HC Deb 27 February 1975 vol 887 cc681-4
7. Mr. Ovenden

asked the Chancellor of the Exchequer what representations he has received from the National Association of Widows concerning tax allowances; and what reply he has sent.

10. Mr. Hooley

asked the Chancellor of the Exchequer if he will appoint a working party to study the personal taxation of widows.

Mr. Healey

In common with other right hon. and hon. Members, I have received a letter from the association's general secretary asking that widows should no longer be taxed as single women. On 11th February my hon. Friend the Minister of State, Treasury, had a meeting with a deputation from the association accompanied by my hon. Friend the Member for Walsall, South (Mr. George) and the hon. Member for Staffordshire, South-West (Mr. Cormack) at which various matters affecting widows were discussed. Naturally I shall consider all the various representations I have received, but I do not think that a working party is called for.

Mr. Ovenden

I am grateful for that reply, and I am grateful to my right hon. Friend for meeting the deputation. Will he be more forthcoming? Does he accept that it is a basic injustice that a widow seeking to earn a family income should be more harshly treated by the tax system than a married woman who seeks to do the same? Is it not an injustice that a married couple with one child qualify for a tax allowance of £1,730 per year when both are working, while the widow receives a tax allowance of only £1,065 in the same circumstances? Will my right hon. Friend examine these injustices and anomalies and give an assurance that he will make some changes in the system?

Mr. Healey

I am aware of some problems affecting widows, but my hon. Friend is not correct in saying that the widow is treated worse than the married woman for tax purposes. What many widows bitterly complain about is that if they are working they pay more tax than the married woman who is not a widow, but that is because the widow's pension is counted, like all pensions, as part of income, and widows are taxed on that as well as on their wages.

I do not think that it would be right, when money is short, to seek to help widows in need simply by relieving the pension of tax. The right way to help is to increase the pension—something which we did to the extent of 30 per cent. last July, and a step that we are proposing to take again in April. Tax relief helps the better off most, while not helping the poor widow at all.

Miss Fookes

Would it not be more appropriate to leave people with more of what they earn?

Mr. Healey

In some circumstances, yes; in others, no.

Mr. Hooley

Will my right hon. Friend consider the curious situation in which a widow whose aggregated income, including her pension, may be as low as £25 per week, pays the same standard rate of tax as a Member of Parliament on £4,500 a year, or a headmaster on £6,000? Is there not a case now for a reduced rate of tax at the lower end of the income bracket, offset, of course, by higher tax on the wealthy?

Mr. Healey

Of course there is a case for a lower rate of tax at the bottom end of the earnings scale. On the other hand, it would be a great mistake to imagine that that could be offset simply by increasing tax on the wealthy. The number of those at the lower end of the scale is so great that if there were to be a reduced rate for them there would have to be an increase in the standard rate as well.

Mr. Nott

As the Chancellor said, many widows who are working feel wrongly that they are paying more tax than the single person working alongside them. Will the right hon. Gentleman ask the Board of Inland Revenue to look at the pay-as-you-earn forms, since these, I believe, mislead widows into believing that they are paying an extra amount of tax. The forms could be changed to clarify the situation.

Mr. Healey

I shall bear that in mind, but no doubt I should get the same reply from the Revenue as the hon. Member got when, I hope, he put the same question when he was a Treasury Minister.

Mrs. Millie Miller

Does my right hon. Friend remember that taxation is specifically excluded from the forthcoming anti-discrimination legislation and that many of the problems of taxation which are faced by many women, especially widows, need urgent attention? May we hope that he will deal with those as soon as possible?

Mr. Healey

I am very much aware of that aspect of the problem. I assure my hon. Friend that I have it under continuous review.

Mr. Ridley

Is the Chancellor aware that a possible solution might be to implement a householder's allowance for single women who are maintaining a house and a family, along the lines suggested by the Financial Secretary? Will he consider that very seriously, because of the heavy burden of expense on those widows who maintain separate establishments for themselves?

Mr. Healey

That is one of the ways of dealing with the problem at which we are looking. The problem to which the hon. Gentleman referred must also be seen as a specific one, in the general context of what help should be given to single-parent families, of which widows form only one example. The Government hope to announce conclusions in that regard in the context of forthcoming legislation on child benefits.

Mr. MacFarquhar

Is the Chancellor aware that the Financial Secretary, in a letter to me last October, stated—

Mr. Speaker

Order. The hon. Member must not quote at Question time.

Mr. MacFarquhar

Is the Chancellor aware that the Financial Secretary stated that widows deserved special consideration? In view of the Chancellor's answers so far, what does "special consideration" mean to him?

Mr. Healey

Widows already receive special consideration. There was an increase of 30 per cent. in their pension in July 1974. They will receive another £1.60 increase in April and a further increase later in the year.