HC Deb 09 March 1972 vol 832 cc1793-812

10.20 p.m.

The Financial Secretary to the Treasury (Mr. Patrick Jenkin)

I beg to move: That the Post-War Credit (Income Tax) Regulations 1972, a draft of which was laid before this House on 18th February, be approved. The House will remember that on 14th December last my right hon. Friend the Chancellor of the Exchequer delighted the country by announcing that all outstanding post-war credits would be repaid beginning in April. It is fair to say that the fact that all the post-war credits created between 1941 and 1946 have still not yet been repaid more than 25 years later has been a source of increasing irritation and disappointment. I am glad that the end is now in sight.

It is interesting to recollect how the post-war credit scheme started. Its origins lay in the proposal made by the late Lord Keynes in his now celebrated paper "How to Pay for the War", that part of people's earnings should take the form of deferred pay. In this way, he argued, people would postpone that part of their consumption attributable to their increased war effort and so help to pay for the war, while the purchasing power could be released when the war ended and mitigate what he then feared would he a substantial post-war slump. Accordingly, in the Finance Act, 1941, when certain of the personal allowances were cut, it was provided that the additional tax levied on each individual in consequence would be recorded as being credited to him for repayment and on such dates as may be fixed by the Treasury being a date so soon as may he after the termination of hostilities in the present war". "So soon as may be" has been rather a long time coming. As the House knows, progress has been painfully slow. By successive steps taken between 1946 and 1962 various categories of claimants became entitled to repayments, and, at some risk of oversimplification, these now include men over 60 and women over 55, widows entitled to credits in their own right, the personal representatives of deceased credit-holders and a fairly restricted range of credit-holders suffering various kinds of hardship, including prolonged unemployment or sickness, certain types of disablement, and so on. The categories entitled to repayment have not been widened since my right hon. Friend the Home Secretary made the last liberalisation in 1962.

Of the net amount of £740 million originally created, a sum of the order of £130 million remains unpaid. We anticipate that some 5 million credit-holders out of the 17 million taxpayers in whose favour credits were originally created will submit claims.

The repayment scheme falls inevitably into two parts. There are those who will be able to produce their post-war credit certificates and for whom, therefore, repayment is a relatively simple task. There will inevitably be some who have long since lost their certificates and in respect of whom there must be a much more laborious tracing process before repayment can be made. These regulations cover only the first category of repayment; that is, those who can produce at least one certificate. The remainder will be covered in due course by separate regulations.

It is proposed that claims by those who can produce certificates should be staggered over the six months beginning on 1st April. The staggering will be on an alphabetical basis by reference to the first letter of the surname appearing on any post-war credit certificate which the claimant produces. Thus, those with certificates with the surnames beginning A-C should submit claims during April; D-G during May; H-L in June: M-O in July; P-S in August; and T-Z in September.

Already many people have begun to make inquiries as to how and where they should claim. The hon. Member for Midlothian (Mr. Eadie) at Question Time on Tuesday asked for more information about this. As the Chancellor of the Exchequer said, it is proposed to launch a substantial publicity campaign, and this will begin in about a week's time. Preparations include the distribution of claim forms posters for display at Post Offices and other publicity material. It is essential for the smooth working of the scheme that those who possess their certificates should claim during the appropriate month. But if someone happens to slip past the end of the month, his claim will not necessarily go to the end of the queue.

Experience in recent weeks has shown that an increasing number of inquiries come from non-residents overseas. Hitherto they have not been able to claim the repayment where the conditions have to be certified by a United Kingdom authority. They, too, will be entitled to reclaim under these regulations if they can produce a certificate, and claim forms are, therefore, being sent to British Missions abroad for this purpose.

Before I sit down, I would say a word about the administrative arrangements, and I would preface my remarks under this head by paying a very sincere tribute to the staff of the Inland Revenue for the way in which they have devised this repayment scheme and for their readiness to take it on board despite the very substantial burdens now facing them as a result of unification and other tax reforms.

As my right hon. Friend told the House last December, exceptional measures are necessary to undertake this task. He has authorised the engagement of about 2,500 additional temporary staff, of which some 2,300 have already been recruited. Treasury Ministers have received a number of approaches from hon. and right hon. Members from both sides of the House asking that the repayment centres might be located in their constituencies where in many cases there is at present high unemployment.

The Inland Revenue has gone to great lengths to ensure that as many as possible of the extra staff are located in development and intermediate areas. About 1,000 staff will be stationed in special repayment centres at Cardiff, Llanishen and Pontypridd in South Wales, in Bootle and Salford in the North-West, with a few at two small centres in the South-West at Portsmouth and Bristol. Just over 1,300 extra staff will be stationed in existing tax offices which will deal with their own post-war credit work. Of this total, about half are located in development areas. All the Scottish work will be handled by staff located at the Scottish tax offices spread throughout Scotland and not at Centre No. 1. Thus, it will be seen that about 70 per cent. of the temporary staff will be located in development and intermediate areas.

However, regional unemployment could not be the sole criterion. The Inland Revenue also had to have regard to the availability of suitable office accommodation which could be fitted out in the short time available and also—I stress this—the availability of supervisory staff. It is for these reasons, in particular, that it was not possible to locate temporary offices in the areas, where P.A.Y.E. computer centres have had to be suspended, such as Washington and Shipley. I very much regret that it was not possible to offer what would have been a temporary alleviation of the disappointment which I know was felt in these areas when I announced the P.A.Y.E. suspension last September.

I turn now to the draft regulations. I think they are for the most part self-explanatory. I should just note on Regulation 3, first, that at least one post-war credit certificate must be produced, and, second, that this special repayment scheme does not in any way prejudice the normal repayments under existing provisions. In other words, a person entitled to claim on, for instance, age or hardship grounds may do so in the normal way without waiting for the qualifying date under these regulations.

Regulation 5 refers to building societies. This is perhaps a slightly interesting quirk in the scheme. During the war special arrangements were made to reflect the fact that when the individual personal allowances were cut the special composite rate of tax paid by the societies was correspondingly increased. Extra-statutory undertakings were given that the difference between the tax at the increased composite rate and what the tax would have been if it had remained unchanged would be credited to the societies and repaid when post-war credits were generally released. This extra-statutory arrangement was made statutory by the 1959 Act, which provided that repayment might be made as prescribed by the Treasury. Three-fifths of these credits were repaid in 1962. Regulation 5 provides for the balance—estimated at about £1 million—to be repaid.

Finally, I remind the House of what was said by my right hon. Friend about interest. Although the credits will be repaid at differing times, we propose to credit them all with interest down to a common date; namely, 30th September, 1972, which is the end of the six months repayment period. This will produce a uniform addition of 38 per cent. to all credits and thus greatly simplify administration. The necessary legislation for this will be included in the Finance Bill.

This special operation represents the beginning of the end of what has been a long drawn out and somewhat unhappy episode in our fiscal history.

I hope that I have sufficiently explained both the background and the purpose of the regulations. I believe that they will command the warm acceptance of the whole House. I shall be very happy to deal with any points which hon. Members may have if, Mr. Deputy Speaker, I catch your eye towards the end of the debate.

10.34 p.m.

Mr. Joel Barnett (Heywood and Royton)

I welcome the repayment of what was originally thought to be a temporary loan.

The tax, as the Financial Secretary has pointed out, was first introduced by Sir Kingsley Wood on 7th April, 1941. At that time Sir Kingsley Wood said that the fund of post-war savings would be for the taxpayer and his dependants; and he went on to say that it would not be possible to claim or use the credit while the war continued. He did not say that it would not be possible to claim it for perhaps another 30 years after the end of that war.

The tax threshold then was very different from today's. A married couple with no children started to pay tax at £200 a year, with three children at £350 a year. A single person started paying tax at £120 a year. So the credit for the average industrial worker in 1941 was not particularly high, especially, with average industrial wages at that time ranging between £3 and £7 a week. I notice that in the debate then Mr. Willie Gallacher said that the average wage in his constituency was about £3 a week. But for the average man with three children earning £350 a year the average credit was £17 6s. 8d., with a maximum of £65.

Most of this £130 million of post-war credits still outstanding goes to people over the age of 50 who were earning above the average at that time. I do not say that because I feel that it should not be repaid; it should be: this is, of course, not a tax or a tax relief but a repayment of what was was described as a temporary loan.

When the present Home Secretary was Chancellor, on 13th October, 1962, and the payment was made for men of 60 and women of 55, the Economist was alone in being a little churlish. It said that this was an earlier-than-expected hand-back to those who had paid most taxes 20 years before. This was a rather churlish view about repaying money to people who were led to believe not that it was a tax but that they were loaning something for the duration of the war. Certainly now, 30 years later, it is a little unfair. So I welcome the repayment.

In answer to a Question on Tuesday the Financial Secretary referred to about £110 million being repaid in the 1972–73 financial year. Is that figure an estimate relating to those who have certificates, or does it include the new regulation for those without certificates? I should have thought that it was impossible to know how many of the 5 million people still have their certificates after all these years. I appreciate the administrative problems for the Inland Revenue when certificates have been lost, but even where they are provided it will surely still be necessary to check the files showing the tax paid at that time.

I assume that a check will be made of pretty well all the claims whether there is a certificate or not. The Financial Secretary said that a claim would lie even if there was only one certificate available out of five, so presumably every claim would have to be checked. If this is to be done, it will be very difficult to trace where tax was paid particularly where a firm has gone out of business.

Why is it not possible also to pay those who do not have their certificates? The Financial Secretary told us of this new regulation. Presumably the majority of claims will be made by those who have lost their certificates. Many people do not keep documents of this kind for a great length of time.

I am particularly concerned about the position of those who have lost their certificates. There is a reference in the instrument to the evidence that the Inland Revenue may require. May we be told what sort of evidence that might be? If someone writes in saying "I worked for XYZ Ltd. in 1941 and paid tax", will that be sufficient evidence; that is, if the firm has gone out of business and what was its head office was not in the district of the applicant's address so that it is not possible to trace the files?

How will the payment of credits be made? May we be assured that there will be no confusion with any current tax liability? It was not made clear in a parliamentary answer last Tuesday whether the Inland Revenue would take this opportunity in the event of an underpayment of tax—in other words, where some tax is owing in respect of the current year—to say "We will recoup this out of the credit which is due to this taxpayer." May we take it that these payments will be considered entirely separately from any tax liability?

Can we be told the approximate number of people who will be involved in the £130 million to which the Financial Secretary referred? At the top end, how many are likely to receive £65 a year for five years, making a total of £325? Will the vast majority of claims be for very small sums?

I appreciate the administrative difficulties to which the Financial Secretary referred, and my hon. Friends, many of whom represent development areas, welcome his statement that wherever possible the extra staff will come from those areas. It was originally estimated that about 2,500 extra staff would be required, I think, for about six months. One assumes that they will be mainly female staff. Has a later estimate been made of the length of time for which they will be required?

Despite the considerable publicity that will be given to this matter—I was delighted to hear the Financial Secretary say that possible claimants will be given substantial publicity—thousands of people will be late in making their claims. While the files cannot be kept open indefinitely, it is important to recognise that this money was borrowed by the Government some 30 years ago and that it would be rather hard to say "Although we borrowed this money from you originally, if you do not reclaim it by a certain date you cannot have it back." To say that would be hard on those who have lost their certificates.

I suggest that to overcome the administrative problem of keeping the files open, instead of the files being thrown away after a certain date they should be placed at a central point so that repayments can be made even years hence. It seems terribly unfair to fix a date, whether it be one or 10 years hence, and say "Beyond that date you cannot have the money you loaned to us." There are bound to be marginal cases. All of us, as Members of Parliament, will receive innumerable requests from constituents saying, "It is most unfair. I was unaware of this, for some reason, and did not claim. Because I am a day late, or whatever it is, I now cannot have refunded the money I lent during the war."

If the Financial Secretary cannot say anything about that matter tonight, I hope he will at least consider the question. I recognise the administrative problems and the desire of any Administration to close the files at some time. But the Government should consider the fairness that one must balance against administrative difficulties.

Perhaps the most serious consequence of the non-payment of these post-war credits has been the economic consequences, for it has destroyed the chance of using this as a further method of managing the economy. At present we are in the happy position—or, in one sense, an unhappy position, because of the level of unemployment—of wanting to increase consumption. But as in the past, and as will occur again under all Administrations, there will be a need to reduce consumption, and a compulsory form of tax saving would be less unpopular than a straight tax increase. I understand that Sweden has such a form of deferred spending which is used to stimulate industrial investment. This would be of use in this country, where the level of industrial investment has been so low. We could release this deferred spending power when and where most needed to deal with industrial investment or to counter a slump or encourage consumption. But if we did such a thing it would have to be made absolutely clear that there would be a firm commitment to repay within a fixed time, or earlier if required.

I conclude by welcoming the regulations, but my welcome is inevitably tempered by the thought that there are many other ways in which I should like to spend £130 million. However, we are honouring a clear pledge, and we are right to do so.

10.48 p.m.

Mr. Eric Cockeram (Bebington)

I suppose that over the past quarter century hundreds of Members of Parliament must have asked a Question of the Chancellor of the day suggesting that he should repay post-war credits. I was surprised, therefore, that when I tabled such a Question for oral answer last December my right hon. Friend the Chancellor replied "Yes, Sir". That answer gave great delight to many people outside the House.

I ask my hon. Friend the Financial Secretary to convey to my right hon. Friend the Chancellor the congratulations and thanks of many millions of people. The job of repaying these post-war credits is a formidable administrative task for the Treasury. I am sure that when the point was first raised the Chancellor was advised of the difficulties of the administrative task of performing this function. Nevertheless, my right hon. Friend was resolute and determined to see that post-war credits were repaid. It is to him and his team of Ministers that we owe congratulations on that answer.

I ask the Financial Secretary three questions. Can he confirm that the amount outstanding is not merely £130 million but that this is the face value of the certificates to which must be added interest of 38 per cent., giving a total repayment of £180 million, and that this is the extra purchasing power that will be injected into the economy over the six-month period?

Can the Financial Secretary give a little more guidance about what will happen to those who cannot find their certificates? Are there likely to be arrangements to help them in the coming financial year or is their claim likely to go even further into the distance?

Among the new centres which have been set up to make the repayments is one which I am glad to say will be established in Bootle. How many extra staff will be required for the centre?

I repeat my congratulations to the Government on their bold step and say how much I support it.

10.51 p.m.

Mr. William Molloy (Ealing, North)

I join those who have proferred their thanks for this very welcome measure and express my appreciation of the work by the Inland Revenue in this remarkable exercise. Far too often it becomes almost a public joke to poke fun at civil servants. Perhaps this is the time to point out their real value. I am grateful to the Financial Secretary for the tribute he paid to the staff of the Inland Revenue.

There is the problem of holders of post-war credits who after a lapse of 30 years have lost their certificates. It is common for people to lose important documents like birth certificates. Postwar credit certificates were issued at a time of great stress during the last war. I cannot imagine anything more mean than to spoil this wonderful gesture now by telling certificate holders who made their contribution during a time of great stress that if they have lost their certificates the obligation will not be honoured.

I hope the Financial Secretary will realise this and will not spoil things by insisting that certificates must be produced by a certain time. I hope the Treasury will show as much patience to these people as these people have shown in waiting for the return of what they gave the nation.

10.53 p.m.

Mr. Edward Lyons (Bradford, East)

I welcome the repayment of post-war credits. There was considerable hope in the Bradford area that a centre for repayments would be situated there, within the new local government area. Shipley is within the new local government area of Bradford. The last Government promised to establish a computer centre there employing, 2,500. The plan was scotched by the present Government, whether for good or for bad reasons, and this caused serious disappointment, particularly when unemployment was rising rapidly.

Unemployment now stands at about 7 per cent., but because Bradford is not officially classed as an intermediate area we shall not be considered as a site for a repayment centre. But there was a feeling in the West Riding that a centre for repayment would be set up in the area simply because it was felt that the Government had an obligation to set one up in the light of what happened at Shipley. Unfortunately, that hope has been dashed.

The next time the Chancellor announces a scheme involving the large-scale recruitment of labour I hope he will remember the condition of towns like Bradford, that he will not consider narrowly what is an intermediate area and what is not, and that he will decide to bring to Bradford and such places the opportunities of fresh white-collar employment which they so badly need.

10.55 p.m.

Dame Irene Ward (Tynemouth)

I add my congratulations to the Government on this occasion, particularly as I was in the House when the post-war credit scheme was introduced. Over the years we looked forward to the time when our indebtedness would be honoured, and I am grateful to the Treasury for having taken this action.

Have we any repayment centre on the North-East coast? We look for every possible chance of increasing our employment there.

Can my hon. Friend the Financial Secretary say something about the problem of women who had their post-war credits aggregated with those of their husbands? In 1941 women were concerned mainly with trying to help to win the war, but now some women whose post-war credits were aggregated with those of their husbands face difficulties. For example, one of my constituents had to divorce her husband some years ago. He married again, and on his death the second wife, who had nothing to do with the post-war credits, obtained them. There must be many women with similar problems. I do not think anyone in those days thought that all these years would pass before the post-war credits were repaid. I gather that women had the right to say whether they wanted the post-war credits in their own names, but with the passing of the years a great deal of disappointment has been caused to some of those who chose instead to have them aggregated with those of their husbands.

Many of the certificates may have disappeared, and people have forgotten what they did in 1941. If my hon. Friend cannot do anything about the people who are feeling bitterly disappointed because they cannot claim their post-war credits, which they undoubtedly earned, it would be gracious if he would explain so that the position is on the record. If he cannot find any way of dealing with the problem, perhaps he will just pay a tribute to those who registered their post-war credits and explain the position, so that at any rate those who are bitterly disappointed will realise that the matter has been raised in the House, that the Treasury knows about it and that he can explain what happened in 1941.

That is all I would like to say, but it is as well to have it on record so that people who will have forgotten what happened in 1941 will know the reason. I have seen several letters in the Press drawing attention to this and it would be helpful to have a little explanation so that people will know the situation when they claim their own post-war credits.

Otherwise, like everybody else, I think this is an important occasion. Many will be grateful that the Chancellor has been able to find the money to meet the undoubted obligation the Treasury has to those who had post-war credits in 1941.

11.0 p.m.

Mr. Simon Mahon (Bootle)

I express my gratitude to the Financial Secretary for having taken into consideration the claims of the County Borough of Bootle. It may be paradoxical or a little bit of justice because Bootle in 1941 was one of the most bombed areas in the country. In those days we had no work such as the hon. Gentleman is now sending to my constituency.

I want to express my gratitude to the hon. Gentleman because employment is needed in that part of the country, where we have a high unemployment rate. My constituents remember the war because of what Hitler did to us when he hit nearly one in five of the houses in the town. But now we have a new claim on society and attract new types of employment. We hope that the generosity of the Government will not stop here, but that they will continue to ensure that those parts of the North-West are still viable places which need this sort of employment.

I ask the hon. Gentleman to be generous about this. When the town was bombed in 1941 people lost not only documents but their homes. So I hope that when they make their claims the Treasury will be as generous as possible. People in my constituency lost not only their homes but their sons, daughters and families. It does not need me to overplay this.

We made a great contribution to winning the war, and I welcome the fact that belatedly the Government are now repaying what Governments should have repaid many years ago.

11.3 p.m.

Dame Joan Vickers (Plymouth, Devonport)

I support what the hon. Members have said. My hon. Friend the Member for Tynemouth (Dame Irene Ward) has expressed the case for women better than I could. I hope notice will be taken of what she has said.

Plymouth was equally badly blitzed and many people have no idea where their certificates are. Not only houses but whole streets went. This will create considerable difficulty.

My hon. Friend said he was trying to find places in development areas and intermediate areas, so why did he choose Bristol, which is neither? Bristol is a flourishing city. I have been in correspondence with him about Plymouth, where we have plenty of office space. There is Plymouth North Road Station, built at a cost of £1 million, which has office space which could be used. Bristol is an area with pretty full employment, whereas Plymouth is not, especially as the other Government Department, the Admiralty, is cutting down on the Civil Service.

If my hon. Friend is taking on a number of people, can he consider the over-fifties and others who have to retire at 60 and cannot get another job but do not draw their pensions until they are 65?

11.5 p.m.

Mr. James Lamond (Oldham, East)

I join in the congratulations to the Government. I accept the argument put forward by my hon. Friend the Member for Heywood and Royton (Mr. Joel Barnett) that if we were to examine all the possible ways of spending £130 million or possibly £180 million we might come up with a scheme which would assist the recovery of the economy more than this. However, it must be particularly satisfying for the Government to be able to take this step.

As the Inland Revenue searches for long-forgotten certificates it may come across long-forgotten tax liabilities. I am sure we have all had cases of people expecting some small sum, perhaps £25, who have been bitterly disappointed because a tax liability of £20 has been discovered and the sum they received has been much smaller than expected. This is an important thing for a pensioner.

While the Government have acted generously in calculating the interest rate as 38 per cent. it is not so generous when considered over a period of 30 years, particularly when we think of the decline in the purchasing power of £130 million today compared with 30 years ago. There is room for the Treasury to say that long-forgotten liabilities will not be deducted from the final payments.

11.8 p.m.

Mr. David Knox (Leek)

I, too, join in the congratulations to the Government for enacting this long-overdue measure. The argument against repaying post-war credits on this scale in the past has been that such a move would be inflationary. This was a legitimate argument. It is for that reason that the present moment is a particularly appropriate time to repay the credits.

Last July certain substantial inflationary measures were introduced by the Government but the trouble with such measures is that they take from 12 to 18 months to be effective. It seemed to me, as I said in the debate on the Gracious Speech last year, that measures such as repaying post-war credits, which would create additional demand of a non-recurring nature, could be particularly helpful. The timing of this is, therefore, good.

Can my hon. Friend give us some idea of the demand effect of the repayment. It is extraordinarily difficult to do this. He has given an estimate of the total value of the post-war credits plus interest. I appreciate that lie cannot know exactly how many of the credits will be reclaimed, nor can he have other than a rough idea of how much of the money that is reclaimed will be spent and how much will be saved. But I would like to know whether the Treasury made an estimate of this. If so, will the Financial Secretary give us some indication of how much will be spent.

I endorse the remarks of the hon. Member for Heywood and Royton (Mr. Joel Barnett) and the hon. Member for Ealing, North (Mr. Molloy) about not having a fixed period for repayments. This money was a loan to the Government many years ago. It is hard that people should have to reclaim a loan, let alone sacrifice it if they do not reclaim it within a fixed period. The records should be kept for a long time so that the people who do not claim within a specified period can do so later.

My final point is that in an inflationary situation the public generally would prefer the idea of deferred spending to tax increases. The history of post-war credits will make it difficult to introduce a similar measure in the future. Nevertheless, I hope the Treasury will not automatically dismiss this concept in any inflationary situation which -may arise. I am not so sure the hon. Member for Heywood and Royton was right that repayment in such a scheme should be on a fixed date. One can be certain that the end of the fixed period would be a time of further inflationary pressure with the problems that involves.

11.12 p.m.

Mr. Patrick Jenkin

I am grateful for the warm welcome that has been given to the regulations by both sides of the House. I am particularly grateful for the remarks of my hon. Friend the Member for Bebington (Mr. Cockeram) which were directed towards the Chancellor of the Exchequer, and I will draw my right hon. Friend's attention to them.

I will try to deal with the large number of questions raised as shortly as I can. The hon. Member for Heywood and Royton (Mr. Joel Barnett) asked about the £110 million. It is an estimate, and is approximately the amount we expect to be paid, excluding interest. The point of my hon. Friend the Member for Bebington was that the 38 per cent. interest is additional. We have found from past experience that 85 per cent. of the claims are supported by certificates. Only 15 per cent. of the claimants have lost their certificates. That figure includes the people who have reached qualifying age and those who are claiming on grounds of hardship. If that percentage applies to the whole we shall be left with relatively few claimants who will not be able to produce certificates.

I cannot say now when the next set of regulations will be produced. This must to a large extent depend upon how successful we are in the next six months in getting claims repaid to the people who can produce certificates. On the whole, they will be the younger people. They may be able to produce their certificates more easily, and the percentage may be higher.

Mr. Joel Barnett

Can we take it that if the repayments to those with certificates is completed at the end of six months the Government will introduce payments for those without certificates?

Mr. Jenkin

I would prefer not to commit myself. I must preserve the freedom of action of the Revenue to deal with the situation in the light of all the circumstances. It would seem to me that the hon. Gentleman's hypothesis is not unreasonable because we want to get the exercise finished. In regard to those who cannot produce certificates, there is no question of there being any intention of depriving them of their rights. The Revenue now pays a substantial number of post-war credits—15 per cent. of the total—where there are no certificates. All it needs to be able to do is to trace the war-time employment of the claimant, and all the records exist to enable this to be done.

The trouble is that people find it difficult to remember by whom they were employed at different periods as long ago as 1941 and 1942, but provided that people can give the Revenue some clue so that the records can be traced it will be possible to do so. But the essence of the present scheme to which these regulations are directed is the speedy repayment over six months to the great bulk of those who can produce their certificates.

My right hon. Friend the Chancellor of the Exchequer made it clear that if we were to get the scheme through at all we had to make a distinction. Although I appreciate that this is a disappointment to those who have lost their certificates, their turn will come, and I hope that not too long a time will elapse. On the question of what will happen at the end when we have done stage two, we shall have to wait a bit. We shall have to wait to see what proportion we are left with after we have done the second stage.

From the point of view of administrative convenience, the right answer would be to have another great publicity campaign and then to wind the thing up and say that after such-and-such a date no further claims may be made, but I take on board the point made by hon. Members on both sides of the House that this would have disadvantages for people who have not been aware of what is happening or who have not got round to doing anything about it. We shall consider what has been said in this debate.

I confirm that there will be no question of confusing the repayments with any question of current tax liability. That would be impossible. The temporary staff in the tax repayment centres have no knowledge of the current taxation position.

In regard to the point made by the hon. Member for Oldham, East (Mr. Lamond) about the tax liability at the time, the credits represent additional tax borne as a result of the extra liability in 1941 and in the years following. To the extent that tax was not paid, the additional tax was not borne. That is bound to remain the position. However, I have no doubt that in a scheme of this nature where a great many repayments will be made over a short period of time one can leave it to the good sense of the Inland Revenue to organise the whole exercise so that it goes as smoothly as possible.

I was asked about the number of taxpayers in the different ranges of scales. Information about holders of post-war credits can be found in the latest Inland Revenue report for the year ended 31st March, 1971, in Tables 41 to 43. The short answer to the point is that there are very few who could claim the full £65 for five years. The average must be about £20 based on 5 million applicants and a figure of £110 million, and there will be many near that average.

How long the extra staff will be employed will depend on what we do with the second scheme. How many will be needed for the second scheme we cannot tell until we know how many will have to be covered. As I have said, 2,300 have already been recruited.

On publicity, I emphasise that it does not matter if someone who is within this scheme and can trace a certificate does not claim in the right month. His claim will be dealt with if it is sent in accordance with the instructions in the publicity material. We hope that as many as possible will choose the right months for the letters of the surnames on the certificates that they are producing.

My hon. Friend the Member for Tyne-mouth (Dame Irene Ward) raised a very important point about the division between husband and wife. Where it was the wife's earnings and she was separately assessed, the certificates will be in her name. Where she was not separately assessed and her husband was liable for the joint tax, the certificates were made out in his name. In the great majority of cases where the marriage subsists or a claim has arisen on widowhood the claim can he paid. Where the marriage has broken up, there is a difficulty. If the wife had the earnings, she should be entitled to the credit when it is repaid.

Application for division of the credit could be made within three months of the date of the certificate or such further time as the Commissioners of Inland Revenue may allow. In those circumstances, the credit was divided as the parties agreed or, failing agreement, by the inspector, subject to a right of appeal. In practice, the Revenue has not accepted late applications for a division of the credit simply because the wife reached the qualifying age of 55 for women before the husband reached 60. But late applications are accepted from either party where there has been a divorce or the parties are separated permanently, provided that application is made before the credit is paid. If there are women who are now separated or divorced and believe that their ex-husbands hold their credits, they should apply without delay for a division of the credits issued in their husbands' favour, giving as much information as possible about their own and their husbands' wartime employments. I do not deny that there may be difficulties in this, but the initiative must lie with a deserted or divorced wife to take action to ensure that she gets her share of the credits which at present are in her husband's name.

A number of hon. Members raised the problem of where we were to put the repayment centres. I dealt with it in opening because I anticipated that it might come up in the debate. I referred to the Shipley position and the difficulties of no suitable premises being there and of recruiting supervisory staff. I am grateful for what the hon. Member for Bootle (Mr. Simon Mahon) and my hon. Friend the Member for Bebington said. The number of staff at Bootle will be 266. It is only temporary, and I think that everyone appreciates that. But it will be a welcome temporary additional employment for those concerned.

My hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers) asked about recruiting the over-50s. As I have said, 2,300 people have been recruited already. It has been left in the hands of the local managers to decide the people appropriate for this kind of work.

I have sympathy for those whose constituencies were not chosen. I mentioned the South-West, Bristol and Portsmouth. It was only a matter of 70 people between the two centres, and the number represents a very small addition.

My hon. Friend the Member for Bebington asked about interest. I think I have answered that. If it is a total of £130 million for the credit, it is £180 million or thereabouts including interest.

I was asked about the effect on demand, and how it will act on the economy. I do not expect the repayments to have other than a small effect on the gross national product in 1972–73. In so far as there is an impact on demand, it is a once-for-all operation, and there is virtually no hang-over to succeeding periods.

I think I have answered most of the questions which hon. Members have asked. I believe that this scheme is widely welcomed. Although only 5 million or so people will benefit, it has been a long source of complaint that this matter has hung on for so many years after the war in complete contradiction to the expectations that people had at the time. I am glad that we have been able to clear up the matter now. I hope, therefore, that the House will approve the regulations.

Question put and agreed to.

Resolved, That the Post-War Credit (Income Tax) Regulations 1972, a draft of which was laid before this House on 18th February, be approved.

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