DEDUCTIONS OR EXCEPTION IN RESPECT OF CERTAIN EMOLUMENTS

HC Deb 22 July 1974 vol 877 cc1073-114

Mr. Joel Barnett

I beg to move Amendment No. 38, in page 51, line 22, leave out one-tenth 'and insert one-quarter'.

Mr. Deputy Speaker

With this we are to take the following amendments:

• No. 194, in page 51, line 22, leave out 'one-tenth' and insert 'one-half'.
• No. 59, in page 51, line 22, leave out 'one-tenth ' and insert 'two-fifths'.
• No. 60, in page 51, line 65, leave out 'one-quarter' and insert 'two-fifths'.

Mr. Barnett

The effect of the amendment would be to increase from one-tenth to one-quarter the special deduction to be allowed under paragraph 1 in charging to tax the earnings of a director or employee who works overseas for less than a continuous period of 365 days. The hon. Member for Worthing (Mr. Higgins) will recall that I told the Committee upstairs that I would be putting down an amendment of this nature on Report. The effect of the amendment was discussed in connection with Government Amendment No. 420 in Committee on 24th June.

I hope it will be recognised that we are going a considerable way towards giving relief to those who go abroad to work for fewer than 365 days. We have indicated that we have no wish to make life particularly difficult for this type of employee who goes abroad to bring back foreign earnings but, at the same time, that must be balanced against the problems of abuses that we have been trying to eliminate by means of the foreign income clauses in the Bill. We all know what led to these items being put into the Bill. This started as long ago as the Lonrho affair last year, when the then Chancellor of the Exchequer said that he was extremely concerned about these matters. We took action to deal with the problem by removing the remittance basis which was the cause of so much of the trouble.

We feel that with 25 per cent. relief there will be sufficient to ensure that there is no particular hardship for those who seek to work abroad for the benefit of this country. I know that a number of other amendments are being taken with this Government amendment, and it may be for the convenience of the House if I delay my reply to them.

The Opposition have tabled one amendment to increase the proportion to 40 per cent. or two-fifths. Another Opposition amendment, although being taken with the Government amendment, is not precisely related to it in that it concerns non-United Kingdom residents working in this country for longer than 9 to 10 years.

I hope the House will accept that the 25 per cent. relief that we have given is more than adequate. Indeed, I regard this as a very reasonable concession, and I hope that the House will accept the amendment.

Mr. Higgins

You have said Mr. Deputy Speaker, that with this amendment we are taking Amendments Nos. 194, 59, and 60. I have previously had occasion, and I gladly repeat it now, to pay a tribute to the tremendous amount of work that has been done by those who have produced the Xerox amendment paper and the Bill, with the enormous amount of work that that must have entailed in checking, and so on. It is also the case that this has placed a considerable strain upon the Government and, I feel bound to say, on the Opposition, too.

It was understood in Committee upstairs—and I hope that a similar understanding prevailed on the Floor of the House—that if necessary a manuscript amendment could be moved from time to time, and perhaps I may for a moment address you on that matter.

As you will have noticed, Mr. Deputy Speaker, in a sense Amendments Nos. 59 and 38 cover a range of options from one-quarter to two-fifths, while another Opposition amendment suggests one-half. Normally, the appropriate thing to do would be to amend the Government amendment if we wanted to substitute two-fifths for what the Government propose. But that has not been done and, as a result, we have two amendments which, in a sense, are mutally exclusive.

It would be possible for the Opposition to vote against the Government amendment, and if, as seems not impossible, we were to carry the vote against the Government, we should then vote on Amendment No. 59. I think you will agree, Mr. Deputy Speaker, that that would be a somewhat clumsy procedure. The normal practice is to table an amendment to the Government amendment, and if one cannot get one's own amendment, let the Government amendment go through on the nod rather than waste 20 minutes of Government time on having an unnecessary Division.

I do not expect you to give me an immediate reply, Mr. Deputy Speaker, because no doubt you will wish to consider the matter. I wonder whether, in the interests of the general efficiency of the House, you would be prepared to accept a manuscript amendment to Government Amendment No. 38 in precisely the terms of Amendment No. 59 that is, to leave out one-quarter and insert two -fifths. I do not expect an immediate answer. It is a question, of what is convenient for the House. Perhaps we might return to this point later in the debate.

5.0 p.m.

Mr. Deputy Speaker

I am obliged to the hon. Gentleman. I had been attracted to what he describes as the cumbersome system, but further thought will be given to this matter and we can come to it a little later.

Mr. Higgins

I am grateful to you, Mr. Deputy Speaker. There is no difference in substance involved in what I have in mind. I am concerned about the number of times we shall have to troop through the Lobbies. Normally we would have hoped to have caught this matter earlier, but alas we have not done so on this occasion.

I turn now to the substance of what is under discussion. The amendment moved by the Chief Secretary would change the fraction from one-tenth to one-quarter, so that, instead of 90 per cent., only 75 per cent. of the earnings of a person who goes abroad to work for less than a year would be taxed. This matter has been debated at considerable length in the Committee upstairs and on the Floor of the House, particularly on 13th June.

As the Chief Secretary pointed out, the origin of the clause was concerned with the original Lonrho affair. My right hon. Friend the Member for Altrincham and Sale (Mr. Barber) and my right hon. Friend the Leader of the Opposition, in a memorable phrase, rightly condemned the fact that to some extent the remittance basis system was open to abuse. That is common ground between both sides of the House and, therefore, the Government have taken steps to deal with the matter. In Committee we expressed the view that the right approach would be to publish a Green Paper so that the whole matter could be gone into in great detail and discussions could take place. We regretted that that did not happen. We can reasonably claim, however, that the House of Commons has done a good job so far as it can in the circumstances, and there is no difference in principle between us and the Government. The only point at issue, as shown in Government Amendment No. 38 and our Amendment No. 59, is the question of the rate that should be charged. This is a matter of quantitative estimate and we regard what we propose as the appropriate amount

As the Chancellor has made clear in Committee, it was not his intention to deter people from going abroad. The total cost of our amendment in terms of fiscal revenue cannot be great. On the other hand the effect upon incentive for people to go and work abroad would be considerable. It is a question of what rate should be chosen. Amendment No. 194 suggests a figure of 50 per cent. while in our Amendment No. 59 we suggest two-fifths and the Government in their Amendment No. 38 suggest one-quarter. The question arises whether the figure which we have selected is preferable to that proposed by the Government.

I have received many representations on this issue. It has some effect on the country's balance of payments to the extent that a consultant engineer, for example, might go to a country abroad and might, as my hon. Friend the Member for Guildford (Mr. Howell) pointed out in Committee, encounter unpleasant climates. Such unpleasant factors must be taken into account and allowance made for them. We must also consider how our overseas earnings might be affected by the proposals we are considering. I have the impression that a number of the measures that the Chancellor announced in his mini-Budget this afternoon will add considerably to our import bill burden. Therefore, anything we can do to cover this by greater exports is likely to be important. That point did not come out in the abbreviated exchanges earlier this afternoon, but it needs to be considered later.

A number of different groups of people were mentioned in connection with this matter in our earlier debates. I have mentioned engineers. People going abroad to work in this way are taking their expertise to other countries, and there can be returns arising from this to our economy. They may sell goods when abroad or undertake work which will help our exports.

We have also debated at length the question of academics working abroad for a period of time, as well as consultants, economists and others. There are many different groups which have been brought to the attention of the Committee and the House.

We are trying here to achieve a package. The Chief Secretary will recall that there were previously other amendments which suggested reducing the period of one year to perhaps six months. There is also the vexed question of expenses, which will be dealt with when we consider the next set of amendments. On consideration we do not feel it right to press the point about the length of time, but we think it right to pursue the matter of the rate and to try to reduce it from 75 per cent. to 60 per cent. For the reasons I have adduced, we believe this to be the right figure rather than the figure which the Government are adopting in what is now a more flexible attitude.

I have also received representations pointing out that a number of people who go abroad to work on Government contracts as part of the overseas aid programme often find themselves in unpleasant climates.

Amendment No. 60 concerns a different point in many ways but it is convenient to debate it with this set of amendments. It is concerned not with people who go to work abroad from this country but with those from abroad who come to work here. The two cases are not symmetrical. Different considerations arise in each case, but the people who come here to work from abroad bring considerable benefit to our economy. The number of people involved cannot be large.

The amendment relates to people who have been here a considerable number of years and who may wish to remit much of their earnings to this country and therefore find those earnings taxed at whatever rate is set. Such people are often the most senior executives of foreign firms with staff in this country. It is desirable—the Government have to some extent recognised this—that we should not do anything to drive those firms away and possibly lead them to establish bases in other European centres instead of this country.

Representations have been made to us regarding tax as a percentage of gross income at the rate of 75 per cent. and for a group of people on incomes of £1,000 a year.

Despite the statement that the Chief Secretary issued on 21st June about the taxation of foreigners living in the United Kingdom, it appears that the rate for the United Kingdom on the basis I mentioned compares with a rate in Belgium for someone from overseas of 18 per cent,. in France of 14 per cent., in Germany of 25 per cent. and in the Netherlands of 19 per cent. So the figures appear to be lower generally in Europe than in this country. Although the difference is not always great, there is some danger of these senior executives deciding that there are advantages in operating from, say, Brussels or elsewhere in Europe than from this country.

That being so, I hope that the Chief Secretary will feel able to make a further move in the direction of Amendment No. 60. My suggestion should get us out of the procedural problem that I mentioned earlier. I hope that the Chief Secretary will accept our amendments.

Mr. Deputy Speaker

Before I call the next speaker, I should say that I shall be prepared in due course to accept a manuscript amendment, as was suggested by the hon. Member for Worthing (Mr. Higgins). Perhaps his hon. Friend the Member for Guildford (Mr. Howell) will be able to move it formally since the hon. Gentleman himself has exhausted his right to speak.

Mr. David Howell (Guildford)

indicated assent.

Mr. Higgins

On a point of order, Mr. Deputy Speaker. I am sure that that would be convenient. It clearly cannot make any difference of substance. I am grateful for the careful consideration which you, Mr. Deputy Speaker—no doubt with your officials—have given to the matter.

Mr. Deputy Speaker

Somebody did.

Mr. David Lane (Cambridge)

I support my hon. Friend the Member for Worthing (Mr. Higgins). I know that there was a full debate in Committee on these issues. I am grateful to my hon. and right hon. Friends who served on the Standing Committee for the changes, or promised changes, which they have already secured. Obviously, the Government's ears were not wholly closed. I hope that they will be able to open them a good deal wider now.

There is undoubtedly still a feeling that, compared with the treatment of people from overseas working here, we do not yet have satisfactory arrangements for our own people working overseas. The problem is familiar, as the Chief Secretary said. We have to take care, in stamping out abuses, not to penalise legitimate activities and the various overseas efforts of the majority of people which are entirely above-board and laudable.

Examples have been mentioned earlier of business men, civil engineers and so on, working overseas in areas like the Gulf. My hon. Friend said, rightly and relevantly, that they make an important contribution to our invisible earnings, thus benefiting our balance of payments. My own concern is mainly with the academics who work overseas for varying periods. The Government must realise from the representations made to them that at the time of the Budget there was consternation on the Cam. I cannot quote any of the views which reached me at that time from my constituents, because they were all lost in the fire after the bomb explosion here, but there will be copies in the Treasury.

It is no exaggeration to say that the whole arrangement of sabbatical academic visits would have been jeopardised by the original proposals. The Government now realise, I think, more than they did that considerable additional costs are involved here to the individuals concerned—in terms of keeping two homes going, extra expenses overseas, family costs, education and so on. This kind of academic visit has never been seen as a money spinner or fortune-maker, but neither should it be regarded as something which should put the people concerned out of pocket. We must find a fair balance.

Without amendments going further than the Government have so far been prepared to go, there would be a strong disincentive to these visits in future. This will be a serious matter not simply for those concerned but for the whole range of international academic contacts by which I believe the whole House sets great store.

5.15 p.m.

I hope that we shall reach a reasonable and fair solution. This is a matter of judgment. It will not involve a great additional loss of revenue, whatever figure we reach. In this kind of case, it would be proper for the Government to lean on the generous side. I hope that the House will agree at least the two-fifths amendment, if not the 50 per cent. amendment.

Mr. Peter Rees (Dover and Deal)

I hope that I shall not be thought censorious if I start by deprecating the constant references by the Front Bench to the Lonrho affair. If this is meant to convey to the House that, by reason of their official position, they know of facts unknown to us, that would be grossly improper. That could not be the reason for doing so. If it is meant to suggest that, by reason of their professional contacts, they know of details unknown to us, that again would be improper. Knowing, as I do, that the Chief Secretary is a person of scrupulous rectitude, I doubt that it is for that reason. I can only suspect that he wishes to introduce an emotive element into what should be a calm and rational debate on an important subject. Therefore, while we are considering the clause, I hope that there will be no more references to Lonrho. We do not know all the facts, so it would be worth while deferring any judgment on the case until we do know them—if indeed we ever do.

Mr. Higgins

I understand my hon. and learned Friend's point. If he reads the OFFICIAL REPORT when it is eventually printed, he will find that I referred to what the Chief Secretary said about Lonrho. I think that I was careful not to fall into the error that he has just pointed out.

Mr. Rees

Of course, nothing that I have said was in criticism of my hon. Friend, who has been most scrupulous in these matters and, it may be, had a considerable responsibility when he was in office. I merely deprecate the constant references to that case, which do not advance our debates and might suggest to the world outside, which perhaps does not read our debates with the care that we would like, that facts are still to come out which are known to the Chief Secretary and on which he is passing a considered judgment. We know that it is a strong administrative convention that the affairs of individual taxpayers are never made the subject of debate. No doubt the Chief Secretary will correct me if I am wrong on that point.

It would be churlish of me not to acknowledge that the Government have gone a little distance, in deference, I hope, to the points that my hon. Friends and I made in Standing Committee and to the representations which we passed on to the Government—which, surprisingly enough, they did not appear to have received. I would draw the attention of my hon. Friend the Member for Cambridge (Mr. Lane) to the surprising statement in Standing Committee that the Government were unaware of the tremendous indignation which, in his experience and mine, has been building up not only in the City but in the distinguished academic campuses—or should it be "campi"?—which he frequents more than I do.

At any event, whether the Government had received those representations or not at that stage, it was our prime duty to make the Government well aware of them. It seems that at least part of the force of our representations has struck home. However, I regret that the Chief Secretary did not approach the problem slightly differently. It may be—we know that he is a modest man—that he realised that he had stumbled with heavy-booted feet into a field in which fiscal angels like my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) had feared to tread. It may be that, with the reluctance to which I am afraid perhaps all people in our honourable career are prone, he did not want to admit that he had gone too far and would prefer to start again. Perhaps on that basis we have to view with a certain charity the present reliefs that the Chief Secretary is offering us. After all, we are told that we are to have yet another Budget in the autumn, and there is still plenty of time for concentration on the Government Front Bench.

Perhaps the Chief Secretary is approaching this matter from the wrong principle. He is saying" All right, we shall increase the number of days that an employee may spend in this country without exposing himself to fiscal penalties, and we shall increase the deduction that he may claim from his emoluments. "Is that the right approach? For instance, why does not the Chief Secretary adopt the suggestion that the deduction which he may claim should be proportionate to the amount of the working year that is spent abroad? Inevitably, where one takes a simple fraction there will be cases of hardship falling on the wrong side of the line.

I return to the question of leave which I raised in Standing Committee—perhaps a little misguidedly, because I doubt whether I had time sufficiently to digest the new subparagraph (4) which the Chief Secretary had promised us. I do not know whether I fully appreciate the consequence of that. I am not certain whether the Chief Secretary has yet entirely dealt with this point. I should like to uncover my anxieties to him and the House.

It seems that the basis underlying Clause 17 and Schedule 2 is that the Government wish to bring within the United Kingdom fiscal net those people who have two employments or two offices, one in this country and one abroad. The Government said that in an era of easy travel there is no longer the same justification for the remittance basis. None the less, surely there is still the same justification for treating with a degree of liberality those who have only one office or employment and where the duties of that office or employment are performed exclusively abroad. Surely it does not matter whether it is a question of fiscal morality or economic judgment and so on if a person comes back and spends more than 63 days in this country. Surely the person whom the Chief Secretary is wishing to entrap, if that is the right word, is the person who has a rather nominal job abroad and whose real centre of economic activity is in Britain.

I put it to the Chief Secretary that he is not seeking to catch the person who genuinely has a full-time occupation for many months of the year. or his only occupation. in some unsalubrious part of the world and who returns for two, three or four months' leave to this country. Surely the Chief Secretary will concede that a person who works—dare I say it, after the Chancellor's announcement?—in the Persian Gulf is entitled to four months' leave here, because the climatic pressures on him are very great. Therefore, to penalise him if he spends more than 63 days here would be unfair.

I notice a look of anxiety on the Chief Secretary's face—perhaps it was not a look of anxiety but a look of utter confidence, which one inevitably hopes to see on the face of a Treasury Minister when debating a complex point. Perhaps he feels that the point was covered by paragraph 1(4) of the schedule which was introduced by Standing Committee. I ask him to look again at that, because although that says that emoluments paid for a period of leave immediately following a period of continuous absence from the United Kingdom shall be treated for tax purposes as paid for that period of absence, it does not say that the period of leave is to be treated as part of that absence.

I may have misunderstood the point, but it seems to me that if a person comes back after an arduous eight or nine months in the Persian Gulf and spends three months in this country on leave, he will be immediately cut down to the one-tenth or, now, the one-quarter relief proposed by the Government's amendment. I cannot feel that the Chief Secretary intended that consequence. He is a man of understanding and generosity and I feel that he would like to do a little better by those of our compatriots who work abroad in unattractive situations.

Moving on, there is the question of expenses. It may be that the Chief Secretary feels that this matter has been adequately covered by the extra-statutory concession he announced in Standing Committee and by the deduction he now proposes by his newest amendment. My right hon. and hon. Friends and I are not at all happy about an extra-statutory concession. We shall be debating a later amendment in our names and looking very closely at what the Chief Secretary has to say in that debate. As it meshes in with this debate, however, I hope that the hon. Gentleman will have a further thought about the particular fraction he is suggesting because if that, coupled with the extra-statutory concession, is all that he is prepared to concede, I hate to say this but I must tell him that he is being uncharacteristically ungenerous. The hon. Gentleman shakes his head. Therefore, we look for great things when we come to debate the amendment to which I have referred, which seeks to embody the extra-statutory concession that he has announced.

Even if the extra-statutory concession were applied with the force and consistency of law, it would not go far enough. It does not deal with subsistence or the question of taking a wife and family to foreign parts. If the hon. Gentleman will not give any concession on that front, he must be much more generous in the fractional deduction that he allows.

The next point that the hon. Gentleman should consider is this. He moved with enormous rapidity, so rapidly—although, perhaps, one should not complain about that, because rapidity on the part of the Government is usually a virtue—that it was not possible to digest the full argument on Amendment No. 19, which I do not think is applicable only to foreign emoluments. If a non-domiciled employee of a foreign company working over here is to have relief for his or his firm's contributions to some foreign pension fund which corresponds to the amount of pension funds which would be approved by the Revenue here, why should not a United Kingdom resident who goes abroad have some relief for any contributions by his firm which may be made abroad—it may not necessarily be a United Kingdom pension fund—to a foreign pension fund on his behalf?

There is here unjustified discrimination against our compatriots and in favour of those who work here. I do not complain about Amendment No. 19. Perhaps the point is covered. If not, however, why should not the principle underlying it be extended to United Kingdom residents who go and work abroad?

I come finally to Amendment No. 60 which, as my hon. Friend the Member for Worthing (Mr. Higgins) correctly pointed out, sits uneasily in harness with the other amendments in this group. Here we have to consider foreign executives and the emoluments of those who may be resident here but are not domiciled and are the employees of a foreign company. By the new paragraph 3 of the schedule the Chief Secretary has sought to reintroduce by the back door a certain part of what was Clause 18. I commend him warmly for having dropped Clause 18, but I qualify that commendation when I look at paragraph 3. I am delighted that he should not have penalised those who, for the best possible reasons, have chosen to make their residence here for many months of the year but are not domiciled here. I am very glad that the burden of United Kingdom tax—it is a burden by comparison with most other countries—is not to rest on their foreign income. I am, however, a little alarmed to see that at least part of the principle has crept back again in paragraph 3.

I do not understand why non-domiciled employees of foreign companies should be penalised after nine years of continuous residence here. If we wish to encourage these people to stay and work here and to make their companies' headquarters here, why are we not consistent and why do we not afford them the same measure of relief in this respect? It is illogical and a little mean that after nine years the chopper should fall and they should get only half of the relief that they have enjoyed up to that point in time.

If we want to welcome these people, why do we not welcome them consistently, whether they stay here for two years, for five years, for 10 years or for 20 years? I do not see any great virtue in driving them away after nine years, but that is what I suspect will happen. I believe that if they make their contribution to Britain and its economy for nine years, we should go on welcoming them thereafter. I believe that it is illogical for this paragraph to have found its way into the schedule.

Finally, in view of the extremely interesting announcements made by the Chancellor of the Exchequer about an hour ago, I put it to the Chief Secretary that, possibly as a delicate compliment to the Shah of Persia and as a response to the generous financial assistance he is affording Britain, there should be a special category of relief for those Iranian residents of domicile who choose to make their careers here. This would be only fair in view of the outstanding contribution to our economic difficulties that the Shah is apparently about to make. I am sure that the Chief Secretary will see the point of that, and perhaps in the autumn Budget which his right hon. Friend is to introduce we shall find a yet further measure of relief.

5.30 p.m.

Mr. Joel Barnett

To deal first with the problem of United Kingdom citizens, the burden of the case made by Opposition Members, particularly by the hon. Member for Worthing (Mr. Higgins), was that there should be relief at 40 per cent. instead of at 25 per cent.

I think that the hon. and learned Member for Dover and Deal (Mr. Rees) has been a trifle touchy on these matters. I am surprised at his sensitivity. When I referred to the Lonrho affair I did so in quotes. It was, after all, the cause of a very remarkable statement by the then Prime Minister, the Leader of the hon. and learned Gentleman's party. That is all I was referring to. As the hon. and learned Gentleman knows only too well, I know nothing of the tax affairs of any individual taxpayer, so he should not be so touchy.

The reason why I mentioned that and what lies behind these provisions is that it is important that we have before us all the time the reason why the Government decided to introduce them—namely, to cut out what has been generally recognised to be a considerable abuse of our tax system.

The hon. and learned Gentleman and his hon. Friends suggest that either 40 per cent. or 50 per cent. should be the relief. The hon. Member for Worthing said that there is no difference in principle between us. I see that the hon. and learned Gentleman is agreeing. I always begin to worry when I hear that said. There would be a considerable difference if 40 per cent. or 50 per cent. of earnings abroad were to be allowed. If a man were to go abroad for, say, six months and earn £10,000 there, I cannot believe that it would be right that he should have £5,000 or £4,000 of that tax-free as opposed to a fellow United Kingdom taxpayer who would have to pay tax on the whole of his income in the United Kingdom. Therefore, there is a considerable difference between us. However, I believe that we have been, if anything, very generous in agreeing that 25 per cent. should be the proportion.

Much has been made of the problem of disincentives created by the fact that 75 per cent. of income earned abroad—I emphasise "income earned abroad"—where the work has been performed abroad for less than 365 days will be taxed. Let us be clear. The earnings of all those who go and work abroad for more than 365 days—that is better than it was before, when it had to be for a fiscal year—remain wholly tax-free. I cannot accept that it will be a disincentive because people will have to pay tax on 75 per cent. of their income earned abroad in a comparatively short spell.

The hon. Member for Worthing mentioned a number of types of individual who could go abroad for less than 365 days and said that for them this rule would be a serious disincentive. He mentioned the example of those under ODA contracts. Those contracts are generally for a minimum period of 21 months, so there would not be any problem in that respect.

Once again we had arguments about consultant engineers and others who go abroad for less than 365 days. It was said that this would be a disincentive to their going abroad and earning foreign income for Britain. It must be recalled that we are talking about the man who goes abroad for a comparatively short period. If he went abroad for 365 days he would, because of the amendment we have agreed, be able to have up to 63 days' home leave and still obtain the full tax-free relief.

I believe that we have been extremely generous in the amendments we have agreed. I cannot help thinking that hon. Members opposite seek to go much too wide in their amendments by seeking to say that as high a proportion as 40 per cent. or 50 per cent. of earnings accrued abroad on a comparatively short stay should be tax-free.

Mr. Lane

The Chief Secretary mentioned two examples. Will he put into the balance of judgment, before he makes up his mind finally, the case of academics who go abroad for perhaps eight or nine months and where there is no question of home leave? There are complications—reduced salary here, not very large salaries at the other end. I assure the hon. Gentleman that there is a serious element of disincentive here. It was with this thought particularly in mind that I asked him to lean, if anything, on the generous side.

Mr. Barnett

I accept that. This is amongst the reasons why we made the concessions we did, including the concession on travelling expenses which we shall come to on a later amendment. We have had discussions with the organisations principally concerned. They believe that we have gone very far in dealing with this and they are pleased with what we have done so far.

If an academic—or anybody else for that matter—goes abroad for less than 365 days, is it right that he should have more than 25 per cent. relief compared with his fellow academic back in the United Kingdom? I argue that 25 per cent. relief should be more than adequate. I will deal with the exception later, when I hope to show that we have been generous in the solutions we have to deal with this type of problem, which I accept is a real one.

The hon. and learned Member for Dover and Deal put to me the problems of a man who goes to a very difficult climate and has to return for leave for two, three or four months. If he is working abroad for more than 365 days and he returns for two months, he will still get the 100 per cent. relief because he will be classed as a person working abroad for more than 365 days. It is a matter of judgment about what more than that amount of relief one should allow. That was the amendment which we accepted in Committee relating to the 63 days. To go beyond that would be more than unusually generous even for the hon. and learned Gentleman. I do not accept that we are penalising such a man, as he put it.

Mr. Peter Hordern (Horsham and Crawley)

Has the Chief Secretary received representations, as some of us have, about United Kingdom citizens working abroad—particularly in climates such as my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) referred to—where there is no facility for them to remit any payment of their salaries home to this country? Is it not therefore very hard on that category of person who is physically debarred from sending his earnings back to Britain? He is, under the Government's proposals, taxed as to 75 per cent. of his earnings.

Mr. Barnett

I think that the hon. Gentleman might have temporarily nodded off in Committee, though I do not blame him for that. I said there that there were already arrangements in existence in countries where it was not possible to remit to this country.

The hon. and learned Gentleman then put to me the problem of terminal leave pay. I hope I got his question right. If I did not, no doubt he will rapidly tell me. In a Press notice issued by the Inland Revenue on 4th July, paragraph lb stated: Under an amendment made to the Bill, terminal leave pay will be 'attributed' to the period of continuous absence from the United Kingdom. This will have the effect that if the latter was for 365 days or more the terminal leave pay would qualify for the 100 per cent. deduction; if the absence was less than 365 days the terminal leave pay would qualify for the one-quarter deduction.…But the terminal leave periods spent in the United Kingdom cannot of course count as days spent overseas. I hope that answers the question.

I should like to turn to another of the hon. and learned Gentleman's questions. He said that we were discriminating against United Kingdom residents working abroad if we did not allow deductions for foreign pensions, as opposed to non-United; Kingdom citizens working here who under Amendment No. 19 would be allowed a deduction if the foreign pension was approvable by the Board of Inland Revenue. In fact it was not Amendment No. 19; it was an amendment which has not been selected, to which, Mr. Deputy Speaker, you will allow me to refer—Amendment No. 197.

The answer is quite simple. We are talking about a man who goes abroad for less than 365 days—a comparatively short period. That kind of man is not likely to have a permanent job abroad. Indeed, if he had a permanent job abroad a 100 per cent. deduction would be allowable because it would be likely to be for more than 365 days. We are talking about people who go abroad for comparatively short stays, for less than 365 days. I should have thought that that kind of person would not be likely to take out a foreign pension.

Mr. Peter Rees

I still derive the impression that the Chief Secretary is not impressed with the facts of modern life. There are people who have regular jobs with companies abroad, or even with United Kingdom-based companies, and who, because of climatic conditions or the type of work they do for eight or nine months of the year, come back here for three months or more on leave. It is that kind of person I have in mind. The hon. Gentleman brushes that example aside and says that it does not exist. I can assure him from representations made to me and other hon. Members that such people exist in relatively large numbers.

I do not think that the hon. Gentleman has grasped the dimension of the problem. That kind of person, who is regularly abroad for seven, eight or nine months a year, for the nicest of possible motives wants to come back to his native country to spend his leave. I am not thinking merely of the person who flies out to do a quick job in Monrovia. That is not the sort of person I am worrying about. I am concerned with Amendment No. 19. Suppose that such a man works for a foreign company which has set up a pension fund abroad. What then? Are these United Kingdom employees, if they are unfortunate enough to come back within nine or 10 months, to be assessed on the payments made into the pension fund on their behalf?

Mr. Deputy Speaker

Order. The hon. and learned Gentleman has already spoken at length on this matter. He exhausted his right to make another speech on the subject. I thought that he was intervening to ask a question.

Mr. Rees

With great respect, Mr. Deputy Speaker, I was.

Mr. Barnett

I am obliged, Mr. Deputy Speaker.

5.45 p.m.

I entirely take the point made by the hon. and learned Gentleman. Indeed, I took it earlier and I did not agree with it. There may well be United Kingdom citizens working abroad, generally for many years, who want to come back to this country for three or four months in every year. I am sure that is very pleasant. But the fact is that there would also be people who would want to go abroad for eight months, and if this amendment were accepted all their earnings for that period of eight months would be wholly tax-free. I do not accept that that should happen. I would not be prepared to recommend my hon. Friends to support that suggestion. I hope they will support me it the matter is pressed, and I hope that the hon. and learned Gentleman will appreciate that what he seeks to do would be excessively generous.

I do not deny that the hon. and learned Gentleman may well have received representations, but that does not mean that we have to accept them. For the reasons I have given, I am afraid that I cannot recommend acceptance of the Opposition's proposals. All the time one must bear in mind that the comparison must be made between the type of worker who under our proposals receives 25 per cent. of his income tax-free and the ordinary United Kingdom worker in this country who is taxed on 100 per cent. of his income. I would not agree that the concession should be extended any further.

I come to the other amendment relating to non-United Kingdom residents working here for more than nine to 10 years. As we have no wish to see that type of person leave the United Kingdom, because we recognise that he is valuable to the United Kingdom, we have made a considerable concession in allowing 25 per cent. of his income to be tax-free.

The hon. Member for Worthing made comparisons with other countries. Relief of 25 per cent. may not seem very great compared with other countries, but there is a bigger difference. In most countries to which the hon. Gentleman referred the levels of taxation of which he spoke apply to non-United Kingdom citizens or foreign nations long before nine or 10 years. What is more, they are taxed on the whole of their investment income. We are not suggesting that we should do that. I should have thought that we were being very generous. The hon. and learned Member for Dover and Deal said that we were being ungenerous. Indeed he has accused me of a lack of generosity on half-a-dozen occasions. He is unusually repetitive. It must be that we are coming to the end of the Finance Bill, and I can forgive him. He did not do that in Standing Committee. He must be getting a little tired.

To say that I am being ungenerous in imposing tax on 75 per cent. of a person's income after he has worked in this country for more than nine to 10 years is unacceptable. It could well be argued that that person should be taxed in the same way as any other worker in this country, on 100 per cent. of his income. It is only because we do not wish that kind of person to work elsewhere, because we recognise his value to this country, that we have made this concession. It is an important concession.

Mr. Higgins

I have naturally been listening with great care to what the hon. Gentleman has said. He said a moment ago, as well as in the Treasury statement on 21st June, that even on this new basis foreigners in this country would, generally speaking, be better off for tax purposes than in most other countries. While that may be true in most other countries, it is not necessarily true for the major European countries. I wonder whether the hon. Gentleman would comment on that. Clearly the major European countries are more relevant than taking all the countries together. The expression "most other countries" is not the most ideal comparison to make, bearing in mind the common ground between us.

Mr. Barnett

I would be happy to quote from the statement I made and my answer to the Question, although many have criticised my statement on the ground that these comparisons are odious because of all kinds of ways in which taxpayers can avoid paying tax in different countries. However, the hon. Gentleman has asked me for the information and I will give it to him.

Here are the comparisons. A foreign national working in Germany—one bears in mind the other concession which we have made, that world investment income will not be taxed unless remitted—on £10,000 a year will be taxed as to 25 per cent. of his gross income. The corresponding United Kingdom figure is 22 per cent. At £15,000 the figure for Germany is 31 per cent. and for the United Kingdom 28 per cent. Germany is certainly one of the major countries of Western Europe, and such a foreign national taxpayer would in that case be better off under the United Kingdom arrangements.

The corresponding figures for France are as follows: on £10,000 14 per cent. compared with 22 per cent. in the United Kingdom; and on £15,000 20 per cent. compared with 28 per cent. One could go through a long list of countries, but I am sure that it would be easier for hon. Members to look at the answer which I gave to a Question on this subject.

As I say, on top of that we have given the further concession that such taxpayers will not be liable to tax on their world investment income unless it is remitted.

I hope I have shown that we have been as generous as it is reasonable to be and that the Opposition amendments would be excessively generous. I see that I even carry with me the hon. Member for Cornwall, North (Mr. Pardoe) and the whole of the Liberal bench. I hope, therefore, that the House will agree to accept the Government amendment.

Mr. David Howell

I beg to move, as a manuscript amendment to the proposed amendment, to leave out "one-quarter" and insert "two-fifths".

You were kind enough, Mr. Deputy Speaker, to suggest this means by which we might press the spirit of our amendment. Various of my hon. Friends have put forward other points dealing with foreign nationals, but I suggest that our main concern here is for United Kingdom citizens working overseas. In considering what the Chief Secretary has said, therefore, I suggest that we address our minds to what would have been Amendment No. 59, which has now come before us as the manuscript amendment.

The most telling remark in our short debate came from my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) that the Chief Secretary and his advisers are out of touch and that they are unaware of the pattern of work which has to be followed by business men going abroad to Arabia, North Africa, Asia or wherever it may be for three or four months at a time and who have to do it several times a year. They have a tough time. They cannot take their families, and they have difficulty in keeping contact with them, although no doubt they can telephone from time to time. On the whole it is a tough and unpleasant life. They are not now to be taxed to the extent of 90 per cent. but they are still caught by the 75 per cent. provision as it will stand under the Government's proposal.

This does not meet the fair and just needs of an important sector of the overseas earning community, a sector bringing valuable benefits to this country. On later amendments we shall come to the equally valuable benefits brought by partnerships and the contribution they make to our overall invisible earnings, which in 1973 were running at a surplus over the whole year of £2,000 million. We shall be coming also to the question of those in receipt of pensions from overseas. For the moment, however, we are concerned with the business man who, under the present provision, will have 75 per cent. of his income taxable. This takes no account of the realities, and I urge the House to recognise the fully justifiable case for making the figure 60 per cent.

The Chief Secretary implies that 75 per cent. would be all right and there would be no abuse but that at 60 per cent. abuse would begin. That is an absurd argument. It cannot be right that at one level there will be no abuse but at 15 per cent. less abuse will suddenly appear. That is not a serious argument to put to the House.

There is no difference of principle here, as the hon. Gentleman tried to imply, putting words into the mouth of my hon. Friend the Member for Worthing (Mr. Higgins). We have always said that we recognise the need for changes in the tax régime governing overseas earnings, but equally we have always said that for goodness' sake we must ensure that the remedy does not kill, that it does not, as it were, cut the head off the animal. We must ensure that in seeking to close loop

holes we do not destroy a valuable part of British overseas earning capacity. What the Government propose, on the other hand, presents a serious threat, and I predict that before long a Chief Secretary or Treasury Minister in one Government or other will ask the House to disentangle the problems which are at present being created and try to recreate the necessary incentive and easement in the tax position of this important sector.

I strongly recommend my hon. Friends, therefore, to join in support of our manuscript amendment to Government Amendment No. 38 which affects the overseas earnings of United Kingdom citizens.

Question put, That the manuscript amendment to the proposed amendment be made:—

The House divided: Ayes 255, Noes 273.

Division No. 96.]	AYES	[5.56 p.m.
Adley, Robert	Crouch, David	Hayhoe, Barney
Aitken, Jonathan	Crowder, F. P.	Heath, Rt. Hn. Edward
Alison, Michael (Barkston Ash)	Davies, Rt. John (Knutsford)	Henderson, J. S. B. (Dunbartonshire, E.)
Allason, James (Hemel Hempstead)	d'Avigdor-Goldsmid, Maj.-Gen. James	Higgins, Terence
Amery, Rt. Hn. Julian	Dean, Paul (Somerset, N.)	Hill, James A.
Ancram, M.	Deedes, Rt. Hn. W. F.	Holland, Philip
Archer, Jeffrey	Dodds-Parker, Sir Douglas	Hordern, Peter
Atkins, Rt Hon H. (Spelthorne)	Dodsworth, Geoffrey	Howe, Rt. Hn. Sir Geoffrey (Surry, E.)
Awdry, Daniel	Douglas-Home, Rt. Hn. Sir Alec	Howell, David (Guildford)
Baker, Kenneth	Drayson, Burnaby	Howell, Ralph (Norfolk, North)
Balniel, Rt. Hn. Lord	du Cann, Rt. Hn. Edward	Hunt, John
Banks, Robert	Durant, Tony	Hurd, Douglas
Barber, Rt. Hn. Anthony	Dykes, Hugh	Hutchison, Michael Clark
Bell, Ronald	Eden, Rt. Hn. Sir John	Iremonger, T. L.
Bennett, Dr. Reginald (Fareham)	Edwards, Nicholas (Pembroke)	Irvine, Bryant Godman (Rye)
Berry, Hon. Anthony	Elliott, Sir William	James, David
Biffen, John	Emery, Peter	Jenkin, Rt. Hn. P. (R'dge W'std & Wfd)
Biggs-Davison, John	Eyre, Reginald	Jessel, Toby
Blaker, Peter	Fairgrieve, Russell	Johnson Smith, G. (E. Grinstead)
Boardman, Tom (Leicester, S.)	Farr, John	Jones, Arthur (Daventry)
Body, Richard	Fell, Anthony	Jopling, Michael
Boscawen, Hon. Robert	Fenner, Mrs. Peggy	Kaberry, Sir Donald
Bowden, Andrew (Brighton, Kemptown)	Finsberg, Geoffrey	Kellett-Bowman, Mrs. Elaine
Braine, Sir Bernard	Fletcher, Alexander (Edinburgh, N.)	Kershaw, Anthony
Brewis, John	Fletcher-Cooke, Charles	Kimball, Marcus
Brittan, Leon	Fookes, Miss Janet	King, Evelyn (Dorset, S.)
Brocklebank-Fowler, Christopher	Fowler, Norman (Sutton C' field)	King, Tom (Bridgwater)
Bryan, Sir Paul	Galbraith, Hn. T. G. D.	Kirk, Peter
Buchanan-Smith, Alick	Gardiner, George (Reigate & Banstead)	Kitson, Sir Timothy
Buck, Antony	Gardner, Edward (S. Fylde)	Knight, Mrs. Jill
Budgen, Nick	Gilmour, Sir John (Fife, E.)	Knox, David
Bulmer, Esmond	Glyn, Dr. Alan	Lamont, Norman
Burden, F. A.	Goodhew, Victor	Lane, David
Butler, Adam (Bosworth)	Gow, Ian (Eastbourne)	Latham, Michael (Melton)
Carlisle, Mark	Gower, Sir Raymond (Barry)	Lawson, Nigel (Blaby)
Carr, Rt. Hn. Robert	Grant, Anthony (Harrow, C.)	Lester, Jim (Beeston)
Chalker, Mrs. Lynda	Gray, Hamish	Lewis, Kenneth (Rtland & Stmford)
Channon, Paul	Grieve, Percy	Lloyd, Ian (Havant & Waterloo)
Chataway, Rt. Hn. Christopher	Griffiths, Eldon (Bury St. Edmunds)	Loveridge, John
Churchill, W. S.	Grist, Ian	Luce, Richard
Clark, A. K. M. (Plymouth, Sutton)	Gurden, Harold	MacArthur, Ian
Clarke, Kenneth (Rushcliffe)	Hall, Sir John	McCrindle, R. A.
Clegg, Walter	Hall-Davies, A. G. F.	Macfarlane, Neil
Cockcroft, John	Hamilton, Michael (Salisbury)	MacGregor, John
Cooke, Robert (Bristol, W.)	Hampson, Dr. Keith	McLaren, Martin
Cope, John	Hannam, John	Macmillan, Rt. Hn. M. (Farnham)
Cordle, John	Harrison, Col. Sir Harwood (Eye)	McNair-Wilson, Michael (Newbury)
Corrie, John	Harvie Anderson, Rt. Hn. Miss	McNair-Wilson, Patrick (New Forest)
Costain, A. P.	Hastings, Stephen	Madel, David
Critchley, Julian	Havers, Sir Michael	Marshall, Michael (Arundel)
Marten, Neil	Prior, Rt. Hn. James	Stewart, Ian (Hitchin)
Mather, Carol	Raison, Timothy	Stodart, R. Hn. A. (Edinburgh, W.)
Maude, Angus	Rathbone, Tim	Stokes, John
Maudling, Rt. Hn. Reginald	Rawlinson, Rt. Hn. Sir Peter	Stradling Thomas, John
Mawby, Ray	Redmond, Robert	Tapsell, Peter
Maxwell-Hyslop, R. J.	Rees, Peter (Dover & Deal)	Taylor, Edward M. (Glgow, C'cart)
Mayhew, Patrick (Royal T' bridge Wells)	Rees-Davies, W. R.	Taylor, Robert (Croydon, N.W.)
Meyer, Sir Anthony	Renton, Rt. Hn. Sir David (H't' gd' ns' re)	Tebbit, Norman
Miller, Hal (B'grove & R'ditch)	Renton, R. T. (Mid-Sussex)	Temple-Morris, Peter
Mills, Peter	Rhys Williams, Sir Brandon	Thatcher, Rt. Hn. Margaret
Miscampbell, Norman	Ridley, Hn. Nicholas	Thomas, Rt. Hn. P. (B'net, H'den S.)
Mitchell, David (Basingstoke)	Ridsdale, Julian	Trotter, Neville
Moate, Roger	Rifkind, Malcolm	Tugendhat, Christopher
Money, Ernie	Rippon, Rt. Hn. Geoffrey	van Straubenzee, W. R.
Moore, J. E. M. (Croydon, C.)	Roberts, Michael (Cardiff, N.W.)	Vaughan, Dr. Gerard
Morgan-Giles, Rear-Adm.	Roberts, Wyn (Conway)	Viggers, Peter
Morris, Mitchell (Northampton, S.)	Rodgers, Sir John (Sevenoaks)	Waddington, David
Morrison, Charles (Devizes)	Rosel, Hugh (Hornsey)	Wakeham, John
Morrison, Peter (City of Chester)	Rost, Peter (Derbyshire, S.E.)	Walder, David (Clitheroe)
Mudd, David	Royle, Sir Anthony	Walker, Rt. Hn. Peter (Worcester)
Neave, Alrey	Sainsbury, Tim	Walker-Smith, Rt. Hn. Sir Derek
Neubert, Michael	St. John-Stevas, Norman	Wall, Patrick
Newton, Tony (Braintree)	Scott-Hopkins, James	Walters, Dennis
Nicholls, Sir Harmar	Shaw, Giles (Pudsey)	Warren, Kenneth
Normanton, Tom	Shaw, Michael (Scarborough)	Weatherill, Bernard
Nott, John	Shelton, Willam (L'mb'th, Streath'm)	Wells, John
Onslow, Cranley	Shersby, Michael	Wiggin, Jerry
Oppenheim, Mrs. Sally	Silvester, Fred	Winterton, Nicholas
Orr, Capt. L. P. S.	Sims, Roger	Wood, Rt. Hn. Richard
Osborn, John	Sinclair, Sir George	Worsley, Sir Marcus
Page, Rt. Hn. Graham (Crosby)	Skeet, T. H. H.	Young, Sir George (Ealing, Acton)
Page, John (Harrow, W.)	Smith, Dudley (W'wick&L'm'ngton)
Parkinson, Cecil (Hertfordshire, S.)	Spicer, Jim (Dorset, W.)	TELLERS FOR THE AYES:
Pattie, Geoffrey	Spicer, Michael (Worcestershire, S.)	Mr. Paul Hawkins and
Percival, Ian	Sproat, Iain	Mr. Spencer Le Marchant.
Pink, R. Bonner	Stainton, Keith
Price, David (Eastleigh)	Stanbrook, Ivor
NOES
Allaun, Frank	Crosland, Rt. Hn. Anthony	Garrett, W. E. (Wallsend)
Archer, Peter	Cunningham, G. (Isl'ngt'n, S & F'sb'ry)	George, Bruce
Armstrong, Ernest	Cunningham, Dr. John A. (Whiteh 'v' n)	Gilbert, Dr. John
Ashley, Jack	Dalyell, Tam	Ginsburg, David
Ashton, Joe	Davidson, Arthur	Golding, John
Atkins, Ronald	Davies, Bryan (Enfield, N.)	Gourlay, Harry
Atkinson, Norman	Davies, Denzil (Llanelli)	Graham, Ted
Bagier, Gordon, A. T.	Davies, Ifor (Gower)	Grant, George (Morpeth)
Barnett, Guy (Greenwich)	Davis, Clinton (Hackney, C.)	Grant, John (Islington, C.)
Barnett, Joel (Heywood & Royton)	Deakins, Eric	Griffiths, Eddie(Shetfield, Brightside)
Bates, Alf	Dean, Joseph (Leeds, W.)	Grimond, Rt. Hn. J.
Baxter, William	de Freitas, Rt. Hn. Sir Geoffrey	Hamilton, James (Bothwell)
Beith, A. J.	Delargy, Hugh	Hamilton, William (Fife, C.)
Benn, Rt. Hn. Anthony Wedgwood	Dell, Rt. Hn. Edmund	Hamling, William
Bennett, Andrew F. (Stockport, N.)	Dempsey, James	Hardy, Peter
Bidwell, Sydney	Doig, Peter	Harper, Joseph
Bishop, E. S.	Dormand, J. D.	Harrison, Waloter (Wakefield)
Blenkinsop, Arthur	Douglas-Mann, Bruce	Hart, Rt. Hn. Judith
Boardman, H.	Duffy, A. E. P.	Hattersley, Roy
Booth, Albert	Dunn, James A.	Hatton, Frank
Bottomley, Rt. Hon. Arthur	Dunnett, Jack	Heffer, Eric S.
Boyden, James (Bishop Auckland)	Dunwoody, Mrs. Gwyneth	Hooley, Frank
Bradley, Tom	Eadie, Alex	Horam, John
Broughton, Sir Alfred	Edelman, Maurice	Howell, Denis (B'ham, Sm H)
Brown, Hugh D. (Glasgow, Provan)	Edge, Geoff	Howells, Geraint (Cardigan)
Buchan, Norman	Edwards, Robert (W'hampton, S.E.)	Hughes, Rt. Hn. Cledwyn (Anglesey)
Butler, Mrs. Joyce (H'gey, WoodGreen)	Ellis, John (Brigg & Scunthorpe)	Hughes, Mark (Durham)
Callaghan, Jim (M'dd'ton & Pr'wch)	Ellis, Tom (Wrexham)	Hughes, Robert (Aberdeen, North)
Cant, R. B.	English, Michael	Hughes, Roy (Newport)
Carmichael, Neil	Ennals, David	Hunter, Adam
Carter, Ray	Evans, Fred (Caerphilly)	Irvine, Rt. Hn. Sir A. (L'p'I, Edge HI)
Carter-Jones, Lewis	Evans, Ioan (Aberdare)	Irving, Rt. Hn. Sydney (Dartford)
Castle, Rt. Hn. Barbara	Faulds, Andrew	Jackson, Colin
Clemitson, Ivor	Fernyhough, Rt. Hn. E.	Jay, Rt. Hn. Douglas
Cocks, Michael	Fitch, Alan (Wigan)	Jeger, Mrs. Lena
Cohen, Stanley	Flannery, Martin	Jenkins, Hugh (W'worth, Putney)
Coleman, Donald	Fletcher, Ted (Darlington)	Jenkins, Rt. Hn. Roy (B'ham, St'fd)
Colquhoun, Mrs. M. N.	Foot, Rt. Hn. Michael	Johnson, James (K'ston upon Hull, W)
Concannon, J. D.	Forrester, John	Johnston, Russell (Inverness)
Conlan, Bernard	Fowler, Gerry (The Wrekin)	Jones, Barry (Flint, E.)
Cook, Robert F. (Edinburgh, C.)	Fraser, John (Lambeth, Norwood)	Jones, Dan (Burnley)
Cox, Thomas	Freeson, Reginald	Jones, Gwynoro (Carmarthen)
Craigen, J. M. (G'gow, Maryhill)	Galpern, Sir Myer	Jones, Alec (Rhondda)
Cronin, John	Garrett, John (Norwich, S.)	Judd, Frank
Kaufman, Gerald	Newens, Stanley (Harlow)	Stewart, Rt. Hn. M. (H'eth, Fulh'm)
Kelley, Richard	Ogden, Eric	Stoddart, David (Swindon)
Kerr, Russell	O'Halloran, Michael	Stonehouse, Rt. Hn. John
Kilroy-Silk, Robert	O'Malley, Brian	Stott, Roger
Kinnock, Neil	Orbach, Maurice	Strang, Gavin
Lambie, David	Ovenden, John	Strauss, Rt. Hn. G. R.
Lamborn, Harry	Owen, Dr. David	Summerskill, Rt. Hn. Shirley
Lamond, James	Padley, Walter	Swain, Thomas
Latham, Arthur (City of W'minster P'ton)	Palmer, Arthur	Thomas, D. E. (Merioneth)
Lawson, George (Motherwell & Wishaw)	Pardoe, John	Thomas, Jeffrey (Abertillery)
Leadbitter, Ted	Park, George (Coventry, E.)	Thorne, Stan (Preston, S.)
Lee, John	Parker, John (Dagenham)	Thorpe, Rt. Hn. Jeremy
Lever, Rt. Hn. Harold	Parry, Robert	Tierney, Sydney
Lewis, Arthur (Newham, N.)	Pavitt, Laurie	Tinn, James
Lewis, Ron (Carlisle)	Peart, Rt. Hn. Fred	Tomney, Frank
Lipton, Marcus	Pendry, Tom	Torney, Tom
Loughlin, Charles	Phipps, Dr. Colin	Tuck, Raphael
Loyden, Eddie	Prentice, Rt. Hn. Reg	Urwin, T. W.
Lyon, Alexander W. (York)	Prescott, John	Varley, Rt. Hn. Eric G.
Lyons, Edward (Bradford, W.)	Price, Christopher (Lewisham. W.)	Wainwright, Edwin (Dearne Valley)
Mabon, Dr. J. Dickson	Price, William (Rugby)	Wainwright, Richard (Colne Valley)
McCartney, Hugh	Radice, Giles	Walden, Brian (B'm'ham, Ladywood)
McElhone, Frank	Richardson, Miss Jo	Walker, Harold (Doncaster)
MacFarquhar, Roderick	Roberts, Gwilym (Cannock)	Walker, Terry (Kingswood)
McGuire, Michael	Robertson, John (Paisley)	Watkins, David
Mackenzie, Gregor	Roderick, Caerwyn E.	Watt, Hamish
Maclennan, Robert	Rodgers, George (Chorley)	Weitzman, David
McMillan, Tom (Glasgow, C.)	Rodgers, William (Teesside, St'ckton)	Wellbeloved, James
McNamara, Kevin	Rooker, J. W.	Whitehead, Phillip
Madden, M. O. F.	Roper, John	Whitlock, William
Magee, Bryan	Ross, Stephen (Isle of Wight)	Wigley, Dafydd (Caernarvon)
Mahon, Simon	Ross, Rt. Hn. William (Kilmarnock)	Willey, Rt. Hn. Frederick
Mallalieu, J. P. W.	Sandelson, Neville	Williams, Alan (Swansea, W.)
Marks, Kenneth	Sedgemore, Bryan	Williams, Alan Lee (Hvrng, Hchurch)
Marquand, David	Selby, Harry	Williams, Rt. Hn. Shirley (H'f'd & St'ge)
Marshall, Dr. Edmund (Goole)	Sheldon, Robert (Ashton-under-Lyne)	Wilson, Alexander (Hamilton)
Mason, Rt. Hn. Roy	Short, Rt. Hn. E. (N'ctle-u-Tyne)	Wilson, Gordon (Dundee, E.)
Mayhew, Christopher (G'wh, W'wch, E)	Silkin, Rt. Hn. John (L'sham, D'ford)	Wilson, Rt. Hn. Harold (Huyton)
Meacher, Michael	Sillars, James	Wilson, William (Coventry, S.E.)
Mellish, Rt. Hn. Robert	Silverman, Julius	Wise, Mrs. Audrey
Millan, Bruce	Skinner, Dennis	Woof, Robert
Milne, Edward	Small, William	Wrigglesworth, Ian
Mitchell, R. C. (S'hampton, Itchen)	Smith, Cyril (Rochdale)	Young, David (Bolton, E.)
Molloy, William	Smith, John (Lanarkshire, N.)
Moonman, Eric	Snape, Peter	TELLERS FOR THE NOES:
Morris, Alfred (Wythenshawe)	Spearing, Nigel	Mr. Walter Johnson and
Morris, Charles R. (Openshaw)	Spriggs, Leslie	Mr. Ernest G. Perry.
Mulley, Rt. Hn. Frederick	Stallard, A. W.
Murray, Ronald King	Steel, David

Question accordingly negatived.

Amendments made: No. 38, in page 51, line 22, leave out 'one-tenth' and insert 'one-quarter'.

No. 38A, in page 51, line 46, leave out 'or' and insert: 'but as absent from the United Kingdom on any day on which he '.—[Mr. Joel Barnett.]

Mr. David Howell

I beg to move Amendment No. 236, in page 52, line 7, leave out 'paragraph 6' and insert 'paragraphs 6 and 7'.

Mr. Deputy Speaker

With it we may also discuss Amendment No. 237, in page 52, line 15, at end insert: '7. Where the holder of an office or employment to which paragraph 1 above applies incurs and defrays out of the emoluments thereof the expenses of travelling from his home or a place of work in the United Kingdom to a place outside the United Kingdom wholly exclusively and necessarily for the purpose of enabling him to perform the duties of such office or employment and of travelling back to his home or place of work in the United Kingdom there may be deducted from the emol uments to be assessed the expenses so incurred and defrayed by the holder of the office or employment. 8. If the expenses of travelling mentioned in paragraph 7 above are paid by the person under or by whom the said office or employment is held and the holder of such office or employment is, but for this provision, chargeable to tax in respect thereof as a perquisite of the office or employment he shall be entitled to make a claim for a deduction under paragraph 7 above in respect thereof.'

Mr. Howell

These amendments arise from lengthy debates in Committee about expenses for business men travelling abroad to their place of work and the way in which such expenses should be treated under the proposed new tax régime. After a considerable amount of debate and after a number of amendments were moved by my hon. Friends, the Chief Secretary came forward with the proposition that something should be done for these people. He proposed an extra-statutory concession. There are comments fairly to be made on the propriety of producing an extra-statutory concession to meet these new needs arising from other statutory proposals being brought forward by the Chief Secretary.

On the whole, I think that my hon. Friends and I would deplore the idea of an extra-statutory concession. Maybe the Chief Secretary will tell us that it is the only way of doing it. It ought to be possible, given good law-making, to ensure that if a new set of laws is proposed to govern a new tax régime for those earning overseas, travelling expenses should also be covered by that law. It ought not to be necessary to have an extra-statutory concession. If there must be one we should like to hear what it is and how it would work. The Chief Secretary differentiated, when we discussed this in Committee, between a number of different categories. It was not entirely clear then, and it is not now after reading HANSARD, which are the categories which will be helped in being allowed to set off travelling expenses against tax.

There are those who have a job here but whose duties keep them abroad. Will they be covered by this concession? There are those who have a second job overseas, those with one or more jobs overseas when the overseas job is not with the same company as is the job which they perform in the United Kingdom. There are other categories too. The Chief Secretary said he believed that something should be done for these people.

Could we know which people the hon. Gentleman has in mind? May we know what category of expenses are to be covered? We have talked mainly about travelling expenses and they are obviously significant. There are, however, many other expenses. There are many additional, unavoidable and extra expenses involved in performing a hard and good job abroad. Such expenses may be incurred when travelling abroad to fulfil services, to take part in a construction project and so on. Could we have an exposé from the Chief Secretary about how this concession will meet the real problems identified in Committee by my hon. Friends?

Mr. Joel Barnett

At the behest of the hon. Member for Guildford (Mr. Howell) I am happy to expose myself on the subject of the taxation of foreign income. It was generally accepted in Committee that there should be some relief for an academic or other person who travels abroad for less than 365 days and who, if something had not been done, would have had his travelling expenses taxed. That would have been most unfair. In Committee I proposed an extra-statutory concession. I shall explain exactly what I mean. I did so in answer to a Written Question on 16th July but I realise the problems about the printing of HANSARD. There was an Inland Revenue Press notice which I believe is in the Library.

6.15 p.m.

The concession we are proposing would exempt from tax the travelling expenses reimbursed to the employee or borne by the employer on his behalf. It would be a clear-cut and simple matter to administer, as I believe has generally been recognised. That is why there have been a number of extra-statutory concessions made before now under successive Governments.

Mr. Higgins

May I ask the Chief Secretary whether he can give us any example of an extra-statutory concession being announced at a time when there was an opportunity for legislating?

Mr. Barnett

I suppose it is fair to say that it is possible to legislate for almost anything and that the extra-statutory concessions which are published today and have been used by both Governments could have been put into legislative form. There was one called A5: (Directors' Travelling Expenses.) There is another called A6: (Expenses Allowances and Benefits in Kind.) It would have been perfectly possible to have put those into legislative form. It was considered appropriate to make them in the form of extra-statutory concessions. The previous Government never thought of changing them. I willingly concede that it would usually be preferable to have them in legislative form. Let me read out the extra-statutory concession.

The further concession will be that where the employer reimburses the employee the expenses incurred by the latter in travelling (whether alone or with his wife and family) to the place of employment overseas and returning to the United Kingdom, the Inland Revenue will not seek to tax the reimbursement as income in the hands of the employee. This concession will also extend to directorships. The amendment would be less helpful to a taxpayer and his family than the concession. The concession goes further in that reimbursements of the family's travelling expenses would not be taxed. If the amendment were to be carried, reimbursements other than those in respect of the director or employee would have to be taxed. In other words, if the amendment were carried, as opposed to the concession, the taxpayer and his family would be that much worse off.

Mr. Hordern

Will the Chief Secretary cover the point about the position of partners in partnerships travelling abroad? I understand from the terms of the proposed, concession that only employees and directors are so covered, and not partners in overseas partnerships.

Mr. Barnett

I will come to that point in a moment. The amendment would enable a director or employee with an overseas job to claim tax relief on the travelling expenses he incurs in getting to the place where the duties are carried on and back to the United Kingdom. These expenses do not qualify for tax relief under Section 189 of the Companies Act 1948—that is, the Schedule E expenses rule—as they are not incurred in the performance of the duties of the office or employment. That is the problem, the Schedule E rule.

We recognise that the 25 per cent. relief that has been given for incomes which have been earned abroad when a person has gone abroad for fewer than 365 days is a considerable concession that goes some way towards helping with travelling expenses. We have now gone further with the extra-statutory concession. It is an extension of a concession. It must be recognised that the person who is offered an overseas job for a continuous period of fewer than 365 days on terms under which he has to pay his travelling expenses to get there and back would not benefit under the concession. However, it would be rather surprising if an arrangement were made with the employer so that a person going abroad would be reimbursed his expenses by a reduction in his actual salary rather than him having to pay more on his salary.

I can tell the House that the proposed extra-statutory concession has been discussed by the Inland Revenue with a body representing university teachers. It has been welcomed because of the many cases in which it is likely to be applicable. I hope that it will be seen that we have gone pretty well all the way towards making the sort of concessions for which some Conservative hon. Members have been asking. I hope that they will understand that in this way we can better help those whom the amendment seeks to help.

I willingly concede that this is not an entirely satisfactory measure. We would rather introduce legislation but we recognise that under the Schedule E rule, which we consider is in need of being reconsidered—in fact, we are doing so—a United Kingdom taxpayer working in the United Kingdom and travelling from home to work is not allowed the expenses of that travel as an allowable deduction.

Mr. George Cunningham (Islington, South and Finsbury)

Hear, hear.

Mr. Barnett

I share the view of my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham). Enormous difficulties would be created if such expenses were to become an allowable deduction. We all know the problems and we all know why successive Governments have not felt able to change that rule. It would be terribly expensive and it would be unfair between one taxpayer and another. It was impossible to change the rule itself and so we came up with the idea of the extra-statutory concession, which fortunately helps those whom the House wants to help.

Mr. A. P. Costain (Folkestone and Hythe)

But how is the ordinary man in the street going to appreciate the terms of the concession? Where is publicity given to the concession? It is not in the Bill.

Mr. Barnett

There has been an Inland Revenue Press notice. That is the customary method of putting out this sort of information. It is a method that is well known to most members of the accountancy profession. The hon. Member for Folkestone and Hythe (Mr. Costain) can rest assured that the extra-statutory concession will be very well known. It will be published in the appropriate professional journals, and it will be generally understood by those concerned. It is understood by academics. I know that many hon. Members are concerned about that particular group of taxpayers who go abroad for short periods during the year. They have had the concession brought to their attention and they recognise that it will be available.

Mr. David Howell

Is the hon. Gentleman referring to the Inland Revenue statement of 4th July 1974? Is he referring to the statement which mentions travelling expenses but does not mention anything about the wife and family aspect? I think that my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) has a good point when he talks about the additional aspects which are not mentioned in the statement of 4th July and which need properly publicising.

Mr. Barnett

There is another Press statement—namely, the Inland Revenue Press notice of 16th July—which reads: This further concession is required because there are—in the context of the Government's proposals for the taxation of foreign incomes—two categories of person who are outside the scope of the Board of Inland Revenue's existing concessions relating to the taxation of travelling expenses …". Those are the two categories to which I have referred. The notice continues: … A5 (Directors' travelling expenses) and A6 (Expenses allowances and benefits in kind). First, there is the person who takes up a new employment abroad lasting loss than a year, and, as will usually be the case, retains his place of abode in the United Kingdom. Second, there is the person with a continuing United Kingdom job and one or more overseas directorships or employments which are not within the same group as the company he works for in the United Kingdom. I think that answers the matter raised by the hon. Member for Fareham (Dr. Bennett). Both categories would come within the scope of the further concession to which I have referred.

I hope that hon. Members will recognise that we have gone a long way towards helping the kind of person about whom concern has been expressed. The extra-statutory concession goes further than the amendment. I hope that the hon. Member for Guildford will feel able to withdraw the amendment.

Mr. Graham Page (Crosby)

I am sure that we are all grateful for the concession. It goes a long way towards satisfying those who have raised the matter earlier, but an extra-statutory concession is an extraordinary way in which to proceed when a Bill is passing through the House.

I was astonished to hear that the Chief Secretary was saying to the public in general "You will find this concession in a Press notice dated 16th July." After he had said that his Parliamentary Private Secretary presented my right hon. and hon. Friends on the Opposition Front Bench with copies of the notice. They are the only people who know what this legislation by Press notice is all about. This is an extraordinary way of dealing with the matter. Those of us one bench behind the Opposition Front Bench have not yet seen the notice.

Where is the general public to find the extra-statutory concession? It is a very important matter to anyone who is going overseas. Such people do not always go to their accountants to find out how they will be relieved of tax or what concessions they will receive. When planning an overseas trip not everyone considers such matters. Even the Chief Secretary did not know what people the concession covered when he started to address the House. He had to receive further information from elsewhere as to whether it covered partners.

I happen to know that the terms of the extra-statutory concession hang on a notice board in an Inland Revenue corridor. I suppose that accountants know that as well. However, that is the only publicity that it is given. For how long does a Press notice remain in a permanent form? It is useful to have an extra-statutory concession when a Bill has passed through Parliament and when it is found that the Bill does not cover the benefits that it was intended to cover. I recollect that in the Land Commission Act 1967 extra-statutory concessions were given frequently, but in that case there was an annual report, a blue book, that set out clearly the concessions that were being given, because the Act had not given the benefits that the House intended.

When a Bill is going through Parliament it is very bad to say to the House "We cannot be bothered to legislate. We cannot find the right words for it. We do not want to alter the Schedule E rule. We do not want to write an exception to it so we shall make a concession for which there will be insufficient publicity." Unless somebody goes to his accountant to find out what it is all about, the average person may find it difficult to get adequate information. I know that the Chief Secretary is expecting to return to his profession after October. He will then be able to advise everyone from his accountancy desk exactly what the concession means. To ask the House to accept the concession when a Bill is going through Parliament is to treat the House with disrespect.

6.30 p.m.

Mr. George Cunningham

Now that the right hon. Member for Crosby (Mr. Page) is in Opposition again, he seems to have resumed the rôle he was fond of performing when he was in Opposition before—that of opposing all legislation other than by measure passed through this House. I can recall reading passages in HANSARD where he objected to legislation by circular, a point to which he attached great importance, and rightly so. I must say that during his period in Government the Department in which he served was notorious for the fact that it legislated by circular. I would only say to him that I think that his views in Opposition are always better than the way he acts when he is in Government.

On the substance of the matter, I entirely agree with the right hon. Gentleman that any rule which can be written down is better written down in statute and not in a Press notice, and since there is no rule which can be applied in a matter like this, where consistency is essential, other than after it has been written down, it should be reduced to writing either in statute or in an order.

However, I really rise to say that, in face of what appears to be unanimity of the Members who served in Committee in favour of the proposal, I find it a rather objectionable one. As I understand it, if I am invited to deliver a month of lectures in Aberdeen, and the University of Aberdeen pays my travel costs to Aberdeen, in the normal way I shall be chargeable for tax on that income. But if I am invited to give the same series of lectures in Paris and I am repaid the costs of the travel to Paris by the University of the Sorbonne, that will be treated not as income but as expenses on which I do not have to pay tax.

I think that that is an unjustifiable distinction to draw. I cannot see any tax principle which would justify it. I shall not oppose it, not least because the present state of our printing has not allowed me to study the exchanges which took place in Committee upstairs, but on the face of it I think that it is an objectionable suggestion, and I hope that it might be looked at again and not built into our practice without second thoughts being given to it.

Mr. Peter Rees

The hon. Member for Islington, South and Finsbury (Mr. Cunningham) has made a powerful contribution, and I regret that he was not a member of the Standing Committee, where no doubt he would have made equally valuable contributions, particularly on this point. The whole tenor of his complaint goes to the scope of the Schedule E rules. He will have noticed the undertaking, if that is what it was, by the Chief Secretary to have a fundamental review of the Schedule E rules. If the Chief Secretary is privileged to support a Budget introduced by the present Chancellor of the Exchequer in the autumn, no doubt the hon. Member for Islington, South and Finsbury and I will look for some substantial amendment reconstructing the Schedule E rules, which I agree are long overdue for reform.

Earlier, the Chief Secretary complained, a little tetchily, that I had accused him of meanness on more than one occasion today. in contrast with the dulcet words I used in Committee upstairs. I cannot go so far as to concede the hon. Gentleman generosity on this occasion, but I will concede at least flexibility because he has accepted this time, by contrast with previous discussions, the point we were making about expenses in relation to those employed or in posts overseas. He has been thinking about the problem since Committee, because the concession he has now announced goes a little further than the one he announced in Committee.

However, the hon. Gentleman has not covered one substantial point. Do expenses of travelling cover subsistence expenses? I can see at once that if a person is permanently stationed abroad and is unfortunate enough to come back for more than 63 days, so that he only gets one-quarter or one-fifth reduction, it might be unreasonable to claim the whole expense of maintaining his house in Kuwait, for example, but if he goes abroad only to discharge the functions of some employment in Buenos Aires, and is there for only a month because he holds that office concurrently with a post here, will the Inland Revenue take a broad view of his travelling expenses and concede the expenses of his hotel accommodation for himself, and, indeed, for his wife, should she accompany him?

Beyond that, I have no complaint about the scope of the extra-statutory concession as it has now been uncovered. My complaint is the same as that of my right hon. and hon. Friends—that we have been reduced to an extraordinary pass if, concurrently with the enacting of a Finance Bill, we are to have extra-statutory concessions on points which should be more properly covered by that Bill but are announced to the House and the country in Press notices. Extra-statutory concessions and Press notices are no substitute for well-thought-out legislation.

Will the hon. Gentleman give an undertaking that this extra-statutory concession will he applied uniformly and consistently—in other words, that there will be no capricious administrative discretion? Will he also undertake that it will not be withdrawn or amended without being made the subject of debate in this House? My right hon. Friend the Member for Crosby (Mr. Page) argued powerfully that it is improper, particularly in finance, for the executive to proceed by fiat, as it were, laid on the Table or put in the Library or announced by Press notice, not being properly debated or voted on by the House. The proper way to proceed is by legislation and not by extra-statutory concession.

My amendment was designed to translate into legislative form the extra-statutory concession which the Chief Secretary announced in Committee upstairs. One of the disadvantages of extra-statutory concessions has been made clear. Between the time we debated upstairs and now, a further extra-statutory concession has been produced, the details of which have not been properly appreciated by the House. This reinforces my plea for translating the provision at the earliest possible moment into proper legislative form.

Since the Chief Secretary has gone further than my amendment, I shall not press it to its proper conclusion. However, I hope that what he has done will not be a precedent. I hope that come the autumn Budget and Finance Bill, he will have been able to complete a fundamental review of the Schedule E rules and will be able to translate them into civilised legislative form so that we can debate them and approve them properly in this House.

Mr. Joel Barnett

By leave of the House, I will reply briefly. I cannot promise that we will review the whole question of the Schedule E rules in time for the autumn Finance Bill, but we shall be introducing many more Finance Bills, of course, and will take the opportunity to review the Schedule E rules.

One recognises the problem with extra-statutory concessions, but it is not new. We do not want to have any more than is necessary—that the Government accept. But we are dealing with the tricky problem of the Schedule E rules and it would not be right to amend them on an ad hoc basis, as the hon. and learned Member for Dover and Deal (Mr. Rees) recognised.

Following our earlier debates, and in the light of representations we received, the Government agreed that it would be right to make a concession. I take the point put by my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham), who said that there is an unjustified distinction between giving relief for the employee who takes a job in Paris as against one who takes a job in Aberdeen. I admire the facility of the hon. and learned Member for Dover and Deal. My hon. Friend took a place at random, and chose Aberdeen. The hon. and learned Gentleman took a place at random, and chose Kuwait.

Of course one recognises that there are problems of expenses for some people who are going to work abroad. I am thinking in particular of academics, whom we do not wish to discourage from going abroad to lecture. In some of these cases, the expenses will have been paid by the employee and probably reimbursed later, but it would have been taxed in the hands of the employee in these circumstances. That may be thought to discourage such a man from going on a job abroad. That is why we felt it appropriate to make this kind of concession.

The hon. and learned Member for Dover and Deal asked for an undertaking that the concession would be applied uniformly. Naturally, one assumes that inspectors of taxes handling these matters will apply the concessions unformly. I cannot guarantee that every inspector in the land will do so, but they will have the instruction and they will need to apply it uniformly in the terms of the concession.

That brings me immediately to the definition of travelling expenses. I assure hon. Members that it will include in all cases reasonable hotel expenses necessarily incurred; that is to say, the subsistence element of the travelling expense. That will be applied uniformly in accordance with the instructions given in the extra-statutory concession.

I do not know why it should be thought that one inspector would regard it differently from the others. In all tax law there are sometimes variations between one inspector and another on a variety of matters where there is some discretion, but the discretion here is inside the terms of the wording of the concession as published.

Mr. Peter Rees

Everything that the Chief Secretary has said for the past 30 seconds has alarmed me considerably. One knows that inspectors of taxes have discretion—they are responsible people and that is right and proper. However, is the hon. Gentleman saying that if in a case falling fair and square within the extra-statutory concession the inspector refuses to allow the expense—and this is only an administrative matter—and that decision is taken to the Board of Inland Revenue, the board will back the inspector or the citizen?

Mr. Barnett

I specifically said that the inspector would have to deal with it on the basis of the wording of the concession. That concession makes clear that travelling expenses as I have defined will be an allowable deduction when reimbursed by the employer. I do not know why the hon. and learned Gentleman should make such heavy weather of it. There is no problem.

Mr. Higgins

Is it not the case that if there is some dispute of this kind with statutory concessions there is some appeal against the decision, whereas in this instance there is not?

Mr. Barnett

Certainly the extra-statutory concession is not part of the legislation. At the same time, in all kinds of expenses—for example under Schedule D or Schedule E—one inspector may interpret a form of expenses differently, even when that is part of the legislation, and hon. Members know that very well. It is often a matter of judgment whether an expense is allowable, because the dividing line with many items of expense is fudged.

Mr. Peter Rees

rose—

Mr. Barnett

I would rather not give way to the hon. and learned Gentleman again. I hope that he will agree that I have been more than generous in giving way to him throughout the course of our debates, for what seems an interminable time. I hope that he will agree that I have been excessively generous. Some of my hon. Friends think that I have been over-generous in the latitude that I have allowed the hon. and learned Gentleman. I hope that he will accept that in this instance he has no cause for alarm. The extra-statutory concession is clear; it has been circulated in all the appropriate technical journals and there is no problem about it.

Mr. Geoffrey Finsberg (Hampstead)

In his former incarnation the Chief Secretary may have read the professional journals, but some taxpayers may not wish to pay fees to accountants, which they cannot claim as allowable to tax, for telling them what the extra-statutory concession says. If a taxpayer asks an inspector for a full list of extra-statutory concessions, will it be supplied to him?

Mr. Barnett

Of course. Inspectors of taxes are very reasonable people. Indeed, I should like to pay tribute to them. Anyone who knows the working of inspectors of taxes will know that to be a fact.

6.45 p.m.

I hope that the hon. Gentleman will feel able to withdraw his amendment, which does not go so far as the concession. The concessions do a job that is generally recognised in our tax law and they meet a purpose constantly pressed on me in Committee. I am sorry that hon. Members still seem not satisfied, but that is one of the facts of life and I suppose that I shall have to learn to live with it for many years on the Treasury Bench.

Mr. David Howell

I should like to say a few words in reply to the Chief Secretary. The House is profoundly uneasy when proposals of this kind come forward in an extra-statutory form, for taxpayers will have to go to the appropriate corridors of Somerset House to find out what is going on. I recognise, now that the new terms of the extra-statutory concession have been unveiled, that it goes rather wider than our amendment, but the purpose of the amendment was simply to elucidate—and this is the way in which we have to go about these things when there is an extra-statutory concession—the terms of the concession rather than force our proposals into the Bill. It is clear that the concession goes a little wider than our proposals, particularly in connection with wives and families.

However, I remain uneasy, and I suspect that my hon. Friends do, about the Schedule E aspect and the position of the person who pays for his own travel. There may be instances—I can think of one or two myself—when academics or free-lance consultants may make a journey, as it were, "on spec", or to arrange business when they arrive, or to arrange lectures when reaching the United States, or wherever it is, and such people will be hurt because the Chief Secretary is not willing to open up the wider area governed by the Schedule E rule, although he has said that he will look at it.

We recognise that, provided that people learn what is contained in the Inland Revenue Press notice, they will see that it goes a little wider than our amendment, but we remain uneasy about the extra-statutory nature of the concession. I strongly defend the right of my hon. and right hon. Friends to safeguard constituents and to ensure that matters binding upon us or affecting the interests of the citizen are properly discussed in the House and, where possible, open to appeal. There is no ground for sug- gesting that they should not be free to set out matters of this kind at length. I urge the Chief Secretary to make sure that the publicity about the concession is effective, rather more than it seems to have been to date. On that note I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.