§ Mr. David HowellI beg to move Amendment No. 61, in page 13, line 17 leave out 'one-tenth' and insert 'two-fifths'.
§ Mr. SpeakerWith this I have selected Amendment No. 62, in page 13, line 21, leave out 'one-tenth' and insert 'two-fifths'.
§ Mr. HowellThese are amendments dealing with the new régime for remittances from overseas, a matter discussed at great length in Committee. In Committee our point was that the new proposals had the effect of suddenly imposing a new burden on those in receipt of overseas pensions, a burden involving making 75 per cent. of their pension liable to tax. We argued in Committee that a particular unfairness arose for those who had made arrangements before Budget day of this year. After a long debate our point of view was rejected by the Committee.
In bringing this matter forward again on Report we have attempted to appeal to the Chief Secretary's understanding and sympathy from a different angle. We say simply that we think that pensions should be treated in the same way as we should like to see all overseas earnings and earnings from partnerships overseas treated; namely, that only 60 per cent. of all pensions should be liable to tax. That is the purpose of the amendment.
The arguments on either side are familiar. We believe that there is an unfairness here particularly relevant to past pensioners and those who have made arrangements. If the concession could be extended to reducing to 60 per cent. the part of the pension liable to tax, that would help past pensioners in making adjustments of a less drastic kind than the higher 1115 percentage would demand and would also help present and future pensioners.
In Committee the Chief Secretary said that these people could afford to live in this country without the additional pension remittance. My hon. Friends and I challenge him strongly on that, because the life pattern of many of these people is designed to ensure that they live six or eight months of the year here, and they have so organised their affairs that they can more cheaply live for the remaining four months on the pension being remitted overseas. That is a familiar pattern. It affects people who are by no means wealthy or rich, or even what the Labour Party calls rich, which seems to mean anyone who earns more than £60 a week. These are people of modest means who have served this country well overseas and have possibly served the overseas country bravely and sufficiently as well. We think that they deserve a little more than they get from the new tax régime. I ask the Chief Secretary to look again at the placing of new and additional tax burdens on overseas pensioners in this category.
§ Mr. Joel BarnettI do not suggest for one moment that the people we are talking about are rich, and that is the burden of the case I presented in Committee. Let us be clear what we are talking about. We have virtually abolished the remittance basis under which a man who lived in this country and remitted his pension from abroad to this country to enable him to reside here was taxed on 100 per cent. of the pension remitted. If he did not remit that pension he was not taxed on it at ill. If a man who lives here does not remit the pension he has abroad, it is self-evident that he has enough income, or considers that he has enough income, on which to live here without having to remit the pension. He need not necessarily be a rich man. That was the situation.
The situation now, with the virtual abolition of the remittance basis, is that the pension, whether or not it is remitted, is taxable in the same way as the pension of any other United Kingdom citizen. The question is not whether the man is rich but whether in equity that taxation of United Kingdom pensioners resident in the United Kingdom should be the 1116 same whether the pension arises overseas or in the United Kingdom. That is the ground on which I resisted the amendment in Committee.
We recognise that there was a problem in that these people had not been paying tax, perfectly legitimately. They avoided tax by not remitting the pension, and that was perfectly proper. There was no need for them to pay the tax and they did not do so. But others, because they could not live without remitting the pension, had to pay tax on 100 per cent. of the pension.
It is a matter of priorities. What relief should one give here? For the reasons I have given I think that the 10 per cent. relief is sufficient—not the 25 per cent. suggested by the hon. Gentleman. The 25 per cent. relief was on incomes, not pensions.
I therefore feel unable to suggest that the House should accept that the pension of one person living in the United Kingdom is taxed as to 60 per cent. whereas the pension of another person is taxed as to 100 per cent. We have given a small relief which I think is sufficient. There cannot be real hardship involved here, otherwise the pension would be remitted to the United Kingdom.
I appreciate that the life pattern of some of these people is such that they like to spend three or four months abroad each year and live on their unremitted pension. That is perfectly reasonable. I should not mind living abroad for a few months each year. I can think of better things to do than some of the things I have been doing in the last few months, and I should very much like to spend a few months abroad in the sun. However, that should not be taken into account in our tax system. We have been more than fair in the suggestion of a modest relief, but to go further would be unfair to other United Kingdom pensioners resident in this country who pay tax on the full 100 per cent. I am therefore, unable to advise my hon. Friends to accept the amendment.
§ Mr. HordernI do not agree with the Chief Secretary. It is wholly unreasonable that someone who has spent the greater part of his life in employment overseas, perhaps with a British company, should be allowed relief of only 10 per cent. That person is not in the 1117 same position as the pensioner in the United Kingdom. The person who has spent many years overseas has made friends overseas and wishes to spend part of the year in the country in which he worked, or, perhaps, in another country where he has affiliations and friendships. He is not at all on the same basis as the pensioner in the United Kingdom, because he may spend only nine months here instead of the full year. The Chief Secretary said that he does not need the full amount of his pension because he is so well placed that he can afford to go overseas for two or three months, but that is not so. The person is here for only nine months and, therefore, does not need such large pension receipts in this country, but he plainly needs his pension where he spends the other three or four months of the year.
In addition, the pension arrangements are entirely different from those applying to a United Kingdom pension. The United Kingdom pensioner has the facility of making deductions in the contributions to his pension funds which count for taxation relief, but the overseas pensioner in all probability has no such facility. Consequently, his contributions to his pension overseas will have to be met out of his net income, which does not apply to the United Kingdom citizen. Quite properly, the contributions which have been made in this country have been greatly facilitated for relief against taxation, starting under your excellent leadership, Mr. Speaker, in your Budget of 1962, in which taxation relief was given for the contributions of self-employed persons to pension funds. That sum has been increasing. No such facilities have been allowed for overseas pensioners. For these reasons it is inappropriate that the only relief they should get is 10 per cent. I support the amendment and I trust that we shall vote upon it.
§ 7.0 p.m.
§ Mr. Norman Lamont (Kingston upon Thames)I support the amendment and what has been said by my hon. Friend the Member for Horsham and Crawley (Mr. Hordern). I have had a number of letters on this topic from constituents. I, too, plead with the Chief Secretary to make a concession on this point. When the Government have made concessions all round it is extraordinary that they have made no concessions for this small group of 1118 overseas pensioners. They seem to be taking up a totally asymmetrical position—to use a word which I know the Financial Secretary would have used had he been taking part in this discussion.
The Government are adopting an extraordinary position, and in honour they should exempt those who have already retired. I refer to people who as a result of the Bill will face a sudden change in their circumstances. They could not have foreseen what was to happen and are innocent people caught in the backlash of the Lonrho affair. They are not the people the Government had in mind when they proposed to end the remittance basis. Having made reasonably generous concessions on the remittance basis generally for people at work, surely the Chief Secretary can be a little soft-hearted to those who have already retired.
I ask the hon. Gentleman to look at the matter again. I personally would be prepared to accept a concession for existing pensioners, namely, for those who have already retired. Many elderly people will be confronted with a drastic change in their circumstances. I can see no economic argument why the Chief Secretary should not give way on a matter which will cause unnecessary hardship to one group of people who should not be dealt with in this way.
§ Mr. CostainI, too, wish to support the amendment. I have a number of constiutents who have now retired having served for many years in hot countries. The burden of the Government's argument on this amendment is that those people use their pensions as pin money. But many of the people have to go abroad for three or four months a year because they cannot stand the vagaries of the English winter. If the Government take this concession from them, they will condemn that body of people to death in this country because of our hard winter, or they will force them to leave the country altogether to live overseas. I appeal to the Chief Secretary to do something for existing pensioners who have settled the pattern of their lives.
§ Mr. Peter ReesI rise with some trepidation following the harsh things that were said about me in my personal capacity by the Chief Secretary. We have noticed that the hon. Gentleman has lost a little of his personal buoyancy since 1119 the beginning of the Finance Bill proceedings. However, I assure him that we wish him well personally. We hope that during the Summer Recess he will recover his former high spirits.
The Chief Secretary appears to glory in the fact that he has abolished the remittance basis. I contrast that with his plaintive cry that it will not be possible to have an ad hoc adjustment—that is the hon. Gentleman's phrase, not mine—or the rules relating to expenses for the purpose of Schedule E. If it is possible to have an ad hoc adjustment of the whole scope of Schedule E and the basis of taxation of the pensions and emoluments of overseas employees, surely it would not be impossible to reconsider the rules on Schedule E.
I pass to the matter we are now considering—namely, the subject of overseas service. The distinct impression I derived from the Chief Secretary's intervention upstairs in Committee on this topic was that he regarded the provisions as a kind of favoured treatment conceded to the rich who could afford to leave their pensions abroad so that they could spend their time in the Bahamas on holiday. That attitude annoyed me on the earlier occasion and I still see no virtue in it as an argument. There are many people who have retired to the bracing climate of the East Coast of England who, because they have spent some years of service to the country in hot climates, like to spend some of the winter months overseas. For that purpose they keep their pensions overseas. It depends on one's standards whether one regards them as wealthy. By the standards of most of my constituents—and no doubt this applies to the constituents of my hon. Friend the Member for Folkestone and Hythe (Mr. Costain)—they are not rich in any sense of the word.
There are other reasons why this group of people needs more sympathetic treatment than the Chief Secretary seems to be disposed to concede. He seems to have a blind spot about the fact that many of our countrymen, generation after generation, served the nation overseas. He seems to be unaware of the good work they did and the kind of benefits which in the long run they have contributed to our economy. One of the disadvantages of their service overseas is that for 1120 many years they were separated from kith and kin and, having retired, they found it necessary to reconstitute their lives in this country. Therefore, they are not in as favourable a position as the Chief Secretary would have us believe.
I have received as many representations on the question of pensions as I have on the whole subject of foreign emoluments. I am not saying that there is insupportable hardship in these cases, but there will be a great deal of adjustment and inconvenience. The Chief Secretary seems not to have a great deal of understanding of the problem. The result may be that those who are affected will go overseas and spend the rest of their days in a warmer climate. That would be a pure loss to this country.
I would prefer to see a postponement of the Government's provision. Indeed, I tabled an amendment on this score upstairs in Committee, and since I felt that I had fully aired the subject on that occasion I did not feel justified in seeking to reintroduce the amendment on report. The least the Chief Secretary can do is to be more generous in his provision for this group of people.
The Chief Secretary may glory in the abolition of the remittance basis, but at the end of the day we should seek to ease the tranisition from one fiscal state to the other; otherwise it will involve drastic alteration in the life style of people who have given of their best in foreign climates.
§ Mr. Joel BarnettI appreciate that the hon. and learned Member for Dover and Deal (Mr. Rees) does not like my arguments. It would be fair to say that I am not exactly in love with his arguments. But that is not the reason why I take the view I do on the amendment. I do not resist the amendment just because I do not like the hon. and learned Member.
The hon. Member for Folkestone and Hythe (Mr. Costain) said that some of these pensioners cannot stand the rigours of an English winter. Nor can I. I am sure that the same must be true of pensioners in many of the constituencies represented by my hon. Friends, yet they do not have the opportunity of spending winters in the Bahamas. I wish that they could have that chance. If any relief were available, I should like to give it to them.
1121 There is a gross misconception about the amendments. The hon. Member for Kingston-upon-Thames (Mr. Lamont) said that I had accepted certain amendments relating to earnings but had not accepted amendments dealing with pensions. The hon. Gentleman is normally a reasonable man, and I am sure he will accept that there is a difference between pensions and earnings.
The hon. Gentleman talked about this provision being a great burden on those who had retired. The hon. Gentleman should remember that people who retired and remitted their pensions here because they needed them to live on had to pay 100 per cent. tax. We are talking now about pensioners who do not like our winters and, therefore, leave their pensions abroad. It is perfectly legitimate for them to do that—and I am not talking about the very wealthy, although there are some people in that category. The fact is, however, that they have not paid tax on their pensions.
I do not think that the situation is necessarily fair as between one pensioner and another in this country. The hon. and learned Member for Dover and Deal said that I was unfair and that I kept talking about the rich. I am not doing anything of the kind in this instance. All I am saying is that it would not be fair to give any greater concession than has already been provided.
I do not think that there is any point in pursuing the matter any further. The hon. and learned Member for Dover and Deal and I take leave to disagree with each other, but I am sure that if Opposition Members think about this a little more carefully they will see that if the amendment is carried concessions will be given to pensioners who are not in the same category as those who have paid 100 per cent. tax on their pensions.
I should like to give this kind of relief to all pensioners, but that is not what the amendment is proposing. It is proposed to give relief only to those pensioners who live here for the most part of the year and have left their other pensions abroad. I do not believe that that is the right way to go about it, and I must, therefore, ask my hon. Friends to resist the amendment.
§ Mr. Norman LamontWhat is the revenue consideration at stake in this concession?
§ Mr. BarnettNot much is at stake. I rested my argument not on the cost but on the equity of the matter as between pensioners, and I hope that the Opposition will feel able to accept what I have said.
§ Mr. David HowellThe cost is not large, and that is why it is absurd to talk about the cost of making a concession for all pensioners. The Chief Secretary's replies seem to get more and more extraordinary as we go along. We are now to have an amendment resisted on the ground that the Chief Secretary was not sufficiently in love with the amendment moved in Committee by my hon. and learned Friend the Member for Dover and Deal (Mr. Rees), or perhaps with my hon. and learned Friend himself. Anyway, this is feeble stuff.
The Chief Secretary keeps on talking—and his voice rises when he does so—about the rich and about people spending winters in the Bahamas. The Bill, the Chief Secretary's brief and the policy of the Labour Party are full of talk about the rich. One feels that Government Members talk about nothing but the mythical rich who are to be made to squeal and to be squeezed in every way to bring massive benefits to other people.
The debate raises a fundamental consideration which we may have missed in Committee. It is that this bit of the Bill which says "Let us get the overseas pensions people" contains a completely different line of thought from that which one finds in the proposals for dealing with foreign emoluments and overseas earnings. One wonders how it is that the people who are to be hit in this way, if the Chief Secretary has his way, came to be the victims designated in the Bill.
These are not people who spend winters in the Bahamas. They are people who have worked for perhaps 40 years on secondment to the civil services of developing countries. Some of them have worked in technical and various economic and development services in very poor countries. They are people who have spent a long time serving this country and the broader interests of Britain overseas, often in unpleasant conditions. They are people who have served their country 1123 in every sense of the word, and they are not to be compared, except lightly and frivolously—and that is what the Chief Secretary is doing—with other pensioners.
It will not do to ask why these people should not be treated in the same way as everyone else. These overseas pensioners are in a different situation. My hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont) asked for a concession on retrospection, but the answer was a lemon. We had no joy on that. We now suggest that overseas pensioners in this category should have at least the same treatment as we should have wished to have for overseas earnings. But they are not to have the kind of treatment that the Chief Secretary is offering for overseas earnings. The only allowance is one-tenth.
The pensioners about whom we are talking are to be penalised. Many old people will now wonder, when they see
§ another little brown envelope drop through their letter boxes, what they have done to this country to make it so vindictive towards them. This proposal will upset younger people who have decided to dedicate themselves to a career overseas. I hope that it will not discourage them, but if they go on with their present work it will be no thanks to the Government who are after them. This is a vindictive piece of legislation, and I am sure that my hon. Friends share that view. We pressed in Committee upstairs for the Bill to be modified. The Chief Secretary has shown not the slightest inclination that he understands the plight of these people or the deserts or merits of their case, and I therefore urge my hon. Friends to press the amendment to a Division.
§ Question put, That the amendment be made:—
§ The House divided: Ayes 255, Noes 270.
1125| Division No. 97.] | AYES | [7.18 p.m. |
| Adley, Robert | Cormack, Patrick | Hall-Davies, A. G. F. |
| Aitken, Jonathan | Corrie, John | Hamilton, Michael (Salisbury) |
| Alison, Michael (Barkston Ash) | Costain, A. P. | Hampson, Dr. Keith |
| Allason, James (Hemel Hempstead) | Critchley, Julian | Hannam, John |
| Amery, Rt. Hn. Julian | Crouch, David | Harrison, Col. Sir Harwood (Eye) |
| Ancram, M. | Crowder, F. P. | Harvie Anderson, Rt. Hn. Miss |
| Archer, Jeffrey | Davies, Rt. Hn. John (Knutsford) | Hastings, Stephen |
| Atkins, Rt. Hn. Humphrey (Spelthorne) | d' Avigdor-Goldsmid, Maj.- Gen. James | Havers, Sir Michael |
| Awdry, Daniel | Dean, Paul (Somerset, N.) | Hawkins, Paul |
| Baker, Kenneth | Deedes, Rt. Hn. W. F. | Hayhoe, Barney |
| Balniel, Rt. Hn. Lord | Dodds-Parker, Sir Douglas | Henderson, J. S. B. (Dunbartonshire, E.) |
| Banks, Robert | Dodsworth, Geoffrey | Higgins, Terence |
| Barber, Rt. Hn. Anthony | Douglas-Home, Rt. Hn. Sir Alec | Hill, James A. |
| Bell, Ronald | Drayson, Burnaby | Holland, Philip |
| Bennett, Dr. Reginald (Fareham) | du Cann, Rt. Hn. Edward | Hordern, Peter |
| Berry, Hon. Anthony | Durant, Tony | Howe, Rt. Hn. Sir Geoffrey (Surry, E) |
| Biffen, John | Dykes, Hugh | Howell, David (Guildford) |
| Biggs-Davison, John | Eden, Rt. Hn. Sir John | Howell, Ralph (Norfolk, North) |
| Blaker, Peter | Edwards, Nicholas (Pembroke) | Hunt, John |
| Boardman, Tom (Leicester, S.) | Emery, Peter | Hurd, Douglas |
| Body, Richard | Eyre, Reginald | Hutchison, Michael Clark |
| Boscawen, Hon. Robert | Fairgrieve, Russell | Iremonger, T. L. |
| Bowden, Andrew (Brighton, Kemptown) | Farr, John | Irvine, Bryant Godman (Rye) |
| Braine, Sir Bernard | Fell, Anthony | James, David |
| Brewis, John | Fenner, Mrs. Peggy | Jenkin, Rt. Hn. P. (R'dge W'std & W'fd) |
| Brittan, John | Finsberg, Geoffrey | Jessel, Toby |
| Brocklebank-Fowler, Christopher | Fletcher, Alexander (Edinburgh, N.) | Johnson Smith, G. (E. Grinstead) |
| Bryan, Sir Paul | Fletcher-Cooke, Charles | Jones, Arthur (Daventry) |
| Buchanan-Smith, Alick | Fookes, Miss Janet | Jopling, Michael |
| Buck, Antony | Fowler, Norman (Sutton C'field) | Kaberry, Sir Donald |
| Budgen, Nick | Fox, Marcus | Kellett-Bowman, Mrs. Elaine |
| Bulmer, Esmond | Galbraith, Hn. T. G. D. | Kershaw, Anthony |
| Burden, F. A. | Gardiner, George (Reigate & Banstead) | Kimball, Marcus |
| Butler, Adam (Bosworth) | Gardner, Edward (S. Fylde) | King, Evelyn (Dorset, S.) |
| Carlisle, Mark | Gilmour, Sir John (Fife, E.) | King, Tom (Bridgwater) |
| Carr, Rt. Hn. Robert | Glyn, Dr. Alan | Kirk, Peter |
| Chalker, Mrs. Lynda | Goodhew, Victor | Kitson, Sir Timothy |
| Channon, Paul | Gow, Ian (Eastbourne) | Knight, Mrs. Jill |
| Chataway, Rt. Hn. Christopher | Gower, Sir Raymond (Barry) | Knox, David |
| Churchill, W. S. | Grant, Anthony (Harrow, C.) | Lamont, Norman |
| Clark, A. K. M. (Plymouth, Sutton) | Gray, Hamish | Lane, David |
| Clarke, Kenneth (Rushcliffe) | Grieve, Percy | Latham, Michael (Melton) |
| Clegg, Walter | Griffiths, Eldon (Bury St. Edmunds) | Lawson, Nigel (Blaby) |
| Cockcroft, John | Grist, Ian | Lester, Jim (Beeston) |
| Cooke, Robert (Bristol, W.) | Grylls, Michael | Lewis, Kenneth (Rtland & Stmford) |
| Cope, John | Gurden, Harold | Lloyd, Ian (Havant & Waterloo) |
| Loveridge, John | Orr, Capt. L. P. S. | Spicer, Michael (Worcestershire, S.) |
| Luce, Richard | Osborn, John | Sproat, Iain |
| MacArthur, Ian | Page, Rt. Hn. Graham (Crosby) | Stainton, Keith |
| McCrindle, R. A. | Page, John (Harrow, W.) | Stanbrook, Ivor |
| Macfarlane, Neil | Parkinson, Cecil (Hertfordshire, S.) | Stewart, Ian (Hitchin) |
| MacGregor, John | Pattie, Geoffrey | Stodart, Rt. Hn. A. (Edinburgh, W.) |
| McLaren, Martin | Pink, R. Bonner | Stokes, John |
| Macmillan, Rt. Hn. M. (Farnham) | Price, David (Eastleigh) | Stradling Thomas, John |
| McNair-Wilson, Michael (Newbury) | Prior, Rt. Hn. James | Tapsell, Peter |
| McNair-Wilson, Patrick (New Forest) | Raison, Timothy | Taylor, Edward M. (Glgow, C'cart) |
| Madel, David | Rathbone, Tim | Taylor, Robert (Croydon, N.W.) |
| Marshall, Michael (Arundel) | Rawlinson, Rt. Hn. Sir Peter | Tebbit, Norman |
| Marten, Neil | Redmond, Robert | Temple-Morris, Peter |
| Mather, Carol | Rees, Peter (Dover & Deal) | Thatcher, Rt. Hn Margaret |
| Maude, Angus | Rees-Davies, W. R. | Thomas, Rt. Hn. P. (B'net, H'den S.) |
| Maudling, Rt. Hn. Reginald | Renton, Rt. Hn. Sir David (H't' gd' ns' re) | Trotter, Neville |
| Mawby, Ray | Renton, R. T. (Mid-Sussex) | Tugendhat, Christopher |
| Maxwell-Hyslop, R. J. | Rhys Williams, Sir Brandon | van Straubenzee, W. R. |
| Maybew, Patrick (Royal T' bridge Wells) | Ridley, Hn. Nicholas | Vaughan, Dr. Gerard |
| Meyer, Sir Anthony | Ridsdale, Julian | Viggers, Peter |
| Miller, Hal (B'grove & R'ditch) | Rifkind, Malcolm | Waddington, David |
| Mills, Peter | Rippon, Rt. Hn. Geoffrey | Wakeham, John |
| Miscampbell, Norman | Roberts, Wyn (Conway) | Walder, David (Clitheroe) |
| Mitchell, David (Basingstoke) | Rodgers, Sir John (Sevenoaks) | Walker, Rt. Hn. Peter (Worcester) |
| Moate, Roger | Rossi, Hugh (Hornsey) | Walker-Smith, Rt. Hn. Sir Derek |
| Money, Ernie | Rost, Peter (Derbyshire, S.E.) | Wall, Patrick |
| Moore, J. E. M. (Croydon, C.) | Royle, Sir Anthony | Walters, Dennis |
| Morgan, Geraint | Sainsbnry, Tim | Warren, Kenneth |
| Morgan-Giles, Rear-Adm. | St. John-Stevas, Norman | Weatherill, Bernard |
| Morris, Michael (Northampton, S.) | Scott-Hopkins, James | Wells, John |
| Morrison, Charles (Devizes) | Shaw, Giles (Pudsey) | Wiggin, Jerry |
| Morrison, Peter (City of Chester) | Shaw, Michael (Scarborough) | Winterton, Nicholas |
| Mudd, David | Shelton, Willam (L'mb'th, Streath'm) | Wood, Rt. Hn. Richard |
| Neave, Airey | Shersby, Michael | Worsley, Sir Marcus |
| Neubert, Michael | Silvester, Fred | Young, Sir George (Ealing, Acton) |
| Newton, Tony (Braintree) | Sims, Roger | |
| Nicholls, Sir Harmar | Sinclair, Sir George | |
| Normanton, Tom | Skeet, T. H. H. | TELLERS FOR THE AYES: |
| Nott, John | Smith, Dudley (W'wick & L'm'ngton) | Mr. Spencer Le Marchant and |
| Onslow, Cranley | Spence, John | Mr. Michael Roberts. |
| Oppenheim, Mrs. Sally | Spicer, Jim (Dorset, W.) | |
| NOES | ||
| Allaun, Frank | Cook, Robert F. (Edinburgh, C.) | Fletcher, Ted (Darlington) |
| Archer, Peter | Cox, Thomas | Foot, Rt. Hn. Michael |
| Armstrong, Ernest | Craigen, J. M. (G'gow, Maryhill) | Forrester, John |
| Ashley, Jack | Cronin, John | Fowler, Gerry (The Wrekin) |
| Ashton, Joe | Crosland, Rt. Hn. Anthony | Fraser, John (Lambeth, Norwood) |
| Atkins, Ronald | Cryer, G. R. | Freeson, Reginald |
| Atkinson, Norman | Cunningham, G. (Isl'ngt'n, S & F'sb'ry) | Galpern, Sir Myer |
| Bagier, Gordon, A. T. | Cunningham, Dr. John A. (Whiteh 'v' n) | Garrett, John (Norwich, S.) |
| Barnett, Guy (Greenwich) | Dalyell, Tam | George, Bruce |
| Barnett, Joel (Heywood & Royton) | Davidson, Arthur | Gilbert, Dr. John |
| Bates, Alf | Davies, Bryan (Enfield, N.) | Ginsburg, David |
| Baxter, William | Davies, Denzil (Llanelli) | Golding, John |
| Beith, A. J. | Davies, Ifor (Gower) | Gourlay, Harry |
| Benn, Rt. Hn. Anthony Wedgwood | Davis, Clinton (Hackney, C.) | Grant, George (Morpeth) |
| Bennett, Andrew F. (Stockport, N.) | Deakins, Eric | Grant, John (Islington, C.) |
| Bidwell, Sydney | Dean, Joseph (Leeds, W.) | Griffiths, Eddie (Sheffield, Brightside) |
| Bishop, E. S. | de Freitas, Rt. Hn. Sir Geoffrey | Grimond, Rt. Hn. J. |
| Blenkinsop, Arthur | Delargy, Hugh | Hamilton, James (Bothwell) |
| Boardman, H. | Dell, Rt. Hn. Edmund | Hamilton, William (Fife, C.) |
| Booth, Albert | Dempsey, James | Hamling, William |
| Bottomley, Rt. Hn. Arthur | Doig, Peter | Hardy, Peter |
| Boyden, James (Bishop Auckland) | Douglas-Mann, Bruce | Harper, Joseph |
| Bradley, Tom | Duffy, A. E. P. | Harrison, Walter (Wakefield) |
| Broughton, Sir Alfred | Dunn, James A. | Hart, Rt. Hn. Judith |
| Brown, Hugh D. (Glasgow, Provan) | Dunnett, Jack | Hatton, Frank |
| Buchan, Norman | Dunwoody, Mrs. Gwyneth | Heffer, Eric S. |
| Butler, Mrs. Joyce (H'gey, WoodGreen) | Eadie, Alex | Hooley, Frank |
| Callaghan, Jim (M'dd'ton & Pr'wch) | Edelman, Maurice | Horam, John |
| Cant, R. B. | Edge, Geoff | Howell, Denis (B'ham, Small Heath) |
| Carmichael, Neil | Edwards, Robert (W'hampton, S.E.) | Howells, Geraint (Cardigan) |
| Carter, Ray | Ellis, John (Brigg & Scunthorpe) | Hughes, Rt. Hn. Cledwyn (Anglesey) |
| Carter-Jones, Lewis | Ellis, Tom (Wrexham) | Hughes, Mark (Durham) |
| Castle, Rt. Hn. Barbara | English, Michael | Hughes, Robert (Aberdeen, North) |
| Clemitson, Ivor | Ennals, David | Hughes, Roy (Newport) |
| Cocks, Michael | Evans, Fred (Caerphilly) | Hunter, Adam |
| Cohen, Stanley | Evans, Ioan (Aberdare) | Irvine, Rt. Hn. Sir A. (L'p'I, EdgeHI) |
| Coleman, Donald | Faulds, Andrew | Irving, Rt. Hn. Sydney (Dartford) |
| Colquhoun, Mrs. M. N | Fernyhough, Rt. Hn. E. | Jackson, Colin |
| Concannon, J. D. | Fitch, Alan (Wigan) | Jay, Rt. Hn. Douglas |
| Conlan, Bernard | Flannery, Martin | Jeger, Mrs. Lena |
| Jenkins, Hugh (W'worth, Putney) | Mitchell, R. C. (S'hampton, Itchen) | Spearing, Nigel |
| Jenkins, Rt. Hn. Roy (B'ham, St'fd) | Molloy, William | Spriggs, Leslie |
| Johnson, James (K'ston upon Hull, W) | Moonman, Eric | Stallard, A. W. |
| Johnson, Walter (Derby, S.) | Morris, Alfred (Wythenshawe) | Steel, David |
| Johnston, Russell (Inverness) | Morris, Charles R. (Openshaw) | Stewart, Rt. Hn. M. (H'sth, Fulh'm) |
| Jones, Barry (Flint, E.) | Mulley, Rt. Hn. Frederick | Stoddart, David (Swindon) |
| Jones, Dan (Burnley) | Murray, Ronald King | Stonehouse, Rt. Hn. John |
| Jones, Gwynoro (Carmarthen) | Newens, Stanley (Harlow) | Stott, Roger |
| Jones, Alec (Rhondda) | Ogden, Eric | Strang, Gavin |
| Judd, Frank | O'Halloran, Michael | Strauss, Rt. Hn. G. R. |
| Kaufman, Gerald | Orbach, Maurice | Summerskill, Hn. Dr. Shirley |
| Kelley, Richard | Ovenden, John | Swain, Thomas |
| Kerr, Russell | Owen, Dr. David | Thomas, D. E. (Merioneth) |
| Kilroy-Silk, Robert | Padley, Walter | Thomas, Jeffrey (Abertillery) |
| Kinnock, Neil | Palmer, Arthur | Thorne, Stan (Preston, S.) |
| Lambie, David | Pardoe, John | Tierney, Sydney |
| Lamborn, Harry | Park, George (Coventry, N.E.) | Tinn, James |
| Lamond, James | Parker, John (Dagenham) | Tomney, Frank |
| Latham, Arthur (City of W'minster P'ton) | Parry, Robert | Torney, Tom |
| Lawson, George (Motherwell & Wishaw) | Peart, Rt. Hn. Fred | Tuck, Raphael |
| Leadbitter, Ted | Pendry, Tom | Tyler, Paul |
| Lee, John | Perry, Ernest G. | Urwin, T. W. |
| Lestor, Miss Joan (Eton & Slough) | Phipps, Dr. Colin | Varley, Rt. Hn. Eric G. |
| Lever, Rt. Hn. Harold | Prentice, Rt. Hn. Reg | Wainwright, Edwin (Dearne Valley) |
| Lewis, Arthur (Newham, N.) | Prescott, John | Wainwright, Richard (Colne Valley) |
| Lewis, Ron (Carlisle) | Price, Christopher (Lewisham, W.) | Walden, Brian (B'm'ham, Ladywood) |
| Lipton, Marcus | Price, William (Rugby) | Walker, Harold (Doncaster) |
| Loughlin, Charles | Radice, Giles | Walker, Terry (Kingswood) |
| Loyden, Eddie | Richardson, Miss Jo | Watkins, David |
| Lyon, Alexander W. (York) | Roberts, Albert (Normanton) | Watt, Hamish |
| Lyons, Edward (Bradford, W.) | Roberts, Gwilym (Cannock) | Weitzman, David |
| Mabon, Dr. J. Dickson | Robertson, John (Paisley) | Wellbeloved, James |
| McCartney, Hugh | Roderick, Caerwyn E. | Whitehead, Phillip |
| McElhone, Frank | Rodgers, George (Chorley) | Whitlock, William |
| MacFarquhar, Roderick | Rodgers, William (Teesside, St'ckton) | Wigley, Dafydd (Caernarvon) |
| McGuire, Michael | Rooker, J. W. | Willey, Rt. Hn. Frederick |
| Mackenzie, Gregor | Roper, John | Williams, Alan (Swansea, W.) |
| Maclennan, Robert | Ross, Stephen (Isle of Wight) | Williams, Alan Lee (Hvrng, Hchurch) |
| McMillan, Tom (Glasgow, C.) | Ross, Rt. Hn. William (Kilmarnock) | Wilson, Alexander (Hamilton) |
| McNamara, Kevin | Sandelson, Neville | Wilson, William (Coventry, S.E.) |
| Madden, M. O. F. | Sedgemore, Bryan | Winstanley, Dr. Michael |
| Magee, Bryan | Selby, Harry | Wise, Mrs. Audrey |
| Mahon, Simon | Sheldon, Robert (Ashton-under-Lyne) | Woodall, Alec |
| Mallalieu, J. P. W. | Short, Rt. Hn. E. (N'ctle-u-Tyne) | Woof, Robert |
| Marks, Kenneth | Silkin, Rt. Hn. John (L'sham, D'ford) | Wrigglesworth, Ian |
| Marquand, David | Sillars, James | Young, David (Bolton, E.) |
| Marshall, Dr. Edmund (Goole) | Silverman, Julius | |
| Mason, Rt. Hn. Roy | Skinner, Dennis | TELLERS FOR THE NOES: |
| Mayhew, Christopher (G'wh, W'wch, E) | Small, William | Mr. J. D. Dormand and |
| Meacher, Michael | Smith, Cyril (Rochdale) | Mr. Laurie Pavitt. |
| Mellish, Rt. Hn. Robert | Smith, John (Lanarkshire, N.) | |
| Millan, Bruce | Snape, Peter |
§ Question accordingly negatived.
§ 7.30 p.m.
§ Mr. Joel BarnettI beg to move Amendment No. 215, in page 13, line 20, at end insert:
(2) Where any income chargeable in accordance with subsection (1) above arises from a pension payable under any special provision made by the law of the Federal Republic of Germany or any part of it or of Austria for victims of National-Socialist persecution, the deduction to be made under that subsection shall be equal to one-half instead of one-tenth of the amount of the income.
§ Mr. SpeakerIt will be convenient to discuss at the same time Amendment No. 177, in page 13, line 34, at end add:
(5) The foregoing provisions of this section shall not apply to annuities payable under the laws of the Federal German Republic or any part thereof or the Republic of Austria relating to the compensation of victims of National Socialist persecution, being annuities which 1128 under any such laws relating to the taxation of such compensation are not specifically exempted from tax of a character similar to that of income tax.
§ Mr. BarnettThe two amendments relate to victims of Nazi persecution and taxation of their pensions in this country. Perhaps I should declare an indirect interest in so far as I have many friends and former clients who were victims of Nazi persecution. One can have nothing but sympathy for such people. I said in Committee that, athough the logic of the new tax system in relation to pensions was right, I thought that on grounds of compassion there should be a concession here. I have considered the matter closely to see how to make the best concession.
Amendment No. 177 seeks to revert to the remittance basis. It would be wrong—this is not the only ground on which I 1129 would resist that amendment—to deal with one small section of taxpayers on the remittance basis while everyone else was on the new system. But there is another reason. My amendment would make 50 per cent. of the pension tax-free. As I said on the previous group of amendments, the pension paid by Germany and Austria to victims of Nazi persecution was subject to 100 per cent. tax under the remittance basis when remitted here—[Interruption.] I am sorry if I have not made myself clear, but it is a fact that 100 per cent. of pensions remitted here were liable to tax.
On the other hand, there were some, as I have said, who perfectly legitimately did not remit either in full or in part and to that extent did not pay tax. But those who had either nothing else or very little else remitted the whole of their pension and would have paid tax on the whole of it.
Amendment No. 177 would revert to the remittance basis, and would mean that those who were in the greatest need because they needed to remit all their pension would still have to pay tax on the whole of that pension. Under my amendment, those whom we want to help most would get 50 per cent. relief. That part of the pension which would not have been remitted would now be taxed as to 50 per cent. So we are giving considerable relief. It would not have been reasonable to give more than 50 per cent. relief in many cases to pensioners who have been paying tax until now under the remittance system on the whole of their income.
I hope that it will be recognised that I have gone a long way to meet the arguments presented in Committee. Although in logic I did not feel able to accept them, on the ground of compassion for people for whom we all have sympathy I felt that something should be done. That is the reason for the concession in Amendment No. 215, and I hope that it will be acceptable.
§ Mr. Geoffrey FinsbergI gather that my Amendment No. 177 is being discussed with Amendment No. 215. The Government's amendment is belated and grudging. If the proceedings in Committee, which were conducted in a great fit of speed at certain times, had speeded up even more last week, we could have 1130 been discussing a Government starred amendment, if there were such a thing, because the Government could not make up their minds how far their compassion should extend.
Since the Budget decision there has been constant pressure on the Government to act in a fair manner and not a prejudiced and doctrinal manner. My hon. and learned Friend the Member for Dover and Deal (Mr. Rees) pressed this matter strongly in Committee and got the Chief Secretary to agree to look at it again. This he has done, but, in a phrase which has been used to me by numerous correspondents. I can only call this Budget proposal "blood money".
These pensions are compensation to victims of Nazi persecution, both Jew and non-Jew—
§ Mr. Joel BarnettThe hon. Member has it absolutely wrong. This is not compensation for victims of Nazi persecution. That compensation is now and always has been wholly tax-free under Section 377. What we are now talking about is a pension taxable in Germany.
§ Mr. FinsbergIf the Chief Secretary will allow me, although I do not have quite as good a brief as he has, I will come to that point. I shall contend that these pensions are compensation and that this has been recognised in other countries. I may now have to spend more time on the matter since the Chief Secretary implies that I do not know what I am talking about.
These pensions are compensation, whether one uses the word in the broad or in the narrow sense, for Jew and non-Jew in Germany and Austria. Only the fortunate survived to claim them. This compensation can in no way be compared to the pensions paid to people who have been able to retire in good health after many years' service overseas. These people may well have suffered torture and humiliation; no wonder they chose to live here. Chancellors try to equate their suffering with the experience of people who were employed and get benefits. That cannot be morally right.
Let us consider the tax treatment of these foreign pensions. On my information, from the Association of Jewish Refugees in Great Britain, there is a problem in the reference in Amendment 1131 No. 215 to "law". The amendment is quite clear and has been drafted by better draftsmen than I could use.
The amendment refers to
the law of the Federal Republic of Germany".My information is that there are at least three West German laws involved. There is the Federal Compensation law of 1961. I gather that payments under that law will continue to be exempt. There is a social insurance pension, which has a capital compensation element in it. That is the point I was trying to make earlier when the Chief Secretary so uncharacteristically tried to tell me that I was not right. That is for the victims of Nazi persecution who had been able to make social insurance payments until 1933 and who were then unable to continue their payments. The third matter involves former civil servants, who are dealt with under a yet further West German law on the compensation of former public servants in Germany. Are all these cases covered by the Chief Secretary's use of the word "law" rather than "laws"?As I said, the position is difficult because an element of these pensions is capital compensation by virtue of the payments which the victims were not able to make. It seems that the problem with which these people are faced is whether they should accept half of what is right out of fear of losing everything or whether they should try to get what they believe is right.
§ Sir Raymond Gower (Barry)Surely the phrase is meant to be "by the general law of the Federal Republic". The amendment says "the law" but the next part of it seems to bear that out because it says
or any part of it.I have good reason for believing that this would cover any part of the law of West Germany.
§ Mr. FinsbergI am asking the Chief Secretary, however, because it is his tax inspectors, in extra-curricular activities or in some documents, who will have to decide in the end the extra-statutory regulations. I should like to be clear from the Chief Secretary that in this instance the singular includes the plural.
1132 What is the cost of the concession that the Chief Secretary has made by increasing the tax-free basis from 10 per cent. to 50 per cent.? How much will the extra 40 per cent. cost? Are there any other similar pensions in payment which are in such a form of compensation that part of them is a capital sum?
My information is that in the United States two of the categories of pensions that I have mentioned—those of public servants and the social insurance pension—are, because of the large element of compensation included in them, entirely exempt from tax. In this country up to 1973–74 the remittance basis provided some protection to the pensioners in question. If the United States is able to recognise the large element of compensation in these and say that this payment should be entirely exempt from tax, why does not the Chief Secretary feel able to go as far as the Americans in this instance?
I find this a very difficult problem. I cannot quantify in percentage terms my feeling of compassion. It has to be either compassion or nothing. One cannot have half compassion. I suggest to the Chief Secretary as dispassionately as I can that although he has recognised that there is a very difficult problem here, as most people recognise, and he has gone a long way towards meeting it, I genuinely do not think that he has gone as far as the victims feel he should have gone. There are several thousand of them who feel unhappy about this matter.
Is the Chief Secretary in a position to say quite categorically that if the House accepts his amendment and my hon. Friends and I decide not to vote down his amendment in order to vote our amendment in, he will look, in the context of the next Finance Bill, at whether the concession that he has given is in all circumstances sufficiently generous? If he felt able to go at least that far, in the circumstances it would probably be possible for me to feel no need to try to vote down his amendment and try to persuade the House to support Amendment No. 177.
§ 7.45 p.m.
§ Sir Raymond GowerI received as a deputation a small group of these pensioners a week or two ago. They explained to me the very special nature of the benefit they now receive—if one can call 1133 it that—from the Governments of West Germany and Austria. One of the people who came to see me is a man who is well-established in industry today, but the other two have had a fairly rough time over the years. I know from their history that they had a very rough time in Germany at the outset of the last world war.
The Chief Secretary and the Government, by the nature of their amendment, have recognised that this is a special case. My hon. Friend the Member for Hampstead (Mr. Finsberg) will accept that they have gone as far as that. Their amendment gives recognition to the fact that this is different from any other kind of pension. But this is not merely a special case or a very special case; it is a truly unique case. I plead with the Chief Secretary to accept the principle set out in Amendment No. 177. This is a case in which there should not be this kind of impost on this benefit. My hon. Friend the Member for Hampstead went as far as to call it blood money. That is not entirely an exaggeration.
We recognise that the Chief Secretary has tried to make some concession, but it is not adequate in the special circumstances of this problem. I hope he can accept what my hon. Friend has put to the House—that it should be not merely a half but should be based on the kind of principle which has been accepted by other legislatures, including that of the United States, in respect of at least a proportion of these pensions.
§ Mr. Peter ReesI hesitate to intervene in the debate because the case for Amendment No. 177 has been so eloquently put by my hon. Friend the Member for Hampstead (Mr. Finsberg) and my hon. Friend the Member for Barry (Sir R. Gower). My hon. Friend the Member for Barry was disposed to say that this is a unique case. I hope that it is, but if it is not I shall be very proud and pleased to have helped to establish a precedent, because it would be a very good precedent. T say that because I played a small part in Standing Committee in bringing this problem to the Chief Secretary's attention.
As my hon. Friends have so eloquently remarked, this is a question of compassion. I am glad, therefore, that the Chief Secretary has, to a degree at any rate, on this occasion allowed his heart to over- 1134 rule his head. I shall only say, as some small consolation to him, that in these cases there is more joy in Heaven over one sinner who repenteth. I hope that on this basis the Chief Secretary will take up the hints made to him by the Opposition.
§ Mr. Joel BarnettWith the leave of the House, Mr. Deputy Speaker, I should like to reply. I am not astonished by what was said by the hon. Member for Hampstead (Mr. Finsberg), because I know that he represents Hampstead and I can understand the reasons for his speech. However, to call what I have done "belated" and "grudging" I took a little harshly. The hon. and learned Member for Dover and Deal (Mr. Rees) will at least know that when the amendment was first moved in Standing Committee I said immediately that I recognised that, although in logic, given the new system that we have, I would not be entitled to accept the amendment, on the ground of compassion I wanted to look at ways of helping. I did not say that belatedly. It took some time to work out the best way of helping. I decided that the remittance basis was not the best way.
I take it a little hard that the hon. Gentleman felt inclined to use such strong language. I understand that there are strong feelings on this subject, but it was nonsense for him to use such emotive language as "blood money". Before the Bill those victims of Nazi persecution who remitted their pension because they needed it to live on paid not on 50 per cent. but on 100 per cent., so that would have been double blood money, according to the hon. Gentleman. It was, of course, nothing of the sort. It was our tax system. They, like any other group of pensioners, paid tax on the pension. I therefore take strong exception to the language the hon. Gentleman used.
The hon. Gentleman argued that this is compensation. There could be argument about this. It was a form of payment to someone who, it was assumed, often, if lie had continued living in Germany or Austria, would have had a pension as a public servant. That man will already have had compensation which in this country will have been wholly tax free as a result of Section 377.
1135 In certain instances, under German tax law certain classes of pension are not taxable. That concerns the German tax law. It does not concern the fact that the pensioner was a victim of Nazi persecution. It is because the German tax law differs from ours.
The hon. Gentleman asked whether "the law" meant laws. The answer is that it does.
The cost of the concession is negligible. It depends on what was remitted before. I have said before that amendments are not resisted merely on the ground of cost. One resists them on the ground of equity as between two classes of pensioner residing in the United Kingdom. Because of the compassion we all have for these people, I have agreed to help not only those who previously would not have paid tax because they did not remit but those who had to remit because they had to live on the money.
In the amendment we are going much further than the situation before the Bill. We are giving relief as to 50 per cent. of income. In view of that, I am obliged to say that all three hon. Members, by talking about "this grudging amendment", are being more than churlish, because I have made a considerable concession.
§ Sir Raymond GowerI tried to express the matter in moderate terms. The Chief Secretary has fairly stated that in Germany the tax laws are the determining factor. Will he deal with the situation elsewhere? I gather from my reading that in the United States it is not the tax law, but these people have been treated in a very special way because of the nature of the pension.
§ Mr. BarnettI was coming to the question put to me about the United States. It depends on the double taxation agreements. I have not, in the time at my disposal, had an opportunity to look at them. It is true that the tax system in other countries, in a whole variety of tax areas, will be different from ours. We have to look at our tax system for pensioners resident and domiciled here. The amendment will afford a greater amount of relief than was previously the case to those pensioners who were living here and remitted the whole of their income. I hope that it will be agreed that that class 1136 of pensioner was more likely to be in need than the other, though I am not saying that the others are rich.
I am asked to look at the matter again in the autumn Finance Bill. I cannot make a commitment, because all manner of things are considered in the next Finance Bill and this matter will be considered together with others. I can give no commitment that I shall be able to go further than what I consider to be a very considerable relief to many pensioners in this class, for whom we all have considerable sympathy because of the suffering they endured during the war and after—indeed, sometimes before the war.
That is why I felt able to bring forward this concession—neither belatedly nor grudgingly—because I recognise that there are strong feelings in the House and outside that something should be done to help these people.
§ Mr. Geoffrey FinsbergIn reply to the point raised by my hon. Friend the Member for Barry (Sir R. Gower) and myself about America, the Chief Secretary said that in the time at his disposal he had not had time to study the double taxation agreements. Surely he has received a document dated 17th June from the Association of Jewish Refugees in Great Britain which raises this point. Is he saying that five weeks was not a sufficient period for his advisers to advise him on this point?
§ Mr. BarnettWe have not looked at every tax system throughout the world. In the United States these people may be slightly better off; I am not saying that that will not be the case. In other countries these people may be worse off. The hon. Gentleman does not argue his case in relation to those countries where these people may be worse off. We have to argue the case on the basis of the country whose tax laws we are discussing—namely, the United Kingdom. For the reasons that I have given, I think that I have gone a long way, and I hope that the House will accept the amendment.
§ Mr. Anthony Fell (Yarmouth)It is clear that the Chief Secretary has been as fair as he can in his own mind, much fairer than anybody has been previously. As a reason for not being able to go further, he said that in equity he could not go further. Is not the very point 1137 that there is no question of equity here? These people are so extraordinary and, one hopes and prays, so few in number that there is no equity about it. They can be equated with no one—at least, I hope not, unless it be with people who were in the hands of the Japanese during the last war. Surely the hon. Gentleman is in no difficulty from the point of view of possible claims from any other class.
8.0 p.m.
The hon. Gentleman uses as his reason the matter of equity. He also said in reply to my hon. Friend the Member for Hampstead (Mr. Finsberg) that the cost was negligible. He went even further and said that it was "a mere nothing". Even if it was twice the amount, it could only still be negligible and "a nothing", or very little. Therefore, I am at a loss to understand him. Although I am absolutely certain of his good faith and that he has done everything he could, I have a feeling that somebody has got him by the legs or the tail and is not allowing him to go as far as he would like to go. Therefore, I make the plea that, although one cannot expect him to do very much more this evening, he will think about this very seriously if he ever has the misfortune to battle through another Finance Bill.
§ Mr. BarnettWith the leave of the House, the hon. Gentleman must understand that compensation as such for Nazi persecution is wholly exempt. We are now talking about a pension which, in the hands of a United Kingdom citizen, is wholly taxable. That is the comparison, and that is why I say "in equity." I mean, in equity as betwen taxpayers domiciled in this country. I can assure the hon. Gentleman that my legs are not being pulled in any direction by anyone. I of my own violation wanted to make this concession. I believe it is an important concession. It goes beyond what the position was previously, and I hope it will be acceptable.
§ Amendment agreed to.