxation and allowances in this country is such that in the case of a married couple allowances attach to them jointly. This is a difficulty which he has not resolved. If he likes to take the new Clause away and redraft it in order to resolve that difficulty, it might be easier to deal with it. Now that the defect has been pointed out, the Opposition could well do that.

Mr. James Callaghan (Cardiff, South-East)

If wet took that trouble, which we should be happy to do, would it be worth our while?

Mr. Green

I could take refuge in the inability to anticipate my right hon. Friend's reaction to that. No, I do not think it would be worthwhile in the sense in which the hon. Member put it to me.

May I give my underlying reason? I am given a particular form of discrimination, which would be added to if the Clause applied other than to spinsters. In any event, there is this discrimination—in terms of a tax relief which might be claimed—against men and in favour of women. I am fortified in giving this answer by the Royal Commission who in paragraph 204 of its second Report expressed itself as being against such a discrimination. I must advise the Committee that my right hon. Friend is against this discrimination and is unlikely to change his; mind about it

Miss Herbison

I asked whether the age 65 had been chosen because of retirement. Whatever the Minister may take out of this discussion, he has at any rate learned that the Clause applies only to women—to spinsters and to widows. Many of them are forced out of work by retirement rules at the age of 60, and they suffer great hardship because of that. Will he take that point into account?

9.45 p.m.

Mr. Green

I follow the hon. Lady's point. It would be very difficult if one started to import into a tax law which does not already have this species of discrimination in it a discrimination between men and women based on different ages of retirement. I am not denying that women can retire earlier than men legally, but it would be impossible to deny also that, if we introduced this piece of discrimination, which is what it is, against men, the criticism from the men would be very violent indeed, and it would be justified. I am against the importation of discrimination, because I do not think that at the end of the day it does any good. One creates more anomalies than one gets rid of. Again, I must advise the Committee that my right hon. Friend is not at all enamoured of new Clause 4.

I come to new Clause 5. It is true that there are some people under 65 who, because of poor health, have to live on a small investment income. The Clause as drafted would benefit that number of people. In fact there would be very few of them. Once again, the benefit comes only if the claimant has an income above the starting point. The truth is that the major benefit here would go in very small amounts indeed over several hundred thousand people. This may be a very good reason for accepting the Clause, that, although the relief it would give would be very small in amount, it would benefit a substantial number of people.

However, I am not absolutely certain that this side-effect is appreciated. Many of those who would get relief would, as the Clause is now worded, be young people at an early stage of their careers who happened to have some investment income in addition to their earnings.

Mr. Callaghan

How many?

Mr. Green

I cannot tell the hon. Gentleman how many. I am saying that this is a somewhat capricious result of this proposal. I do not know that the proposal would be too valuable, particularly in this year. The small income relief is relevant only for people who are under 65, because the age relief for those over 65 is more generous. It has a higher income limit. Therefore, I am bound to advise the Committee that, in a year in which concessions in terms of direct taxation are, to say the least of it, thin, I would put this one pretty low down on the list of priorities. My right hon. Friend would not wish to consider it between now and and Report. It is a matter of priorities.

I come to new Clause No. 6. As I expected, this proposal has brought forth expressions of very sincere sympathy and sentiment. I do not for one moment question the sincerity with which they have been advanced from both sides of the Committee. There has been some misconception, certainly in the speech of the hon. Member for Penistone (Mr. Mendelson). The pension awarded to the disabled soldier or the man disabled by an industrial injury is very largely compensation for his personal inability to go on working.

Mr. J. Griffiths

Under the old Workmen's Compensation Act the compensation was for loss of earnings. The whole concept of the Royal Warrant for war pensions—indeed, the National Insurance (Industrial Injuries) Act was based on the same concept—was that the disablement pension, assessed on a percentage up to 100 per cent., was awarded for loss of faculty and was not affected in any way by what the man or woman could earn afterwards. It is important to make this distinction.

Mr. Green

I am not dissenting from what the right hon. Gentleman has said. Indeed, there is no conflict between us on this issue. I am pointing out that if a soldier is disabled and discharged because he is wounded and unable physically to continue his particular form of employment, or if he is handicapped for any other employment, what he is clearly getting is a form of compensation. But if he dies and his widow so to speak inherits an entitlement to income—it must be realised that this is what she is inheriting; an entitlement to income—it becomes difficult to assess or exempt from tax the amount she receives on any basis other than that it is income. This is where one gets into great difficulty and I want to illustrate the sort of difficulty I have in mind.

Mr. Mendelson

The Financial Secretary said that as long as the husband is alive this is something that he has received. Does not the hon. Gentleman agree that it is a joint household? The fact that the husband has not been able to earn a living in the way he would otherwise have done had he not been injured is as hard a blow to the wife as to the husband and, therefore, there is no reason to alter that on purely technical grounds once the husband has died.

Mr. Green

I have the greatest sympathy with that sort of argument of sentiment.

Mr. Mendelson

It is not a question of sentiment.

Mr. Green

With respect, it is. It is understandably an argument of worthy sentiment.

Mr. J. T. Price

rose—

Mr. Green

I want to illustrate the sort of difficulty I have in mind.

Mr. J. T. Price

The Financial Secretary is making much of the technical argument that it is difficult to make this distinction in principle. If it is so difficult, how does he explain that our closest colleagues in the Commonwealth, Canada and Australia, have already done it and that among the European nations Germany, Austria and some of the other defeated countries have also accepted the case which my hon. Friends are arguing? For a British Minister to say that we cannot, with our technical knowledge, do the same would appear to indicate that something is wrong. It certainly indicates to me that the hon. Gentleman's argument is unconvincing.

Mr. Green

The hon. Member seized that opportunity to add a second part to his original speech. I do not blame him, but he might have given me credit for wishing to come to the point he raised, for I was just about to do so. The fact that other countries, whether Germany or Canada, have decided to go along with this argument of worthy sentiment and produce this form of tax exemption does not, and certainly should not, necessarily prevent us from considering whether or not this is, in its own terms, the right thing for us to do. When someone else has done something, that is no reason for not considering whether it is the right thing for us to do.

The cost of the provisions in this new Clause would be small, if it could be confined to the particular exemptions stated. It might cost £1 million a year, though it is very difficult to estimate. But, if the new Clause were passed, what would we have to do in the following circumstances, which I trust are not too far-fetched? I put the case in order to show the type of anomalies that could be created. In a collision between a vehicle driven by a Service man and a vehicle driven by a civilian, both men are killed. Under the new Clause, the widow of the Service man would not get her pension tax free, but the civilian's widow might. That is the sort of anomaly we would run into, and there are plenty of others that would most certainly be created. What about the widow of a man who is drowned seeking to rescue a child? Is not she as deserving a case as any?

I believe that one would be driven inexorably to the argument that widows' pensions, as such, should be exempt from tax. I am quite certain that one would continue to find case after case left out under the new Clause which would be bound to demand strong sympathy as soundly and worthily based on sentiment as is the present argument. One would be driven to exempt all widows' pensions from liability to tax—[Interruption.] That is an argument on principle that might well be made. My objection to the new Clause is that it does not make that argument, but simply leads inexorably to it.

As I say, the cost in a year would be about £1 million, but that is not really the ground on which I base my argument. My case is that the new Clause would produce so many anomalies that it would inevitably lead to an irresistible demand for the relief, to be progressively widened, and thus become expensive. This is the sort of thing that, though put forward for a worthily sentimental reason, might well destroy the balance, not of this Budget but of future Budgets, and I could not advise the Committee to accept it.

Mr. Loughlin

Before the hon. Gentleman sits down, will he deal with the intervention of my hon. Friend the Member for Westhoughton (Mr. J. T. Price)? The Financial Secretary said that it did not necessarily follow that because a country in Western Europe had pursued a taxation policy similar to that proposed in this new Clause Britain should do likewise. Will he explain what might have happened had the Government led us into the Common Market?

Mr. Green

The case of Germany has been cited. I cannot tell the hon. Member whether all the other members of the Common Market have adopted the German treatment, though I do not think that they have done so. It will not have escaped the hon. Gentleman's notice that each Common Market country still has its own separate Government, and often quite a different tax code, and in all respects continues to behave as an individual country. Therefore, the hon. Gentleman's question does not arise. It was a good shot, but it missed the target.

Mr. Callaghan

The Financial Secretary's reply is typical of Treasury reasoning—lucid, clear and sterile. Having listened to everything he had to say, I think that we are driven back once again by this circular route to a very difficult position because of the Government's failure to act as they should have done in respect of the small incomes at the bottom of the Income Tax scale.

10.0 p.m.

A number of the Clauses which have been put down are devised to try to force the Chancellor to exempt more incomes at the bottom of the scale. The Chancellor and the Financial Secretary seek to prove that it would create a number of anomalies if the new Clause 6 were singled out, but the way to avoid those anomalies is to increase the exemption limit for this type of income. This is the case which I have argued year after year, and at times it seems to be partially recognised when the Government put up the exemption limit.

It would be ridiculous for us, as was said on the new Clause 3, to exempt Field Marshal Montgomery's old-age pension from Income Tax with the most deserving cases. The way to avoid the anomalies would be to put up the exemption limits. The Financial Secretary could very well have met the case made in the new Clause 6 if only he had agreed to new Clauses which we have moved year after year in an attempt to get the exemption limits raised.

It is because the Government have refused to push up the exemption limits that my hon. Friends are compelled to put down Amendments to single out and highlight particular difficulties, and then we are met with the circular argument by being asked to look at the anomalies that we create. Therefore, the Treasury always wins. There is a substantial case for considering the new Clause 6 in relation to raising the exemption limits. There are far too many people at the bottom of the Income Tax scale who are still being taxed and who should be exempt. It is an extraordinary argument to hear advanced from the benches opposite, as we have heard it, that this might upset the future balance of the Budget.

Mr. Green

I was pointing out that these particular proposals were not going to upset the future balance of the Budget, but that if one were driven on, in the way that I suggested one would be, the future balance of the Budget would be upset.

Mr. Callaghan

I have heard the argument that Clause 3 would cost £3 million, and although the phrase was not that it would unbalance the Budget it was suggested that it was typical of the irresponsibility of the Opposition in that we were always putting these things forward without counting the cost.

The hon. Member for Rutland and Stamford (Mr. K. Lewis) said that we were putting that forward when we were asking for a reduction of the Purchase Tax. If budgeting were an exact science there would be something in this argument about unbalancing the Budget, but if anybody looks at the Financial Statement he will see that it is worse than trying to fill up the football pools. The last Statement published with the Budget showed mat last year the Chancellor collected £51 million more in revenue than he expected. He spent £112 million less than he had expected to spend and taking various other figures, the right hon. Gentleman's arithmetic at the end of the day was out by £209 million.

When I hear the argument that we cannot afford concessions of this sort because this might upset the balance of the Budget I would point out that it is the Chancellor who upsets the balance more than anybody else. If he gets within £100 million of the right figure he thinks that he is doing very well. When we are asked to tie ourselves on the proposition whether the Chancellor has withdrawn the correct amount from the consumer this year, my answer is that it is absurd to ask that of us when the Chancellor himself does not know within £100 million or £200 million whether he has done the right thing.

I see no reason why we should commit ourselves to the reasoning by which the Chancellor feels bound. I reject the argument that, when we are talking about a number of these new Clauses, we have to demonstrate where the revenue should be raised from, when the Chancellor himself has no idea within £100 million whether his revenue or expenditure figures will be right.

Mr. Turton

The hon. Gentleman has not been here for the debate, or he would know that no one on this side of the Committee has used this argument. He is right off the point.

Mr. Callaghan

I have sat through most of the debate and it so happens that, while the right hon. Gentleman was away at dinner, his hon. Friend the Member for Rutland and Stamford made exactly that point, and it has been reproduced in other ways during the debate. Moreover, it is constantly made on a number of similar occasions. In relation to this Clause, it is quite irrelevant.

The Financial Secretary told us that the Chancellor is to reconsider new Cause 3. Is this part of the budgetary provision which has been made for an increase in pensions? Is this the way in which the Chancellor intends to do it? For the life of me, I cannot understand why the Chancellor has to wait until the Opposition put down a new Clause dealing with exemption limits for old people before he can tell the House of Commons through the mouth of the Financial Secretary, that he will consider the matter.

If ever there was a justification for a Committee stage, this is it. We have got to the position where the Chancellor, who has had all year to think about it, waits until we are half an hour or so before a vote and then says, "All right; I think there is a good point in what you say, and I will consider it". We have been putting this point year after year. What has happened to make him change his mind now?

Mr. Green

I trust that the hon. Gentleman does not wish to be too unfair. We have already agreed on both sides that this particular form and structure of exemption has been built up by Chancellors on this side of the Committee in recent years. What I said was that the Chancellor had considered, and was still considering, whether he had got the balance right in this particular year for this particular relief.

Mr. Callaghan

This gets more and more unconvincing. Why could not he do it when he presented his Budget? The process of preparing the Budget starts in October. What is the magic in the period between 14th April and today which leads him to say that, in the light of the Opposition's new Clause, he will now consider whether he has got the structure and relationship right between the exemption limits and the marginal reliefs for old people?

I am delighted that my hon. Friends' pressure has resulted in this. [HON. MEMBERS: "It is Faversham."] I do now know whether it is Faversham or not. But let us be clear, and let the country be clear, that it has been from this side of the Committee, with certain honourable exceptions, that the pressure has come. I say to the hon. Lady the Member for Tynemouth (Dame Irene Ward) that to her vehemence we have added a logical and rational background of fact from which the Chancellor has been quite unable to escape. I include the hon. Lady in the roll of honour in this matter. I only wish that she had signed the new Clause.

It is important to get it clear that from this side of the Committee we have exposed the logical fallacy of the Chancellor's position on these allowances by prosecuting the matter year after year.

Dame Irene Ward

I am very grateful to the hon. Gentleman for the nice things that he has said. The point is that we have got the money. He has not provided it, or said how he would.

Mr. Callaghan

I am very glad to hear that the hon. Lady has the money.

Dame Irene Ward

I said ''we'' —on this side of the Committee.

Mr. Callaghan

I well remember the occasion when the hon. Lady sat on the Government Front Bench one evening. She is still not a member of the Government, although she was there on that occasion.

I can only repeat what I said before. When the Budget is so much out of balance, as it is at this moment, and the figures are completely irrelevant in relation to the sort of relief we are talk-

ing about, it is nonsensical to argue as the Government have done.

I have no doubt that my hon. Friends ought to prosecute this matter now to a Division. We have beaten the Government in argument. We have forced them to concede that they will reconsider this matter before the Report stage. We shall certainly put the matter down again ourselves, though I hope that we shall have some concession from the Government by that time. My hon. Friends can conclude that, as a result of their speeches, their time has not been wasted. I believe that there will be profit and benefit out of this for a great many old people and my hon. Friends can conclude that they have done a good day's work.

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

The Committee divided: Ayes 168, Noes 198.

Division No. 102.] AYES [10.10 p.m.
Ainslay, William Fletcher, Eric McKay, John (Wallsend)
Albu, Austen Foley, Maurice MacKenzie, J. G.
Allaun, Frank (Salford, E.) Foot, Dingle (Ipswich) McLeavy, Frank
Allen, Scholefield (Crewe) Foot, Michael (Ebbw Vale) MacPherson, Malcolm
Awbery, Stan (Bristol, Central) Fraser, Thomas (Hamilton) Mallalieu, E. L. (Brigg)
Bacon, Miss Alice Galpern, Sir Myer Manuel, Archie
Barnett, Guy George, LadyMeganLroyd (Crmrthn) Mapp, Charles
Baxter, William (Stirlingshire, W.) Ginsburg, David Mason, Roy
Beaney, Alan Gourlay, Harry Mellish, R. J.
Bellenger, Rt. Hon. F. J. Griffiths, David (Rother Valley) Mendelson, J. J.
Bence, Cyril Griffiths, Rt. Hon. James (Lianeliy) Millan, Bruce
Blackburn, F. Hamilton, William (West Fife) Milne, Edward
Blyton, William Hannan, William Mitchlson, G. R.
Bottomley, Rt. Hon. A. G. Harper, Joseph Monslow, Walter
Bowden, Rt. Hn. H. W. (Lelcs, S. W.) Hayman, F. H. Morris, John (Aberavon)
Bowen, Roderic (Cardigan) Henderson, Rt. Hn. Artbur (RwlyRegis) Neat, Harold
Boyden, James Herbison, Miss Margaret Noel-Baker, Francis (Swindon)
Braddock, Mrs. E. M. Hill, J. (Midlothian) Oliver, G. H.
Bray, Dr. Jeremy Hilton, A. V. O'Malley, B. K.
Broughton, Dr. A. D. D. Holman, Percy Oram, A. E.
Butler, Herbert (Hackney, C.) Holt, Arthur Oswald, Thomas
Boston, T. Hooson, H. E. Owen, Will
Callaghan, James Houghton, Douglas Padley, W. E.
Carmichael, Nell Howie, W. Panne, Charles (Leeds, W.)
Cliffe, Michael Hughes, Cledwyn (Anglesey) Pearson, Arthur (Pontypridd)
Coillck, Percy Hughes, Hector (Aberdeen, N.) PentJand, Norman
Corbet, Mrs. Freda Hunter, A. E. Prentice, R. E.
Craddock, George (Bradford, S.) Hynd, H. (Accrington) Price, J. T. (Westhoughton)
Crossman, R. H. S. Hynd, John (Attercllffe) Probert, Arthur
Cullen, Mrs. Alice Irvine, A. J. (Edge Hill) Pursey, Cmdr. Harry
Dalyeil, Tarn Jenkins, Roy (Stechford) Rankin, John
Darling, George Jones, Dan (Burnley) Redhead, E. C.
Davies, G. Elfed (Rhondda, E.) Jones, Elwyn (West Ham. S.) Rees, Merlyn (Leeds, S.)
Davies, Harold (Leek) Jones, J. Idwal (Wrexham) Rhodes, H.
Davies, Ifor (Gower) Jones, T. W. (Merioneth) Roberts, Albert (Normanton)
Deer, George Kenyon, Clifford Roberts, Goronwy (Caernarvon)
Dempsey, James King, Dr. Horace Robertson, John (Paisley)
Diamond, John Lawson, George Rodgers, W. T. (Stockton)
Dodds, Norman Ledger, Ron Rogers, G. H. R. (Kensington, N.)
Doig, Peter Lee, Miss Jennie (Cannock) Ross, William
Donnelly, Desmond Lewis, Arthur (West Ham, N.) Short, Edward
Duffy, A. E. p. (Colne Valley) Lougriun, Charles Silverman, Julius (Aston)
Edwards, Rt. Hon. Nese (Caerphilly) Lubbock, Eric Skeffington, Arthur
Edwards, Robert (Bilston) Mabon, Dr. J. Dickson Slater, Mrs. Harriet (Stoke, N.)
Edwards, Walter (Stepney) McBride, N. Slater, Joseph (Sedgefield)
Evans, Albert MacColl, James Small, William
Fernyhough, E. MaoDermot, Niall Smith, Ellis (Stoke, S.)
Fitch, Alan McInnes, James Snow, Julian
Spriggs, Leslie Thornton, Ernest Willis, E. C. (Edinburgh, E.)
Stewart, Michael (Fulham) Thorpe, Jeremy Winterbottom, R. E.
Stones, William Wainwright, Edwin Woodburn, Rt. Hon. A.
Swain, Thomas Watkins, Tudor Woof, Robert
Swingler, Stephen Weitzman, David Wyatt, Woodrow
Symonds, J. B. Whitlock, William Yates, Victor (Ladywood)
Taverne, D. Wiltkins, W. A.
Thomas, lorwerth (Rhondda, W.) Willey, Frederick TELLERS FOR THE AYES:
Thomson, G, M. (Dundee, E.) Williams, W. T. (Warrington) Mr. Charles A. Howell and
Mr. Grey.
NOES
Agnew, Sir Peter Gurden, Harold Oakshott, Sir Hendrie
Atkins, Humphrey Hamilton, Michael (Wellingborough) Orr, Capt. L. P. S.
Awdry, Daniel (Chippenham) Harris, Reader (Heston) Osborn, John (Hallam)
Barlow, Sir John Harrison, Brian (Maldon) Osborne, Sir Cyril (Louth)
Batsford, Brian Harrison, Col. Sir Harwood (Eye) Page, Graham (Crosby)
Berkeley, Humphry Harvey, John (Walthamstow, E.) Partridge, E.
Bidgood, John C. Hendry, Forbes Pearson, Frank (Clitheroe)
Biffen, John Hiley, Joseph Percival, Ian
Biggs-Davison, John Hill, Mrs. Eveline (Wythenshawe) Pickthorn, Sir Kenneth
Bingham, R. M. Hill, J. E. B. (S. Norfolk) Pounder, Rafton
Birch, Rt. Hon. Nigel Hobson, Rt. Hon. Sir John Powell, Rt. Hon. J. Enoch
Bishop, Sir Patrick Hogg, Rt. Hon. Quintin Proudfoot, Wilfred
Black, Sir Cyril Holland, Philip Quennell, Miss J. M.
Bossom, Hon. Clive Hollingworth, John Ramsden, at. Hon. James
Bourne-Arton, A. Hopkins, Alan Rawlinson, Rt. Hon. Sir Peter
Box, Donald Hornsby-Smith, Rt. Hon. Dame P. Redmayne, Rt. Hon. Martin
Boyd-Carpenter, Rt. Hon. John Howard, John (Southampton, Test) Rees, Hugh (Swansea, W.)
Boyle, Rt. Hon. Sir Edward Hughes Hallest, Vice-Admiral John Renton, Ht. Hon. David
Brewis, John Hughes-Young, Michael Ridsdale, Julian
Buck, Antony Hulbert, Sir Norman Roots, William
Bullard, Denys Hurd, Sir Anthony Ropner, Col. Sir Leonard
Bullus, Wing Commander Eric Hutchison, Michael Clark Royle, Anthony (Richmond, Surrey)
Campbell, Gordon Iremonger, T. L. Scott-Hopkins, James
Carr, Compton (Barons Court) James, David Shaw, M.
Carr, Rt. Hon. Robert (Mitcham) Jennings, J. C. Smith, Dudley (Br'ntf'd & Chiswick)
Chataway, Christopher Johnson, Eric (Blackley) Smyth, Rt. Hon. Brig. Sir John
Chichester-Clark, R. Johnson Smith, Geoffrey Spearman, Sir Alexander
Clark, Henry (Antrim, N.) Jones, Rt. Hn. Aubrey (Hall Green) Stairnton, Keith
Clark, William (Nottingham, S.) Kerens, Cdr. J. S. Stanley, Hon Richard
Clarke, Brig. Terence (Portsmth, W.) Kerby, Capt. Henry Steward, Harold (Stockport, S.)
Cooke, Robert Kerr, Sir Hamilton Stoddart-Scott, Col. Sir Malcolm
Cooper, A. E. Kirk, Peter Studhoime, Sir Henry
Corfield, F. V. Kitson, Timothy Summers, Sir Spencer
Costain, A. P. Leavey, J. A. Tapsell, Peter
Coulson, Michael Legge-Bourke, Sir Harry Taylor, Sir Charles (Eastbourne)
Lewis, Kenneth (Rutland)
Craddock, Sir Beresford (Spelthorne) Lilley, F. J. P. Taylor, Edwin (Bolton, E.)
Critchley, Julian Linstead, Sir Hugh Taylor, Frank (M'ch'st'r, Moss Side)
Curran, Charles Litchfield, Capt. John Taylor, Sir William (Bradford, N.)
Currie, G. B. H. Longden, Gilbert Teeling, Sir William
Dalkeith, Earl of Loveys, Walter H. Temple, John M.
Dance, James Lucas-Tooth, Sir Hugh Thatcher, Mrs. Margaret
d'Avigdor-Coldsmid, Sir Henry McAdden, Sir Stephen Thomas, Sir Leslie (Canterbury)
Deedes, Rt. Hon. w. F. MacArthur, Ian Thompson, Sir Richard (Croydon, S.)
Digby, Simon Wingfieid Maclay, Rt. Hon. John Touche, Rt. Hon. Sir Gordon
Doughty, Charles Maclean, Sir Fitzroy (Bute&N. AyTs) Turner, Colim
du Cann, Edward McMaster, Stanley R. Turton, Rt. Hon. R. H.
Duncan, Sir James Macmillan, Maurice (Halifax) Tweedsmuir, Lady
Eden, Sir John Maddan, Martin van Straubenzee, W. R.
Elliot., Capt. Walter (Carshalton) Maginnis, John E. Vane, W. M. F,
Elliott, R. W. (Newc' tle-upon- Tyne, N.) Markham, Major Sir Frank Vaughan-Morgan, Rt. Hon. Sir John
Errington, Sir Eric Marten, Neil Walder, David
Farr, John Mathew, Robert (Honiton) Walker, Peter
Finlay, Graeme Matthews, Gordon (Meriden) Webster, David
Fletcher-Cooke, Charles Maude, Angus (Stratford-on-Avon) Wells, John (Maidstone)
Fraser, Ian (Plymouth, Sutton) Maudling, Rt. Hon. Reginald Williams, Dudley (Exeter)
Gardner, Edward Mawby, Ray Williams, Paul (Sunderland, S.)
Gibson-Watt, David Maxwell-Hystop, R. J. Wills, Sir Gerald (Bridgwater)
Giles, Rear-Admiral Morgan Maydon, Lt.-Cmdr. S. L. C. Wilson, Geoffrey (Truro)
Glover, Sir Douglas Mills, Stratton Wise, A. R.
Glyn, Dr. Alan (Clapham) Mlecampbell, Norman Wolrige-Gordon, Patrick
Goodhew, Victor Montgomery, Fergus Woodhouse, C. M
Gough, Frederick More, Jasper (Ludlow) Woollam, John
Gower, Raymond Morrison, Charles (Devizes) Yates, William (The Wrekin)
Grant-Ferris, R. Morrison, John
Green, Alan Neave, Alrey TELLERS FOR THE NOES:
Griffiths, Eldon (Bury St. Edmunds) Noble, Rt. Hon. Michael Mr. McLaren and Mr. Pym.
Grosvenor, Lord Robert Nugent, Rt. Hon. Sir Richard