Clause 14

HC Deb 27 May 1970 vol 801 cc1800-20

ALTERATIONS OF PERSONAL RELIEFS

3.18 p.m.

Mr. Marcus Worsley (Chelsea)

I beg to move Amendment No. WH17, in page 12, line 25, at end insert: (e) in subsections (2) and (3) of section 9 for the references to £1,000 (maximum income qualifying for full relief) there shall be substituted references to £1,200, and the following words shall be added to subsection (2): except that in the case of a married couple living together the maximum income qualifying for full relief shall be 1,400'. The Liberal Amendment not having been moved, I am glad that at least one party in opposition is present on this occasion.

The Amendment refers to the relief whereby the first slice of the income of a taxpayer, where one of the two partners to a marriage is over 65, can be treated for tax purposes as earned, when, in fact, it is unearned, income. The Committee will recollect that this relief was altered as recently as last year, and I have little doubt that when the Financial Secretary replies to the debate he will try to persuade the Committee that it would be premature to make an alteration once again. The fact is, however, that the rate of inflation during the past year makes an alteration necessary.

We are not wedded to the precise amount, but, as I shall show, there is a strong case for the figures which we have chosen. The simple fact is that so rapid has been the rise in prices during the last 12 months that a relief which was increased only a year ago needs to be increased once more.

There is a double implication in the Amendment. The first is the increase it proposes, but it goes rather wider, seeking to alter the characteristic of the relief, in that it suggests that where there are two persons in a household the relief should be higher than where there is only one. Mere common sense suggests that this should be done, and it is already done in the case of similar reliefs in income tax and in our national insurance scheme. Why is there not a differentiation in this relief between a household with two persons in it and a household with one person in it? That half of the argument is self-evident, and, therefore, I put it forward without further supporting evidence.

We suggest increasing the figure from £1,000 to £1,200, and have reached that figure in the following way. The rise in the Index of Retail Prices in the 12 months ended last April was 5.6 per cent. In a household with an income of £1,000, which is the limit of the relief at present, this would mean an additional burden, purely in terms of rising prices, of about 10s. a week, or about £26 in a year. Altering the treatment of the income from the treatment as for unearned to the treatment as for earned, as the Amendment suggests, would increase the income of the household by £18.

So, although the increase seems superficially to be very large, if we are seeking to relieve the household in this way it needs to be as much as that to make nearly full recompense for the increased cost of Labour Government. It is for those reasons that we feel that it would be desirable to make the change.

I do not know the cost of the Amendment, but I do not think that it can be very large. The House was told a year or two ago that the cost of treating all pensioners' income as earned income would be about £30 million, so I do not think that to treat a relatively small section of that income in this way could be very expensive. That is our case. We believe that such has been the pressure of inflation during the past year that the relief given only 12 months ago should be further increased.

Mr. Michael Shaw (Scarborough and Whitby)

I support the case of my hon. Friend the Member for Chelsea (Mr. Worsley). Clearly, there have been great increases in costs during the past year which alone warrant another look at the Clause. I am glad that my hon. Friend has suggested amending the approach a little this year. He his sought not only to increase the allowance, but also to differentiate between that for a single person and that for a married couple. We should work all the time to stop the discrimination against those who choose to remain in married bliss rather than to live together without the authority of a wedding, and this is another case in point.

If elderly people choose no longer to be wedded together but rather to live in sin, to use the old-fashioned description, they would be entitled to a great advantage from the Clause. Once over 65, each would be entitled to have income up to £1,000 regarded as earned income, but if they were married the benefit would be reduced, because the single allowance would apply to both, instead of each of them enjoying it.

Therefore, in so far as the Amendment seeks to expand the allowance for married couples it is to be welcomed. I hope that it can be accepted both because of increased costs and because it accepts the need to increase allowances given to married people in general.

The Financial Secretary to the Treasury (Mr. Dick Taverne)

The hon. Member for Chelsea (Mr. Worsley) put forward the case very simply and briefly, and I hope to reply in the same spirit.

This is a straightforward issue which divides into two parts. First, there is the question whether the age relief should be increased this year. Secondly, there is the question whether we should differentiate beween the single and the married rate.

With regard to the first question, my right hon. Friend the Chancellor explained that there was a limit to what could be done in the Budget this year, and he decided that on this occasion he would give help to older persons in the area where it was perhaps most needed. He has certainly not been unmindful of the needs of old people, as his record has shown. Last year, as the hon. Member for Chelsea reminded us, he raised the age relief limits from £900 to £1,000. Coupled with the marginal relief, which depends on how much of a person's income is earned or unearned, that could give some relief up to an income of £1,666.

But my right hon. Friend decided that this year the area on which he should particularly concentrate was the area of age exemption. The raising of the age exemption limit up to £475 for a single person and £740 for a married couple should give a considerable relief to a section of the population which could certainly do with such relief.

Mr. John Nott (St. Ives)

Surely the concession given by the Chancellor does not anything like compensate those people for the inflation they have suffered over the last few years?

Mr. Taverne

I do not think that that is right. In many cases the relief will amount to a very useful sum for the people affected. Raising the married relief in particular from £680 to £740 should bring substantial relief to these individuals.

The cost of the proposal would be about £5 million in a full year. It is not a sum that we could neglact. There is a limited amount available, and my right hon. Friend felt that the best area in which the relief could be given this year, in the light of what happened last year, was in age exemption rather than age relief.

The second point introduced by the hon. Gentleman was a differential rate for married and single persons. I certainly would not wish to dismiss this idea out of hand. But it is true that in this sector the married couple will have benefited from the substantial raising of the married allowance by about £90.

While I regard this as an interesting idea, which has never yet been adopted by either this or the previous Conservative Administration, it could best be considered when we are looking at all the personal allowances together. Ever since this relief was introduced, it has been at a constant rate for the single person and the married couple. In the case of the married couple, there is some relief auto- matically given to them which is not given to the single person because of the ordinary personal allowances and the special allowances for the married couple.

It is not an idea which I should wish to dismiss, but I should wish to look at it with sympathy when we look at the whole question of personal reliefs, as we shall continue to do. I should wish then to bear the question very much in mind.

Amendment negatived.

3.30 p.m.

Mr. Eric Lubbock (Orpington)

I beg to move Amendment No. WH13, in page 12, line 41, at end insert: (g) in section 9 (earned income and old age reliefs) for the reference in subsection (1)(a) to two-ninths there shall be substituted reference to one-quarter. The practice this afternoon seems to be to make brief speeches, so I shall not go into detail in proposing this Amendment on behalf of my right hon. and hon. Friends. If the Chancellor could not alter the standard rate of income tax this year, for reasons which have been thoroughly deployed already in the House, some concession is certainly warranted for people living entirely on earned incomes. There is a case for saying that there is a lack of incentive for people whose incomes are entirely earned and that whatever we do in this Finance Bill or in our fiscal policy generally should be designed particularly to encourage such people.

I had hoped that, with decimal currency in the offing, we might at least have expected a 3d. reduction in income tax this year, making it 8s. in the £, in which case altering the two-ninths fraction which has obtained hitherto to one-quarter would have made the arithmetic a good deal easier. However, that is water under the bridge now, and, in the absence of any reduction in the standard rate of income tax, there is a strong case for looking at the two-ninths fraction again.

As far as I know, this fraction has ruled for many years. I do not know how the two-ninths was originally calculated. I do not know what the logic of it is, or whether proper consideration has been given by the Treasury over the years to some variation in the amount, a variation which, as I say, would give greater incentive to people living entirely on earned income.

I do not altogether expect that the Financial Secretary will accept the Amendment, but I should like to know how the Treasury views the two-ninths fraction which has ruled for so long.

Mr. Nott

It was interesting to hear the hon. Member for Orpington (Mr. Lubbock) move the Amendment, obviously stepping into the shoes of certain of his hon. Friends, but I do not think that he understands his own party's Amendment. He laid considerable stress upon the position of elderly people with earned incomes. Perhaps I shall be corrected by the Minister and be told that I do not understand the Liberal Party's Amendment either, but I believe that the two-ninths age relief applies to all incomes, not purely to earned income.

To my mind, the argument here applies even more, perhaps, in the case of those who have saved up for the whole of their working careers, accumulating a nest-egg and then, being in receipt of income from their lifetime savings, having that income treated as unearned.

The distinction between earned and unearned income is one of the most unfair distinctions we have. I say that not because of any capitalist feeling about whether income from inheritance is more or less right or wrong than income from earnings, but simply because the term " unearned income " is thoroughly bad, because, basically, it is applied far more to savings income than to income from inheritance.

Mr. Lubbock

I agree that the terminology may be, unfortunate. If we spoke of income from employment, on the one hand, and income from property, on the other, we should draw a more accurate distinction between the different cases.

Mr. Nott

To some extent, I agree with the hon. Gentleman, but the point is that an elderly person may have put his life's savings into property. I am unable to see why a person's life's savings should bear a heavier form of taxation than his income during working life. If the Labour Party wishes to impose penal taxes upon inheritances, that is a different matter. It can tackle it through the estate duty or in some other way.

Many old people are having a particularly difficult time as a result of inflation. The £ is now worth 15s. 10d. compared with 1964. It is time we looked again at the two-ninths relief and made the improvement which the hon. Member for Orpington suggests. The argument applies to unearned incomes as well, and for that reason, too, since the present system applies particularly harshly to savings income, I support the Amendment.

Mr. Taverne

I shall ask the Committee to reject the Amendment for three reasons. First, it would leave a mess in the whole earned incomes sector because it would not apply to the two-ninths earned income relief as regards small incomes and age relief.

Perhaps I might here answer one question raised by the hon. Member for Orpington. The two-ninths fraction was arrived at, in some ways, in rather arbitrary fashion. In 1941, it was one-tenth. In 1946, it was one-eigth. Then it became one-sixth, then one-fifth, and eventually it was brought to two-ninths, the figure which we have now.

The second reason for asking the Committee to reject the Amendment is, perhaps, slightly more important. In our view, it would mean that the benefits would go to the wrong people, giving no benefit to the lower-paid and concentrating the advantage at the upper income reaches. Here are some examples. On earned income of £720, the amount of relief each year would be £15. On earned income of about £4,000, the relief would be £110 a year. In the present climate, it would be wrong to distribute reliefs in that way.

The third and conclusive answer which I must regretfully put to the hon. Gentleman is that his Amendment would cost about £320 million.

Mr. Patrick Jenkin (Wanstead and Woodford)

Are we to understand that it is the philosophy of right hon. and hon. Members opposite that no reduction can ever be made in taxation paid by someone higher up the scale until everyone below has been wholly relieved of tax?

Mr. Taverne

I am not saying that. I am saying that in this year it has been the Government's policy to concentrate what tax reliefs could be given at the bottom of the scale. That policy could certainly not be followed if the Amendment were carried.

Mr. Michael Shaw

If the hon. and learned Gentleman has decided that that would not be a proper course to take, will he tell us when the Socialists have ever increased, or would ever increase, reliefs at the higher range?

Mr. Taverne

The question is where the main reliefs could be given this year, and we decided that they should come at the bottom. The hon. Gentleman is quite wrong in suggesting that one should never give relief at the top, or that we have never done so. He will recall that this Budget gave substantial marginal relief to a section of surtax payers.

Lord Balniel (Hertford)

The Financial Secretary is mistaken in thinking that Budget gives help principally to the poorer sections of the community. That is precisely what was not done. The way to help them would have been to increase family allowances.

Mr. Taverne

I realise that there is a dispute here about the way relief should be given. Some say that it should come at the top of the income scale, and others at the bottom. On the question of tax reliefs, we decided that the help should be given at the bottom of the tax range.

Mr. Lubbock

Although I am obliged to the hon. and learned Gentleman for the historical background to the way in which the two-ninths fraction was reached, I still consider that this is a matter which the Treasury should consider in due course. However, in the light of the overall figure of cost which he has given, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Maurice Macmillan (Farnham)

I beg to move Amendment No. WH 14, in page 12, line 41, at end insert: (g) section 18 (relief for blind persons) shall also apply to any other chronically disabled person which means a person who is deaf, dumb or otherwise substantially handicapped by loss of physical or mental faculty which is likely to be permanent.

The Chairman

With this Amendment we can take Amendment No. WH 15, in page 13, line 4, at end insert: (3) Where a claimant proves that he is maintaining or employing a person for the purpose of the care of either a member of his family who is incapacitated by reason of old age or chronic mental or physical disability or of himself being so incapacitated he shall be entitled to a deduction from the amount of income tax which is chargeable equal to tax at the standard rate on £120 in respect of the employment or maintenance of that person. This relief shall be allowed whether or not the person employed or maintained is resident in the same house as the incapacitated member of the family.

Mr. Macmillan

Yes, Mr. Irving.

This is a very simple Amendment. My argument need not detain the Committee for very long. Its object is to extend to chronically disabled the relief that is at present available to the registered blind. It is relevant to think of the purpose for which the registered blind are given a special allowance in our tax structure. At the moment, it is £100, and is given in recognition of the difficulty or handicap caused by a permanent but static disability rather than by a progressive illness or other form of trouble. This tax allowance is granted to the registered blind regardless of their capacity to overcome their handicap and to work at a profession Or trade and lead as normal a life as, I am happy to say, so many do.

The Amendment seeks to extend that recognition to those who suffer from other forms of chronic disability. In form, if not in substance, it has been moved on many previous occasions, and has been rejected by successive Governments. One of the main reasons put forward by Treasury Ministers for refusing an Amendment in these terms has been the difficulty of definition, in terms of deciding who should be covered by the description " chronically disabled "—a difficulty that does not obtain to anything like the same extent in defining the registered blind.

It is fair to say that this problem of definition is a genuine one, but it has been faced by the Government in defining the conditions for receiving a constant attendance allowance and it is, therefore, right to say that it can and has been overcome in other and similar circumstances. The allowance proposed in the Amendment is designed to help all chronically disabled, whether or not they qualify for a constant attendance allowance. The principle is quite clear. It has been put forward by the Disablement Income Group and other bodies, and has been widely accepted by hon. Members on both sides of the Committee and many different sorts of people engaged in this work. The first principle of the Amendment is that any form of allowance, tax relief or similar concession for disability should be applied to individuals taking account of the extent and nature of their handicap but not how it was acquired or in what way it operates. As far as possible disability of every kind should be equated, whether it takes the form of a loss of physical or mental faculty, including deafness, dumbness and blindness. The criterion should be the extent of the disability and the difficulty that the individual has in facing ordinary life. That principle is receiving more and more recognition.

The second principle underlying the Amendment is that an allowance of this nature should be paid regardless of the success or otherwise of the individual in overcoming his disability, and regardless of how incapacitated he may be in life—that is to say, separating the concept of a constant attendance allowance from other measures designed to help people in their homes, or to help those who cannot cope. This proposal goes beyond that, and says that the disability of those who are facing extra difficulties and handicaps in comparison with the more fortunate members of the community should, in itself, be recognised by the community, and that some attempt, however inadequate, should be made to compensate such people for this.

The Financial Secretary should reflect on the words and policies put forward by his right hon. Friend the Secretary of State for Social Services in trying to extend the concept of community care, because this proposal is part of that concept. The people that we are seeking to help are, among others, those who are already leading as normal a life as possible—people who are trying to earn their living and play their parts in our community and in doing so are facing extra difficulties and handicaps because their earning capacity will always be lower than that of a comparable normal person.

This proposal will be of help to them, and it is in that spirit that I commend it to the Committee.

3.45 p.m.

Mr. Tim Fortescue (Liverpool, Garston)

I wish to address my remarks directly to Amendment No. WH 15, which seeks to provide tax relief for a taxpayer who employs, for the care of a chronically sick, mentally sick or physically sick, person in his household—or someone who suffers from extreme old-age—an allowance of £120 a year to help cover the cost of a person brought into the household to care for that chronically sick person. The last sentence in the Amendment extends that concept to provide relief even if the person employed is not resident in the same house as the incapacitated member of the family.

We have found it difficult to think of an all-embracing name for such an allowance. I propose to call it a home care allowance a phrase of which I am not very proud, but which will do as shorthand for the moment. The National Superannuation and Social Insurance Bill, now deceased, contained a proposal for an attendance allowance of £4 a week for those who attend chronically sick persons. In spite of all the efforts of the Opposition in Committee, that allowance was not to have been brought into force before 1st April, 1972, and in the present course of events it seems unlikely that it will be brought into force even then. We believe that the Amendment will meanwhile at least go some way towards helping those who have to employ people to look after the invalids in their families.

The Financial Secretary has said that he would consider one of my hon. Friend's other Amendments when he has a chance to consider all personal reliefs together. That has been the cry of Governments of all complexions for many years. Ministers have said, " We cannot do one thing because if we do we shall affect something else. Therefore, we must look at everything together." But they never get around to looking at everything together. Allowances are introduced ad hoc and piecemeal, year after year, by Governments of all complexions. There is no co-ordination of reliefs.

Among other things we have the blind persons' relief—introduced after years and years of pressure by hon. Members from both sides of the House. That is limited to blind persons only, although we seek to extend it this afternoon. There is the old-age relief. There is the housekeeper allowance for elderly widowers and the personal allowance for wives and children.

We also have—and this has recently caused some comment in political circles, as well as throughout the country—a system whereby students who are living with people who are not their spouses and who have children by them are given a grant by the Government. That has not been universally welcomed either here or in the other place, but it is a recognition of the fact that when there is a stable union, as it is called, society may wish to provide support for more partners in that union than simply the wageearner—if there is such a person in the family—or the man concerned.

These extensions having been made, there seems to me to be no reason why the concept of allowing tax relief to a member of a household who is not part of the family in that household should not be considered. Where a person or two people in a family are unable to look after a spouse or another member of that family living in the household, we ask that it should be recognised that society can, and should, take the obligation to help the head of the family in that case in paying towards the cost of bringing an individual into the household, either full-time or part-time, in order to look after the invalid whose care is beyond the ability of the family itself to provide.

Mr. Donald Chapman (Birmingham, Northfield)

I am sympathetic to the point being made by the hon. Gentleman, partly because there is provision for repayment of selective employment tax where a household employs someone to help look after someone aged over 70. This is a similar point. But surely the Amendment is defective unless it more narrowly defines what old age means. Surely we could not have inspectors all over the country defining in differing ways what is incapacity.

Mr. Forteseue

I am grateful to the hon. Gentleman for his sympathetic welcome to the Amendment, but I do not think that it is defective. If it is defective, however, then the Government suffer from exactly the same defect. In Committee on the National Superannuation and Social Insurance Bill, where the same sort of provision was made for the old, chronically sick and disabled through an attendance allowance, there was the same lack of definition. When we pointed it out in Committee, we were told that it would be taken care of by regulations. If this provision were included in the Finance Act, the point could also be taken care of by regulations. If it could not be so taken care of, then the Government themselves are wrong in what they said in Committee on the attendance allowance.

If this allowance is provided for in the Finance Act, and people are enabled more easily to pay for home care for invalids in their families, it is likely, if not probable, that a considerable amount of public money will be saved. Obviously, if private persons are not able to employ others to look after their chronic sick within the family, the probability is, as I am sure the Committee agrees, that sooner or later the invalid will find his way into hospital or an old people's home, or into care of some kind, because the family itself will not indefinitely be able to look after him.

Mr. Taverne

The arguments on these two Amendments are to some extent familiar. They have been gone over year after year and the unattractive task of resisting what on the face of it appear to be attractive proposals normally falls to the Treasury Ministers. But although they are old arguments, they are nevertheless on a very important subject.

The first objection, which has always had merit, is that the most effective way of dealing with the problem is not through tax reliefs. Such reliefs could only benefit those who are better off, those who are paying tax. They could do nothing for those who are not paying tax at all, for example, the disabled, people who are unemployed and who are unable to find employment and earnings.

No one appreciates this point more clearly than the hon. Member for Hertford (Lord Balniel), particularly in the light of the interjection he made on a previous Amendment. Obviously, the most satisfactory answer is cash allowances. Whereas in the past there has been no concrete proposal for a cash allowance, we now have the proposal for a constant attendance allowance and I suggest that this is the right kind of solution.

Amendment No. WH14 deals with a general disablement allowance, if I may call it such. It is fairly close to the suggestion which at least commended itself to the Royal Commission, but the Commission's proposal, which it thought feasible, related only to an allowance for 100 per cent. disability. It suggested that there should be a choice between this allowance and other benefits and it made a number of other suggestions which would not apply here. But the difficulty which applied to some extent to the Royal Commission's recommendation, and particularly applies to Amendment No. WH14, is that any such allowance would need an elaborate system of medical assessments which the Revenue simply could not carry through.

If an industrial injuries benefit or a war pension is payable, to some extent provision has already been made. But when it comes to chronic illness there are problems of assessment and definition which the hon. Member for Farnham (Mr. Maurice Macmillan) referred, but did not deal with. He did not face up to that problem and it is still there. It would mean a tremendous number of claims being made with a great and deep sense of disappointment being felt among those who did not have their claims accepted because they fell on the borderline of whatever arbitrary percentage was laid down as constituting substantial disablement. It would mean that the test would be loss of functional ability and not earning power. We believe that the constant attendance allowance shows the correct way to deal with the problem.

The suggestion embodied in Amendment No. WH15 is the kind of suggestion which was specifically rejected by the Royal Commission, which felt that it would not be feasible. Indeed, the Royal Commission felt that such a suggestion had a particular quality of unfairness because it would not help people who incurred different kinds of expenditure, such as payment to nursing homes. One kind of expenditure would be liable for tax deduction while another kind would not. Because neither Amendment would deal with the problem in the way we think it should be dealt with, and because there are substantial objections in any event to these proposals I cannot recommend the Committee to accept either Amendment.

Amendment negatived.

Question proposed, That the Clause stand part of the Bill.

Lord Balniel

The Clause is basically concerned with personal reliefs, but, in discussing it, we should also consider the relationship of those personal reliefs with the cash allowance, because, as the Financial Secretary has quite rightly said, there is a close relationship, and as a means of alleviating poverty this is the most effective means.

My hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) put down an Amendment which was designed to enable us to discuss this relationship. It was an ingenious product. His written work on social contract and his contributions to our debate on the National Superannuation and Social Insurance Bill were of great value to the House of Commons and would have been of greater value if some of the advice had been heeded by the Government. I always regard him as being one of the perennial optimists of the House, but I must disillusion him. There is little chance of the Government accepting his advice. It is too late.

The Government have not yet fully understood the relationship between tax allowance and cash allowance. In an Amendment which was out of order, we made it plain that we thought that it would be wise to publish the figures so that at least a more reforming Government, who will take office in due course, will have the basic statistical information on which to consider how best to alleviate poverty.

4.0 p.m.

Many of us are now involved in drafting our election addresses. The election address is the most carefully worded personal statement which any Member of Parliament ever addresses to his constituents. In discussing the Clause, it is right at least to refer to the Prime Minister's own election address in which he promised: Labour will abolish poverty in Britain

I should regard the abolition of poverty as the greatest secular objective of any political party of any political complexion. It is also one the hardest objectives to achieve.

Far from poverty being abolished, every evidence appears to suggest that it is growing. Until we have the figures, which we were hoping would be produced during the debate, it will be extremely difficult to assess how best to bring help to those in greatest need, whether through tax allowances, or through cash allowances. We want the information to be tabulated.

As my hon. Friend the Member for Liverpool, Garston (Mr. Fortescue) said, the tax reliefs have gone up haphazardly over the years, ad hoc and piecemeal. Sometimes old-age relief went up; sometimes the blind persons' relief; sometimes the housekeepers' allowances; sometimes the child allowance. Those allowances affect different families differently, and their overall effect is extremely difficult to assess.

In his Budget statement, the Chancellor of the Exchequer asserted that he was giving limited help to where it was " most socially necessary ". That is blatantly not the fact. Help has not gone to those groups which I should regard as being in the greatest need. It is by no means certain that those most in need are obtaining the greatest help. It is quite possible—I cannot prove this—that the higher income groups are obtaining more in cash or in kind out of the Welfare State than are those in the greatest need.

We want to discuss this the more particularly because this year the volume of evidence, whether from the Child Poverty Action Group, or the social workers, or the welfare correspondents, points almost conclusively to growing poverty among the lower income groups. There are five groups in which there is the greatest concentration of poverty. They are: first, the elderly, particularly those who receive no pension; secondly, the long-term unemployed; thirdly, the disabled, whom my hon. Friend tried to assist by his Amendment; fourthly, the fatherless families; fifthly, probably the most difficult to assist, namely, those who, in full-time employment and with families, have wages so low that their children are living below the poverty line.

The report of the Family Expenditure Survey of 1964 showed that the average wage of the lowest paid 10 per cent. of men at work in 1960 was 70 per cent. of the average wage, but by 1968 the lowest paid had slipped to only 67 per cent. of the average wage. The wage gap between those in the lowest income groups and the average wage earner increased from the 1950s and early 1960s.

I suspect, although I cannot prove this, that the devaluation package, whereby family allowances were increased in order to compensate for the rising cost of living following devaluation, has not solved the problems of those families, particularly not at a time when prices are rising very rapidly. The impact of failure to assist these families is felt most deeply by the children. In 1966, there were half a million children living in families below the poverty line; today there are three-quarters of a million children below the poverty line.

Until we establish a tax system which automatically brings help to those in need, the medium for helping these families is the family allowances. In the Budget, the Government did absolutely nothing to help these families. I echo the words of my right hon. Friend the Member for Enfield. West (Mr. Iain Macleod): I think that if we operate in this matter we should do so on the family allowances with the claw-back. The cost of a 10s. increase with claw-back would be £30 million net. It is, of course, much more gross. This is a very strong claimant indeed upon the amount of money the Chancellor thought was available "—[OFFICIAL REPORT, 15th April, 1970: Vol. 799, c. 1400.] The Financial Secretary said that the Budget helped those in greatest need, but that is precisely what it did not do. It did nothing for the poorest section of the community. The slogan of this Budget could well have been, " Under Labour, the poor get poorer."

Sir Brandon Rhys Williams (Kensington, South)

May I crave your indulgence, Mr. Irving, and ask for your ruling on a point of order? I notice that in your wisdom you have not selected Amendment No. WH16. In case there is any danger of establishing an unfortunate precedent, I should be glad if you would be so kind as to enlighten hon. Members who are interested in precisely your reasons. I should not like it to be thought that it was not selected because it was out of order.

The Chairman

It would be setting a precedent if the Chair gave reasons for the selection of Amendments. I am sorry that I cannot help the hon. Gentleman. Indeed, we have now passed that stage and are now discussing the Question, " That the Clause stand part of the Bill ".

Sir B. Rhys Williams

Further to that point of order. Of course, I defer to your Ruling, Mr. Irving. I should be happy to hear from you, however, that it was not selected because you thought that it would not lead to a profitable debate on this occassion, rather than that it was out of order.

The Chairman

All I can say to the hon. Gentleman is that it was not selected. I cannot go further than that, not even as far as the limited point which the hon. Member wants me to reach.

Mr. Taverne

The noble Lord the Member for Hertford (Lord Balniel) was somewhat dogmatic when he suggested that the poor were getting poorer. He himself said that he only suspected that that was the case and was not in a position to prove it. The basic figures show that that is not a correct view of the pattern over the last few years. Looking at the most important of all the changes, in spending ability, one finds that the social security benefits, which provide for the poorest section of the community, excluding low wage earners, have increased in real terms by 20 per cent. The increase in consumption over the last five years has been 10 per cent. That conclusively proves that those who qualify for social security benefits have increased their relative share of total consumption at the expense of the rest of the community.

I should be the first to agree that one is disappointed by the small amount of redistribution which has taken place, but the statement that there has been no redistribution and that the poor have got poorer is contradicted by the figures and is totally untrue. On the question of low wage-earners, which in some ways is the most worrying, I refer to an Answer given by my hon. Friend the Minister of State, Department of Health and Social Security, in which he said: If we make a comparison between 1964 and 1969, we find that the low-wage earners have done substantially better than other sections of the population. Taking account of the Budget a married couple with two children have 11½ per cent. more money in their pockets than in 1964, a couple with three children have 14½ per cent. more, and a family with four children are 16½ per cent. better off. These are genuine increases in spending power after allowing for all price increases." [OFFICIAL REPORT, 11th May. 1970; Vol. 801. c. 814.] It is just not true to say, as the hon. Member and his hon. Friends say, that the poor have become poorer. That is not so. They are relatively speaking better off.

Mr. Neil Marten (Banbury)

Does not the hon. and learned Gentleman recall an interview given by the Secretary of State for Social Services about five weeks ago in which he said that the gap between the poor and the rest of the community has not narrowed under Labour? What does the Financial Secretary say about that?

Mr. Taverne

In the first place, I do not recall it. Secondly, on remarks made by my right hon. Friend, for whom I have the greatest respect, I should always like to see the full context in which they were made. These figures certainly do not bear out any such statement.

Coming back to the specific proposal made by the noble Lord, that family allowances should be increased with claw-back, I certainly do not dissent from the proposition that perhaps that is the best way at present of relieving certain sections of poverty. It is a fact, however, that when we introduced such a measure we met with the unanimous opposition of hon. Members opposite.

I do not remember the noble Lord coming into the Lobby with us on that occasion. The Tories were bitterly opposed to the 1968 Budget and in Committee on that Finance Bill they gave us no support whatever. Now, on this occasion, when we do not put forward the same principle hon. Members opposite say that we should increase family allowances plus claw-back.

Mr. William Molloy (Ealing, North)

Is my hon. and learned Friend being fair to the Opposition? The country knows that the basic elements of the Welfare State were created by the Labour Government from 1945 to 1951 and have been enhanced by this Government.

When, for once in a while, the Tories show an interest in the poor as an election draws near, should not my hon. and learned Friend allow them to show that compassion, if only for a few weeks?

Mr. Taverne

I am sure that the Committee will have noted the observations made by my hon. Friend. I am grateful for his remarks.

To turn back to the serious question of family allowances plus clawback which suddenly the Opposition now embrace—

Lord Balniel

The hon. and learned Gentleman was extremely courteous in not interrupting my speech, but the increase in family allowances to which he referred concerned two increases which took place almost coincidentally. Total confusion was caused by an April increase in family allowances and a claw-back in the October.

Mr. Taverne

The noble Lord must study the remarks made by his right hon. Friend in which he referred to the principle of claw-back as a thoroughly bad principle. The whole claw-back principle was roundly condemned by hon. Members opposite.

Of course, there are difficulties, but the reason we have not increased family allowance plus claw-back is that it would bring people back into taxation. Roughly, 300,000 would come back into taxation. Secondly, there is a serious omission in this proposal for dealing with poverty, in that it does not take into account the difficult question of the cost of housing. I do not say that the idea of increasing family allowances plus claw-back may not be the best weapon we have, but let us look at the results of the Family Expenditure Survey, which is the best way of dealing with the subject rather than going straight for this principle in a year when one of the main improvements is to take people out of taxation rather than to put them hack into taxation.

Question put and agreed to.

Clause 14 ordered to stand part of the Bill.

Clauses 1 and 2 ordered to stand part of the Bill.