HC Deb 30 June 1964 vol 697 cc1146-66

In section 13 of the Finance Act 1957 (relief for persons ever sixty-five with small incomes), as amended by section 8(2) of the Finance Act 1962 and section 12(7) of the Finance Act 1963, for the references to £325 and to £520 (the income limits for exemption) there shall be substituted references to £360 and to £575; and (as regards the marginal relief) for the reference to £75 (the addition to the income limit) there shall be substituted a reference to £130.—[Mr. Maudling.]

Brought up, and read the First time.

3.52 p.m.

The Chancellor of the Exchequer (Mr. Reginald Maudling)

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

Mr. Speaker

I think that it might be convenient for the House to discuss, at the same time, new Clause 6—Income Tax: increase of small income relief—and new Clause 9—Increase of personal relief for certain householders over 50 years of age.

I should call either or both of the other new Clauses for a Division if that were desired.

Mr. Maudling

The purpose of the new Clause is to increase the limit of income at which age exemption can be claimed. The House will be familiar with this feature of our Income Tax code, which is of fairly long standing and which provides that where a single taxpayer has reached the age of 65, or where, in the case of a married couple, one of them has reached the age of 65, exemption from Income Tax is given if their income, be it single or joint, does not exceed a certain sum. The existing sums are £325 a year for a single taxpayer and £520 for a married couple.

The Clause increases those limits to £360 in the case of a single person and to £575 in the case of a married couple. The new Clause further makes provision for an addition to the range of marginal relief, in this case extending it from £75 to £130. The cost of these provisions would be £1¾ million in the current financial year and £3 million in a full year. The effect of the Clause, as we calculate it, would be to exempt from taxation about 120,000 taxpayers, and a further 185,000 taxpayers will benefit from the marginal reliefs to which I have referred.

The amount of gain for the individual taxpayer in the case of exemption from tax will become greater as his income approaches the maximum at which exemption will be granted. The nearer to the limit, the more he benefits. The maximum benefit in the case of a single person will be £15 15s. and in the case of a married couple £24 15s., at the point where their income is the equivalent of the new limit which the Clause prescribes.

In the case of marginal reliefs the amount by which people benefit will vary with individual circumstances, but it will be possible for people to benefit under the new provisions to some extent by marginal relief with an income of £424 a year for a single person and £704 a year for a married couple

That, briefly, is the purpose of the Clause. As far as administration is concerned, the Inland Revenue will review the field and pick up the cases of people who will benefit and automatically adjust their P.A.Y.E. coding. Taxpayers should receive notices of their new coding shortly after the Finance Bill becomes law, and they will receive any necessary repayment by means of coding adjustments immediately or shortly after that.

I would ask people who benefit not to write to their tax offices, because automatically the benefits will be applied through the machinery of the Inland Revenue, and after the distribution of notices of revised coding the Revenue will also insert notices in the local Press, in case any people have been overlooked, advising them that if they have not received new coding notices they should apply to their tax office. This form of administration has proved satisfactory in the past and it will enable this benefit to elderly taxpayers to become effective as rapidly as possible.

During the Committee stage there were discussions on this and similar proposals for tax reliefs. As my hon. Friend the Financial Secretary said at the time, I wanted to consider whether any changes could be made in this field this year. Before making up my mind I wanted to consider the discussions in Committee and the views put forward by both sides of the Committee. Looking at that discussion and at the current level of the age exemption provisions, it seemed to me that there was a case this year for making the changes which I have just outlined.

On both sides of the Committee we always wish to make improvements in this relief, but the limit is normally set by its relation to other tax reliefs, given to other taxpayers, including married couples. The figure which I have chosen of £575 for a married couple will be just slightly below the figure available to a married couple with one young child where the income is wholly earned.

I think, therefore, that the provision which I am suggesting in the new Clause keeps the tax code on personal allowances logical and consistent and retains a fair balance between various taxpayers. It will, at the same time, provide a very welcome easement to people who, as taxpayers, command the sympathy of both sides of the House. Those are the reasons for which I move the Clause, and these are the provisions which I propose for carrying them into effect.

Mr. Douglas Houghton (Sowerby)

The House warmly welcomes the proposals which the Chancellor has made to improve the conditions of age exemption. The right hon. Gentleman has noticed that since he put the new Clause down he has received strong reinforcement from this side of the House.

Mr. Gordon Walker (Smethwick)

In case he changed his mind.

Mr. Houghton

We gladly withdrew our new Clause, which we had discussed in Committee and which we were anxious to discuss again, to give the Chancellor an opportunity to say what his intentions were.

Frankly, it surprised me that he had delayed doing this until this late hour of our deliberations on the Bill He has given a rather lame excuse why he was prepared to do nothing earlier and why he has delayed action until now. He said that he was anxious to hear the views of both sides of the House and to inform his mind on whether this year he should carry the age exemptions still further.

But when I moved the new Clause to improve the age exemption in Committee on 9th June, the Financial Secretary, in in reply to the debate, presumably without conveying anything to his right hon. Friend, said: … 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 …"—[OFFICIAL REPORT, 9th June, 1964; Vol. 117, c. 357.] But if the Chancellor was delaying consideration until he had heard the views of both sides, why was he considering the question before he had heard any remarks at all? It seems a very strange situation for the Chancellor to be in.

4.0 p.m.

The proposal has now come from the Chancellor and a number of old people whose incomes would have been taxable again this year will have the advantage of a reduction or the extinction of the tax which they would have had to pay. Happily, the Chancellor has gone further this time than on previous occasions in improving this relief. In the new Clause which we put down in Committee, we followed the amounts by which age exemption had been improved on earlier occasions, which, we thought, would be the most we could persuade the Chancellor to accept when he himself had not made any proposal whatever. I raised this matter first in a speech on the Budget Resolutions. On 20th April last, I stressed that, in the view of my right hon. and hon. Friends, a further improvement of age exemption should appear in the Finance Bill. The Chancellor made no response to that, and there was nothing in the Bill when it was introduced. At the last stages of the Bill, however, we have his new Clause before us.

There is no doubt that the new amounts will widen the disparity between younger people and old people in the level of taxation, a point I referred to when I introduced our new Clause in Committee. We should not disguise the advantage which older people will have under the age exemption, but what we should say is that it is justified and will be acceptable to those who pay tax in the normal way. According to my figures, a younger married couple without young children will pay about £20 tax at the point at which older people will be completely exempt, and a single person under 65 will be paying about £11 10s. a year tax at the point when the single person over 65 will be completely exempt.

This disparity is justified on the ground that older people, generally speaking, suffer a reduction of income at this point in their lives and any taxation on an income already slashed by retirement is felt as a very heavy burden. Younger people, on the other hand, are generally on rising incomes and they are not in the position of those who have retired on half or less than half pay supplemented as may be by resources of their own.

On this side, we welcome the Chancellor's proposal and we welcome, also, the fact that he has broken away from the pattern of previous adjustments, which hitherto have never been more than £25 for a single person and £40 for a married couple. The improvement is now to be £35 for a single person and £55 for a married couple.

New Clause No. 6 is, to some extent, a stable companion of the age exemption and age relief provisions. We propose that a further advance in small income relief should be made this year. As the House knows, the small income relief does not provide any exemption limit similar to the age exemption. All it does is to extend the two-ninths relief to investment income of persons of any age whose total incomes are within the limit prescribed as "small", so that it gives, virtually, earned income relief on unearned income. At present, the limit of the concession is a total income of £450 a year, and we propose that it should be raised to £500.

The small income relief has never kept absolutely in step with changes made in comparable reliefs, still less with the age exemption. There have been differences in the pattern of change over the years, sometimes one standing still longer than another. Lest year, however, the Chancellor improved the small income relief limit from £400 to £450 at a time when he improved the age exemption and age relief. In our view, the problem of people with small incomes should be further relieved this year.

In terms of revenue, it is a very small matter. On the human side, however, it is most important to a number of people. Many of the people who are concerned with small income relief are widows, spinsters and others living on annuities, on the proceeds of legacies, and so forth. They are people who, for various reasons, are unable to take employment or can do so only to a small extent. They may be invalids or semi-invalids, people with disabilities of one kind or another. One has in mind also the woman who has kept house for an aged relative and who, on the eventual death of the relative, has been unable to enter any suitable employment, though being provided for on a modest scale by a legacy from the deceased relative.

We hope that the Chancellor will, even now, sympathetically consider an improvement of the income limit for small income relief. The improvement of £50 which we propose is small enough, and I emphasise again that the effect in terms of revenue must be small.

New Clause No. 9, in its present form, is a newcomer although it has appeared on the Notice Paper in a different form in years past. It raises a matter upon which I myself have felt quite keenly for quite a time. Some years ago, I persuaded the Trades Union Congress to include a proposal on these lines in its evidence to the Royal Commission on the Taxation of Profits and Income.

It proposes to distinguish between one single person and another in order to grant a higher personal allowance to the single person who is a householder—that is, an occupier of unfurnished accommodation or a tenant of furnished accommodation. By "single person," I mean any person to whom the single person's allowance applies. That covers widows, widowers, separated spouses who are assessed as single persons, divorced persons who are assessed as single persons—everyone who receives the single person's present allowance of £200 under the Income Tax code. This provision would apply to those who are householders or are tenants of furnished accommodation, subject to a stipulation of age, and the age of 50 is mentioned.

This Clause is an attempt to meet the special grievance of many people of mature years, both men and women, occupiers of unfurnished accommodation, householders maintaining a house in which they have probably lived all their lives—the parental home, may be—who feel that it is very wrong that the taxation system applies to them only the same personal allowance that it gives to younger people with smaller responsibilities, and who are relatively better off on the same amount of money because of their smaller commitments in life.

I do not pretend that this is a scientific way of dealing with the matter, and I know that I have some very powerful opinions against me on the general question of the place that personal allowances should occupy in a progressive system of taxation, but I must voice the grievance expressed to me over the years by many hundreds of people who feel that the present system is wrong in not providing for some differential between themselves and those who have lesser responsibilities.

The typical case one gets is that of the married man who, unhappily, loses his wife. He looks round the house—a lonely man, but with the same commitments as before—and says, "Now I am classified as a single man. Surely, that is not an adjustment of the burden of taxation to ability to pay?"

I know what the Royal Commission said on this question in its second Report—I have read it again and again. And I clearly understand that it is for the convenience of the administration to have a few simple personal allowances that can be easily applied to those who may receive them, but we have to bear in mind that in these matters we are applying the fundamental principle of any system of direct taxation, which is to attempt to adjust the burden to the shoulders that have to bear it. Although we cannot carry refinement too far, I believe that the existing system of personal allowances has many crudities about it which operate unfairly in a large number of individual cases. New Clause No. 9 is an attempt to deal with that position.

I recall that in the past objections to a proposal on these lines have been made on the ground of difficulty of administration. It has been asked, "Who is the occupier of an unfurnished accommodation?" "What is it?" "When is a person a tenant of furnished accommodation?" "How does one define it?" Due to the diligence of my hon. and learned friend the Member for Kettering (Mr. Mitchison), the new Clause contains cross references to provide the basis of definition of the status to qualify for this additional relief.

4.15 p.m.

The age point is comparatively simple. The additional relief proposed would be to give one half of the difference between the single person's allowance and the married man's personal allowance to taxpayers who qualify for the additional relief in this Clause. At the present time, the single person's allowance is £200 and the married man's personal allowance is £320. The additional relief would be one-half of the difference between those two amounts.

I hope that the House is now fully seized of the purpose of the new Clause; and that hon. Members will observe its moderation, and its attempt to solve a very real problem in the lives of many people. We cannot be satisfied with our system of direct taxation unles we are continually adjusting it within the scope of practical administration to meet circumstances in everyday life that we clearly realise, and which do excite the sympathy of all of us who come up against these individual cases in our constituency and other experience.

I leave the matter there. Because of the way it is put to the House I cannot formally move either of my new Clauses, but I trust that the House will mix with its congratulations to the Chancellor some concern with two sets of people whom the two proposed new Clauses would cover.

Dame Irene Ward (Tynemouth)

I have not the slightest idea how the Chancellor of the Exchequer has suddenly come forward with these new proposals. I only know that I am delighted that he has, and when I am delighted I do not try to penetrate very much further—I think that it is a waste of time. I have tried for years to find out how the brains of various Chancellors have worked, and that is hard work, because one never really arrives at a satisfactory conclusion. I only know that this particular concession is very welcome.

The whole idea of a special age relief for those on small fixed incomes started with my right hon. Friend who is now the Minister of Defence. I do not know that it has been recorded in the House, so I must say that he was at one time chairman of the Tory Reform Committee. I can tell my right hon. Friend the Chancellor—who, of course, was too young to be a member of that committee—that it made some very valuable suggestions which almost revolutionised the Tory Party. He should, therefore, always listen to those who were members of the Committee, as it has been very valuable to the Tory Party in the past.

I never like to forget old friends, so I am always delighted to say that the present Minister of Defence was really the first Chancellor who ever departed from the advice given by all those very distinguished and marvellous civil servants—who advise, but who live in a world of their own. It is a great thing to have a. Chancellor who does not always listen to them on matters like this.

I accept that in regard to the big overall matters the Chancellor and the civil servants have a duty to perform to the country, but in little matters like this—because it is a little matter, though very worthy—the Chancellor ought to listen to the backbenchers, who really know a great deal more about it than distinguished Chancellors or civil servants. I am delighted that my right hon. Friend has taken this line.

I have listened with great interest to what the hon. Member for Sowerby (Mr. Houghton) said about new Clause No. 6. I entirely agree with him. Neither the Opposition, when they were in power, nor the Tory Party, have ever concerned themselves about the small man and the small woman, because they have always: been so concerned with such matters as the overall balance of payments, which is very important. I am not one of those who think that they are not tremendously important. However, we want to do justice. I say with deep humility that those who are referred to in the hon. Gentleman's new Clause have never had the interest of Chancellors whether they have been Tory Chancellors or Labour Chancellors.

I suspect that the power behind this move, which, I hope, will be extended, is the new Prime Minister. I have never come across a Prime Minister who has been as easy to talk to and as understanding to talk to as the present Prime Minister. I am delighted that he is the Prime Minister, because I look forward to influencing a great deal in the future.

There is a great deal in all these matters which requires examination. My right hon. Friend the Member for Thirsk and Malton (Mr. Turton) played a large part when we made our speeches on this matter in Committee. I do not expect that the Chancellor will make another move forward and accept the new Clause of the hon. Member for Sowerby. However, my right hon. Friend the Chancellor should carefully consider what the hon. Member for Sowerby said, because, even though the hon. Gentleman belongs to the Opposition, he knows a good deal about all these things and has been a great help in bringing forward the rather small detailed matters which escape the Treasury's attention. I should like to thank the hon. Gentleman, because on many things he and I have co-operated. It is a pity that our co-operation has not had a greater effect on Chancellors.

I am no mathematician. I find it difficult to understand all these details, but I am grateful for the move which has been made today. I should have been much more pleased if my right hon. Friend had explained marginal relief a little more fully. I am not certain whether everyone has been uplifted to marginal relief or how this substantial extension will work. My right hon. Friend always assumes that everybody in the House knows exactly what it all means, but I say frankly that I do not know what it all means. I want to be assured that both men and women benefit and that we are something fairly helpful to those living on small fixed incomes.

It has taken a long time to get the House to be aware of small fixed incomes. I am delighted that we are moving into the era of studying the problems of those on small fixed incomes. There is a great deal about them that needs readjusting. I am sure that my right hon. Friend would like to rise and say that the cost of living has been held steady. I accept that it has been, up to a point, but it has not been kept steady in the things that matter to those on small fixed incomes.

I wish that my right hon. Friend would not say so much about washing machines and television sets. I wish he would talk about coal, gas and electricity, which are much more important to those on small fixed incomes. They will benefit from the reliefs in the new Clause. I could make a much better statement about small fixed incomes and the expenses their recipients have to meet than my right hon. Friend could by talking about washing machines, television sets and motor cars. I know that those things are very important, but they are important to those who can pay for them.

Those on small fixed incomes, who are affected by the Clause, must find more money for the increased cost of gas, coal, electricity, transport, rates and rents. I should like to see all those things taken out and the small fixed income problem related to them. It is possible to economise on certain things, but not on those things. It is very misleading to those on small fixed incomes when the Tory Party gets blown up, even though we have done so well, by saying that it has kept the cost of living steady. We have done so for those who have had increases in wages and salaries. We have not kept the cost of living steady for those living on small fixed incomes. I want my right hon. Friend to address himself to this point, which I regard as the most important thing in the Finance Bill at the moment, as we have got rid of all the other great things which affect the country.

I am always very happy when something is done. It takes a good deal of hard work to get action, but we have got action today. I thought that my hon. Friend the Financial Secretary did this very nicely in Committee. He is a very good speaker. He was followed today by the Chancellor. We still do not quite know how much has happened, but I hope that the House together—because this is very important—will get moving on small fixed incomes. I am glad that we have a Tory Chancellor, because, when we Tories say that we will do something we provide the money to meet the concessions, and that is equally important as making the concessions. I thank my right hon. Friend the Chancellor very much. I hope that he will go from strength to strength and do everything he can for those in whom so many of us are desperately interested.

Mr. W. A. Wilkins (Bristol, South)

I am not concerned about the committee to which the hon. Lady the Member for Tynemouth (Dame Irene Ward) referred, whose job it is, or was, to reform the Tory Party. I am sorry for that committee, because I imagine that it has a rather difficult task on hand. I have risen to address myself to the new Clause No. 9. No one on this side of the House would desire to detract in any way from the interest of the hon. Lady in the difficulties and needs of people who have been trying to exist on small fixed incomes. We welcome her support for the principle we seek to enunciate in our new Clause.

With all possible respect to my hon. Friend the Member for Sowerby (Mr. Houghton), I can claim to be the first back-bench Member to raise the specific case to which my hon. Friend referred. Five or six years ago I called the attention of the House to what I thought was an anomaly in the treatment for Income Tax purposes of the widower. I shall not weary the House with the details of the case I then cited. They are on record in HANSARD. Perhaps one reason why we have failed in our responsibilities to those people, both as a Government and back bench Members, is that it is only when one is brought face to face with the circumstances by someone who is obviously suffering under these difficulties that one realises that they exist.

The case I have in mind is that of the widower. I have in mind, more particularly, someone whose case was brought to my attention. He had not been married very long before his wife became physically incapacitated. She endeavoured to do some of her work in the home. She had to go to hospital on many occasions. Eventually, she died. The home has to continue. The house is on mortgage. There are two children, one aged 14, who must be looked after. The widower must continue with his employment. He is faced with the difficulty of trying to run the home, keeping the home clean by some means or other, and meeting all the expenses of the home, which are precisely the same now as they were when his wife was alive.

This widower can obtain no relief whatever. He is treated for tax purposes as a single man. When this widower went to the Revenue to ask whether there was any means by which he could be relieved of his tax responsibilities as a single man, and be taxed as a married man, he was told, "No, although you can go into lodgings, or, if you wish, stay where you are and employ a home help".

4.30 p.m.

It is worth noting that if he employs a woman as a housekeeper he can obtain tax relief, but no hon. Member will want me to explain why there are sometimes reasons for people not wanting to accept the help of a housekeeper as such. There are often valid reasons why a widower might not wish to employ a woman in this way, but prefer to have someone come in to look after the house on a day-to-day basis, in which case the widower gets no relief for the money paid to such an employee.

I do not want to argue this case at length. I explained it in detail to the House six or seven years ago, when I pointed to it as one of the hardest cases that had come to my knowledge since becoming a Member of Parliament. I recall telling the House that despite the tremendous physical disabilities suffered by this man's wife before she died, this man had fulfilled in every way his marital vows. He had cared for her to the best of his ability, had looked after her well-being and their home. He was a man of character—yet the moment he found himself a widower he was in difficulties about maintaining his home.

I need only add that the financial commitments of a widower are equal, often greater than, those when his wife is alive. From the time of her death he must employ someone to carry out the normal household work. I hope that, having aired this matter briefly again, the Chancellor will consider people who find themselves in this position and will again consider the suggestions made by my hon. Friend the Member for Sowerby and at some future date offer relief to the sort of case I have described. I appreciate the administrative difficulties in giving relief in this sort of case, but I do not believe that they would be insuperable.

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

I thought the hon. Gentleman the Member for Sowerby (Mr. Houghton) a little ungenerous in his criticism of the method my right hon. Friend the Chancellor has used to discuss this subject. It is important that the Committee stage of a Finance Bill should be used to suggest improvements to the tax provisions. Many of us have for years felt strongly on this question of tax relief for the old and I thought that my right hon. Friend was wise in leaving it for hon. Members on both sides to air their views on whether there should be improvements again this year.

We have gained a great deal by this provision, because the new Clause is a good deal more generous than that suggested in Committee by the hon. Member for Sowerby. I do not make any point in saying that we have now gained for the old people a good deal, particularly in marginal relief. The Clause put forward in Committee by the hon. Member for Sowerby did not mention marginal relief. I congratulate my right hon. Friend on the step he has taken in extending marginal relief from £75 to £130, because that means that the band of help has been extended considerably.

I hope that the Chancellor will not feel inhibited by what he has done in this and previous years. I hope that he will go further in his next Budget, if there has been any change in the intervening time; in other words, if there is a rise in the cost of living then that should be reason enough for him putting these age limits higher. Equally, if we get a 4 per cent. growth rate, that will be a good reason for the age exemption limits being raised.

What is extremely annoying for older people is that they should get increases in their pensions and then find, because of those increases, that they are brought within the sphere of Income Tax which they were not previously paying. This is the great widom of the present move, in conjunction with the Pensions (Increase) Act of last year, by which increases are provided to enable old people to pay less tax than before and have a higher income left.

The other Clauses we are discussing about age exemption limits are important. There is a good deal to be said for trying to help those in the small income groups, but I suggest that new Clause No. 9 would be extremely difficult to administer. I am sure that the hon. Member for Sowerby will agree that while there are hard cases, such as that described by the hon. Member for Bristol, South (Mr. Wilkins)—cases which excite our sympathy—to try to define "occupies furnished accommodation" and similar phrases might result in relief being given not necessarily to only hard cases. But I agree that this matter should be looked at again in an effort to find a fairer way of dealing with what is undoubtedly a difficult problem which some widowers must face.

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

We have had a relatively short debate on these three new Clauses, but the points involved were made with clarity and were so thoroughly discussed in Committee—apart from Clause No. 9, to which I shall refer—that I believe the House is now seized of the real considerations in each case.

I would like to say first, on behalf of my right hon. Friend, how much he has appreciated the reception given to his proposals on age exemption. I hope that I can reassure my hon. Friend the Member for Tynemouth (Dame Irene Ward) and my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) that my right hon. Friend's proposals show that personal allowances are in a real sense considered year by year. I am sure that this is the right way to proceed; that they should be considered in the circumstances and context of each year. It is, therefore, proper that on this occasion my right hon. Friend should have listened and considered with care—added to his own consideration—the considerations advanced on both sides in Committee.

We had a fairly full discussion of new Clause No. 6 in Committee and I am sure that the hon. Member for Sowerby (Mr. Houghton) will not mind my saying that I did not think that he added in any way today to the arguments he advanced in favour of this proposition in Committee.

Mr. Houghton

One cannot go on adding to a glimpse of the obvious.

Mr. Green

In that case, perhaps the hon. Member will glimpse the obvious from this side of the House. It would be a welcome thing if he did, if he does not mind my saying so.

The hon. Gentleman made some attempt to link this with age exemption. I did not notice him try to push very hard the argument that every time one improves the age exemption limit one is automatically bound to improve this particular limit. Perhaps he was being wise, because although over a period of years the limits have moved more or less together, a degree of difference in the relationship has been kept between them. It would be difficult to make any automatic link between these two forms of relief. Indeed, small income relief, which is what we are talking about, was substantially improved in 1962 and 1963. The hon. Member for Sowerby is quite right in saying that the cost of new Clause No. 6 would be small. I have had the figures checked again and on the latest findings that I can give him it would cost about £500,000 in a full year and benefit about 100,000 people.

The reasons which I gave him for not accepting this proposal this year must remain valid. In any year changes in these allowances must be a matter of priority, and I am sure that he would agree that this must always apply. There are always priorities to be observed in any one year. Sometimes the Chancellor has nothing at all to give away, in which case the priority is to give nothing away, quite literally, in the interest of the whole economy. In other years, he can give something and it is a matter of priority where to give it.

The difficulty about this proposal is that, although the cost is small, a very high percentage of the benefit would not, in fact, go to those who are living wholly on small fixed investment incomes. A substantial number of young people, part of whose income is invested income, would benefit and this, I am sure, is not the result that my hon. Friend the Member for Tynemouth would desire. It would be benefiting the elastic income, so to speak, to quite a substantial extent.

The intention, certainly on this side of the House, is to give assistance, where possible, to the inelastic income of those who cannot adjust their incomes upwards when prices rise or when, as my right hon. Friend the Member for Thirsk and Malton said, the general standard of living in the country rises and they are not able to go up with it. I called this a capricious result in Committee, and it is because of this my right hon. Friend has not felt able to afford any priority to this relief this year. I cannot, therefore, advise the House to accept the new Clause.

I come to new Clause No. 9. Here it was very fairly said by both hon. Members opposite who spoke about it that this was not a scientifically based proposition. That would be near about the words which the hon. Member for Sowerby used. Of course, it is not. He went on to argue that this fact should not prevent a relief of this kind being given because it would undoubtedly give some help to a number of people who are hard cases and to whom particular misfortunes occur in the course of their lives, as for example, that given by the hon. Member for Bristol, South (Mr. Wilkins).

Again, the hon. Gentleman was perfectly fair. He said that the Royal Commission was against it, and it most certainly was, on the ground that it is very much better to try to keep to simple, readily definable classes of allowance. Once one gets away from that, one enters the whole jungle of anomalies, disparities and difficulties and probably injustices between one taxpayer and another, which, again, my right hon. Friend the Member for Thirsk and Malton suggested would be the case.

There does not seem to be, when one thinks about it, a real reason for putting a single person who is past the prescribed age, in this case 50, and who occupies a house or a flat, in a better position for Income Tax purposes than the younger single person who is a householder or a single person, of whatever age, who lives in an hotel or in lodgings.

4.45 p.m.

It is precisely such a breaching of equity in the principle of tax law that would follow if this kind of proposal were adopted. That is not to say that hon. Members on both sides of the House do not have the very greatest sympathy indeed with the hard cases that can be found, and, unfortunately, are found, such as those which have been quoted It is extremely rough for the man whose wife dies. This, of course, in itself is a far bigger misfortune than the Income Tax consequences that follow, and for which there is no foreseeable compensation in Income Tax terms which could be of any real help. He feels it particularly because his allowance is reduced to that of a single man.

But it has to be remembered that he got the higher marriage allowance in the first place not because he was a householder, but because it was for two persons, himself and his wife. That is what really gave them the higher marriage allowance. It is the only conceivable ground on which he could receive it. I agree that it is very bad luck when he reverts to the single person's allowance, but if he did not do so, all other single persons would instantly have a grievance, and it would be extremely difficult to resist the grievances which they would be bound to voice. I am, therefore, afraid that on the ground of principle I cannot advise the House to accept the new Clause No. 9. It goes flat against the present cannons of tax law, as I think the hon. Member for Sowerby would agree. He said that there was no reason why we should not change them from time to time. I agree about that, but a change in this case, we are quite certain, would create more anomalies, difficulties and injustices than it would remedy.

The second ground that I must give for refusing it this year is that although we have no precise estimate of the cost and it would be very difficult to estimate, it would certainly run into tens of millions of pounds. This would disrupt seriously the difficult matter of keeping this year's Budget in balance and, therefore, it is with regret that I must advise the House against accepting the Clause.

Mr. John Diamond (Gloucester)

We have discussed two of these proposals in Committee as well as today and I am sure that the House will forgive me if I deal with them very shortly. Concerning new Clause No. 7, we all wish, as the hon. Lady the Member for Tyne-mouth (Dame Irene Ward) expressed in such charming sentiments, to thank the Chancellor for the decision that he finally has made. I could perhaps go into it a little more and say that I was impressed by the main argument which the Chancellor used in favour of this step and which is, of course, that he said that it would keep the tax code logical and consistent, or, as I would say, keep the various personal allowances in some reasonable relationship or parity one with the other.

But this argument, being a permanent argument, can have nothing whatever to do with the bringing forward of this new Clause. One felt, as the hon. Lady felt, that the question which remains to be answered, and which no one attempted to answer, is why the Chancellor did not bring it forward earlier—why did he leave it to the last minute? It would be a very brave man indeed who would attempt to offer to the hon. Lady any guidance on a political matter of any kind, because the hon. Lady is so experienced in these matters, but I have been brought up to believe that in politics it matters not so much what one does as when one does it.

Perhaps, therefore, if one looked around very carefully, one might find an occasion that either has presented itself, or is likely to present itself in the near future, which might give us some guidance why the Chancellor is bringing this Clause forward at this last minute when the reasons for it have been obvious the whole time and which were very relevant in Committee, and indeed, in the Budget itself. Perhaps we can leave it at that and say to you, Mr. Deputy-Speaker, that as we have added our names to the new Clause we would wish, when the Question is put, to voice our support strongly in favour of it.

I turn now to new Clause No. 6, entitled "Income Tax: increase of small income relief." This is a very small item in terms of the Budget—a matter of £500,000. Such a sum would help 100,000 people. I should have thought that that was not a very expensive way of helping a large class of people whom we would wish to help. The argument of the Financial Secretary that by adopting this new Clause we should also help some people whom we did not necessarily wish to help is not very powerful.

It arises in many allowances and in many parts of the Income Tax structure. It has affected this allowance throughout its history. It has virtually always been the case, except when other personal allowances have been in a particular relationship to it, that it has helped those whom we wanted to help and, to a certain and variable extent, those whom we did not want to help as much. Therefore, I cannot regard that argument as very strong.

I am still of the opinion that this is a new Clause which could well have been accepted. The arguments for it have been made time and again. They are very sound arguments. The cost would be small and the number of people affected would be large. Therefore, when you put the Question on that new Clause, Mr. Deputy-Speaker, we shall wish to divide the House.

Finally, I deal with the last new Clause, which is a new idea. We are aware, of course, that the Royal Commission reported against this proposal, but we are helped by the fact that it stated clearly what its arguments were. It rested its case almost exclusively on administrative grounds. That is a very good guide and help to us, but it does not determine our attitude in this place completely. There are other matters, such as matters of human sympathy and hardship. No one who listened to the speech of my hon. Friend the Member for Bristol, South (Mr. Wilkins) could have failed to be affected by the sincerity of his approach and the knowledge that here was a case, one of many—we can all think of similar cases—which called precisely for this kind of treatment and help.

With deference, the Financial Secretary did not take the matter a great deal further by saying that there would be difficulty and inconsistency if a married man, on losing his wife and becoming a widower, were not treated immediately as a single person. He is right in saying that a single person, when he marries, gets the allowance as a married man for having to support his wife. But the thing which normally goes with that is an establishment. The couple do not normally continue to live separately. When a married man loses his wife he is compelled to continue to keep his house for the time being and sometimes for a considerable time. In the case envisaged by my hon. Friend the Member for Bristol, South, that situation is likely to go on for some considerable time.

That is why the new Clause is drawn in this form. The physical facts continue as they were during the marriage. The expenses involved are the same. The expenses are appropriate to a married establishment and not a single establishment. It is for these reasons that we think that there is a solid case in favour of the new Clause, and we shall seek to divide the House on it when you put the Question, Mr. Deputy-Speaker.

Question put and agreed to.

Clause read a Second time and added to the Bill.