HC Deb 24 June 1965 vol 714 cc2001-20

Where, in the case of a person dying after the 6th day of April 1965, estate duty is payable on the death of one of the parties to a marriage, the payment of such estate duty may, at the option of the surviving party to the marriage, be postponed subject to the following provisions and conditions, namely—

  1. (a) the payment of estate duty may be postponed in relation only to freehold or 2002 leasehold property being the sole or principal dwelling house of the deceased and his spouse;
  2. (b) payment of estate duty may be postponed for such time as the said property remains the sole or principal dwelling house of the surviving spouse;
  3. (c) the option referred to in (a) shall be exercisable in writing to the Comptroller of Estate Duty by the relevant party to the marriage within three months of the death of the other party to the marriage;
  4. 2003
  5. (d) the estate duty shall stand charged on the said property from the date of the exercise of the option referred to above until payment is made but no interest shall be payable to the Estate Duty Office in respect of such charge.—[Mr. Younger.]

Brought up, and read the First time.

Mr. George Younger (Ayr)

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

I hope the Financial Secretary has come with a large and comprehensive brief clearly marked that he should accept this proposed new Clause. This is a matter which is not concerned with improving the taxation system as such. It is not concerned with technical matters of taxation. This Clause is concerned with making an improvement in the system of levying Estate Duty, a system which at present causes very great hardship to quite a number of people. I hope to show how this is so, and I hope also that the Financial Secretary will be moved by the appeal which I shall make.

I will start by explaining in outline what the Clause will do. Briefly, the idea is this. When one partner of a marriage dies and the other partner is left, it will be open under this Clause for the surviving partner to elect, in writing to the Commissioners, to postpone payment of Estate Duty on the freehold value of the home in which the two partners were living. In other words, the payment of Estate Duty on the home of the two people, one of whom has died, can be postponed until the second partner dies. The option will be exercisable within three months in writing and not thereafter, and the duty payable on the value of the home will have to be paid in full when the second partner eventually dies. Under this Clause there will also be no interest payable during the life of the second party to the marriage.

That, briefly, is what I intend the Clause to do, and I say straight away that if there is any fault in drafting which prevents it from achieving that purpose I shall be only too happy, if the Financial Secretary feels it advisable, to accept or consider any improvements to the drafting.

Now I come to the purpose of introducing the Clause. We hear a lot of arguments in favour of measures of one sort or another on the basis of sympathy and compassion for people who are put in difficult positions. I want to be absolutely open and frank about this and say that that is precisely the reason why I am moving this new Clause. I feel that people are suffering hardship now because of the way in which Estate Duty operates in these circumstances.

I must confess that Estate Duty is not a duty which in itself entirely commends itself to me. Personally, I much prefer the idea of an inheritance tax, because I think it operates much more fairly in that it recognises the means of the recipient and not the means of the donor. However, it would be out of order to go into that subject now, and it is no part of my argument that Estate Duty as such is a bad thing. But we should recognse that by its very nature Estate Duty operates at a time when people find circumstances most distressing, at a most difficult and complicated time in their lives. For that reason, if for no other, we all ought to look very sympathetically at any proposal which alleviates people's distress in these circumstances.

When one partner of a marriage dies—and in the majority of cases both partners will by that time be fairly advanced in years—it is obvious that the other party is in a very difficult position personally. Obviously that person is highly distressed and is suddenly faced with many problems. I remember being told some years ago by somebody on the death of a close relative that the thing which impressed him most about this experience was the vast number of problems with which a surviving partner has to deal—problems which have never arisen before. This is aggravated by the trouble which besets such people in connection with the assessment of Estate Duty.

It is probably common ground that one of the greatest worries of such a time is having to pay the Estate duty, having all one's possessions valued, having people go through the property, and so on, and, of course, this comes at a time when the surviving partner is feeling very upset. Probably the most difficult problems of all are centred on the home in which the married couple have been living. Many hon. Members will know this from their correspondence. Incidentally, if I had not been strongly in favour of the new Clause before it was tabled, I should certainly have been convinced afterwards. I should never have believed the amount of support I have received for the Clause, both oral and written, since it was tabled.

Very often, by the nature of things, an elderly married couple will be living in the home where they have been nearly all their lives or, at least, for a great number of years, and it will probably have become too big for them or in other ways a problem. The problem is greatly exacerbated the moment one partner dies. If the house was too big, it becomes that much bigger. If it was difficult to run, it is that much more difficult to run. In the circumstances, many reasons arise for the surviving partner to leave the home, because it is too big, because it is too far removed from other relatives who can help, or simply because the expense of running it is too great.

Paradoxically, when a move is made essential in this way, it often leads to even more expense than was incurred previously. All hon. Members know that, as soon as one moves house, an infinite number of other expenses seem to arise. Here is an extract from one letter which I have received which demonstrates this point and shows how difficult life can be. It is from a man who wrote to say that he and his brother are faced with this problem, their father having died and left their elderly mother living in a house which was really too big. It is not by any means a big house but it is too big for one old lady. He says: We know very well, of course, that we ought to force our mother to leave her home and move into a flat which would be more within her means, but I am quite sure that to do this would give her great distress and possibly hasten her end. I am determined that somehow we shall find the money to keep the home going until she eventually dies. Many hon. Members will know of similar cases. We ought, if possible, to do something to make things easier for people in such circumstances. Exemption of the value of the home from immediate payment of Estate Duty will afford that bit of extra financial help which can turn the scale and make it unnecessary for the surviving old partner to move to a new home.

The benefit can be considerable. As an example, I take an estate worth £20,000 for Estate Duty purposes, which, for anyone who owns a home or has ever run even the smallest of businesses, is by no means out of the normal run. The house is valued at only £5,000—quite a reasonable house in my part of the country, though I know that in this area that amount of money would not buy much of a house—and if Estate Duty payable on that house were remitted until the death of the second partner £600 would be saved. For my second example I take a larger estate of £50,000, and in this case duty payable on a home valued at £10,000 could be as much as £3,100. Clearly, there is need for such a provision as I propose, which would be of considerable benefit to the surviving partner.

6.15 p.m.

I come now to the loss to the Exchequer, which always looms so large when we discuss tax changes of this kind. The loss in this case would be extremely small. We do not suggest that the duty should not be paid; we suggest merely that it be deferred. Admittedly, interest might have been charged in other circumstances, but it would be quite inappropriate to charge interest to the surviving partner for what might be quite a number of years. The value of the interest to the Exchequer would not be of great significance. It would certainly not be significant compared with the help given to the recipients of the concession.

There are precedents for the deferment of Estate Duty in certain circumstances. I understand that woodlands, although they are assessed with an estate at the time of death, are subject to a provision which makes it possible to postpone payment of the duty on the actual timber until such time as the timber is felled and realised. There is also facility for postponing payment of duty on agricultural land for a certain time. If we are looking for a precedent for bringing in only the home, we have in recent weeks established the principle that the home is something which should be exempt from the Capital Gains Tax, and we have done this because, of course, the home is used by the whole family and is of great importance to everyone in it.

We ought to do anything we can, however small, to help older people. For years we have heard about their difficulties. In this country now, we are moving slowly, too slowly, many of us would say, towards doing better for our old people, but they have recently suffered considerable extra difficulties. There have already been references to the fact that dividends are likely to produce less money in the months following the passage of this Bill. Old people who require home help have to pay more for it because of the abolition of exemption from National Insurance contributions in respect of home helps. Rising rates are a particularly heavy burden on old people who cannot vary their income. Old people are the most sensitive of all to rises in the cost of living, and we all know about the rises which have recently occurred and are likely to occur.

I emphasise that the reason behind the Clause is sympathy, sympathy for people who deserve consideration from both sides of the Committee. I very much hope that the interests of neatness in our financial legislation, the possibility of a small loss to the Exchequer, and the old feeling in this country that we always resist change whenever we can will be swept aside and not be used as a reason to resist a measure which could give very great relief, relief disproportionate to the amount which it might seem on paper, to the old people who certainly need it.

Mr. David Steel (Roxburgh, Selkirk and Peebles)

I support the Clause and the case presented by the hon. Member for Ayr (Mr. Younger). Not the least of my reasons is that I was impressed by his conversion, expressed in an aside, to the Liberal Party's policy on an inheritance tax. I hope that in a future Finance Bill we shall abolish Estate Duty altogether and replace it by an inheritance tax. In the meantime, however, I welcome any measure of reform to remove the hardship which Estate Duty undoubtedly causes. Clearly, there is a case for removing the hardship which is borne by the surviving partner of a marriage.

It seems to be a convincing argument, particularly as the Clause, as worded, is proposing not the abolition of a certain income to the Treasury but merely its postponement. Also, the Clause makes clear that if after the death of one partner the survivor decides to sell the house the Estate Duty will then become payable. An important point is that no one will have finance reasons forcing them to sell their property immediately on the death of the partner, thus bringing additional distress. Therefore, on social grounds the principle of the Clause should be accepted by the Government.

The drafting of the Clause may not be acceptable, including the definition of the various properties, which might have to be clarified in relation to Scottish law on the holding of property, but I hope that the principle will be accepted.

Mr. Daniel Awdry (Chippenham)

I support my hon. Friend the Member for Ayr (Mr. Younger). The Clause is humane. It will be kind to people just at the moment when they need kindness most. I was moved by the speech of my hon. Friend, and I noticed that the Financial Secretary was, too. I hope that the Government will show how humane they can be. We all agree that the rates of Estate Duty are extremely harsh. I speak with first-hand knowledge as a solicitor dealing with people at the time when they lose relatives, and I echo everything that my hon. Friend said.

The first advantage of the Clause is that it will cost very little. The Financial Secretary will no doubt tell us exactly how much. Compared with the figures that we have been discussing in the last few weeks, it is a very small amount. It is the loss of interest over a certain period.

The Clause is even more necessary in view of the Capital Gains Tax provision. I give an example of a typical case, that of a small businessman. Let us say he starts this year with £1,000 in cash and decides to buy his house on mortgage with an endowment scheme. Let us say that the business is successful over the next 10 years and he builds it up to a value of £15,000. He has a wife and family. Then he is killed in a motor accident. What will be the position of his estate in terms of Capital Gains Tax and Estate Duty?

First, unfortunately, the estate will have to pay £3,000 in Capital Gains Tax because it will be a disposal on death. There would have been a capital gain of £9,000 for assessment. About one-third of it will be taken by way of capital gain. The business will have to be sold. Let us say it fetches £15,000. Out of that the £3,000 will be paid, and we shall have an estate of £12,000 cash. The endowment policy will pay off the mortgage. Let us say that the house is then worth £6,000. That is a small estate especially when we are now thinking in terms of 10 years ahead. So there will be a total estate of about £18,000. The rate of duty at present—we do not know what it will be in 1970—is 12 per cent. Therefore, out of the cash another £1,400 has to be used for Estate Duty, and the amount on the house is £700. Altogether, therefore, the estate has to pay £5,000 in Capital Gains Tax and Estate Duty combined.

If the Clause were accepted, the £700 payable in respect of the dwelling-house could be postponed. That would have the effect of reducing the Estate Duty by a third. It would have been £2,100; now it will be £1,400. So the widow will be saved about £1 a week, on the basis of £700 invested at 6 to 6½ per cent., and that will be in circumstances in which she will need every help that she can get. This seems to be an overwhelming case. The Government need not worry, because upon the house there will be a charge of £700, and they will get their money anyhow, although they may have to wait a little for it.

My hon. Friend says that there are precedents for this. I am glad to hear that. Even if there were no precedents, I am sure that that would not stop the Financial Secretary helping us. The Government claim again and again that they are humane and interested in people's personal problems. Here is the test. Let them show that they are humane. Let them accept the Clause.

Mr. Ian Lloyd

Having been responsible this week for moving a number of highly technical and arid Amendments which have found the Financial Secretary's heart as stony as one might expect for that type of Amendment, it gives me pleasure to support my hon. Friend the Member for Ayr (Mr. Younger) in this Clause, which embodies in principle what I had hoped to succeed in obtaining with my Deferment of Estate Duty Bill which was seventh in the Ballot and has not been reached and is not likely to be reached.

This proposal is very humane for reasons which must be apparent. I am concerned that the Clause should be accep- ted and that the Financial Secretary should not turn it down purely on financial grounds, saying that the State cannot afford either now or in the foreseeable future a very large loss of duty. The loss of duty would not be much in terms of the current figures in our total national Budget.

The total number of estates subject to duty in the year 1963–64 was 316,000, of which 154,224 were the estates of surviving women. Of the total number, roughly 60,000 bore duty, and of those—they are all estates over £5,000–26,400 were the estates of surviving women. The total capital value of these estates was about £1,100 million, but the segment of the total capital value which applied to freehold and leasehold residential property was only £175 million, or 15 per cent. of all estates over £5,000.

The net receipt of all duty was £312 million, roughly £1,075 per estate, if all estates, including those exempted, are taken into consideration, and no less than £5,000 per estate if only those estates bearing duty are taken into consideration. This sets the spectrum in which the problem has to be considered.

As my hon. Friend the Member for Chippenham (Mr. Awdry) pointed out, the rates are rather penal. In the estates which just come into the duty bracket, £5,000 to £6,000, 1 per cent. can be ignored, because a charge of £50 or £60 is created on an estate of that size. When one reaches the figure of £8,000 to £10,000, which is by no means the vast sum nowadays that it might have been considered to be before the First World War, or even the Second World War, the 4 per cent. rate produces a duty of £320 to £400.

When we reach the level of estate given in the example by my hon. Friend the Member for Chippenham, £18,000 to £20,000, we reach duty levels of £2,160 to £2,400. This represents a real burden on what is, by common consent, a modest estate. One might suggest that at current levels of inflation practically all estates will be in this modest bracket by 1985. Thus, we do not have to look far forward to a situation where the average price of an average house will be £6,000 to £7,000, and those houses will be very much embraced by these proposals.

I shall not weary the Committee any more with statistics, but I end by reminding hon. Members who may have read it of the distinguished book by the late President Kennedy, "Profiles in Courage", in which he quotes an incident in a quarrel between two distinguished United States senators—the late Senator Benton and the late Senator Calhoun.

6.30 p.m.

The two Senators conducted a lifelong quarrel with great virulence, much to the delight and amusement of the American public. When Senator Benton lay on his death bed, Senator Calhoun suddenly stopped the quarrel and someone asked him why, because the quarrel was very well known. His reply was most relevant to this Clause. It was: When God Almighty lays His hand on a man, Sir, I take mine off, Sir. In the United Kingdom—and not alone here—when God Almighty lays his hand upon a man, that is the moment that the Inland Revenue chooses, with the full blessing of the State, to lay its hands on his wife. This is an uncivilised practice and its removal is something that a great many citizens, at every level of income, would be prepared to pay more tax in another direction in order to secure, knowing that they were postponing the date for the collection of this duty.

It would be only a relatively short period of five to seven years—the average difference in the life spans of men and women—after which the duty would automatically start coming back to the coffers of the State. That is all we ask. It is a matter of timing, of postponement. It would entail a loss of revenue, but I am sure that the country would be prepared to make it up in other ways.

Mr. MacDermot

The hon. Member for Ayr (Mr. Younger) and the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) made it clear that they do not view with any great favour our Estate Duty law and much of the hardship they say results from it. They followed through, quite logically, with an attack upon the system. I have a lot of sympathy with what they say and as a party we are committed to reform and to tax reform. Nevertheless, the Committee may feel that we have bitten off quite sufficient in the present Bill without tackling Estate Duty law as well.

No doubt, in the full course of time, in the years ahead, my right hon. Friend will turn his constructive mind to these problems, but, meanwhile, we have to consider whether it would be right to make the alteration in the law proposed by the Clause. I must say at once that it would be a departure in principle from the basis of the present duty. In technical language, the present Estate Duty is what is known as mutation duty, which means that the whole of the estate as such is charged at a given level of tax, depending on the size of the estate, without any regard to the circumstances of the beneficiaries.

No doubt this was one of the matters the hon. Member for Ayr had in mind when he said that he would like this duty replaced by an inheritance duty, but that is the law and it would be a departure from the principle to make this alteration. However, that is the sort of argument which I know does not greatly appeal to the Committee and, having made the point, I will leave it.

I come to more worth-while arguments. The first is that the proposal would be highly discriminatory as between one beneficiary and another. I concede that it is a class which commands great sympathy because, for the most part, this would benefit widows although, sometimes also widowers. It would, however, benefit only a limited sector of that class, namely, widows who were owner occupiers or whose husbands were owner occupiers. But even within that sector it would benefit only a limited number because it would affect only widows whose husbands were owner occupiers and who continued to live in what had been their home. These are the only people who would benefit.

The hon. Member for Chippenham (Mr. Awdry) gave a moving example of the man who has built up his business. Because the hon. Gentleman wanted to bring out the full iniquity, as he believes, of the Capital Gains Tax, his example was that of a man with a business where there would be a large capital gain element. The classic example of this would be the shopkeeper because of the large goodwill element within the value of the capital assets.

A great many shopkeepers live above the shop and if we are envisaging an example where the business is sold—which is what the hon. Gentleman envisaged—then usually the premises above are sold with the shop and so the widow in many cases could not benefit from the Clause at all because she would have ceased to live in the matrimonial home. The relief under the Clause would thus be confined to the surviving spouse who remained living in the house and only for so long as she remained in it.

Of course, many widows succeed to an estate which is larger than the exemption. The estate up to £5,000 is exempt. Then there is a very low rate—1 per cent.—on estates between £5,000 and £6,000, 2 per cent. within the next £1,000 and 3 per cent. within the next £1,000, and so on. It builds up.

Assuming that a widow succeeds to an estate of £10,000 to £15,000, there is an appreciable sum to be paid in estate duty. There will be many such widows whose husbands were not owner-occupiers and they will be confronted with similar difficulties. Yet they would not benefit from the Clause. Thus, the Clause would make one widow feel that she had been deprived of a benefit granted to another. That situation would not assist in producing that sense of equality and fairness which we strive to achieve in our tax system.

The hon. Member for Ayr—at some peril to his argument—referred to the fact that many elderly people at the time of the death of one spouse are already living in a house that is too big for them and that that element of under-occupation, as it is called by housing experts, increases when there is only one spouse left. Of course, if the surviving spouse did move to accommodation of a size better suited to her needs, she would lose the benefit of the Clause.

I remember that, just before the election, I discussed the housing problems of Derby with the housing manager. He told me that if he could have 1,000 old people's bungalows he could solve Derby's housing problem overnight. This is because so many people live in under-occupied accommodation. Nearly all of them are widows and elderly people who have brought up a family in their home and one can fully understand the human reasons why they do not want to move.

Of course, for some particularly elderly people it would be a great shock to move. The hon. Gentleman quoted the instance where to try to move the person might imperil that person's whole future. Nevertheless, one wants to encourage movement wherever it can reasonably take place and to build into our tax law an inducement to remain in the house—which is what the Clause would do—when looked at from the wider social point of view would be of very dubious value.

The class of people who would be singled out for preferential treatment by the Clause are already getting some relief on Estate Duty compared with others because, while the Estate Duty on personal property must be paid when the probate is obtained, the duty on real property, which is what we are concerned with, can be spread by instalments over eight years. We should, therefore, be adding to an advantage which already exists. I would, in parenthesis, comment that this is the answer to the hon. Gentleman who referred to the favoured treatment of agriculture. The only way in which agricultural land is favoured is by spreading the liability.

A number of hon. Members have referred to cost. They say that the new Clause would not cost the Treasury anything because it would only defer payment. I do not base the argument primarily on cost, but I must correct the mistaken impression that if we defer permanently a tax for a period of years it does not cost the Treasury anything. It does. For the initial years, it costs the Treasury the whole amount. One can illustrate the point by imagining everybody's liability to tax being assessed at this moment but their being given two years before they need to pay. The result would be that the Treasury would get no taxes for two years.

This proposal would, in the first year, mean a loss of £10 million to the Treasury. The loss would decline over the years until it disappeared. From then on, there would be no further loss. However, at a time when my right hon. Friend the Chancellor has found it necessary to increase taxation very substantially, he cannot, even if he wanted to do so, accept a proposal which would mean a revenue reduction this year of £10 million.

As I have said, that is not the argument on which I ask the Committee to reject the Clause. We do not think it should be accepted because it proposes a relief which would single out a particular class within a particular class on a particular form of property.

For these reasons, I suggest that the Clause is unacceptable.

Mr. Peter Walker

I am sure that my hon. Friend the Member for Ayr (Mr. Younger) and my other hon. Friends who have spoken will be very disappointed with the Financial Secretary's reply. I give my sympathy to the hon. Gentleman, who, for 16 days, has had to speak to long Treasury briefs, most of them proposing the imposition of very bad taxes on the country. I should have thought that the Treasury would have had the kindness to give the hon. Gentleman one opportunity to do something pleasant and which would have shown that there is a spark of humanity even in this very hard Government.

Mr. MacDermot

When agreeing with the Motion to report Progress the other night, the right hon. Member for Bexley (Mr. Heath) said that for the previous two days we had been doing nothing but capitulate to the Opposition's demands.

6.45 p.m.

Mr. Walker

My right hon. Friend was perfectly right when he said that for two days the Government had been in a state of constant capitulation. But this was not because they were being generous to the taxpayer; it was because they had drafted the Bill badly and incompetently and recognised the superior attitude to these matters of my right hon. and hon. Friends. What we should like to have is a little human warmth on the part of the Government. Once again, it has been lacking.

During the Committee stage I have come to the conclusion that the Treasury prepares its briefs by giving the Ministers five or six pages of arguments, many of them differing arguments, and leaving it to the Ministers to decide which of them they should deploy. One of the difficulties is that, probably through being under great pressure, the Ministers have at times deployed contradictory arguments, all contained in the same Treasury brief. This afternoon was no exception.

We heard, first, the general argument that the new Clause involves a great change of principle in respect of Estate Duty. Later, it was said that there was a certain amount of discretion given on Estate Duty on real property in that the payment of the duty could be spread over a period. The principle which allows people to pay Estate Duty on real property over eight years is identical to the principle advocated in this Clause. We say, not that these people should not have to pay Estate Duty, but that the estate should pay when the widow or widower dies. This involves a spread of the period different from the eight year method, but in principle it is identical to the principle involved in allowing people to pay Estate Duty over eight years. I would argue that no change of principle was involved in the new Clause.

The second argument which the Financial Secretary endeavoured to deploy was that the Clause proposed a discriminatory concession which would not apply to everybody. This is surely true of almost every tax concession which is made. Estate Duty is a discriminatory form of taxation. There are discriminations within it. Any form of concession in Estate Duty obviously will apply in a different way at various levels of Estate Duty. This is not an argument for giving a concession in respect of something which involves real human hardship.

There is an easy solution to the argument about shopkeepers and the continuous under-occupation of property. I am sure that my hon. Friends would be willing for the Clause to be redrafted to fit the perfectly cogent argument of the Financial Secretary. He quoted the case of the shopkeeper. He asked what was the position if, as a result of Capital Gains Tax and Estate Duty, the family business has to be sold and the widow or widower has to move out of the premises into some other premises. He said that the Clause would not provide for such a person. He is perfectly right, and we shall be most grateful to him when he decides to include it in the Bill.

Perhaps he will add to the Clause a method similar to the replacement of business asset provisions of the capital gains section of the Bill whereby such a person could change the living accommodation part of the shop into a private dwelling-house. This same happy formula could be applied, and it would encourage people to move to smaller premises. It would be the responsibility not of the local authority, but of the individual concerned. If there were added to the Clause a provision that if the widow or widower decided to move to a smaller unit of accommodation the amount of money invested in that smaller unit would enjoy the privileges of the Clause, this would overcome the Financial Secretary's difficulty. Perhaps he will decide, on reflection, that his objections can be easily overcome and will go back to the Treasury and say that, in view of the cogent arguments of my hon. Friends he is willing to accept the new Clause.

The hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) rightly argued the importance of the case. The action of the Treasury Bench today, after the blandishments of the Leader of the Liberal Party yesterday, must be disappointing to the Liberal Party. Within the space of three and a half hours, the Government have turned down a new Clause to encourage the spread of share ownership, a new Clause encouraging education and, now, the new Clause so ably advocated by the hon. Member for Roxburgh, Selkirk and Peebles. This is not the way to go on if the Government want 10 extra votes.

Mr. David Steel

Is the hon. Member now supporting the views of the Leader of the Liberal Party?

Mr. Walker

I am saying that this must be a day of bitter disappointment to the Leader of the Liberal Party, who will have to reconsider his position and make another speech at the weekend suggesting, perhaps, that he will join up with us, provided that we give him proportional representation.

In the long term, as the Financial Secretary admitted, the Clause would cost the Treasury nothing. In fact, if the Government continued in office, they would actually make money. Over a time of rising prices, property would be worth much more than at present and thus the Government would have a share of the inflation that they are causing. All that the Committee is asking is that a person should not have to pay Estate Duty upon the home if he or she continues to live in it.

My hon. Friends the Members for Ayr (Mr. Younger) and Chippenham (Mr. Awdry) have both given good examples of what an inhuman form of taxation is imposed upon a widow or widower. My hon. Friend the Member for Chippenham pointed out that the situation has now been aggravated by the imposition of the Capital Gains Tax at the time of death. Not only do people have to find immediate cash resources to meet their Estate Duty obligations, but they have to find immediate cash resources to meet any Capital Gains Tax which is imposed upon on estate.

At a time when the Government are increasing the incidence of taxation at death—and to a greater extent upon people with small estates than with larger estates—the least they could have done would be to accept our excellent and humane Clause to solve a problem which exists in many homes when a leading member of the family dies.

I am very disappointed at the Financial Secretary's reply. Unless he is willing, as I hope he is, to say, on reflection, that most of our arguments could easily be met by making slight Amendments to the Bill, I must ask my right hon. and hon. Friends to divide the Committee.

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

The Committee divided: Ayes 122, Noes 128.

Division No. 203.] AYES [6.52 p.m.
Alison, Michael (Barkston Ash) Blaker, Peter Channon, H. P. G.
Allan, Robert (Paddington, S.) Boyd-Carpenter, Rt. Hn. J. Clarke, Brig. Terence (Portsmth, W.)
Allason, James (Hemel Hempstead) Boyle, Rt. Hn. Sir Edward Cooke, Robert
Anstruther-Gray, Rt. Hn. Sir W. Braine, Bernard Cooper-Key, Sir Neill
Baker, W. H. K. Brinton, Sir Tatton Craddock, Sir Beresford (Spelthorne)
Balniel, Lord Brooke, Rt. Hn. Henry Crawley, Aidan
Batsford, Brian Burden, F. A. Crosthwaite-Eyre, Col. Sir Oliver
Beamish, Col. Sir Tufton Buxton, Ronald Curran, Charles
Black, Sir Cyril Carlisle, Mark d'Avigdor-Goldsmid, Sir Henry
Deedes, Rt. Hn. W. F. Hill, J. E. B. (S. Norfolk) Prior, J. M. L.
Doughty, Charles Hogg, Rt. Hn. Quintin Rees-Davies, W. R.
Drayson, G. B. Hooson, H. E. Ridley, Hn. Nicholas
Eden, Sir John Hordern, Peter Royle, Anthony
Elliot, Capt. Walter (Carshalton) Hornsby-Smith, Rt. Hn. Dame P. Sharples, Richard
Elliott, R. W.(N'c'tle-upon-Tyne,N.) Hunt, John (Bromley) Shepherd, William
Emery, Peter Iremonger, T. L. Sinclair, Sir George
Errington, Sir Eric Jenkin, Patrick (Woodford) Speir, Sir Rupert
Fell, Anthony Johnston, Russell (Inverness) Steel, David (Roxburgh)
Fletcher-Cooke, Charles (Darwen) Kerr, Sir Hamilton (Cambridge) Studholme, Sir Henry
Fraser,Rt.Hn.Hugh(St'fford & Stone) Kershaw, Anthony Summers, Sir Spencer
Fraser, Ian (Plymouth, Sutton) Kimball, Marcus Taylor, Sir Charles (Eastbourne)
Gardner, Edward Lagden, Godfrey Taylor, Edward M. (G'gow,Cathcart)
Glover, Sir Douglas Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield) Thompson, Sir Richard (Croydon, S.)
Goodhew, Victor Longden, Gilbert Thorpe, Jeremy
Grant, Anthony Lubbock, Eric van Straubenzee, W. R.
Gresham Cooke, R. MacArthur, Ian Vickers, Dame Joan
Griffiths, Eldon (Bury St. Edmunds) Maclean, Sir Fitzroy Walker-Smith, Rt. Hn. Sir Derek
Griffiths, Peter (Smethwick) Marples, Rt. Hn. Ernest Walters, Dennis
Grimond, Rt. Hn. J. Mathew, Robert Ward, Dame Irene
Gurden, Harold Mawby, Ray Weatherill, Bernard
Hall, John (Wycombe) Maxwell-Hyslop, R. J. Whitelaw, William
Hall-Davis, A. G. F. Meyer, Sir Anthony Williams, Sir Rolf Dudley (Exeter)
Harris, Frederic (Croydon, N.W.) Mills, Peter (Torrington) Wills, Sir Gerald (Bridgwater)
Harris, Reader (Heston) Mills, Stratton (Belfast, N.) Wilson, Geoffrey (Truro)
Harrison, Brian (Maldon) More, Jasper Woodhouse, Hon. Christopher
Harvey, John (Walthamstow, E.) Morrison, Charles (Devizes) Wylie, N. R.
Hastings, Stephen Mott-Radclyffe, Sir Charles Yates, William (The Wrekin)
Hawkins, Paul Munro-Lucas-Tooth, Sir Hugh Younger, Hn. George
Hay, John Onslow, Cranley
Heath, Rt. Hn. Edward Osborne, Sir Cyril (Louth) TELLERS FOR THE NOES:
Hendry, Forbes Page, R. Graham (Crosby) Mr. Pym and Mr. Dudley Smith.
Higgins, Terence L. Peel, John
Albu, Austen Holman, Percy Paget, R. T.
Atkinson, Norman Horner, John Parker, John
Bacon, Miss Alice Howarth, Harry (Wellingborough) Parkin, B. T.
Bishop, E. S. Howarth, Robert L. (Bolton, E.) Pavitt, Laurence
Boston, T. G. Howell, Denis (Small Heath) Popplewell, Ernest
Bowden, Rt. Hn. H. W. (Leics, S.W.) Howie, W. Prentice, R. E.
Bradley, Tom Hughes, Emrys (S. Ayrshire) Pursey, Cmdr. Harry
Bray, Dr. Jeremy Hughes, Hector (Aberdeen, N.) Rees, Merlyn
Brown, Rt. Hn. George (Belper) Hunter, A. E. (Feltham) Reynolds, G. W.
Brown, Hugh D. (Glasgow, Provan) Irving, Sydney (Dartford) Rhodes, Geoffrey
Brown, R. W. (Shoreditch & Fbury) Janner, Sir Barnett Roberts, Albert (Normanton)
Buchanan, Richard Jenkins, Hugh (Putney) Roberts, Goronwy (Caernarvon)
Butler, Herbert (Hackney, C.) Jenkins, Rt. Hn. Roy (Stetchford) Robinson, Rt. Hn.K.(St. Pancras, N.)
Callaghan, Rt. Hn. James Johnson, Carol (Lewisham, S.) Rogers, George (Kensington, N.)
Carter-Jones, Lewis Jones, J. Idwal (Wrexham) Rose, Paul B.
Chapman, Donald Jones, T. W. (Merioneth) Shore, Peter (Stepney)
Cousins, Rt. Hn. Frank Kelley, Richard Short.Rt.Hn.E.(N'c'tle-on-Tyne.C.)
Crawshaw, Richard Kerr, Mrs. Anne (R'ter & Chatham) Short, Mrs. Renée (W'hampton,N.E.)
Darling, George Kerr, Dr. David (W'worth, Central) Silkin, John (Deptford)
Davies, Harold (Leek) Lawson, George Silkin, S. C. (Camberwell, Dulwich)
Delargy, Hugh Ledger, Ron Silverman, Julius (Aston)
Dell, Edmund Lee, Miss Jennie (Cannock) Silverman, Sydney (Nelson)
Dodds, Norman Lewis, Arthur (West Ham, N.) Skeffington, Arthur
Driberg, Tom Lipton, Marcus Slater, Mrs. Harriet (Stoke, N.)
Dunnett, Jack Loughlin, Charles Snow, Julian
English, Michael McCann, J. Stonehouse, John
Evans, Albert (Islington, S.W.) MacDermot, Niall Strauss, Rt. Hn. G. R. (Vauxhall)
Evans, Ioan (Birmingham, Yardley) McInnes, James Swain, Thomas
Fitch, Alan (Wigan) McLeavy, Frank Thomas, George (Cardiff, W.)
Fletcher, Sir Eric (Islington, E.) Mallalieu,J.P.W.(Huddersfield,E.) Tomnev, Frank
Fletcher, Raymond (Ilkeston) Mason, Roy Tuck, Raphael
Floud, Bernard Mikardo, Ian Urwin, T. W.
Foley, Maurice Molloy, William Varley, Eric G.
Freeson, Reginald Morris, Alfred (Wythenshawe) Wallace, George
Garrow, A. Morris, Charles (Openshaw) Warbey, William
Grey, Charles Murray, Albert Weitzman, David
Griffiths, Will (M'Chester, Exchange) Newens, Stan Whitlock, William
Gunter, Rt. Hn. R. J. Noel-Baker, Francis (Swindon) Wilkins, W. A.
Hamling, William (Woolwich, W.) Norwood, Christopher Wilson, William (Coventry, S.)
Hannan, William Ogden, Eric Zilliacus, K.
Harper, Joseph O'Malley, Brian
Hazell, Bert Oram, Albert E. (E. Ham, S.) TELLERS FOR THE NOES:
Heffer, Eric S. Orbach, Maurice Mr. Ifor Davies and Mr. Gourlay.
Henderson, Rt. Hn. Arthur Page, Derek (King's Lynn)