§ Mr. John Horam (Gateshead, West)
I beg to move Amendment No. 3, in page 8, line 16, after '£100', insert:'(or £265 in the case of a dependent relative who though of working age is sufficiently incapacitated by infirmity to be unable to support himself.)'.
Mr. Deputy Speaker
With this Amendment it would be convenient to 1448 take Amendment No. 4, in page 8, line 19, at end insert:'(or £265 in the case of a dependent relative who though of working age is sufficiently incapacitated by infirmity to be unable to support himself)'.
§ Mr. Horam
I take no great pleasure in introducing this Amendment at this stage of the night and I blame the Government that we have gone so late. My hon. Friends would not have agreed to complete the Report stage in one day if they had known before hand how many Government new clauses would be moved and the amount of time to be devoted thereto. We seem to have gone down the highways and byways. However, in deference to the lateness of the hour I will be brief.
The object of the amendment is to remedy a defect of the tax laws which is the cause of much bitterness amongst people who already have a hard enough time, namely, couples with a child who is so badly disabled that on his becoming an adult he is unlikely to be able to support himself. Until the age of 16 or while the child is in full-time education his parents, like all other parents, will receive the child allowance up to a top rate of £265 which gives a tax saving of £80 per annum.
Upon the child leaving that category, however, the parents drop into the dependent relative allowance which is £100 under the unified system, giving a tax saving of £30, meaning a loss of £50.
The effect of the amendment would be to uprate the dependent relative allowance. This would be a saving for those who have to support such children or approximately £50 a year or about £1 a week—not a great sum for couples who must support a relative who is disabled to this degree.
I raise this general point because it was raised with me by a constituent who is in this position. His son, now 18, has ataxia and athetosis—a combination of disabilities similar in effect to, only worse than, a spastic condition. The son has no chance of ever working. This constituent did not seek to raise this case on his behalf alone—this is characteristic of the generosity of many people burdened with particular tragic problems of this kind—but wished the case to be 1449 raised on behalf of parents in general who are in this position.
Earlier this year I raised the general point with the Minister of State. In a letter to me dated 26th March 1973 he said:This allowance—that is, the dependent relative allowance—is of course less than the child allowance and this is the substance of your constituent's complaint. But I think it is only fair to say that when a child over 16 continues to depend on his parents because he suffers from physical disability his case is very similar to that of other dependants and the appropriate relief is the dependent relative allowance.In reply to that, an adult of the type that such a child becomes is not similar to other dependants. He has no income. We know that many dependent relatives—for example, retirement pensioners—have an income as of right. Secondly, the degree of dependence of this category of dependent relative is far greater than any other kind. No one can imagine the extent of the commitment of supporting a person throughout his life who is unable to work in any form, who is indeed in many cases unable to communicate properly, who in every physical action must be helped or supported by his parents who must give him some attention. It is the lifelong attention and financial strain which makes this case exceptional and unlike any other kind of dependent relative.
That is not the only point the Minister of State made. He went on to say:I realise that at first sight this may seem hard but it must he remembered that 16 is also the age at which the State can step in with direct help by giving a child who is unable to work an income in his own right irrespective of the means of his parents. Taken together with the dependent relative allowance, the position then normally compares favourably with the benefit to parents from the income tax child allowance which would have been due had the child been able to stay on at a school or educational establishment.It is true that my constituent, for example, now an adult, receives supplementary benefit to the tune of £5.20 a week. But that is not income as of right. We have not yet introduced the disability income. I agree that if we had I probably should not be pressing this amendment, but we have not, and the position 1450 remains most unsatisfactory on that account.
Second, even with some supplementary benefit, the position of the parents still compares unfavourably with that of parents of a normal child who, by definition, will have gone out to work and be earning his or her own living, with no drain, either emotional or financial, on the parents. Again, therefore, the parents of a disabled child are penalised as compared with the parents of a normal child.
What would have been the position if the parents had not accepted their responsibility, as they are legally entitled to do? If the parents of the boy in my constituency, at some stage in his life, had done as they are quite entitled to do, that is, handed him over to the State and said, "We cannot bear this load any longer. He is yours. You must look after him", what then would have been the cost to the State of looking after such a terribly paralysed child? I do not know what the estimates are, but I imagine it would cost £20, £25 or £30 a week to cover a lifetime's care of a child in that predicament.
It goes strongly against the grain that a couple who, with enormous courage, have rejected that alternative and chosen to care for the child throughout his crippled life should be penalised by the operation of this part of the income tax law.
My amendment would help to rectify the position in a small way. It would mean that parents would not drop from the child allowance to the dependent relative allowance as it now is. There would be some small help, and I hope that the Minister of State has an encouraging reply to give.
§ Mr. Joel Barnett
I am sure that the House congratulates my hon. Friend the Member for Gateshead, West (Mr. Horam), as we do from this Front Bench, on his persistence and on the wonderful way in which he described a case of which many of us were not aware. I very much hope that the Minister will give sympathetic consideration to the amendment, which would give some small help to meet an important need.
§ Mr. Nott
I am aware of the particular case which the hon. Member for Gateshead, West (Mr. Horam) brought to my 1451 attention in his letter, and, naturally, I offer my great sympathy to the parents of that child.
I appreciate that the hon. Gentleman's main purpose in these amendments is to draw attention to the reduction in allowances which the parent of a handicapped child may suffer when the child reaches 16 years of age. Perhaps I should say that if the child is in an educational establishment or a school, the child tax allowance continues beyond the age of 16. We made a change in these arrangements recently, because certain schools for handicapped children were outside the definition of school or educational establishment. We have now brought them within the definition, so that if this particular child were at a school for handicapped children or something of that sort, the parents would continue to receive the child tax allowance. However, over the age of 16 or where the child is not receiving full-time instruction at a school, the child allowance is no longer due and at this point the dependent relative allowance comes into play and may then be claimed.
§ 12.30 a.m.
§ I agree that the dependent relative allowance of £100 is a good deal less valuable than the £265 child allowance but there are fair and reasonable grounds why the higher child allowance should not be payable. At 16 the mentally handicapped child can qualify for direct assistance from the supplementary benefits scheme, and the hon. Member pointed out that his constituents' child was benefiting from supplementary benefits. These benefits are available for mentally and physically handicapped children according to their own means irrespective of the means of the parents and that is important because it means that at 16 the child who is mentally or physically handicapped becomes independent of the parents in financial terms and therefore in the majority of cases probably will be entitled to supplementary benefits by virtue of that independence.
§ Taken together with the dependent relative allowance the position of someone in this category compares favourably with the benefit to parents from the income tax child allowance which would be due in respect of a normal child over 1452 the age of 16 at school or in another education establishment. The amendment would create curious and indefensible anomalies. The full dependent relative allowance for a taxpayer who maintains a dependent relative under working age would be £265 under the hon. Member's amendment, but would be only £100 for an elderly relative over 65 in receipt of an income. At present no allowance is due when the relative's income reaches £478. The amendment would raise that to £643 for a relative of working age but where a relative's income for tax purposes substantially exceeds the basic amount payable to a retirement pensioner it can hardly be said that he is dependent upon someone else. A single person entitled to the basic personal allowance begins to pay income tax when his income exceeds £595 and it would be difficult to defend giving someone an allowance for supporting a relative whose income is signficant enough to be taxable.
§ I have sympathy for the case mentioned by the hon. Member but it is relevant for me to point out as I did in my letter that the child will be independent of his parents and therefore will be independently assessed on his income. For that reason he is receiving supplementary benefits. I do not know the full circumstances of the case, but, as the hon. Member is aware, we have taken a number of measures to improve the position of the invalid. There is the invalidity allowance which we have introduced for the chronically sick and disabled person, and being over the age of 16 the child would rank in his own right not only for supplementary benefits but for social security allowances.
§ Generally speaking the Government feel that this sort of problem is more usefully and more efficiently dealt with through the social security system than through the tax system, so that although I have sympathy for the case, I point out that the child in question is no worse off for being in receipt of supplementary benefits than he would be if the hon. Member's amendment were accepted.
§ Mr. Horam
I accept that the right way to solve the problem is through the creation of a disability increment, as the Disablement Income Group advocates.
1453 But until that situation arrives, these people have to live as they do and the income tax laws affect them in this way. Apart from stating a number of technical disadvantages of my amendment, which I accept, the hon. Gentleman did no more than repeat the arguments made in his letter, which I must again refute. Therefore, I cannot withdraw the amendment.
§ Amendment negatived.
§ Mr. Nott
I beg to move Amendment No. 8, in page 8, line 31, leave out from following to end of line 39 and insert'subsections:—(2A) Subject to subsection (2B) below, for the purposes of this section 'the basic retirement pension' for any year means the aggregate of the payments to which a person is entitled in that year on account of a Category A retirement pension under subsection (1) of section 24 of the Social Security Act 1973 if, throughout that year—
- (a) he fulfils the conditions in paragraphs (a) and (b) of that subsection; and
- (b) none of those payments is reduced under section 26(1) of that Act (by reference to his earnings) or increased under any provision of subsections (4) to (7) of the said section 24 or under any other provision of that Act.(2B) In relation to any time before the coming into force of section 24 of the Social Security Act 1973, subsection (2A) above shall have effect as if the words from 'Category A retirement pension ' to 1973 ' there were substituted the words 'retirement pension under subsection (1) of section 30 of the National Insurance Act 1965 where the pension is payable by virtue of his own insurance' and as if for paragraph (b) there were substituted the following paragraph'.Clause 12(2) provides that the dependent relative income limit for full dependent relative allowance is to be equal to the basic national insurance retirement pension for the time being. The basic retirement pension is defined by reference to the National Insurance Act 1965. This amendment incorporates the definition in terms appropriate to the Social Security Bill. The existing definition is retained to cover the period until the Social Security Bill is brought into operation.
§ Amendment agreed to.