Clause 10.—(ALTERATIONS IN RELIEFS.)

HC Deb 20 May 1965 vol 712 cc1737-87

7.0 p.m.

The Deputy-Chairman (Sir Samuel Storey)

The next Amendment selected is Amendment No. 28, in page 6, line 21, leave out "£340" and insert "£400".

We can also discuss Amendment No. 29, in line 23, leave out "£220" and insert "£250".

Amendment No. 30, in line 26, leave out "£.220" and insert "£250".

Amendment No. 300, in line 30, leave out "£30" and insert "£75".

Amendment No. 31, in line 30, at end insert: Provided that for the purposes of any year of assessment or part thereof in which a husband and wife are living together one of whom is a dependent relative the said amounts of £255 and £180 shall be increased to £435 and £360 respectively.

Amendment No. 298, in line 30, at end insert: (4) In section 217 of the Act of 1952 (claimant depending on services of a daughter or sister) for the reference to £40 (inserted by section 14(4) of the Finance Act 1953) there shall be substituted a reference to £100.

Amendment No. 299, in line 30, at end insert: (4) In section 214 of the Act of 1952 (person taking charge of widower's or widow's children or acting as his or her housekeeper) as amended by section 18 of the Finance Act 1960 for the reference to £75 there shall be substituted a reference to £100.

Amendment No. 87, in line 31, leave out subsection (4).

Amendment No. 32, in line 33, after "effect", insert: except in relation to employers' contributions".

Amendment No. 33, in page 7, line 2, leave out "£390 and £625" and insert "£400 and £650".

Amendment No. 34, in line 4, leave out "£160" and insert "£200".

Amendment No. 109, in line 4, at end add: (7) In section 211(2) and (3) of the Income Tax Act 1952 (old age relief), as amended by section 12(2) of the Finance Act 1963, for references to £900 (maximum income qualifying for full relief) there shall be substituted references for £1,000.

Amendment No. 110, in line 4, at end add:

(7)In section 212 of the Income Tax Act 1952 at the end of subsection (1A) there shall be inserted the following:— (1B) If a claimant proves that he is in receipt of any small maintenance payments as defined by section 205 of this Act, or of any payments which, but for their amount, would be such small maintenance payments, in respect of any child living with him at any time within the year of assessment he shall be entitled in respect of each child to a deduction from the amount of income tax with which he is chargeable equal to tax at the standard rate on the appropriate amount for each child.

(8) In subsection (2) of section 525 (meaning of "earned income") of the Income Tax Act 1952, at the end of paragraph (c) there shall be inserted the following:— "(cc) any small maintenance payments, as defined by section 205 of this Act, and any payments which, but for their amount, would be such small payments; and".

(9) Section 207 of the Income Tax Act 1952 (duty of court to give information as to small maintenance orders) shall have effect in relation to any payments mentioned in subsections (7) and (8) of this section as it has in relation to small maintenance payments and the expression "small maintenance payments" shall, for the purposes of subsections (7) and (8) of this section be construed accordingly.

Amendment No. 120, in line 4, at end add: (7) If the claimant, being a parent in full-time occupation, employs during the year of assessment any person for the purpose of having the charge and care of the claimant's child or children, or in the capacity of a housekeeper or house-worker, he or she shall, subject as hereinafter provided, he entitled to a deduction from the amount of income tax with which he or she is chargeable, equal to tax at the standard rate on a maximum of £150, or any lesser sum paid in wages to such an employee".

Provided that—

1. (a) no relief shall be allowed under this section unless, in the case of married parents living together, both husband and wife are in full-time employment or either spouse is permanently incapacitated;
2. (b) not more than one deduction of tax shall be allowed under this section to any claimanant for any year;
3. (c) this section shall apply to a claimant being a widow; widower; separated, divorced or deserted parent having custody of a child or children; or unmarried mother having permanent charge of her child or children.

Amendment No. 88 in Schedule 19, page 219, leave out lines 7 to 11.

Amendment No. 87 could be moved formally later if a Division is required.

Mr. Ellis Smith (Stoke-on-Trent, South)

On a point of order. To facilitate the business, will you be good enough, Sir Samuel, to consider the possibility of benefiting from past experience and having, within reason, a broad discussion on the Amendments on the understanding that the Committee undertakes that hon. Members shall not cut across one another in discussing them? Afterwards, if the Opposition wished to divide on any Amendment their right to do so would be safeguarded.

The Deputy-Chairman

If the hon. Member will study the Amendments which I said can be discussed together he will find that the Committee will be given an opportunity to have a broad discussion on the whole lot.

Mr. Ellis Smith

Thank you, Sir Samuel.

Mr. Geoffrey Hirst (Shipley)

I beg to move Amendment No. 28, in page 6, line 21, to leave out "£340" and to insert "£400".

I shall refer, in the first place, to Amendments Nos. 29 and 30 with this Amendment, because within your grouping, Sir Samuel, they particularly hang together. Subsection (10) proposes the abolition of National Insurance tax relief whereby a proportion of National Insurance payment could be set off against tax. I consider this to be a very measly business. It is, regrettably, part of an unfortunate element of which we have already seen a great deal and which I can only describe as envy, malice and spite which permeates throughout this miserable Measure.

It is objectionable because it supposes that there is something unseemly about the taxpayer receiving some assistance for tax purposes in respect of a compulsory levy. There is supposed to be a social injustice here which is being put right, but I make the point now that that is plain nonsense. However, that is by no means the end of it. The Government, having decided to change the system, proceed, as I am advised, to rob the individual of part of his rights.

A single person under the subsection gets an increase in personal allowance of £20 set off against the stamp allowance for tax purposes whereas the amount that could formerly be deducted for tax purposes was £22. I apologise if I am not correct in thinking that this is a rather silly creaming off of the odd £2. If I am wrong I shall be delighted to withdraw that remark. In the past it was accepted that the National Insurance relief was considered to be analogous to that operating for life insurance. As the pension which one is paid is taxable, the contributions towards it should not be themselves taxable. To put it in another way, it was a postponement of income.

What are the Government doing, apart from indulging in the rather contemptible old-fashioned class hatred which is boring us so much in this Finance Bill? What is their game? They are ripping to pieces—and I choose my words carefully—a well-understood and well-respected theory. I hope that my hon. Friends will develop this point.

What next? Are we to be informed? Will the public, who are very nervous about this matter, be informed? I trust that they will be. Is this to be an excuse for another onslaught on private insurance schemes? Is that the game at the bottom of it all? I am sorry to search like this on the Finance Bill, but we on this side of the Committee, and the country generally, have been very much shaken by this. It has rather destroyed our faith in even democratically elected Governments.

We are bound to ask these nasty questions. I do not like doing it, but I shall not desist. I have resisted very few such opportunities, on whichever side of the Committee I sat, and I shall not start now, least of all on this Bill. The country has a right to know what the game is. If it is as I think it is, I hope that this debate will expose the Government's purpose to the full glare of public knowledge.

My right hon. and hon. Friends, by Amendment No. 87, seek to delete subsection (4) altogether. That would be the wisest of all courses. But what I have said so far has expressed only part of the purpose I seek to serve by my Amendments. It will be observed that Amendment No. 28 would increase the personal married allowance from £340 to £400, a net gain of £60 in relation to the Bill, or £80 overall instead of the £20 which the Government propose. Amendment No. 29 would raise the personal single allowance from £220 to £250, a net gain over the Bill of £30, or £50 in all instead of the £20 in the Bill. Amendment No. 30 would do the same in respect of a wife's earned income relief.

The increases I propose are reasonable and essential to help to meet the quite appalling increase in living expenses which people have suffered in recent months, an increase which has been particularly marked by the enormous rise in the cost-of-living index last month. Let the country beware. Plainly, we are getting back more rapidly than even I expected to the minimum increase of 6½ per cent. which characterised the Socialist Government's period of office before, about which we so earnestly reminded the nation at the election but which it so easily forgot. We are well back on the road to it now.

All these increases in living costs mean a great deal to the average family, the best part of a £1 a week—for some a bit less and for some a good deal more. One by one, they are being pushed on people by this Givernment. Income tax up 6d., employer's contribution up 2s., petrol up 6d., car licences up £2 10s., with a rise of 100 per cent. for small vehicles. I must not develop that point now, but we all remember the figures from our debate last night. Cigarettes up 6d. a packet, beer up 1d. a pint, wine duty up 6d. and whisky up 4s. a bottle, postage up 33½ per cent. on a 3d. letter, T.V. licence up, rates up nearly 14 per cent.——

The Deputy-Chairman

Order. The hon. Gentleman is developing the point.

Mr. Hirst

I see your point absolutely, Sir Samuel, but I felt that, if I made the statement that the cost of living had gone up a great deal in order to justify my argument for increased personal allowances, I was in honour bound to show why. Perhaps you have saved me a certain amount of time, Sir Samuel. I had by no means reached the end of my list of increases, although, perhaps, I have indicated enough to support an argument which no hon. Member opposite can conceivably controvert.

Things are very serious for the average family. The Government, having done it knowingly, having created a great sense of injustice in everyone, have a duty to set things right as far as they can and to do something in mitigation of their mismanagement during the past few months. Even the increases which I propose are not enough to meet the spiral of increased costs which lie ahead, as every action taken by the Government shrieks in letters bold enough for all to see. This is more than a justification for that particular set of Amendments.

7.15 p.m.

I come now to another set, Amendments Nos. 33 and 34. Naturally, in this large group of Amendments selected for discussion together, there is some overlapping. Amendments Nos. 33 and 34 go together, dealing with age exemption for small incomes and marginal relief. The first would raise the limits of age exemption under Section 13 of the Finance Act, 1957, rather more generously than the Government propose so that people, over 65 years of age will not pay any tax, if single, if their income does not exceed £400, or, if married, provided that one of the couple is 65 years of age, if their income does not exceed £650. I admit that this is a modest Amendment, but it is an important one and an improvement on the Government's proposals, giving an extra allowance over that proposed of £10, if single, and £25, if married, in respect of these small incomes.

On the Report stage of the Finance Bill last year, the right hon. Member for Sowerby (Mr. Houghton), speaking, as he often did, with great sincerity about incomes of this type, said: In terms of revenue"— that was his suggestion at the time— it is a very small matter. On the human side, however, it is most important to a number of people."—[OFFICIAL REPORT, 30th June, 1964; Vol. 697, c. 1151.] I am sorry that other duties—I am sure that it must be other duties, because nothing else would have kept him from the Chamber when we are debating these matters—have prevented the right hon. Gentleman from coming here, because I am sure that he would have great difficulty in not giving me his support. Indeed, his speeches over the past 10 years are meaningless otherwise. I know something about his attitude because, occasionally, both he and I were against my own Government. I did not have to press them very strongly, of course, because Conservative Governments have done a great deal in this respect. This particular form of relief—I acknowledge that there was an earlier one of a kind in about 1925—was first introduced in 1957.

I need hardly remind the Committee or the nation, which only wishes that they were back again, that the Conservatives were then in power. The reliefs have been extended three times since then. Many of my hon. Friends, quite apart from what my right hon. and hon. Friends on the Treasury Bench did, played a great part and were champions of this worthy cause. I can see one or two of them round about me now, and I know that they will give me their support in full measure.

Placed as I am on the Opposition side today, I appeal to the Government to do at least something to put things right, if only in honour of the absent right hon. Member for Sowerby, whose ghost must be walking up and down the Treasury Bench at this time, making even the Financial Secretary bow his head. I only hope that something of the right hon. Gentleman's spirit has permeated the Financial Secretary and that he will not give us one of his quite pleasant but miserably marked briefs in reply.

There is no better cause than this. Older people living on small fixed incomes have been especially hard hit by inflation, and they are being more grievously hit by the inflation which the Government are almost wantonly putting upon the nation. Goodness knows, they need the maximum degree of help at present.

The extra amount I propose would cost, relatively, only a trifle in the great sea of Government expenditure. It would hardly be noticed. But it would help some people to pay their rates, which are a grievous burden from which people are receiving no alleviation by the policies of Her Majesty's Government. It would help those people for a few months until they are rescued once again by the return of a Tory Government.

The Deputy-Chairman

Before I call the next speaker, I should add that Amendment No. 300, in the name of the hon. Lady the Member for Tyne-mouth (Dame Irene Ward), is also selected for a Division if required.

Mr. Ellis Smith

I desire to make some observations on behalf of people who are earning less than £20 a week. I desire to protest against the unfair taxation of those people. I desire to protest against the fact that reliefs are given to those who are better off than these people. I desire to protest, providing I understand it correctly, against the reliefs given in this Bill. These Amendments provide me with an opportunity to do so.

Many of my observations will be of an interrogatory character, and I hope, therefore, that my hon. and learned Friend the Financial Secretary to the Treasury will be good enough to make notes of them, because I want those whom we represent to be able to understand what is at stake.

This country has arrived at a serious situation which the Committee has not yet faced. Many of the people I represent are working two or three shifts to produce the wealth that we need for exports. It is by that means that we are living. Yet we are involved in this unfair incidence of taxation which is imposing a serious burden upon those engaged on both sides of manufacturing, productive industry.

When one is faced with serious competition, and when every farthing that goes into the cost of production counts in maintaining a competitive position, then one is bound to have regard to overhead costs imposed upon one by constantly increasing taxation and by an unfair incidence as a result of the way that taxation is imposed by this Committee. That is the basis on which I want to make my observations and I have a number of questions to my hon. and learned Friend.

Will the withdrawal of the tax reliefs with regard to part of the employees' National Insurance contributions only affect what is deemed to be in respect of State pensions—normally, £22 per annum? Is it correct that the disallowance is only to be made as regards employees' contributions, with those paid by the employers still being allowed in full? If so, is it not significant that the Amendments would further worsen the position?

Is it correct that the allowance in the case of pension policies undertaken by life assurance companies not only includes full tax allowance on subscriptions to such policies, both by employers and employees, but that the whole of the investment income on the investment of such premiums is accumulated by the insurance companies free of any charge to United Kingdom taxation? Am I correct in this assumption? If so, surely this calls for serious reconsideration by the Chancellor.

Is it correct that there is preferential treatment of the life assurance companies and the employers in relation to normal life assurance policies and pension schemes? Is it correct that, when these life assurance companies or pension schemes undertake endowment policies, the employers are allowed Income Tax rebate on each contribution? Is it correct that, for taxation purposes, the employees' contributions are allowed only to the extent of 40 per cent.? Is it correct that the life assurance companies, whether on pension or other types of life assurance policies, are subject to reduced rates of taxation?

I am armed in regard to the seriousness of this position by two documents which can be obtained from the Library or the Vote Office—the Blue Book on National Income and Expenditure and the publication "The British Economy: Key Statistics 1900–1964". In those documents there is confirmation of the unfair incidence of taxation in Britain. That is the situation we have now arrived at. It affects those engaged in industry, those working for their living, those who are keeping us going, whether they have managerial responsibility or are on the shop floor. Both these documents confirm the existence of the unfair distribution of our total national income.

My right hon. Friend the Chancellor of the Exchequer said in his Budget speech that he was compensating for this disallowance of tax on National Insurance contributions. This is not enough. There ought to be a quality of treatement between one section of the community and another, especially in matters of this kind.

7.30 p.m.

The point that I am making is that if it is correct in the Income Tax calculations to allow employers, or life assurance companies or other federated employers of that kind, to charge these contributions against their Income Tax, no matter for what they may be, pensions, life assurance contributions, or National Insurance contributions, it is equally right to have equal treatment for those for whom I am speaking.

This is an issue which has become so serious that it is time that the Committee faced up to the problem. Our total expenditure is gigantic and this Committee should never have agreed to it. I am on good ground here, because I am one of the very few who did not agree to it. The country will suffer greatly in future—it will not affect me very much, because I have reached the age when it will not matter, but I have some concern for the future of the country and, if we are to hold our own in world exports in the greater competition which we shall face, we must have regard to fairness in the incidence of taxation and in allowances for tax purposes. When we make alterations in Income Tax relief, they must be seen to be fair and not only be fair, to use a phrase which I do not like using, but which is a typical lawyer's phrase.

These are the matters which the Committee should consider instead of playing about, as we were playing about the other night, laughing and joking. I do not want to he misunderstood. I like a joke as much as anybody, but there is a right time and a right place for everything. When in this Committee we are dealing with serious matters, we ought to approach them in a responsible manner, making constructive proposals and realistic analyses of the Amendments which we consider so that we can improve the Bill as it proceeds through the Committee. If the documents which I have mentioned are studied, it will be seen how unfair is the present incidence of taxation. I am asking my hon. and learned Friend not only to be good enough to deal with the matters which I have raised, but between now and the next Finance Bill to consider the unfairness of the incidence of taxation.

Mrs. Margaret Thatcher (Finchley)

I rise to support my hon. Friend the Member for Shipley (Mr. Hirst) in his cogent arguments and to congratulate him on the clear way in which he moved the Amendment and also to take up some of the issues raised by the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith). I wish to refer my remarks particularly to Amendment No. 87.

When the Chancellor of the Exchequer said in his Budget statement that he was proposing to withdraw tax relief from National Insurance contributions, he did it shortly and in a way which made the proposition sound extremely plausible, and for a moment it was not realised how far-reaching his proposal was. I reinforce what my hon. Friend said—if his ideas go through in this Finance Bill, the Chancellor of the Exchequer will be reversing a principle which has stood the test of time since 1799. When Income Tax was first introduced, in that year, Pitt himself emphasised the principle that where benefits were taxable, contributions should be deductible. There was a time when that relief was partially withdrawn and there was a time when it was wholly withdrawn, but then so was Income Tax, and that seemed to be a fair bargain.

I do not want to go back to trace the history right from 1799, but it is right that I should trace it from the inception of the National Insurance scheme, because the principle was again enshrined in the National Insurance Act and the Finance Act which accompanied it that summer. All benefits under the original National Insurance Act were taxable, with the exception of the lump sum benefits, the death grant and the maternity grant. They were not of a taxable nature. They were small once-and-for all benefits, whereas the other benefits were meant to be of an income nature, and so the contributions were allowed for tax purposes.

After a time, it was found extremely difficult to collect the tax on the short-term benefits, the sickness, unemployment and maternity weekly benefits. In the Finance Bill, 1949, the Treasury proposed that unemployment benefit, sickness benefit and maternity benefit should not be taxable, and that therefore that part of the contribution which was paid to secure those benefits should likewise not be allowable. Basically, the equation was the same—if the benefits were taxable the contributions were deductible; if the benefits were non-taxable the contributions were not allowable. So again the principle was reaffirmed in the Finance Act, 1949. I have many quotations from debates—I could deluge the Financial Secretary with them if he doubted this principle at all, but, because of time, I will not give them all now.

The next stage came with the inception of the graduated pension scheme. Again for administrative reasons, it was found that the precise amounts of the contributions paid for pension purposes in effect could not now be calculated on a yearly basis until after the end of the year. The graduated pension contribution is collected with the P.A.Y.E. tax, but is calculated on an entirely different basis. But the principle was retained and, instead of allowing the precise amount of the contribution referable to the pension, an annual lump sum was allowed, as my hon. Friend has said. The annual lump sum allowed for tax purposes was £22 for an employed man, £27 for a self-employed man and £26 for a non-employed person. Still the principle was retained.

But the present proposals of the Chancellor of the Exchequer are a complete reversal of the principle. What they mean is that once income has exhausted its taxable capacity and tax has been paid on one's entire income, there is still a compulsory contribution to be made, which is a compulsory direction of income into the National Insurance scheme, and the simple way of saying it is that tax is paid on the contributions.

Several reasons were advanced by the Chancellor for his thesis. He said that at the moment the reliefs operated in such a way that the better-off paid less. Of course, if there are reliefs against tax, then those who have never paid tax never get relief. This follows throughout every relief allowed in the Income Tax Acts. There is nothing new about that. But the better-off usually pay more tax on their benefits when these become payable, and the larger amount of tax which they pay helps to support the Exchequer contribution to the National Insurance scheme. Also, it helps to support many of the other social services.

I looked up on the Vote on Account the amount of Treasury money which the Ministry of Pensions and National Insurance estimates it will need in the 1965–66. This is Treasury money, not National Insurance contributions. My point is that the better-off people already contribute very heavily to the social services and, in particular, to the Ministry of Pensions. Treasury money to National Insurance this year will be £304 million; to family allowances £146 million; to the National Assistance Board £269 million and to war pensions £122 million. This makes a total of £841 million in one year, all of which will be contributed by those who pay Income Tax. I think that the Committee will agree that these people pay a fair whack through this method.

The Chancellor of the Exchequer advanced the view that National Insurance contributions rank for Surtax relief. Certainly they do. Why should they not? I wish that we could get rid of the idea that as soon as a person pays Surtax he should not have any tax relief whatsoever. He already pays a very considerable amount of tax.

In the 107th Report of the Commissioners of Inland Revenue, Table 71, which deals with the classification of incomes by size before tax, analyses 22 million incomes. Of those, only 730,000 odd are above £2,000 a year. I use the word "incomes", although they are income units. For this purpose, husband and wife are one, although perhaps they are not for many other purposes. Therefore, two teachers aged about 36, having done their three years' training and being on their maximum teachers' salary of over £1,000 each, would come into this category. Out of 22 million incomes, 735,000 —that is, 3 per cent.—have in total over £2,000 per annum. But those who make up the 3 per cent. pay 40 per cent. of the Income Tax paid by all individuals directly on their income.

Out of £2,326 million paid in tax, the people with incomes of over £2,000 a year—that is, the 3 per cent.—pay £915 million. My view is that we need more Surtax payers, not fewer, because they would help very considerably to increase the tax pool without putting up the rate of tax.

Another reason which the Chancellor advanced was that he would relieve the situation by putting up personal reliefs. Conservative Governments put up personal reliefs three times during their period of office—in 1952, from £110 to £120; in 1955, from £120 to £140; and in 1963 from £140 to £200, a much bigger jump than is proposed now. But no one ever suggested that to pay for those increased personal reliefs the tax relief on National Insurance contributions should be withdrawn.

Apart from putting up the personal reliefs, we introduced the age exemption relief. We also increased pensions five times at the same time as we brought down the standard rate of Income Tax from 9s. 6d. to 7s. 9d. in the £ and Purchase Tax from 100 per cent. down to a top rate of about 30 per cent. We did very well for the pensioners, in giving relief on National Insurance contributions and in bringing down the rates of tax.

7.45 p.m.

We are led to look for other reasons for withdrawing this relief. I hope that the Chancellor of the Exchequer will not succeed in establishing this new principle by a side wind, because, as has been said, what I believe he is doing is paving the way to disallow private pension contributions for relief. The reasoning which I deduce is in the Government's mind is that if State contributions are not allowed for relief the next stage is to disallow contributions to life assurance or occupational pension schemes. I shall require a very firm assurance from the Financial Secretary that no such thought is in the Government's mind and that the schemes approved under Sections 379 and 388 of the Income Tax Act will continue to enjoy the tax relief which they enjoy now.

After all, this is a vital question for many people. There are 12 million employed people in membership of occupational pension schemes. The annual contributions to those schemes amount to £750 million, their total funds amount to £8,000 million and the annual outgo on retirement pensions amounts to £400 million. This is a vital part of the retirement provision of people of this country. It will continue to grow and solve many problems for retired people provided that tax reliefs remain.

Secondly, if the Chancellor of the Exchequer upholds his action by pointing to the increased personal reliefs which he is giving, we shall want an assurance that every time National Insurance contributions go up an equivalent amount will be put on to the personal reliefs and that the operation will be in addition to the amount required by the effects of inflation.

There are two other technical points which I should like to raise. The Financial Secretary may know about the position of students under the National Insurance scheme. This is extremely important to them. While they are undergoing full-time education they are not compelled to pay weekly contributions to the National Insurance scheme. But if they do not do so they lose the cover which those contributions provide. I am afraid that many a student has found himself without unemployment benefit or sickness benefit and sometimes, if he has had a tragic accident, his widow has found herself without cover from widows' benefit.

There is, therefore, a special arrangement under which when they start work students, as well as paying their current National Insurance contributions, can pay their back National Insurance contributions, and they have six years in which to do so. Before this Bill, they could claim for tax relief not only that part of their current National Insurance contributions attributable to retirement pension benefit, but also the amount which they paid in respect of back contributions. That situation arose under the extra statutory concession No. 39. Students will obviously want to know whether there is to be a continuation of this concession, because, otherwise, they will have to meet quite heavy expenditure in the years just after they start work and get no tax relief on it.

I refer to Amendment No. 32 which relates only to part of subsection (4) of Clause 10 and to which the hon. Member for Stoke-on-Trent, South referred. This Amendment refers to the employer's part of the contribution.

The subsection which the hon. and learned Gentleman seeks to delete, as well as referring to the employee's part of the National Insurance contribution refers also to the employer's part of the contribution in relation to certain employees. It does not relate to employees who are employed in a trade or business because tax relief for those National Insurance contributions by the employer is allowed under a different Section and a different Schedule, Schedule D. It refers to the employer's contribution which he pays on behalf of a private employee.

If we employ anyone in the house of if a daily help works more than eight hours a week, one is supposed to pay an employer's contribution in respect of that person, in which event the amount paid can be set off against income. This is particularly important to the married woman who goes out to work, and particularly to the teacher or the nurse who returns to work. The first thing which they have to do is to get someone into the house to help with their domestic work to enable them to go out to follow their skilled profession.

As all married women Members of the House know, the wages which they pay to that person who comes to help with the domestic work are not allowable against the income which a married woman earns, but the amount which the married woman pays in the employer's contribution is allowed against her Income Tax. If the Chancellor's proposals go through unamended, that will be disallowed and, therefore, the married woman who seeks to return to work will have yet another deterrent and irritant put in her way.

That concludes my preliminary remarks. I will reserve any further comments for later observation, but I hope that the Financial Secretary will reply to these vitally important points.

Mrs. Lena Jeger (Holborn and St. Pancras, South)

I speak to my Amendment No. 120, which would add a new subsection to the Clause and would try to deal with some of the anomalies regarding Income Tax relief in respect of domestic help for people who go out to work. This follows, not unhappily, what the hon. Lady the Member for Finchley (Mrs. Thatcher) has said.

I must start by apologising for any of the inadequacies and inelegancies of the drafting of my Amendment, but I hope that the wording at least makes the intention clear. I know that in the Amendment I am asking a great deal of my right hon. Friend the Chancellor of the Exchequer. The basic purpose is to try to bring some aspects of our taxation law a little more into line with the realities of modern life. The provisions for tax relief in respect of domestic help are rooted in privilege and are completely anachronistic.

At present, the law allows tax relief—I am over-simplifying to save time—in respect of a resident housekeeper employed by a widow or widower whether or not he or she has children. This concession was introduced in 1918 and was limited to widows or widowers with small children. It was a rational provision. The Royal Commission of 1920 recommended that this concession should be limited to taxpayers who had children. In 1924, however, the allowance was extended to childless people and so it remains in force today, although the 1954 Royal Commission, in paragraphs 206–7 of its Report, recommended its withdrawal.

To make the position clear, I should like to give the following brief quotation from the Royal Commission: This provision is an anomaly and we do not see how it can be reconciled with any fair distribution of burden between one tax- payer and another. As a transitional provision to meet the difficult circumstances of a widow or widower after the death of husband or wife, left with the maintenance of a household that belonged to the married life, it would be intelligible: but as a permanent grant of a special relief for the maintenance of a household to a taxpayer, merely because he or she possesses widowed status, it seems to us meaningless. … Since we see no good reason for it, we recommend that it"— the concession— should be withdrawn. That was in 1954. It seems to me extraordinary that successive Chancellors of the Exchequer have not taken that advice. I am trying to help my right hon. Friend by suggesting an Amendment which, far from costing him anything, is likely to help him.

I should announce my personal disinterest in this connection. I, as a childless widow, need not even go out to work. I could loll around the house all day. If, however, I had a big enough house into which I could put a resident housekeeper, and let her do all the work, the Chancellor of the Exchequer would grant me tax relief in respect of that resident housekeeper. Similarly, a widower who may be enjoying a social life not very much different from that of his bachelor colleagues could install a resident housekeeper and, again, the Chancellor, out of his generosity, would contribute tax relief in respect of the lady who lives in the house of the widower, but not for the lady who lives in the house of the bachelor. I hope that I have put it correctly.

I suggest that that view belongs to the days when living-in help was not unusual among people in the Income Tax-paying bracket, but life simply is not like that nowadays, for various reasons with which I need not bore the Committee in relation to the smaller houses and flats in which we tend to live and also because of the changing pattern of employment, which means that these living-in treasures are not available to do this sort of work.

There are very few people who are in a position to take advantage of this concession. To my mind, it therefore becomes a privilege and, therefore, socially unjust. At the same time, it gives relief in many cases where relief is not especially required, but it inflicts considerable hardship in many other cases of great need.

For example, if a widow with a small child goes out to work, not necessarily only to supplement her pension, but because she has answered the call, perhaps, of my right hon. Friend the Minister of Education, and has returned to teaching, she can claim no tax relief whatever in respect of the daytime care of the house and children unless she, again, is in a position to have the helper living in. That was confirmed in a recent case in January in the Court of Appeal, H.M. Inspector of Taxes v. Whiting. Mrs. Whiting, a widow with two small children, was trying to carry on a business. She employed someone to look after the children while she was at work. The case was taken right up to the Court of Appeal. The Guardian law report of 20th January was headed: Children's nurse must be resident for widow's tax relief". We are saying to a widow in that position that if only she was a bit better off, if only she had a bigger house, if only she was a nice woman with a living-in nanny, the Chancellor would give her some help. Because she is having to rely on having someone coming in daily the Chancellor has to turn away. I do submit that this cannot be the wish of any Members on either side of the Committee. I therefore ask my hon. and right hon. Friends to look at what I regard as a completely unreal and unfair differential. 8.0 p.m.

Paragraph (a) in my Amendment also tries to deal with another injustice by suggesting that we ought to try to help families where either parent is incapacitated. Under the present law, if a man has small children and has an incapacitated, invalid wife he can claim tax relief in respect of a housekeeper who helps in that difficult situation. I see this as part of the continuing masculinity of Chancellors of the Exchequer and the solidarity of men in this country, because if the position is reversed, if a woman who has small children and has a permanently incapacitated, invalid husband goes out to work she cannot claim Income Tax relief in respect of the person she employs in the home.

It is as though the Chancellor of the Exchequer were saying to a man with an invalid wife and with small children, "Well, old boy, of course we do not expect you to rush out and do the shopping in your lunch time, and hurry home to get the children their tea, and do the washing, and see to your wife, and see the children do their homework, and get them to bed, and the next morning get the breakfast, and see to your wife, and get the children off to school, and then go to work."

Of course, the tax law says that no man should be expected to fulfil that double function of doing two jobs in this way, and, therefore, relief must be granted in respect of someone to help him. But no Chancellor of the Exchequer in my recollection—and I have been into this in great detail—has ever said to a woman who is in this position, "That is bad luck. You ought to have help. If you can get someone to help you with these two difficult jobs, there is fair case for tax relief". Therefore, I have suggested that for either parent who is incapacitated relief should be made available.

I know that parts of my Amendment go very far, but I have drawn it wide deliberately, and have suggested that we should even try to include families where both parents may be alive and well and in full-time work, but where there are small children at home, because that fact itself raises all sorts of difficulties because it is part of the pattern of our modern society that married women have got to go out to work.

I shall not weary the Committee with figures, but for far too long we have taken it for granted that our society should be underpinned by spinsters, but the spinster is becoming a most rare member of our modern society; the tendency is for there to be fewer and fewer single women, as the age of marriage is continually coming down. Therefore, we base our tax laws and reliefs on an unreality, and the present social pattern is a fair point for thought. I know that sociological problems are subjects for which the Treasury is possibly not responsible, but I do think that our tax law has in certain instances got to come much closer to realities.

In saying this, I am very much aware that the problem of the woman doing two jobs, one inside the home and one outside the home, has become apparently more urgent in that it has now become a middle-class problem. For generations working-class women, poor women, have been doing two jobs and never dreaming of the possibility of ever getting anyone to look after their children at home, and those working-class women have often done some of the heaviest and hardest work to be found. However, the fact that an Amendment cannot help everybody is no reason why it should not at least seek to try to deal, as I can only deal while keeping myself in order, with some, within the Income Tax provisions.

While paragraph (c) would limit relief to cases where children have to be cared for and only where there are children I would suggest to the Committee that we ought not to continue to confine tax relief only to cases where they are the children of a widow or a widower. The whole attitude of many social workers and of much contemporary thought in dealing with the difficult-family problem is to accept the fact that there are a vast number of fatherless children in this country—children who are, in effect, fatherless. Their parents may be divorced; there may be desertion; the mother may be unmarried: there are all sorts of circumstances in which children, as far as the support by a father goes, are without a father.

Therefore, I suggest that where the children are living with a mother who is unmarried, or who is a widow, or deserted, or divorced, or separated from her husband, or with their father who is similarly placed, there should be this provision; and it is because it applies to either parent that I have used the word "parent". I know of many sad cases like this, where a husband has been left with small children because his wife has gone off.

I think that the intention must be to grant tax relief in all these cases and not to differentiate. After all, it is not the children's fault; they cannot be held responsible for the circumstances in which they have only one parent instead of two to look after them.

Mr. Charles Curran (Uxbridge)

Would the hon. Lady extend the argument also to adopted children?

Mrs. Jeger

Of course, adopted children are the children of the parents who adopt them.

Mr. Curran

To the children who have not been formally adopted, but are simply being taken care of?

Mrs. Jeger

I am not sure whether the hon. Member is thinking of adoptive parents who are, as it were, on probation for trial periods. These must be very special cases one must look at in detail.

I have spoken very widely and I apologise, especially to my right hon. and hon. Friends in having taken this question so widely into some of the contemporary social problems, and I again pray their indulgence for possibly not having translated my intentions into acceptable language, but this is such a vast question, and it does demand a great deal of thought, and I hope that at least I can be assured that these considerations will not go without some attention being paid to them in future.

Mr. Simon Wingfield Digby (Dorset, West)

The hon. Lady the Member for Holborn and St. Pancras, South (Mrs. Lena Jeger) has made an interesting contribution, and I am sure the Committee listened with much sympathy to what she had to say. It emphasises the fact that we are at the moment discussing a very wide group of reliefs from Income Tax. I am sorry I cannot follow the hon. Lady, because I want to take up an appeal made by one of her hon. Friends on behalf of those who earn less than £20 a week.

I want to direct the attention of the Committee for a moment to retired people all of whom are earning less than £20 a week. I want to speak for a moment about age exemption which is dealt with in Amendment No. 33 and which has already been referred to, and I want to refer at greater length to Amendment No. 109, which deals with age relief, the Amendment standing in my name. The reason that I am speaking to these two Amendments is that I moved Amendments on both these subjects in 1963, when we had debates on them during discussion of the Finance Bill. I want to speak mostly about age relief.

This relates to those over 65, those above retiring age, and it has the effect of giving earned income relief to their income at present up to £900. I want to raise it to £1,000. The deduction which is liable for earned income is two-ninths, so it is of considerable importance to them. I believe that the time has come to take a further step and I shall try to explain to the Committee why I think that this is the case.

Age relief was introduced in 1925, when a Conservative Government was in power, at a rate of £500. Having looked up the figures I find that, according to the London and Cambridge Economic Service, that would be equivalent to £1,500 today. It will be seen, therefore, that we have slipped back considerably in this direction since 1925. In 1953, it was raised for the first time, by a Conservative Government, to £600; in 1957 to £700, in 1958 to £800, and in 1963, two years ago, to £900. Nevertheless, in view of the fact that it has been raised so little since 1925, I believe that this is a serious case.

I know that it can be argued that it affects a limited class of people, because this relief relates solely to savings or investment income which do not rank as pension. But there are many people in that position and they are living on interest and savings. I think that they are just as entitled to relief as those who are living on pensions pure and simple. In 1963 when the relief was raised by £100, no fewer than 55,000 people were calculated to benefit completely and 80,000 partly. A considerable number of people were affected.

It was estimated at the time that the cost in a full year would be £1½ million. Though I have no figures, I dare say that my proposal would cost about the same. No doubt the Minister will be able to tell me exactly what it is. When we were debating this matter in 1963, the present Chancellor of the Duchy of Lancaster said: We wish to see age relief taken as far up the scale as possible …"—[OFFICIAL REPORT, 15th May, 1963; Vol. 677, c. 1379.] The Government now have an opportunity to do something about that sympathy.

Apart from the fact that we have fallen behind on the scale we set in 1925, I believe that there are some special reasons that these retired people are in special need today. I need scarcely remind the Committee of the rate increases of which we have heard a good deal in recent weeks. There have also been, in this year, tax increases, direct taxation through Income Tax and indirect by means of tax on drink, tobacco and petrol. We know, too, that this is reflected in the cost of living index. We heard on the news yesterday that it had gone up by 2 points, but, even before that, it had risen by 5.9 points in the course of the year. A further point which may affect some of these people is the very high level at which the Bank Rate now stands.

8.15 p.m.

I know that much has already been done in small stages for these people. I have many of these people in my constituency. I am sure that other hon. Members will be able to think of some examples themselves. For example, in 1951, an elderly couple with an income of £900 a year paid £281 in tax, whereas last year with that income of £900 they paid only £111 a year. I believe that there is a strong case for their paying even less.

Age exemption affects a much larger class of people who live on much smaller incomes. Something more ought to be done for them. It is true that the age exemption, both for single and married people, has been raised by the Government, but only to the level at which it equals the rise in old-age pensions. I do not think that the Government can claim much credit for that. When we bear in mind that this income is £8 a week, we realise that it is not very much. I believe that the time has come to raise it a little higher. I know that on previous occasions when this case has been argued, it has been said that it would be wrong for old people on a certain income to get much greater tax exemptions than young marrieds. I would not entirely accept that argument, because the old people have no method of supplementing their income, whereas the young people have their lives ahead of them and would certainly hope to raise their income fairly quickly.

Therefore, I commend the case of the retired under these two Amendments to the Committee and especially to the Government. I think that when one comes to think out how the fairest balance can be struck, and considers the figures, they have perhaps had a little less than their share in the kind of society and in the kind of inflationary age in which we are living. I hope, therefore, that the Government will have another look at this.

Dame Irene Ward (Tynemouth)

I am very grateful to my hon. Friend the Member for Dorset. West (Mr. Wingfield Digby) for returning to what I consider to be the purpose of the Clause and the Amendments, which is to deal with the plight of those who have recently been called the small fixed income groups. Though I found the speech of the hon. Member for Holborn and St. Pancras, South (Mrs. Lena Jeger) most interesting and informative and found myself in almost complete agreement with it, I am slightly surprised that so few Members of the Government are here to add to the various Amendments with which I and many of my hon. Friends are connected, particularly Amendment No. 300 about which I want to speak.

I am very glad that my hon. Friend referred to the plight of those living on small fixed incomes. My postbag is full of letters from people who have been good, sound and responsible citizens and, quite apart from the problems of ordinary life, are in a state of great apprehension for the future as to how they will meet their increased rate obligations, which are causing them very great anxiety. A wide range of individuals are affected by the Clause and would benefit if my Amendment were accepted. Although I have been glad to see some improvement made in the conditions of those living on small fixed incomes, I have been surprised that the Government have not attempted really to deal with the whole problem; that is, a special cost of living index for these people, who include those living on public pensions, retirement pensions and small investment incomes.

I was somewhat entertained when the Chancellor rose last night to move to report Progress. He said that he hoped that during our debates on the Bill hon. Members would refrain from making quotations. I suggest that my hon. Friends have refrained from doing so, but I hope that the right hon. Gentleman is aware that there are a great number of quotations, from letters and so on, which could be given to demonstrate the plight of the people about whom I am speaking. It is obvious that the Chancellor, if he thinks that quotations in such numbers do not exist, has not been doing his homework in studying the difficulties faced by those who live on small fixed incomes.

The present Government have really built on the pattern of progress set by former Conservative Governments during the last 13 years. I say, frankly—I always endeavour to speak frankly—that while I have been proud of the various steps which former Conservative Governments took to improve the position of those living on small fixed incomes, I have never thought that they did enough. If I had had my way they would have done a great deal more. I have been tremendously surprised, therefore, to find that the new Government, despite their pledges at the last election, have done nothing but follow that pattern. In my constituency, at any rate in one part of it, I represent above the average number of retired people. The new Socialist Government have contented themselves with building only very slightly on the pattern established over a period of years by successive Conservative Governments.

I do not wish to detain the Committee for long. The plight of those living on small fixed incomes is well known, and I have been interested to find that the phrase "small fixed income" is used today from John o'Groats to Land's End. That being so, I come directly to Amendment No. 300, which stands in the name of my hon. Friend the Member for Renfrew, East (Miss Harvie Anderson) and myself. Although only two names appear to it, I feel sure that it has the support of all my hon. Friends and, I hope, the majority of hon. Gentlemen opposite. It is designed to leave out '£30' and insert '£75'". I noticed with interest that the hon. Lady the Member for Holborn and St. Pancras, South referred to the difficulty of drawing up accurate Amendments and keeping them in order when discussing the Finance Bill. I sympathise with her because it is one of the most difficult tasks. It is funny in this country how one can always get Amendments drafted for things like taxes on corporations or capital, but when it comes to the small, simple things of life, in which I happen to take a great interest, it is extremely difficult to find anybody who will get down to the task of drafting Amendments which will be in order.

As is well known to the Committee, to attract Income Tax relief in respect of dependent relatives there is an income range for the dependent relatives. This is understandable and it fits in with the general pattern which is acceptable to Parliament and the country. At the same time, there is a wide range of single women—I will not be a feminist in this matter because it applies to single men as well—who accept the responsibility of looking after, maintaining, housing and working for their dependent relatives. Not only is this a sympathetic and human approach, and one which is very right to be cherished in Britain, but it also helps enormously the difficulty of finding accommodation—much of which would have to be Part 3 accommodation or hospitals—for these people. It helps the Exchequer considerably.

I do not feel that any of us have yet faced up to the necessity of doing what we should do to encourage, support and sustain the single woman or widow who sets out to accept the responsibility of caring for her dependent relatives. I would be out of order if I developed the theme of giving additional tax relief to those who support their relatives who have no incomes. That is the problem of getting Amendments in order and getting the subject discussed by the Committee.

At the same time, it must be well known to all hon. Members that there is an important new organisation called The Organisation for the Counsel of the Single Woman, which is run by that distinguished woman, the Rev. Mary Webster. For the last two years she has never ceased to emphasise the problems of the single woman or widow who does her best to maintain and support her dependent relatives.

The purpose of my Amendment is to give relief in respect of dependent relatives' incomes so that the single woman or widow, or the widower or bachelor, supporting them can get extra relief for that support. However, it does not go nearly far enough because, as I say, there are a great number of these marvellous individuals who support dependent relatives who have no incomes at all. It is extremely difficult to find a way in a Finance Bill to be of help to these people.

I have been on many deputations to Chancellors of the Exchequer of former Conservative Governments as well as to the Chancellor of the Duchy of Lancaster recently in support of the aims of the organisation led by the Rev. Mary Webster. What is so maddening is that all Chancellors of the Exchequer and all Treasury Ministers have the most delightful method of receiving these deputations, and then nothing happens. That is very distressing, and does no credit to the country or to any Government.

In this country we seem to have got into a situation where we support mass movements and groups of people, but when it comes to individuals—and individuals acting in a Christian way and taking responsibility for their own families—there is not nearly the same support. I am sure that the necessary support would willingly be given if the country knew the circumstances in which these people carry out their obligations, and the problems and difficulties facing those who have reached an age when they can no longer work to maintain themselves, and must look for support to their sons or daughters.

8.30 p.m.

Therefore, although my Amendment goes only a short way—because of the difficulties of getting it within the terms of order—its real purpose is to indicate to the country and to the Government that we feel that the time has come when action should be taken to support those women who are prepared to accept responsibility for their dependent relatives.

I support, of course, all the various Amendments to which I have added my name. I am sure that the Financial Secretary will reply in most sympathetic terms, because all Treasury Ministers always answer in sympathetic terms, but I must tell the hon. and learned Gentleman that people are getting tired of sympathy. What they want is action. I hope that the Financial Secretary will not say that we have had 13 years of Tory Government in which to take the action that I am advocating tonight, because he must remember that we did a very great deal. However much the Treasury Bench may enjoy talking about 13 years of Tory rule, I must point out that we were always supported by the country until we lost the last election, while it has only taken six months for the country to say that it does not think very much of the Government that was elected in October. We can therefore wash out the political controversies and get down to the human issues that are involved.

I fully support everything that the hon. Lady the Member for Holborn and St. Pancras, South has said about housekeepers and widows and widowers. While the hon. Lady and I have been in the House, we have tried by means of new Clauses to get a sense of fairness and justice into these Income Tax reliefs. I congratulate her—I am always delighted when members of my own sex do well—on having found a new method of raising the matter directly on a Clause in the Finance Bill rather than on a new Clause. The hon. Lady has done extremely well there.

I have discovered over the years, and I dare say that the hon. Lady will discover it too, that a Chancellor of the Exchequer will not be anxious to withdraw any allowances from any section of the community except in regard to the particular cause being talked about. On housekeeper allowances, I have always argued that if the relief given to widows and widowers is not to be withdrawn, it should be extended to spinsters and bachelors in order to ease their position. All Chancellors of the Exchequer have some regard for the finances of the country, as they should, and I have always thought that it should be possible to divide the Income Tax relief, giving part to the widow and the widower, and part to the spinster and bachelor. That would not cost the Chancellor any more and it would be "fair-do's" for both sections of the community.

On these problems of widows and widowers who have dependent children, we on this side of the Committee get a little tired of hearing about reviews which are taking place. When we look back on debates on Finance Bills over the last 13 years we find that then Opposition hon. Members who are now on the Treasury Bench always promised additional allowances and relief. Having regard to the election pledges they made, I should have thought that they could have come forward today with a well-thought-out matured plan which would help that large body of deserving people covered by the phrase, those with small fixed incomes. I am terribly disappointed.

Of course I was very glad about the increase in retirement pensions, but many retired pensioners who get pension increases are much better off than some people living on small fixed incomes. It is important when giving public money provided by taxpayers to be fair about the expenditure of that money and to see that all sections have a share in what is paid out of public funds. The additional reliefs given under Clause 10 of the present Bill deserve to be considered as far too small to bear any relation to the needs of the situation. The cost of all kinds of things has gone up but that cost has to be met by those with small fixed incomes. Rates, travel, food and all kinds of things have gone up in price. How anyone on a small fixed income manages to pay for fuel and lighting, I have no idea.

When we talk to individuals they say that heating and rates are the two costs which hit them most. Although some will welcome the small concessions given by the Treasury Bench, I hope that when we come to the end of this debate the Financial Secretary, in his usual charming way, will accept every one of the Amendments which have been put forward from this side of the Committee in addition to accepting that put forward by the hon. Member for Holborn and St. Pancras, South. I very much support all the Amendments now before the Committee and look forward to their acceptance by the Government.

Mr. Bryant Godman Irvine

I support all this group of Amendments because, like my hon. Friend the Member for Tynemouth (Dame Irene Ward), I have in my constituency a great number of people who live on small fixed incomes. I can adopt everything that my hon. Friend said.

We have had many speeches today on the subject of what the Government have not done about their pledges to deal with the rating situation. In my constituency there is a difficult problem from that point of view. A further reason why I support these Amendments, in particular those relating to dependent relatives, is that they would encourage people who are accepting responsibility for their relatives.

I think that is a principle which we in this Committee ought to do all that we can to further. There is an Amendment standing in my name to add at the end of Clause 10 the words standing on the Notice Paper in Amendment 31. The object of the words on the Notice Paper is to enable those who are supporting a husband and wife, living together where one is a dependent relative, to be given additional benefits of aggregation for the two relatives.

To put it simply, the position is that if you happen to have a father who has an income of perhaps £20 or so over the limit and a mother who has no income at all, at the moment the £20 would not count towards relief. If this Amendment were accepted the result would be that the whole of the father's income would be included in the total of the aggregation and the balance would then be counted towards relief. I think that it is an Amendment which should receive favourable consideration by the Treasury and I hope that the Financial Secretary will do just that.

Mr. Geoffrey Howe (Bebington)

The sight of the Financial Secretary's eternally bowed head on the other side of the Dispatch Box has reminded me that until almost a year ago the greater part of his time was spent on behalf of the good citizens of this country pursuing the great train robbers. It is a sad reflection that he has now so completely changed sides and has embarked against the citizenry of this country in a great train robbery of his own.

It is a sad thing that he is doing so on briefs so less well marked than those which he enjoyed in those days. Unless he shows a generous attitude to the Amendment which many of us are moving, he will earn the reputation of being a hard-faced man who has done badly out of the election.

I want to speak in support of one particular group of people to whom the hon. Lady the Member for Holborn and St. Pancras, South (Mrs. Lena Jeger) referred, namely, fatherless families, children of fatherless families and wives who have to look after them. My Amendment, probably not aptly drafted, is intended to give to any woman living apart from her husband, divorced or undivorced, the benefit of earned income relief on the maintenance allowance she receives in respect of herself or her children. The law is exceedingly complex, but if I understand correctly, at the moment a woman getting a maintenance payment from her husband gets no income relief on that at all or, possibly, only a small income relief. She receives no earned income relief against it and it is taxed as though it was unearned income, although the husband is entitled to set the payment off against his earned income and receive tax relief in respect of it.

This has been so for a number of years and it is a position in which I can see no justice. It affects a very large number of women and children. Since the matter was last raised in the House about five years ago, we have had the helpful and clearly argued book by Margaret Wynn entitled "Fatherless Families", which enables us to identify the scope of the problem. Her estimate is that there are no less than 305,000 families where the mothers are divorced or separated from their husbands and something over 450,000 children to whom the Amendment which stands in my name and that of other of my hon. and right hon. Friends would bring some help. I will not go into detail but simply deal with arguments advanced against this proposal in the past. I hope that the Financial Secretary will be impressed by the way in which it was put by the right hon. Lady the Minister of Overseas Development five years ago. She said: … from the purely human point of view, it seems an outrage to these women who have faced the break up of marriage and who have had to carry on with the family life and family home with no companionship from the husband and with simply these small payments from him, suddenly to find that this money, which they regard as part of the ordinary housekeeping money, which they were getting before the home was broken up, is classified as investment income and is taxed as though it were unearned. The argument then advanced against this approach to the problem was that because it is deducted from the husband's income and he pays no tax on it, earned income relief is not justified. The point is that the wife pays tax on it but she gets no earned income relief on it, so nobody does so. This is how the Minister for Overseas Development put it: Why should a slice of the man's income not be entitled to the normal tax relief that everyone else would get? Why should the benefit of it go to the Chancellor instead of to a woman who has to face life's struggle under additional difficulties? Clearly, the point of principle is that somebody should get the legitimate earned income relief on this slice of the man's earned income. The second traditional Treasury argument which will be advanced is that this is all very well, but it is not really earned income. The answer to this was provided, I thought, more aptly than in any other way by the Chancellor of the Duchy of Lancaster, as he now is. He said that whether this is earned income or not earned income is a matter for the House. These are his words: In asking what is earned income, the reply is: what this House says is earned income is earned income. Already, in the past, the House has departed from the strict interpretation of earned income as being by the exertions of the individual by conceding earned income relief to such income as pensions."—[OFFICIAL REPORT, 6th July, 1960; Vol. 636, c. 500–9.] The next argument is that the courts in fixing the amount paid to the wife take into account the incidence of tax. I will not weary the Committee with the quotation now, but the answer to that was provided shortly and aptly by the present Chief Secretary to the Treasury. What he said, in effect, was that even if the court takes it into account it is irrelevant in deciding whether tax relief should be granted on it. The hon. Member for Pontypool (Mr. Abse) gave a second answer to this argument when he said that, in fact, the court does not take account of the incidence of tax and that it is nonsense to pretend that it does.

I suggest to the Committee that the case for this is unanswerable. It has been urged previously in debates on Finance Bills by the Minister for Overseas Development, by the Chief Secretary to the Treasury, by the Chancellor of the Duchy of Lancaster, by the hon. Member for Pontypool and by the President of the Board of Trade.

The Financial Secretary will be a bold man if he can ignore the arguments advanced by such distinguished colleagues in the present Government. It is a genuine case and he should make some concession on the many Amendments which have been urged, mainly from this side of the Committee. It is a case for some relief for the 300,000 women who have had to struggle along without the support of their husbands and who still have to do so to make ends meet. It is a case for helping the almost 500,000 children many of whose mothers, as the hon. Lady the Member for Holborn and St. Pancras, South (Mrs. Lena Jeger) pointed out, have to do a job and run a home single-handed. I suggest that it is cynical juggling with words to suggest that the allowances they receive from their husbands should be treated as, of all things, unearned income. This is a case which the Government should try to meet here and now.

Mr. Paul Dean (Somerset, North)

I support the strong case which has just been made by my hon. and learned Friend the Member for Bebington (Mr. Howe). It is clear from the extremely cogent quotations he made from a comparatively recent debate on this subject that it will be very difficult for the Financial Secretary to resist the Amendment.

8.45 p.m.

Subsection (4) has slipped in very quietly. We have heard extremely little about it—three or four sentences in the Chancellor's Budget statement in which he drew attention to fairness and simplicity. It may be said that the proposal looks innocent enough and that although the tax relief on the pension part of the National Insurance contribution is being removed, nevertheless the personal allowance is being increased to compensate for it. But the essential difference, as my hon. Friend the Member for Finchley (Mrs. Thatcher) has said, is that this relief is now given in a different form. We have the merging of tax relief for National Insurance contributions with the personal allowance.

This could be a change of great significance to millions of people, not only to those paying National Insurance contributions but also to the millions who are contributing to personal pension schemes, life insurance, and the like. This change weakens, if it does not altogether undermine, the principle that because pensions are taxable the contributions towards them should not be taxed, so as to avoid double taxation. It also weakens the principle that pension contributions should get tax relief because they represent income which is postponed until retirement.

I am bound to ask, as my hon. Friend the Member for Finchley asked, whether this represents the thin end of the wedge and the Chancellor will say to us next year, in the unlikely event of his still being in office, that tax relief on contributions to occupational pension schemes and the like is now an anomaly and should be removed. Is this the real significance of subsection (4)? We have every reason to be suspicious about the Government's intentions with regard to the future of occupational pension schemes. If they think that they can get away with the vicious doctrine of increasing taxation, on the one hand, and, on the other, withdrawing tax relief from those who are helping themselves and providing for their retirement over and above the State scheme, they are making a big mistkae.

To return briefly to the arguments put by the Chancellor in his Budget statement, when he dealt with this point he said that the system, through the tax relief, made the national contribution much more regressive than it would be otherwise. But this is inherent in any system of taxation or tax relief. The logical conclusion of that argument is that there should be no tax relief at all. Against this argument which the Chancellor put there are two important counter-arguments, in addition to those put by my hon. Friend the Member for Finchley.

The first is that it is surely absolutely right to encourage self-help, and one of the effective ways in which we can do this is to provide tax relief for those who are saving for their old age over and above the State scheme. The number of people who are able and willing to do this is growing year by year.

The second counter-argument against the regressive argument is that the more we encourage self-help the more the State can concentrate on helping the poorer sections of our community, and the more resources from the National Insurance scheme can be channelled to those who really need this additional help.

I remind the Committee of the views on tax reliefs and allowances put forward by Professor Titmuss. Do the Government agree with his views? He regards the whole of these tax allowances as what he calls an "erosion of the tax base". In his book, "Income Distribution and Social Change", he speaks of the erosion of the tax base by a steady enlargement in the value and range of personal allowances—for children, parents and other relatives, child minding, further education, wives at work, housekeepers, and so forth. Presumably, he would strongly oppose all these Amendments and the proposals of the Chancellor himself.

I view subsection (4), which looks innocent enough, with deep suspicion. It may well be one of the most vicious provisions in a vicious Finance Bill.

Miss Harvie Anderson (Renfrew, East)

I apologise to the Committee for not having been here throughout the debate, but I was attracted to a meeting of the principals of the Scottish universities, which I am sure hon. Members will appreciate was of equal importance.

In considering this whole group of Amendments, it is important above all to remember how unrealistic the allowances have become in many cases. We are thinking of the many thousands of people who live on small fixed incomes, and for them the allowances which have been made, roughly, over the past thirty years have in no way matched social progress during that time. As I understand it, these allowances were made originally at a time when the so-called emancipation of women from their Victorian shelter was developing to, I hope, the benefit of the nation as a whole. Whether that is so or not, the allowances were conceded in the spirit of Victorian times, being given as a form of reward for the services of women who were undertaking the only duties which they could undertake at that time, that is, in the home, if they were not, as the hon. Lady the Member for Holborn and St. Pancras, South (Mrs. Lena Jeger) said, working in factories. The most serious point to which we should address ourself is how utterly unrealistic the whole allowance structure has become.

I have been both a beneficiary and a benefactor under one or other of these allowances, and I know from personal experience what effect they can have. By the Amendments with which I am particularly concerned, which would introduce a figure considerably higher than that in the Bill, we seek to draw attention to the fact that the amounts proposed in the Bill are wholly unrealistic. Hon. Members opposite, including those on the Treasury Bench, have in the past supported the very Amendments which we are now putting forward. As has been said, the Conservative Administration over the years made considerable strides in advancing the amounts provided for in the allowances, and, what is more, we did not, as the new Governernment have already done, raise the essential costs of the very people whom we are now considering. Because, in a few short months, costs have risen for these people, I hope that the Government will realise that they must match those rising costs with increased allowances.

9.0 p.m.

I want to make three points in relation to these Amendments. The first concerns the differentiation between married and single women. This, too, is a hang-over from former times, and it should at last be recognised that equality means allowances should be available to single women that are available to married women. We should pay tribute to the attention drawn to this subject by the Rev. Mary Webster, who has so recently instituted both research and constructive proposals whereby single women not so far entitled to some of the allowances available to their married friends could have them.

Secondly, in considering Amendment No. 120, in the name of the hon. Lady the Member for Holborn and St. Pancras, South, I suggest that it is a fallacy for us to discuss at this time a distinction between those who are in part-time and those who are in full-time employement. I take this opportunity, therefore, to put on record my suggestion to the hon. Lady that in her admirable Amendment, her consideration should not only be for those women employed full-time but for those who go out to work part-time as well.

Finally, I hope that Amendments Nos. 298, 299 and 300, to which I and my hon. Friend the Member for Tynemouth (Dame Irene Ward) have put our names, will be read not just in terms of the money they represent but as an indication of our belief in the increasingly widespread feeling that these allowances generally are wholly inadequate for the purpose.

In this age, we are concerned with two things—with seeking to improve the lot of those who see their primary responsibility as looking after others in the home and with providing for the nation as many married women as are qualified and willing to go out and work at a time when it is essential for their homes to be aided or looked after by someone else in their stead.

I hope that these Amendments will find some favour with those hard-hearted right hon. and hon. Gentlemen on the Treasury Bench who are concealing with firm looks the hearts that appeared to show some mercy when they were on this side of the Committee.

Mr. Ridsdale

The people we are talking about have no trade unions or employers' organisations to look after them. They look to this Committee to help them. Indeed, in the past, some have looked to the Liberal Party to help them, but I notice that in the debate on this very important series of Amendments not a single member of the Liberal Party has been here.

These people also look to the Government to help them as well. The Government, however, in the Bill have been attacking these very people. They have attacked the small men by not helping them with their self-employment contributions. They have attacked them through National Insurance contributions and are creating a form of double taxation. Are they now to attack private assurance as well? I hope that the Financial Secretary will answer these questions. We want to help these people who want to become as independent as they can and not be too dependent on the State.

That is why I have been so glad to add my name to Amendment No. 109, in the name of my hon. Friend the Member for Dorset, West (Mr. Wingfield Digby), which would extend income relief from £900 to £1,000. As my hon. Friend rightly said, this relief was instituted in 1925, and if it was right to provide it in 1925, the income relief should be £1,500 and not £900 by now. When one considers the amount of indirect taxation which these people have to bear on drinks, tobacco, rates, heating and all the other impositions which the Government are placing on them, there is an urgent need to do something to help this section of the community, and I urge the Financial Secretary to think again especially for these people.

Miss J. M. Quennell (Petersfield)

Like my hon. Friend the Member for Harwich (Mr. Ridsdale), I should like to address my remarks to Amendment No. 109, in the name of my hon. Friend the Member for Dorset, West (Mr. Wingfield Digby). The debate has covered a wide range of Amendments, but any particular sympathy, if Treasury Ministers are ever so human as to possess such a strange emotion, could safely, and ought to be, directed to the circumstances of those living on fixed incomes, of whom my hon. Friend the Member for Tynemouth (Dame Irene Ward) has become the champion and stalwart friend.

The circumstances of those who have retired on small incomes, which were previously held to be adequate perhaps to run a small car, keep a small house, live quietly and peacefully with a television set and a radio, the sort of things which people now take for granted, in recent months have become more uncomfortable and in future months are likely to become acutely so.

In that type of house there will be found, not unreasonably, a washing machine, a dishwasher, some sort of electric appliance for cleaning floors, carpets and soft furnishings, probably a food mixer, an electric iron, a television set and a radio set. Due entirely to the actions of the Government and no one else, the cost of the licences for the last two has risen and electricity charges for running all other electrical appliances have also recently risen. It is a fact, and the hon. Lady the Member for Holborn and St. Pancras, South (Mrs. Lena Jeger) would agree, that people of this sort, unlike those with whom she was so interestingly and deeply concerned, cannot supplement their income by taking on additional work. They cannot do so for two very telling reasons which cannot be escaped—one is age and the other is probably infirmity. In circumstances like that, they are probably unable to defend their standard of living.

It is a rather sad thought that the Labour Party came to power on a promise that retired people and widows would have their incomes guaranteed. It is also a fact that, unlike people who are able to defend their standard of living, these people cannot secure an increase to enable their standard of living or income to rise as the index of the cost of living rises, as we notice that the unions are now negotiating to arrange in their new package deals for wage rates.

Now, with the credit squeeze, the Government will hit this part of the community particularly hard. They cannot supplement their income and they cannot make use of any method of purchasing the goods which they need because their age makes them more dependent on things like washing machines to ease the manual labour involved in running a house.

It is also true that two days ago the Financial Times index of grocery prices announced a rise of 3.7 per cent. since November. Twenty-four hours later the official index of retail prices recorded the biggest monthly increase for 10 years. I cannot resist quoting to the Financial Secretary the words of the Ministry of Labour release in making this announcement: The rise in the index during the month was due mainly to increases in the prices of cigarettes and tobacco and alcoholic drink, higher local rates and water charges, increases in costs of motor vehicle licences, and increases largely seasonal, in the prices of tomatoes—partly offset by seasonal reductions in the prices of household coal. In the main, all those increases were due to the actions of the Government. Unfortunately, left out of those figures are the dearer items which will be reflected in the current month's figures—dearer postal charges, electricity, tyres and footwear. These will hit the unfortunate group of people who cannot supplement their income by doing extra work and who are more vulnerable probably than any other group.

I therefore plead with the Financial Secretary to look favourably on the Amendment.

Mr. MacDermot

At the outset of our discussion my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) reminded us in forcible terms of certain built-in features of our taxation system which are perhaps a heritage of an age when those who paid taxes were, for the most part, only the wealthier sections of the community and when reliefs were designed to give relief to various members of them. In many cases still the main beneficiaries of tax reliefs are the wealthier sections. My hon. Friend made a strong plea to my right hon. Friend the Chancellor of the Exchequer to remember this fact and to give greater consideration to the poorer sections of the community. He indicated that my right hon. Friend's goal should be to ensure that we have a fairer system of taxation.

I need hardly remind my hon. Friend that, in a sense, that has been the guiding light for the decisions which my right hon. Friend the Chancellor has made since he took office. The introduction of the Capital Gains Tax is an attempt to achieve social justice in a considerable measure by ensuring that a lot of people who have been escaping the tax net will be caught by it. When my right hon. Friend introduced the increase in Income Tax in the autumn Budget he applied it to the standard rate but did not make any increase in the reduced rates. The increase in the National Insurance pension which recently took effect was directly designed to help the most afflicted section of the community.

I remind my hon. Friend the Member for Stoke-on-Trent, South that the main decision which we are discussing in this Clause is designed to achieve this object. It has been a matter of complaint by hon. Members opposite, in a sense, because the effect of substituting the increase of £20 in the personal allowances for the National Insurance contribution allowance has been to replace an allowance which in its effect has been regressive in the sense that it has benefited most the wealthiest taxpayers. That is being replaced by an allowance which will benefit all sections of the community and it will bring the greatest benefit to the most afflicted section, namely, retired old-age pensioners.

9.15 p.m.

In considering these Amendments, we are entering into the labyrinth of tax allowances. Compared with some hon. Members, I feel myself a relative newcomer in this field, but I have made enough study of it to see what an involved labyrinth it is. My hon. Friend the Member for Holborn and St. Pancras, South (Mrs. Lena Jeger), in a speech which undoubtedly appealed to the whole Committee, drew attention to some of what, at first sight at least, might seem to be the more obvious illogicalities in our present system. My hon. Friend made forcible arguments to suggest that there is sex discrimination in it and discrimination between married and single women.

Obviously, to try to make a fundamental review, as the Amendments taken in toto ask us to do, of the whole field of these tax allowances, is a Herculean task which all Chancellors have shrunk from attempting at one go. Various of my right hon. Friend's predecessors have tried to clear up some of the anomalies here and there one by one. My right hon. Friend is not one to shrink from Herculean tasks, but he has already taken on two in this Finance Bill with the introduction of the Capital Gains Tax and the Corporation Tax. I do not think that many hon. Members would seriously have expected him in the same year to try to tackle this complicated field of seeking to sort out the tax allowances.

Moreover, it is obviously not a task which can be undertaken in a year when the Chancellor finds it necessary to increase taxation, and to increase it substantially. In introducing his Budget, except for one or two marginal reliefs he was unable to grant reliefs in taxation. Obviously, it is only within the context of introducing general reliefs that it would be possible for my right hon. Friend to attempt to tackle the many problems which have been presented by the Amendments.

Thirdly, a comprehensive review of this kind must be undertaken within the context of a review of the social services, because these matters interpenetrate in so many places. The fact is that the more illogical of these allowances date back from a day before we had our modern conception of the social services. The problems with which they seek to deal might be better dealt with within the context of the social services rather than by means of tax allowances. All those are good and sufficient reasons to explain why my right hon. Friend in this Budget has not been able to tackle these many questions.

The hon. Lady the Member for Tynemouth (Dame Irene Ward), in her forthright way, invited me to stand up and accept all these Amendments. If I were to accept her invitation, apart from bringing an abrupt end to my political career, I would be committing the Government to an expenditure of no less than £500 million a year additional expenditure. For one brief moment of glory it would not be right to plunge the nation's finances into the chaos which would result.

That leads me to the first of the Amendments introduced by the hon. Member for Shipley (Mr. Hirst) which, without any discourtesy to the hon. Member, I can only describe as a wrecking Amendment. It would be not merely wrecking of the Clause but wrecking of my right hon. Friend's Budget, wrecking of the whole strategy of it, because the modest Amendments which the hon. Member proposes, the three Amendments together, would cost £255 million in the coming year and £320 million in a full year, and since the strategy of my right hon. Friend's Budget was to restore our balance of payments position and to reduce demand of the same order, of £250 million, would be a little frustrating of that object, if we were to accept Amendments which would cost precisely that amount, and in a full year rather more. The Amendments which the hon. Member proposes would mean increasing the single allowance to £250 and the married allowance to £400. These Amendments, I would comment also, would be particularly valuable to those with larger incomes. They would be the chief beneficiaries. However, the simple and obvious objection to these Amendments is that they would destroy the whole object of my right hon. Friend's Budget.

Mr. Hirst

A good idea, too.

Mr. MacDermot

The same comment, in general, I think can be made with almost equal force to the main Opposition Amendment put forward from the Dispatch Box opposite by the hon. Lady the Member for Finchley (Mrs. Thatcher), because she proposes that we should omit subsection (4) from the Clause which withdraws the tax allowances for National Insurance contributions. The cost of that in the coming year would be £111 million, and £140 million in a full year. I think that she proposes this Amendment really in order to raise the important questions of principle which underlie my right hon. Friend's decision to withdraw the special allowances for National Insurance contributions—and, of course, replace them by the increase of £20 in the single and married allowances.

Perhaps I should explain the effect of these measures a little more fully than my right hon. Friend had time to do in his Budget statement or than was done on Second Reading of the Bill. The effect is that for all individuals who previously were entitled to the flat rate allowance, which for most people was an allowance of £22—for the ordinary, average adult worker—there would be substituted an increase in personal allowance of £20, a net loss of £2 on the allowance. Some people will suffer a little more. The self-employed man who has now an allowance of £27 and the non-employed man with an allowance of £26 will lose the difference between those figures and £20.

As the hon. Lady pointed out, no Surtax relief will be given in future for National Insurance contributions. The result of that is that the impact of that change will be greater on Surtax payers than people subject only to Income Tax.

On the other hand, more people will benefit from the change; in particular, National Insurance beneficiaries, who do not pay National Insurance contributions and therefore do not get any such tax allowance at the moment, will receive the full benefit of the £20 increase in personal allowance, and there will be others who will get a bigger increase in allowances than the present National Insurance allowance. For example, some married women employees, and certain widows who opted not to pay flat rate contributions but who have liability to graduated contributions, get a flat rate tax allowance of £7, and will now get the £20 increase in the personal allowance. The main reason for this change and for the withdrawal of the National Insurance allowances, as my right hon. Friend explained, is that these allowances make the effect of the contribution regressive.

Perhaps I can illustrate. A married man earning £900 a year and not contracted out of the graduated pensions arrangements pays now close to the maximum in National Insurance contributions. But if he has three dependent children, the earned income relief and married and child allowances cover, or nearly cover, his earnings. Thus, he has little or no tax to pay and the National Insurance allowance is worth little or nothing to him. A Surtax payer, on the other hand, receives the benefit of the allowance at his highest rate of tax and the effective cost to him of his National Insurance contributions is therefore greatly reduced. The adjustment which is now made by subsection (4) has the effect of making the position fairer and making the burden of the National Insurance Scheme more fairly distributed.

The hon. Lady the Member for Finchley raised a bogey which was taken up and followed by many of her hon. Friends—that, by this change, my right hon. Friend is paving the way for disallowing life assurance relief. She must be more careful in future before making such suggestions to us. I confess that the thought had never even entered my mind until I heard her suggest it. I have heard so many hon. Members opposite voicing their fears and suspicions about what our intentions are that I am almost beginning to think that there is something in it. I hope that hon. Members will not Lake me seriously——

Mrs. Thatcher

If the Financial Secretary would read the speech of his right hon. Friend the present Minister of Housing on 11th November, 1958, in c. 303 in HANSARD, he would see some grounds for my fears. If he would also read the speech of the right hon. Member for Belper (Mr. George Brown), the present First Secretary of State, on 10th December, 1963, he would find further grounds for the fears which I have expressed.

Mr. MacDermot

I should be delighted to read those speeches, but I assure the hon. Lady that the Government have no intention of withdrawing these reliefs.

She then based an argument on the contrast between these reliefs and the withdrawal of the National Insurance contribution allowance. The two are not comparable. In other words, the National Insurance scheme is not comparable with the private pension schemes. The general rule, as it applies to approved pension schemes, is based on the assumption that there is a direct relationship between contributions and pensions, but this is not the case with National Insurance pensions. The build-up in the National Insurance Fund is, of course, assisted by a direct Exchequer subsidy and there seems to be no reason to supplement this direct Exchequer subsidy by an indirect subsidy to those contributors whose incomes are large enough to attract liability for Income Tax.

The general principle which she enunciated and which, of course, applies to private pension schemes is not one which has been universally accepted in the past. There are some spheres—for example, certain Civil Service pension schemes—in which the principle does not apply. But, in any event, it is an entirely different consideration when one is dealing with a compulsory National Insurance scheme to which the Exchequer makes a substantial contribution.

The hon. Lady also raised the argument that when the short-term National Insurance benefits were withdrawn from liability to tax the relevant appropriate part of the contributions were no longer the subject of the allowances. She suggested that, on that analogy, National Insurance retirement pensions should be exempted from Income Tax. With respect, that is putting the cart before the horse. The reason for exempting short-term National Insurance benefits was that it proved impossible to collect the tax which was due on them, and when they were exempted from Income Tax the corresponding element in the contributions was disqualified from tax relief.

In the case we are considering there is no difficulty about collecting the tax on the income of National Insurance pensioners whose income is large enough to involve liability to tax. It would be wrong to exempt from Income Tax those pensions which obviously are part of the ordinary income of those who are receiving them.

The hon. Lady asked me to deal with one specific detail in connection with an extra statutory concession for students. I am advised that the position is that this concession will be extended so as to give relief for that part of the lump sum payment which refers to contributions for the years up to 1964–65. Of course, it will not be relevant after that date.

As to the many detailed suggestions which were put forward, I am in the hands of the Committee. We have reached quite a late hour and I believe that it is the wish of the Committee to make further progress with the Bill to-night. If hon. Gentlemen opposite wish me to deal with the points that have been raised and answer in detail each of the Amendments to which they have spoken—and they have spoken to them with great sincerity, clarity, brevity, knowledge and obvious concern—it would take me a very long time.

I think that it was the hon. Member for Shipley who referred to my "miserable brief". As the Committee will see, in quantity at least it is a very generous brief. I am ready, following carefully my brief, to try to answer all the detailed points that have been made, but I feel, if I sense the opinion of the Committee rightly, that it would not be the wish of the Committee that I should do that. I say that because, as I have made clear, I must advise the Committee that whatever be the merits of these proposals. this is not the year in which my right hon. Friend can extend the allowances which we have been discussing.

Mr. William Clark

We have had a wide-ranging debate and I regret that the Financial Secretary has not thought fit to deal, at least briefly, with the various points which have been raised. The discussion was opened by my hon. Friend the Member for Shipley (Mr. Hirst) with a cogent speech, which set the tone of the whole debate on the Amendment. One of the arguments adduced by my hon. Friends was that we have had so much inflation in the past six months that some tax concession should be given to people with small incomes.

9.30 p.m.

I remind the Financial Secretary of the valid point raised even by his hon. Friend the Member for Holborn and St. Pancras, South (Mrs. Lena Jeger), who spoke of housekeeper allowances, or whatever one wishes to call them, of a teacher returning to work after marriage, of an incapacitated husband or wife, and so on. I should have thought that the Financial Secretary, without reading a huge Treasury brief, would have been able to refer to those matters. It is not good enough for the hon. and learned Gentleman merely to say that this is not the year in which to do these things because, as far as I can see, while this Government are in office it will never be the year to reduce taxation.

The Financial Secretary might at least have taken the point of the income limit of the recipient with respect to dependent relative allowance. Both my hon. Friends the Members for Tynemouth (Dame Irene Ward) and for Rye (Mr. Bryant Godman Irvine) referred to this, although from slightly different angles. My hon. Friend the Member for Tynemouth wanted a straight increase of £75 instead of the £30 proposed in the Bill. My hon. Friend the Member for Rye referred to an anomalous position. If one contributes to two dependent relatives who are married and living together—that is, a father and mother—for income exemption limit the incomes of the father and mother are taken separately. The anomaly is that sometimes the father has an income just over the exemption limit while the mother's income is just below it. My hon. Friend's wanted to get an aggregation of the two incomes, and the Financial Secretary could well have said something about that.

My hon. Friend the Member for Finchley (Mrs. Thatcher), in a very well reasoned speech, specifically asked the hon. and learned Gentleman: what is the National Insurance position now of someone employing a daily help, or someone to look after the children while she goes to work? We are not here talking about tycoon employers but about ordinary people who, because of their daily life, have to employ someone to look after the children. What is to be the National Insurance position of that person? It would have been slightly more courteous of the hon. Gentleman to have answered my hon. Friend's specific point rather than to say, "My brief is so long", "The hour is so late", "I sense the feeling of the Committee", and the rest of it. We are, of course, glad of his assurance about private pension schemes, a matter also raised by my hon. Friend the Member for Finchley.

This very wide-ranging debate has been directed at those people on small incomes for whom small tax reliefs are extremely important. Small tax reliefs give an incentive for the individual to be less dependent on the State, and I am certain that we must follow that principle.

It is true that many of my hon. Friends' Amendments would have cost the Exchequer some money—the hon. and learned Gentleman made great play of the fact that the withdrawal of the National Insurance contribution provition would have cost the Exchequer £111 million—but it must be realised that the increase in the personal and marriage allowance of £20 is a very phoney increase. No one will really get any benefit from it. A £20 increase in personal allowance is nothing to be proud of when, at the same time, one is taking away a tax allowance of at least £22 from the taxpayer. That is the typically Socialist "bounty" one always gets. Something given with one hand is always surreptitiously taken away with the other.

Many of my hon. Friends have said during this debate—and I think that even the hon. Lady the Member for Holborn and St. Pancras, South (Mrs. Lena Jeger) nearly said—that many of these people are suffering considerable hardship—and more hardship in the last six months than they were suffering last October. It is factual that in the last six months the cost of living has gone up by just over 4 per cent.—an annual return for this Government of 25 per cent. inflation. This is going through the pipeline to the people of small fixed incomes. Great play is made about the increase in the pension. Of course everyone welcomes the increase in the old-age pension, but it is small comfort to old-age pensioners when they see day after day, week after week, month after month their 12s. 6d. dwindling like snow in the sun.

There has been an extremely disappointing reply from the Financial Secretary. We realise that he is working extremely hard. He made the point that it was not easy to make a complete review of all the various reliefs mentioned in this debate because this year the Chancellor thinks he must introduce the Capital Gains Tax and the Corporation Tax, as though those two taxes will solve anything for the country. The Chancellor has got his priorities wrong. I ask the Financial Secretary to look at some of the small Amendments, particularly the plea about the dependent relative aggregate income. That would not cost the Exchequer very much. I should not think the aggregation would cost anything approaching £1 million.

9.45 p.m.

Although the debate started on a very high note by the speech of my hon. Friend the Member for Shipley, it has ended on a very disappointing note by the speech of the Financial Secretary.

Mr. Hirst

I shall not keep the Committee for more than a few moments, but I must support everything which my hon. Friend the Member for Nottingham, South (Mr. William Clark) said. The speech of the Financial Secretary was singularly disappointing. This is one of the most important Clauses in the Bill. The hon. and learned Gentleman, presumably to gain time, said that he had not time to reply to the important points raised by a large number of my hon. Friends. That indicates the type of Government we are having to deal with.

I do not mind the fact that the hon. and learned Gentleman did not reply in detail to my speech—I am an old soldier in these debates—but I do mind that for those who brought out some special points he suggested that in the circumstances a reply would not be necessary. It is absolutely terrible and more miserable than the Finance Bill itself that the Financial Secretary should believe that owing to the reforms of the Corporation and Capital Gains Taxes the Government are not able to sort out tax allowances for old people. It is one of the most despicable things said in this Committee. I am deeply sorry that the Financial Secretary, for whom I have a personal respect, should say such a disgraceful thign.

Question put, That "£340" stand part of the Clause:—

The Committee proceeded to a Division:—

Mr. HOWIE and Mr. GREY were appointed Tellers for the Ayes but no Member being willing to act as Teller for the Noes, The DEPUTY-CHAIRMAN declared that the Ayes had it.

The Deputy-Chairman

Does the hon. Lady the Member for Tynemouth (Dame Irene Ward) wish to move her Amendment to a Division?

Dame Irene Ward

Yes, I do, Sir Samuel, and if no one will tell for me I will stand at the door myself.

Amendment proposed: In page 6, line 30, to leave out "£30" and insert "£75".—[Dame Irene Ward.]

The Deputy-Chairman

The Question is, That Clause 10 stand part of the Bill.

Dame Irene Ward

On a point of order. Am I not to have my Division? You called my Amendment and I said "No". Am I not to have my Division in support of the small fixed income group?

The Deputy-Chairman

The last time I called for the "Noes" I heard no reply.

Dame Irene Ward

I said, "No".

Clause ordered to stand part of the Bill.