HC Deb 14 December 1971 vol 828 cc262-5
The Chancellor of the Exchequer (Mr. Anthony Barber)

With permission, I will now answer Question No. 6.

It has often been suggested, as by my hon. Friend, that all outstanding post-war credits should be repaid at the earliest opportunity instead of being phased according to age or hardship.

The difficulties of doing this are, however, considerable. The House will appreciate the sheer magnitude of the operation involved. It has been estimated that the number of credit-holders still unpaid may be of the order of perhaps 5 million, and up to £130 million may be still outstanding. Against this, repayment is now being made at the rate of about £14 million a year to some 300,000 people.

But it is now more than 25 years since the end of the war, and the time has come to dispose of this relic of the past. All outstanding post-war credits wilt, therefore, be repaid as soon as possible, which is from the beginning of next April. The bulk of the repayments will be made during the six months following that date.

This will be a very large operation indeed, and to undertake it at all exceptional measures are called for. First, some staggering of repayments will be essential. This will be mainly over the period of six months from April to September next year, and, for a reason I shall mention shortly, it is essential that the work should be largely completed within that period.

Second, in the initial invitation to the public to make claims under this procedure it will only be possible for the Revenue to deal with those to which a post-war credit certificate is attached. The date on which claimants who cannot forward a certificate may claim will be announced later. It would be quite impossible for the Revenue to handle this very large task if time had to be spent on the detailed research needed to settle the claims of people who do not have a certificate. In the interests of getting the work done, therefore, these people must be left to a later date. In the meantime, the Revenue cannot enter into correspondence, nor can it issue duplicate certificates in these cases.

Third, interest on credits repaid under these arrangements will run to the common date of 30th September, 1972. This will produce a uniform addition on account of interest of 38 per cent. to all credits. As this will be a winding up operation, I also propose that there will be a final date after which no further claims to repayment of credits will be accepted by the Inland Revenue.

The necessary legislation will be included in the next Finance Bill.

The burden on the Inland Revenue will obviously be a heavy one, and it is clear that when tax offices begin work next September on the unified income tax scheme introduced in this year's Finance Act there will be no further opportunity for at least three years of undertaking this operation. Hence, the particular timing, which will enable the bulk of the outstanding credits to be repaid in the six months preceding the preparation for unification.

The reason for making this announcement now is to allow the Revenue to carry out the great deal of planning and organisation which will be needed. To get through the work, I have authorised the Inland Revenue to engage about 2,500 additional temporary staff for a period of some months. Some of these extra staff will be located in special post-war credit repayment centres and, wherever possible, these will be established in development areas.

Individuals who qualify for repayment under the existing regulations should continue to submit their claims for repayment whether or not they have certificates. Other people should not get in touch with their tax offices. In due course, full publicity will be given about when and how to claim under this general release.

I have decided on this action primarily because we now have an opportunity which will not recur for some years. As far as the impact on the economy is concerned, I would not expect the repayments to have other than a small effect on gross domestic product in 1972–73 and, of course, this action has the advantage, in present circumstances, that it is a once for all operation.

Finally, I know that the House will join me in a tribute to the Inland Revenue for taking on this extra task, notwithstanding its present burdens and heavy future programme.

Mr. Cockeram

Will my right hon. Friend accept that his announcement, whilst restoring social justice, will also give great pleasure to a group of people who served their country with distinction during the war? Will he also accept the congratulations of the House that this announcement made today, together with other economic measures which he has announced and taxation cuts, will ensure that 1972 will be the year of rising economic activity?

Mr. Barber

I think that the proposal which I have made will be generally welcomed.

Mr. Heffer

Whilst obviously everyone will welcome this announcement—[Interruption.]—as it was one of the proposals made by the General Council of the T.U.C. when it met the Prime Minister and the Chancellor in recent discussions, will the right hon. Gentleman tell the House that he will take the advice of the T.U.C. in all its other proposals and that he will this afternoon go further and announce the other steps which he will take along the lines of the T.U.C.'s proposals to really get down to solving the problem of unemployment?

Mr. Barber

As my right hon. Friend the Prime Minister said a few minutes ago, we have in fact implemented a considerable number of the proposals which, over the past year, have been put to the Government by the T.U.C. in part in meetings with my right hon. Friend, at other times with myself, and partly in N.E.D.C. I am certain that whenever the T.U.C. puts forward proposals which we consider have merit and will help the economy, we shall accept them.

Sir Harmar Nicholls

Is my right hon. Friend as surprised as I am that neither the Leader of the Opposition nor the Shadow Chancellor has welcomed this announcement?

Mr. Marks

Is the right hon. Gentleman aware that a great many people who gave distinguished service in the ranks during the war do not have any post-war credits and that in the main this is a long-awaited benefit to those in their fifties who had reasonable jobs during the war. Is this in accordance with the Government's policy of giving to those in greatest need?

Mr. Barber

I do not accept what the hon. Gentleman said about the level of incomes of people who will be entitled to these post-war credits. I am also very surprised indeed at the implication behind the hon. Gentleman's question that this is not a welcome move.