HC Deb 27 May 1970 vol 801 cc1907-19

Amendment proposed: No. 19, in page 32, line 21, at end insert:

(2) An order under subsection (1)(a) above, so far as it relates to interest for a period before 1st January 1972, may be made so as to apply only as respects deposits in accounts not closed before that date, or so as to make different provision for such deposits, and other deposits.—[Mr. Taverne.]

Mr. Higgins

We should have some explanation of the Amendment from the Financial Secretary. I understand it to be permissive. It does not bind the Government, but simply enables them to make an upward change in the interest rate if they wish to do so. There is perhaps a point which should be made clear. It would appear that what the Government will do under the Amendment is to make a change, but with the higher rate applying only to all those who have deposits in their account during 1971 under certain circumstances. Would the hon. and learned Gentleman make it clear whether that is the case, because there is one question that I would like to ask him if that is so?

Mr. Taverne

The reason for the Amendment is the computerisation programme taking place in the National Savings Bank. It is in the middle of an operation that will eventually lead to all accounts being handled by computer. The operation will not be complete until about 1974. Meanwhile, all new accounts opened in the recent past are handled by computer, but the rest are dealt with manually. About one-tenth of the 23 million accounts will be on the computer by 1971. If the interest rate is changed the computer will have to be re-programmed to pay a higher rate of interest. If a change in the rate were announced this autumn, the reprogramming operation would take most of the time between the date of the announcement and the end of 1971. A further complication Is that the programming timetable is already heavily committed with preparations for decimalisation. It would therefore not be possible for the computer to pay a higher rate of interest during the year on those accounts closed during the year.

Nor would it be feasible to take such accounts off the computer when they are closed and make the necessary adjustment by hand. It would require the recruitment of 200 extra staff. Recruitment is difficult, and the difficulties that would follow recruitment specially for this would be intolerable. This is in many ways unfortunate, because the effect is that if the interest rate is raised the increased rate would be payable only, in the case of a National Savings Bank account, on those accounts which remain open the whole financial year. Even if there had been withdrawals during the year, one could still pay an increased rate of interest at the end of the year on the sums in an account during the course of the year, but it would not be possible, because of these complications, to pay the increased rate of interest if accounts had been closed before the end of the year.

This position will be made absolutely clear by the National Savings Department to account holders. They will be told that if they leave something—even a nominal sum—in the account until the end of the year they will be able to receive the increased rate of interest if there is a rise in the rate, but in other circumstances the only sum payable will be 2½ per cent.

For example, if someone withdrew after 11 months of 1971 £90 out of an account which held £100, but left in £10 until the end of the year, he would receive the new rate of interest not only on the £10 for 12 months, but on the £90 for 11 months. But if he withdrew the entire amount and closed the account at any period before the end of the 12 months in 1971, only the previous lower interest rates would be payable.

Mr. Higgins

I am most grateful to the Financial Secretary for making it clear. We seem to have changed from the normal argument when the Government reject an Amendment saying that something is administratively not possible to an argument which says that something must be administratively convenient. It raises a point which, while the sums involved are not enormous, is of some principle.

If I understand the hon. and learned Gentleman correctly, anyone can obtain the interest on the amount he has deposited during 1971 on a month-to-month basis as he normally would, provided he leaves a small sum in the account —even if it is a penny, presumably. Therefore, I can see that the hardship would not be very great, because anyone in that position, provided he happened to see the publicity, would leave in the penny, so that at the end of the year he receives the whole of his interest. But presumably a tremendous number of accounts will end up with pennies in them, which is not a very tidy arrangement.

What worries me about the principle concerned is that it means that anyone who happens inadvertently or deliberately to close his account actually loses the interest which he would otherwise receive whereas someone in the same position who happens to leave ld. in the account gets it. This seems an arbitrary procedure. We can see the administrative arguments the hon. and learned Gentleman has put but we urge him to ensure that publicity is as thorough as possible. We have great reservations about the principle which, in the light of his explanation, gives cause for concern.

Mr. Taverne

The hon. Member for Worthing (Mr. Higgins) is right to feel concerned. So did I. We explored carefully whether it would not be possible to get round this very unsatisfactory state of affairs but the administrative complications would have been enormous if we had not taken this power, assuming that there would be alterations in the interest rates. It would not have been defensible to have employed 200 extra staff for this one purpose for one year, as I am sure he would agree. In the circumstances, we have no alternative but he is right in saying that it is very important that the holders of National Savings Bank accounts should be aware of this position and we will ensure through publicity that they are.

I should add that this provision does not of course apply to trustee savings banks.

Amendment agreed to.

Motion made, and Question proposed, That the Bill be now read the Third time.

8.30 p.m.

Mr. Higgins

This is perhaps not so much a Third Reading as a funeral oration. Indeed, it looks as though the number of mourners is diminishing rapidly. But there are one or two points in conclusion which should be made on Third Reading.

The Bill has been put through in most exceptional circumstances and it is a matter of great regret that we have not had the opportunity to debate as we would have wished a number of the proposals embodied in it. Usually on a Finance Bill, we discuss the details of each Clause line by line with the catalystic effect of actually having Amendments before us which concentrate our minds on the detailed points to which we should give attention. There is probably no half-way house between the normal situation of discussing a Finance Bill line by line and this situation in which we have given the Bill virtually no serious consideration. The kind of debate we have had today is not a satisfactory arrangement.

For this, of course, the Government must take the responsibility and the Prime Minister most of all. If it is true, as he told the nation on television, that the date of the election was originally decided by himself immediately after the last general election—namely, on 1st April, 1966—one might have thought that he would make provision for an arrangement whereby we could debate the Clauses of the Bill in detail and with adequate time.

It is said that, in today's discussions, the Financial Secretary should have to say things like, " Perhaps the top of the paragraph on page 11 holds the key to the question put to me by the hon. Member for the Cities of London and Westminster ", or that he was sorry but he did not think that he had found all the answers. I feel bound to add, on the other hand, that we have not found all the questions because we have not had time adequately to consult the various interests affected by the Bill.

I want to say a special word to the Chief Secretary to the Treasury because presumably this is the last economic debate of this Parliament. He above all others has carried the burden of economic debates throughout this Parliament. He alone has continued in his high office throughout. I would say to him a personal word of thanks for the courteous way he invariably has dealt with matters of great complexity and controversy. But again, when we return to today's discussions, the best argument he could put —and he always finds the best arguments available to him—was that he was sorry that there had not been adequate time to discuss one of the Clauses but that it was at least a relieving clause. But not all the Clauses in the Bill are relieving. Many of them have a profound and serious effect on many people.

I thought that it was worth looking up the precedents for this, because a somewhat similar situation arose in 1955. The Third Reading on that occasion was moved by my right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle), then Economic Secretary to the Treasury, whom hon. Members on both sides of the House will greatly miss in future debates and whom we wish every success in his new vocation. That Bill had only one Clause and three Schedules and was, therefore, a much simpler matter which one could debate reasonably in the short time available. It is interesting to note that the present Chancellor of the Exchequer at column 957 of the OFFICIAL REPORT of 27th April, 1955, stressed that the important thing was that the standard rate of income tax ought to be abolished. It is not something which we have found the present Government introducing.

Grave concern has been expressed today about the way in which we have not been able to debate in great detail the controversy about occupational pension schemes, although we were able to debate the Clause dealing with them. There has been a change since the Budget debates. We have had the recent announcement of improved rates of supplementary benefit, which we welcome. This is a change since the Budget and I am not entirely clear whether it appears anywhere in the " red book ", or whether the situation in the " red book " is altered, or whether there is an item which will have to be changed in the coming financial year.

Our debates today have not been very partisan. The general atmosphere has been that of getting on with the detailed consideration of the Bill. But there has been reason to be concerned about the way in which during the debates on the Budget and on the Finance Bill the Chancellor has not answered questions about the serious misgivings about the present price explosion. My right hon. Friend the Member for Enfield, West (Mr. lain Macleod) described the Budget as a " one-month Budget " when the Chancellor introduced it. As has been rightly pointed out, in a sense it became only a two-week Budget, because inflation eroded the so-called concessions which the Chancellor made almost immediately. Although the Chief Secretary tried gallantly, as he always does, to refute my right hon. Friend's argument, I pointed out on Second Reading that he had not succeeded in doing so, and this has been a Finance Bill embodying what has become something less than a one-month Budget.

Certainly there has been no attempt by the Government at the end of this Parliament to explain how it is that the Prime Minister's statement that his programme could be carried out without any general increase in taxation over the life of the Parliament has not been fulfilled. This Finance Bill does not make any move in that direction, and there has been an increase in taxation over the Parliament of about £3,000 million.

It is a Finance Bill which would give us cause for concern in many ways if it were passed into law with what we regard as all its imperfections on its head. What is worrying is that because there has been so little time for discussion, it may be going to its end, not so much with all its imperfections on its head, as with many imperfections unknown to the House and perhaps only to be discovered later.

This is a regrettable state of affairs, and it marks an approach to our economic affairs, in raising a record amount of taxation and with the Clauses on direct taxation still unamended as we should like, which the Opposition totally oppose. Of this Finance Bill it is probably true that in a few moments the rest will be silence, but also in a short time the cannonades will echo forth from the ramparts, and I do not wish to anticipate them.

8.40 p.m.

Sir B. Rhys Williams

I am glad to support my hon. Friend the Member for Worthing (Mr. Higgins) in his criticism of the procedure adopted for considering this Finance Bill. Yesterday, Parliament in its wisdom decided that the Committee and remaining stages of the Bill should be truncated for obvious reasons. That was a perfectly right decision, because the government of the country must continue. What was wrong was that the Government insisted on proceeding with the whole Bill. They should have entered into the spirit of Parliament's concession and simply passed those Clauses which were needed for the government of the country.

The Bill in the form in which it has emerged from Committee contains highly technical Clauses, particularly Clauses 21 to 28 and Schedule 5, which ought to have had very much more detailed consideration than we were able to give thorn this afternoon. Although in the light of experience hon. and right hon. Members opposite may say they are willing to make changes, unfortunately there is nothing more permanent than the temporary.

I can only express the hope that Clauses 21 to 28 and Schedule 5 will very soon come before the House again for revision, but in the nature of things that might not be the case. Although I understand why the Chief Secretary was anxious to press forward with those Clauses which contain good as well as bad, I am sure that his decision will be seen in retrospect as a wrong one and that more concern will be caused by what has been done than in fact will be saved.

I said to him earlier today that if the right hon. Gentleman pushed through those Clauses he would regret it. That was not intended as a personal remark to him; and I did not say it just because I imagined that the House would have to go over the whole ground again in due course. I certainly did not say it because I am against the amalgamation of Sections 388 and 379, which will be a tremendous boon to trustees of occupational pensions schemes. But it is a bad day when the House of Commons resigns its function as controller of the Executive in matters of taxation, and that is what we have done today. I hope that we shall not again have a situation in which we discuss £7,000 million of people's private savings and deal with legislation affecting 12½ million people in a few hours without proper preparation or proper consideration of Amendments, in an almost empty House.

If the Bill becomes an Act large parts of it will be just a kite—an experiment for further consideration. I hope that our work today will not become a precedent, because that would be deeply regrettable. I hope that when Parliament looks back at what it has done it will see that this procedure should never be repeated.

Mr. Alfred Morris (Manchester, Wythenshawe)

What has commended the Bill to the country is the fact that it is so unlike other Finance Bills in election years. I am satisfied that it has been well received because it has much more to do with national needs than with pre-election tactics.

The hon. Member for Worthing (Mr. Higgins) skirted the rules of order by referring to the imperfections of the Bill. I thought that he was about to say that this proposition or that should have been in the Bill. I have a feeling that he thinks that one of the main imperfections is that there is no value-added tax in the Bill. The Conservative Party should have " come clean " and told us what has happened to the Wheatcroft Report. There is a great deal of curiosity about what the hon. Gentleman meant by " imperfections ".

I must not speak about matters which are not covered by the Bill, but I should like to ask my right hon. Friend the Chief Secretary to solve one of the great mysteries of contemporary Britain, namely, what has happened to the Wheatcroft Report which was promised by the right hon. Member for Enfield, West (Mr. Iain Macleod) on 9th October last year?

8.45 p.m.

Mr. Diamond

I thank the hon. Member for Worthing (Mr. Higgins) very sincerely for his courteous reference to me. May I, in warm response, say to him that if I had a majority of 19,000 I should not have talked about funeral orations, or been as gloomy as the hon. Gentleman. I did not think that the position was as black as that, but I might not be thoroughly up-to-date.

I wish to thank the Committee and the House and—I hope that this does not embarrass them—the Opposition for the way in which they have co-operated in a very difficult exercise in an unusual situation. This once more demonstrates something in which I have never failed to have confidence and faith—the capacity of the House of Commons to deal with any problem as it arises, its flexibility, good sense and feeling of responsibility. We shall have shown to future Members of Parliament how we can cope with what is admittedly a long and difficult Finance Bill with many technical and not all that straightforward Clauses—all of them important, all of them needed and all of them pressed very hard by one section or another of the community.

I am very grateful to the Opposition, and I hope that hon. Members opposite will be good enough to convey my thanks and appreciation to the right hon. Member for Enfield, West (Mr. Iain Macleod), who has sat throughout our debates and has helped enormously in this difficult exercise. An extraordinary thing which people should note is that today, one of the last days of this Parliament, the speeches have been short, objective and entirely non-partisan when one might have felt that thoughts of the election might enter people's minds.

I realise that it is a responsibility to suggest to the House that we should deal with a Bill as quickly as we have dealt with this Bill. However, to say that it has been dealt with in one day is not the full story. We had a full day on Second Reading, two full days in Committee of the whole House, and a full day today, making four full days on a Bill which is mainly a relieving Measure. I repeat that that does not mean that it should not be discussed fully. But it is less difficult and onerous to suggest a short passage for a relieving clause than for a taxing clause. I can only repeat my gratitude to the House for having accepted the situation.

The hon. Member for Worthing asked whether the new supplementary benefit rates have had their effect in the Red Book. The answer is that they have not. As he knows, they are not taxable in any event.

Mr. Patrick Jenkin

It was not so much a question whether the tax revenue was in the Red Book, but whether the expenditure was provided for on the relevant side of the table.

Mr. Diamond

I do not believe that it was, but the wisest course is to check up and let the hon. Member know.

I was criticised by the hon. Member for Kensington, South (Sir B. Rhys Williams) because the Government had decided to go ahead with Clauses 21 to 28. He is on that score not exactly the odd man out, but is dissenting from the view taken by his own Front Bench. I thought the position was fully explained by the right hon. Member for Enfield, West (Mr. Iain Macleod), whose view I share. He understood the reasons why we thought it right to press on with these Clauses. We would have been doing a disservice to the community at large if we had not pressed on with those Clauses, as was accepted by the House and indeed by the official Opposition.

The hon. Gentleman then asked whether we ought not to have shown a concessionary spirit in only putting forward those things which are necessary. In my view we have done both. We have put forward the Finance Bill Clauses because they are necessary. We have shown the concessionary spirit outside the Finance Bill. If he will think of the Bills which are not now going to be pushed forward in the time available, he will accept what I am saying. Therefore, we have played our part in a joint co-operative effort to clear up important matters before the House dissolves.

I was asked by my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris) what has happened to the Wheatcroft Report. I do not know what has happened to it, because I do not see it referred to either in the Bill or anywhere else. It remains a mystery to me, and no doubt in the weeks ahead my hon. Friend and I will try to unravel that mystery for the benefit of the electorate at large.

I should like to say one or two words about poverty, as to which many of these Clauses are closely related and which figured very much in our earlier debate today. It is not accurate or true to say that as a Government we have moved away from equality towards greater inequality as a result of our budgetary proposals in the period 1964 onwards. The contrary is the case. It is the established fact by the only known method of establishing it, that is to say by establishing the total impact of proposals in each Budget on a wide selection of families in this country. We have done this and have applied what everybody is now familiar with, the Gini coefficient. This is an exercise that we undertake in every single Budget.

I can only repeat what was said by my right hon. Friend the Chancellor of the Exchequer in the last three Budgets, that notwithstanding increases in taxes, and indeed the substantial increases in taxes in the 1968 Budget, we have managed to move towards equality and away from inequality both in those years and overall. I want that to be clearly understood. Therefore, it would be totally wrong for any hon. Gentleman, particularly on the Front Bench opposite, to repeat such statements as were made today to the effect that as a result of the Labour Government the poor have got poorer. The reverse is not only correct, but is established in the only statistical way one can establish it.

What is also relevant is the effect of taxation on the lower income groups. It is the fact that what we call the break-even point, the point at which an individual family receives as much in benefits and subsidies as it pays in direct taxation, has been rising all the time. It rose from about £750 in 1965 to about £1,000 in 1968.

We are talking in money terms, making whatever conversion ratio in real terms hon. Members care to make. It is still a very substantial increase. It means that more and more of those at the bottom of the scale are getting more out of the State than they are contributing to the State. This is the effect of the impact of taxation and it has been continuing ever since 1968. I cannot give exact figures today: one has to look at them over a period of months—indeed years—to be absolutely accurate about the figures. However, I can certainly say that the move is continuing in that direction and that the break-even point is rising.

So for these reasons it is undoubtedly the case that we have made a real impact on poverty as a result of the totality of our budgetary proposals, in this Bill and over the whole period of our Government.

I am attracted by the new approach of the Opposition to family allowances. We have already established that it is an official change of view. I do not know what has induced the change of view. We all recollect how the approach of a General Election clarifies—concentrates —the mind enormously. I do not know whether it is that, but I am bound to remind the House that the proposal to increase family allowances by 10s. and then add the clawback would mean an additional £30 million cost a year in public expenditure—something which one has always to bear in mind, something which the Opposition always invite us to bear in mind.

I express my gratitude to all those who have contributed to this careful but not over-lengthy debate on our Finance Bill and to its pleasant and happy conclusion. I hope that the House will give the Bill a Third Reading.

Question put and agreed to.

Bill accordingly read the Third time, and passed.