INCOME TAX: ALTERATION OF ADDITIONAL RATES FOR 1974–75

HC Deb 15 January 1975 vol 884 cc475-581

4.32 p.m.

Mr. David Howell (Guildford)

I beg to move, in page 3, line 33, to leave out from 'the' to the end of line 39 and insert 'addition after paragraph (b) of the following provision, that is to say—'. With it may I discuss the linking amendment, No. 8, in page 4, line 2, leave out '10' and insert '15'.

The Chairman

If that is for the convenience of the Committee.

Mr. Howell

The story behind these amendments will be very familiar to some Members of the Committee, but for those who may not have followed all its aspects, it is worth while going over some of the story again—and a very shoddy story it is. I should like to take the Committee back to the night of 16th July when an amendment moved by, I believe, the hon. Member for Cornwall, North (Mr. Pardoe) was carried after a rather desultory debate by 16 votes. That amendment rejected proposals by the then minority Government to change the threshold for the investment income surcharge from £2,000 to £1,000, or down to £1,500 for those over 65.

Although it was desultory debate, it was rather significant because it contained a chilling phrase of the Chief Secretary that he regarded the people concerned and affected by the amendment—and we are talking here for the most part of elderly people, not necessarily retired but getting on, who have saved up and are living on a savings and investment income considerably lower than the average wage in Britain today—as the "lowest priority". That brought home to some of my hon. Friends on this side of the Committee just exactly what were the views of the Chief Secretary and his colleagues on priorities and their view of the kind of people we believe needed to be helped.

The House and Parliament at that time rejected the proposals of the Government but on 12th November, after a General Election, the Chancellor of the Exchequer came forward again and announced that he wished to reverse the matter and to go back to his original proposals of 26th March last year and that he intended to do so retrospectively. He did not, of course, say it in that way. He offered no arguments whatever.

If hon. Members will turn to the Chancellor's Budget Statement of 12th November 1974 they will see that he said I intend to restore the proposal I made in my first Budget to bring down the starting point of the investment income surcharge from £2.000 to £1,000, or £l.500 for the over 65s. The House rejected that proposal in the summer —the Chancellor admitted it quite frankly— but I believe that it will now recognise that the burden of personal tax should fall that much more heavily on investment income than on income which is earned by current effort."—[Official Report, 12th November 1974; Vol. 881, c. 274.] Whether or not one agrees with that sentiment, and I do not, that has nothing to do with what the Chancellor is proposing. It is just possible to argue that if the Government elected on 10th October 1974 wish in 1975 to attack elderly couples living on sums which are below the average weekly wage in this country they have some right to do so. I do not believe in the doctrine of the mandate but I suppose that an argument of that kind could be produced. What the Government have no right to do is to legislate into the past and overturn the clear decision of a previous Parliament on this matter. We regard this as an unpleasant piece of political horse trading which we shall oppose.

The amendments do two things. First, they restore what would have been the position on 26th March last year, and, secondly, they go a little further and propose an additional concession for retired people—the extra £500 for the £2,000 not attracting the 15 per cent. I emphasise the date of 26th March 1974 and that we are talking about income generated from investment and savings during 1974 up to the end of the financial year 1974–75. That is money that has already been largely spent, if the spending is in an even flow. If we were dealing not with March of last year but with the position now, all of these figures would need radical adjustments.

Mrs. Elaine Kellett-Bowman (Lancaster)

Does this not also apply to those who have been severely injured through accidents and are living on the income from their damages?

Mr. Howell

My hon. Friend is quite right. I will come to a number of such categories. Should the Government be unwise enough to continue with this shady practice and insist on their new proposal in this Bill we shall come to other amendments which will deal with specific categories covering that sort of situation.

If we were to deal with the situation now as opposed to last March we would need to make a substantial adjustment to these figures to leave people in the same position as they would have been in before 26th March because there has been a fall of at least 12 per cent. in the purchasing power of the pound. We shall no doubt be debating the question of monetary correction and indexing during our debates here and in Standing Committee. On this occasion we are simply trying to prevent a nasty piece of retrospective injustice.

I have no doubt that in the Chief Secretary's brief there will be, first of all, some familiar arguments, and maybe, if we are lucky, one or two new ones dealing with why this is very difficult for him and why he wants to stick to the Chancellor's proposals to carry through this retrospective measure. We shall be told it helps people with an investment income of more than £2,000 a year. That is not so terrible in itself and it is a flimsy excuse for hurting many thousands with less than that. It is also a direct discouragement to saving. Secondly, we may hear, and this would be a change from the repetitious arguments of last July, that it will all be all right and we should not worry because the age allowance mentioned by the Chancellor in his Budget Statement will put everything right for people paying on £3,000 a year.

4.45 p.m.

We are not concerned with 1975–76. We are talking about what has happened, about the year which began in April 1974 and is nearly over. I hope that we shall not be fobbed off or diverted by the Treasury Bench argument that it will be all right in future. We are concerned with what has hapened and what is happening now rather than any proposals the Government may have up their sleeve for the Spring Finance Bill.

A third objection which may be put is that this proposal of ours will cost money. That is so. The Treasury estimate in the summer was that it would cost about £40 million, and presumably that would need to be revised now. We have no hesitation in saying that if money has to be found for this change it should come from cuts in Government spending, cuts which the Government are presumably preparing and about which we shall hear in due course when their next emergency package comes forward.

Throughout the passage of this Bill I and my right hon. Friend will be supporting measures which encourage saving for investment. We shall be opposing measures which are hostile to saving for investment. In doing so we believe that we shall be following the Chancellor's injunction to get the nation to switch out of consumption and provide the savings which are essential to his objectives, which are to finance more investment, to consume less in relation to what we produce, and to put more aside to save and finance tomorrow's investment. The difference is that, unlike the Chancellor and the Chief Secretary, we are not content to make a speech about it and then duck down and wait for the mud to fly from the Left wing. We want to do something about it.

We deplore this measure not only for its retrospection but because it is part—and we shall see many other parts before this Bill is enacted—of the Government's war on savings. In their hearts they do not believe in the idea of private savings. They do not wish to encourage them, and whatever speeches may be made by the Chancellor or anyone else about the need to save and switch resources out of consumption it is a certain bet that every measure contained in this Bill or other Bills which the Government will present in this sphere will continue that war on private savings.

My hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) mentioned one of the categories of people who will be hit. We shall be referring to all these categories in due course. There are the disabled, possibly well over 1 million of whom cannot work full time. There are widows with children, and pensioners who purchased annuities with a lump sum and now find that while part of the annuity comes tax-free the other part suffers this impost. There are many other categories. One category which the Chancellor thought he was helping in some concessions he hinted at—had he been able to get his measure through last May and June—was that of divorced people with children. He said that the first £1,000 of investment income would be free of surcharge and the first £1,000 of maintenance income.

In real life, the maintenance often does not come through. Does it follow that there is to be a penalty? The answer is that under the present proposals the Government believe that there would be a penalty upon the divorced person trying to live on an investment income which may be in the region of £1,500 to £1,800. The maintenance does not come through and, therefore, they do not qualify for relief. My hon. Friends will no doubt raise many other categories and have many stories to tell of the kind of people who will be hit by this nasty little measure. It is part of the business of concessions between the Chancellor and the Left wing of the Labour Party. Obviously, the right hon. Gentleman has his problems trying to settle that account. Every one else sees this for what it is. It is a piece of political horse-trading, the victims of which are many thousands of people who do not deserve to be treated in that way.

It has been said that the only people who would escape the previous Chancellor's measures were the quick and the dead. As we shall learn from future debates and amendments, not even the dead will escape many of the provisions of this Finance Bill. The quick, if they are quick in spending, may get rid of some of their savings and avoid paying the penalties. They will thus escape some of the provisions of the Bill by doing the exact opposite of what is needed from the national point of view, which is to increase savings rather than to increase spending.

The provision which we seek to amend back to its previous state is an attempt to legislate over a period back to when the Government were not in power. There was then a minority Government, admittedly a Labour Government, in a different situation with a different form of parliamentary support. Because this measure tries to legislate back over that period, and because it is utterly hostile to private savings, we seek to press the amendments to restore the previous position, and I commend them to the Committee.

Mr. David Mitchell (Basingstoke)

The clause applies an extra tax to anyone whose income from investments exceeds approximately £20 per week and to anyone over 65 whose income from investments exceeds approximately £30 per week. The clause is unfair, vindictive and against the national interest, and I hope that the amendment will be supported vigorously by my hon. and right hon. Friends.

The clause is unfair because a business executive with a company pension, a retired civil servant with a Civil Service pension, a retired member of the armed forces, a bank manager and others who have superannuation schemes are able to have an income which is supplementary to the State pension without incurring the investment surcharge. A person who has worked overseas and brought back a lump sum which he has invested is clobbered. Small business men who have had a small factory or workshop, market gardeners and small shopkeepers who have sold their businesses, retired and are living on income from the sale of those businesses are clobbered.

I am glad to see that the Under-Secretary of State for Industry, who is responsible for small businesses, is sitting on the Government Front Bench. I hope that he will seek to justify the clause, which is a powerful and unfair attack on the small shopkeeper and the like.

The clause applies to people who during their working lives have ploughed their savings into a business. With the present rate of inflation, every small business has become a rapacious consumer of funds. A business which has £1,000 worth of stock on its shelves this year, with a 20 per cent. rate of inflation, will need £1,200 worth of stock on its shelves next year so as to have the same number of tins, bottles and so on. Countless small businesses have been drawing on the proprietor's savings in the form of extra working capital just to keep going. The proprietors have had no money to put aside for a pension or superannuation benefit. Many have sold their businesses. They were clobbered by capital gains tax but hoped to be able to live off what was left.

As I came into the Chamber I cast my mind back to a couple of examples. Hon. Members may remember Jimmy Jones, the milkman in Crooked Lane in the City. His place has gone now and has been replaced by a pub and a bank. Jimmy Jones and his wife both worked in the business. They had a milk round in the City in the morning and at lunch-time they had a clientele which consisted of bank clerks, shop managers, city cleaners and myself. They did the best baked jam roll that was obtainable in the City in those days. Mrs. Jones did her cooking in the kitchen at the back with sweat pouring off her from early in the morning until late at night. Jimmy Jones is retired and living on his savings now. Those two worked hard to have the capital to invest to enable them to live in reasonable comfort in old age, and are a typical example of the people who have been picked on by the Chancellor for such unfair treatment.

I think also of a shopkeeper in Basingstoke, which is an expanded town. The council compulsorily purchased the business when the shopkeeper was 62, too old to be able to start afresh, so he had to take the compensation money, which represents his savings. He, too, is clobbered.

It is unfair that the well-paid bank manager should not be clobbered when the retired small business man is clobbered. The Government should think again about this provision on grounds of fairness alone.

The clause is also vindictive. It is an unwarranted attack on those who have saved throughout their working lives. Those people are not wealthy. Let us look at the capital sums which will give the sort of income with which we are dealing. For someone who had invested savings in Consols the Government relief would start at £6,123, or on £9,185 if the person was over 65. Under the modest amendment that person would be able to receive £12,246 on the investment before he started to pay the surcharge, and £15,307 if he was over 65.

Let us take an investment in the Commercial and Industrial Preferred Index, which is a usual investment for someone who seeks to safeguard his old age. The Government relief starts at £5,316, or £7,974 if the person is over 65. Those are minuscule amounts. The amendment would apply to investments of £10,632 or, for a retired person, £13,290. That is less than the cost of an average fourbedroomed house, and that is the point at which people are clobbered by the clause.

If we take the All-Share Index we find that the amounts are £9,000, and £13,500 for a person over 65, on which the Government seek to allow relief. On the All-Share Index the modest amendment means that someone with an investment of more than £18,000 would start to pay the surcharge or more than £22,500 if he is over 65.

To clobber a man who throughout his working life has saved such a modest sum—and his widow—is vindictive in the extreme. I urge the Committee to support the amendment and to reject the clause, which is unfair and vindictive.

Thirdly, I urge the Committee to support the amendment because it is in the national interest, and the Bill is against the national interest for one straightforward reason which everyone can understand. There are countless analyses of Britain's problems. There are as many different solutions as there are economists or working men's clubs. One thing on which they all agree is that we need more investment and more capital. More investment means more capital, and more capital means more savings. It is the only way to obtain such money unless it is borrowed abroad. But apparently the present Government prefer to borrow abroad and to run up debts for future generations rather than encourage the present generation to save, build up capital and invest it.

The Government have vindictively clobbered those who have saved in their working lives and will discourage those who want to save now and in the future. It is against the nation's interest that vindictive legislation of this kind should be allowed to go on the statute book.

[Mr. ALAN FITCH in the Chair]

5.0 p.m.

Mr. Julian Ridsdale (Harwich)

I am not surprised that the Labour benches are empty for this debate when we are discussing a measure which is both unfair and, to adopt the word used by my hon. Friend the Member for Basingstoke (Mr. Mitchell), "vindictive". I think the word "dogmatic" should be applied to this proposal.

I represent an area in which there are a great number of elderly people. At a time when we have seen increases in the level of rates and in the price of fuel, food, clothes and shoes, the cost of living has borne heavily upon the people at whom these proposals are aimed. They can hardly afford to eke out a meagre existence. Indeed, many pensioners affected by the proposal are not living but merely existing. Yet the Labour Government, in the name of Socialism and so-called fairness, are hitting at those people and hurting them a great deal. For this reason I am only too pleased to support the amendment.

I wish to underline what was said by my hon. Friend the Member for Guildford (Mr. Howell). We do not believe in taxing the weakest members of the community. Could anything he more unfair? We believe in encouraging saving. The present Finance Bill attacks saving, and this is a weakness which plays a great part in the crisis which faces the Government not only in terms of financial standing but in their dealings with the world at large.

I am sure that the Chief Secretary agrees that something should be done to encourage saving, yet along come the Government with this vindictive measure as an example of their thinking. This attack on saving can only lead the country to disaster. The proposal represents an attack on the weakest members of the community at a time when inflation is rampant. I support the amendment and sincerely hope that it will be carried.

Mr. Ian Gow (Eastbourne)

I also wish to support the amendment, and I do so for four principal reasons.

First, I intensely dislike the whole principle of retrospective legislation. The Finance Act which was passed earlier in the year laid down the rates of tax which were to apply for the current financial year. Therefore, it was reasonable for Her Majesty's subjects so to plan their affairs and arrange their finances on the basis that following that legislation they knew what their tax liabilities were to be. That principle has been flagrantly violated by the present Finance Bill, and it is an evil that will be removed if the Committee accepts this amendment.

The tendency to retrospective legislation is apparent not only in this Finance Bill in respect of the rate of investment surcharge but also in the procedure that followed on capital transfer tax. That tax was made retrospective to 26th March and the proposals were not published until the present Session.

My second reason for supporting the amendment is that of all categories of people who have suffered most as a result of inflation it is the person with a small savings income. Since he is a retired person and in a different category from others, it is impossible for him by his own efforts to do anything to increase his income—for, by definition, retired people have already carried out their working life. Furthermore, the category of person which we are now considering has already suffered grievously as the result of the collapse on the Stock Exchange. Therefore the very people who are among the most worthy citizens and who have given a lifetime of work are now penalised since they are hardest hit by inflation, and unless the amendment is passed they will be hit even harder.

The right hon. Gentleman the Chancellor of the Exchequer seems to have a guilt complex on this subject since on 12th November he said that the House would recognise … that the burden of personal taxation should fall that much more heavily on investment income than on income which is earned by current effort."—[Official Report. 12th November 1974; Vol. 881, c. 274] The phrase "current effort" implied that he recognised that the income to which we are now applying our minds is, in almost every case, the result of past effort, and it is a grievous mistake for the Government to penalise savings.

The third reason for supporting the amendment is that the present Parliament has a special duty to protect the most vulnerable at times of inflation. We shall fail to discharge that duty unless we agree to the amendment.

Finally, if the figures of £1,000 and £1,500 for those over 65 were right when the Chancellor introduced his Budget on 26th March, surely they now need to be revised upwards significantly by about 12 per cent. to take account of inflation. If the Government thought those figures to be right in March, they are obviously wrong today. For these reasons I hope that we shall press this amendment to a Division.

Mr. Giles Shaw (Pudsey)

I, too, wish to lay special emphasis on the plight of the elderly retired. The assumption behind any attempt to introduce a surcharge, particularly a tax surcharge, is that it should be primarily on large incomes. At the moment we are discussing incomes from investment. In many cases there will be large incomes from investment, and, in addition, incomes from other sources to sustain the standard of living of those who enjoy an investment income. But, by definition, a tax surcharge is an additional impost to cover exceptional earnings.

This fact to some extent is grudgingly acknowledged by the fact that in the clause some extremely modest and inadequate relief is given to those of retirement age. Yet the vast majority of those who are of retirement age and above, or those who will be affected by the clause, will be beneficiaries of pension schemes—some no doubt "top hat" pension schemes—and many may receive income from other sources. The elderly retired who are caught by this surcharge, whose total income is made up of investments which they have gathered during their working lives plus the State pension, are most unfairly hit by this impost. Therefore, I fully subscribe to the view so splendidly expressed by my hon. Friends the Members for Basingstoke (Mr. Mitchell) and Eastbourne (Mr. Gow).

There is a particular group of persons in my constituency to whom this measure applies fully. The spokesman for that group is now approaching his eightieth year. He built up his investments through saving for retirement when there was no available pension scheme during his employment. There are many retired shopkeepers, retailers and small business men in my constituency. All of them, as has been demonstrated, relied exclusively upon the sales of their businesses and the savings that they accrued during their working lives to live modestly in retirement. The relief of £500 for this group is nothing short of malicious. One of my pensioner constituents has advised me that the proposals in the Budget would leave him with a take-home nay of only 71p for two persons out of the £2.50 increase in the pension which is to come into effect in April.

I ask the Chief Secretary to consider, if possible, absolving from this surcharge those of retirement age who have no income whatever from any other source. I expect that he will argue that such a proposal will be far too costly. But this modest amendment to raise the surcharge start-line rate would be some small contribution. Surely the Chief Secretary must agree that a surcharge on the elderly retired is unjust and unrealistic, revising, as it does, their tax rate to about 48 per cent.

We on this side of the Committee make a special plea for this group of persons which has been most hard hit by inflation. The very least that we might do for this specific group is to agree some form of indexation to protect them from inflation. But, more important than that, we plead for those who have given a lifetime of service to the community and, as they approach their declining years, seek some respite on the earnings that they have accumulated. It is for savings and to be realistic and human that we wish to press the amendment.

Mr. Douglas Crawford (Perth and East Perthshire)

I do not intend to pull the heartstrings of the Committee as other hon. Members have done. However, I should like to endorse the amendment proposed by the hon. Member for Guildford (Mr. Howell) and to point out something which may not have occurred to him—namely, that the Bill, as it stands, is a positive discrimination against Scotland because we save more per head than the rest of the United Kingdom. If and when the amendment is passed, some of the discrimination against Scotland will be removed. I hope that the Treasury will take note of that point.

Dr. Reginald Bennett (Fareham)

I endorse what my hon. Friends and the representative of the independence of the North have said about this matter. It is not necessary for me to add epithets and other expressions. I agree in principle with all that has been said. However, I should like to ask the Chief Secretary how much will be taken from these defenceless people by this measure.

5.15 p.m.

Mr. Tom King (Bridgwater)

I intervene to reinforce the comment made by my hon. Friend the Member for Eastbourne (Mr. Gow) that inflation has already diminished the real value of the levels at which the surcharge will apply. The knowledge of many hon. Members is that when levels are fixed they remain.

No inflation adjustment is built into any of these proposals. Indeed, what was considered to be a fair level a year or two years before, since this policy has become a political football, is palpably becoming extremely unfair. If inflation continues at its present rate, within another year or two years it will be a positive outrage in the knowledge that successive Governments have refused to adjust the allowances to take account of inflation.

I recently visited a factory in my constituency. One of the foremen told me about a man who had been regarded as a bit of a freak in his time because he had never indulged himself very much but had been proud that he had saved and not spent his money on the pleasures of this life. That man had continually said to his colleagues "You are all mugs. You will regret it when you retire." That chap has now been retired for five years. The foreman to whom I spoke met him quite recently. They had a conversation, during which this retired man said "Do you remeber what I used to tell you when I was working? I should like to tell you now that I was a real mug. I should have been far better off had I spent my money as fast as I could."

I agree with my hon. Friend the Member for Guildford (Mr. Howell) that destroying the interest in and the concept of saving is bitterly damaging the whole fabric of our society. The Chief Secretary no doubt has a brief ready to play ping-pong with our arguments in an attempt to keep the Government's end up. No concessions have been made so far. I hope that he will take to heart what I have said. This is a bitterly tragic and distressing situation. I believe that the concessions and the levels that we are fixing, even if they remain at the levels that we are now proposing for more than a year, will, at the present rate of inflation, still be too low. I hope that the Chief Secretary will not play parliamentary football with this matter, but will take to heart the arguments that have been put forward.

Mr. John MacGregor (Norfolk, South)

I do not wish to repeat the arguments which have already been advanced, with which I most strongly agree. However, I want to bring out certain points because this proposal, about which I feel most strongly, has caused immense bitterness amongst many people to whom I have spoken.

The first point that I want to emphasise, which has already been stressed but cannot be repeated enough, is that the people concerned have only modest means. I refer particularly to the over-65s, though many of my arguments apply to other groups.

The hon. Member for Perth and East Perthshire (Mr. Crawford) need not be so partisan. Speaking as a Scot but representing an English constituency in which there are many Scots, I assure the hon. Gentleman that the savings habit has spread well south of the border for a very long time.

The people about whom I am concerned have savings of between £15,000 and £30,000. We have heard how easy it is for someone to come into that category. It is not difficult for a person to accumulate £15,000 during a lifetime. Often shopkeepers and the self-employed have no means of accumulating savings other than through the sale of their businesses when they retire at 60 or 65 years of age. These people have been unfairly hit in many ways in this last year, and this is the final blow.

I repeat, it is easy to get in to this category on retirement. A man may sell his house in a prosperous part of the country to retire to an area like Norfolk where, at least until two years ago, he could buy a new house fairly cheaply. He may have had life policies which matured when he reached 60 or 65 years of age, he may have commited part of his pension, or he may have built up his ordinary savings. The resulting sum comes exactly into the category on which this excessive tax would have to be paid.

If these people have equities, they have seen their capital value collapse. If they have put money into fixed interest stocks, they have seen them drop 20 per cent. in value. With perhaps 20 years of life ahead of them, they wonder how their savings will last. They now face a tax of 43 per cent. on the first slice of their income over £1,500 and 48 per cent. after that. Even without this tax their net income does not keep up with inflation levels, and the tax will make the position worse.

These people are bitter because they feel themselves particularly ignored by the social contract. They face heavier increases in their spending than groups who are not retired. They have retired to rural areas where they face long journeys for shops and other services. The petrol increases have hit them particularly severely. They are bitter towards wage-earners, many of whom have received three increases ranging from 30 per cent. to 50 per cent. over the past year. They feel bitter about the young, particularly the unmarried, many of whom, with few commitments to families and others, have also received substantial increases and have, therefore, achieved an enormous increase in their discretionary spending power in the past year. They feel bitter about the con trick which has been played on their lifetime habit of saving towards their retirement.

We should also consider the effect on their children who, having seen what has happened to their parents, wonder whether it is worth saving. Finally, there is the effect on the economy. When the Government should be encouraging savings and investment, this policy, among others, will achieve exactly the reverse.

But the problem goes much deeper. This is the inconsistency in the Bill. In Clause 6 the Government are trying to encourage additional investment in the building societies, but this provision is crippling many of the most likely contributors to the building societies. It also affects people's desire to invest in life and insurance policies. Instead of helping the present problems of the insurance industry, this proposal makes things worse. The effect on savings in industry has already been mentioned. This provision goes directly contrary to what we should be trying to achieve in economic policy. It encourages a philosophy of spend, spend, spend. I cannot believe that that makes sense.

There are two other arguments against this proposal. In the debates on this Finance Bill, as on the last, we shall hear a great deal about indexation, and I should welcome a prolonged discussion. If we were to index the allowances in this area, we should be talking in the main about £2,400 not £2,000, as the limit at which the higher rate applies. The amendment will at least achieve that purpose for the over 65s.

What astonishes me is that the Government have elsewhere accepted the principle of special treatment for these people, as shown in the Chancellor's announcement about the new age allowance to be implemented in the next Finance Bill. So he must have recognised the validity of many of our arguments. The inconsistency of hitting that group much harder this year before giving them extra relief next year is beyond belief. For that reason, among many, I hope that the Government will have second thoughts and will yield to the amendment.

Mr. Percy Grieve (Solihull)

The action of the Government in seeking to set aside the amendments to the 1974 Finance Act and to reduce to a limit of £1,000 the concession for aged people living on investment incomes will demonstrate what the middle classes now believe—that the Government are waging deliberate war upon them. In March last year I put down a series of Questions to the Chancellor of the Exchequer asking what income would be necessary today to produce after tax the equivalent of a series of incomes in 1939 from £1,000 to £10,000 a year. His answer showed that in March last year one would have needed £64,000 to achieve the equivalent of a 1939 income of £2,000. That figure shows, if anything does, that someone in retirement with investment income of £2,000 today is far from rich.

I have sent the Treasury a number of letters from constituents about this clause. A large number of people in my constituency have sold their businesses and are living in retirement on the fruits of a lifetime of labour, many of them on incomes of £1,000 to £2,000. Today £2,000 is being earned in many sections of industry; it is not a high income.

The clause will hit people who have saved hard. The Government are deliberately seeking to discourage the virtues of thrift and industry by which alone our country will achieve economic recovery. In speech after speech, Treasury Ministers pay lip-service to the need for thrift, saving and investment in industry, but by their actions in this Bill, including many clauses to be debated later, they are discouraging those very qualities.

I warn the Government that the patience of the middle classes is nearly at an end. An article in The Times the other day headed "The Anger of the Middle Classes" expressed no more than the truth about the actions of this Government toward the middle classes.

These people have also been hit throughout by the fall in the value of stocks and shares. I made a speech in May or June of this year, when the Financial Times Index had fallen to 271, and the Financial Secretary sat on the Front Bench with a grin on his face—[An HON. MEMBER: "He is not even listening."] I dare say he is not, because Treasury Ministers are shutting their ears to the arguments about this vicious attack on saving, investment and those who save and invest. I hope that they may yet have second thoughts and concede the amendment I say "I hope" because Hope springs eternal in the human breast. But I very much doubt whether they will, because their real motives are to destroy the middle classes and to destroy the economy of this country.

5.30 p.m.

Mr. Patrick Mayhew (Royal Tunbridge Wells)

I want to support the central point made by my hon. and learned Friend the Member for Solihull (Mr. Grieve). I represent a constituency which perhaps has an unusually high concentration of people who are now retired. They have been brought up throughout their lives to save, but they now bitterly regret ever having done anything so unworldly.

I do not want to belabour the practical or the constituency point. I want to attach it to a point of principle because, as I understand it, the philosophy behind this part of the Bill is the philosophy of social justice. Not many of us may be able to define social justice, but probably all of us would say that we were in favour of it. But social justice, just as is the case in any other form of justice, requires that there shall be justice as between one subject of the Queen and another. Those members of our community who have done the unselfish, the independent and the patriotic thing, who have done the thrifty thing, all their lives, now see themselves penalised, while at the same time they see other members of the community who have done none of these things now becoming the non-contributing beneficiaries of retirement pensions and other welfare benefits to pay for which the savers are being taxed. These people now see themselves not the beneficiaries of social justice but the victims of social injustice.

It is partly because the Bill makes no distinction between persons living upon incomes derived from inherited investments, on the one hand, and persons living upon incomes derived from saved investments, on the other, that I believe it essential that the amendment should be accepted. The other reason is the reason of principle to which I have already alluded. I believe the Bill to be fundamentally bad in this particular because it is based upon an unjust principle, and it is on the point of principle just as much as upon the particular point that I shall support the amendment.

Mr. William Clark (Croydon, South)

I agree with what my hon. and learned Friend the Member for Royal Tunbridge Wells (Mr. Mayhew) has just said. The Minister really is setting taxpayer against taxpayer in this regard. We can talk about inflation and about people drawing welfare benefits, the old-age pension, and so on, but in this regard what we must examine is the positions of, for instance, two people working for different firms.

It may be that one person is fortunate enough to work for a firm which has a superannuation scheme. That employee, during his working life, may or may not contribute to that scheme, but if he does contribute, successive Governments have given him tax relief on his contributions. When he comes to retire at the age of 65 or 60—I think that the age of 65 is a little mythical—having had his superannuation contributions allowed for tax relief during his working life, he then receives a pension and enjoys what is known as the earned income relief. In any case, he is not subjected to the investment surcharge.

In the case of his contemporary who is working for a different firm which, unfortunately does not have a pension scheme, his salary may be adjusted because of the lack of a scheme during his working life. He has not paid superannuation contributions because there was no scheme to join, and he has been paying tax on his slightly higher income during his working life. When he comes to retire, the savings he has made are then clobbered.

We are talking about £1,500 a year, but what is that as a pension? It is about £30 a week. When one considers that average industrial earnings are well over £40 a week, one appreciates that we are not talking about anything to assist the rich. It is the small man.

I regret very much that the Minister who is responsible for small businesses is not present. He was present earlier. I should have liked him to answer the debate, because the people who are being penalised are particularly those who were not sufficiently fortunate to belong to a superannuation scheme and the self-employed. The self-employed, during their working life, have had to make provision for their old age.

The Government are being a little schizophrenic in the Bill. The Chancellor says in Washington, and at any meeting of Finance Ministers anywhere, that in this country we must have investment. But what do the Government do? They clobber investment. They do not encourage it. The Government cannot have it both ways.

The Chief Secretary has great expertise in taxation matters. Fortunately, he is one Minister who understands what tax is all about. I am sure that he will agree that taxation, to be acceptable, should be equitable. That has been the premise and philosophy of successive Governments. In the example which I gave, of two persons working for different firms, one in a superannuation scheme and the other not, it is not equity at all. This is grossly inequitable. I do not find it funny—as apparently do Ministers on the Government Front Bench. Not all of my constituents are terribly rich. They are thrifty. They have saved money during their working lives. Not all of them have belonged to firms with superannuation schemes or have additional pensions.

I ask the Minister to look again at this matter, because the clause is a vicious attack on anyone who shows a sense of independence. Whether or not a person is to have a pension from his firm, why should he not save his money during his working life and augment his old-age pension or whatever pension he may receive at the age of 65? Why should the present Government, or any Government, say "You have been thrifty all your life, but now at your retirement age we shall clobber you and tax you harder than your contemporary"? That is why I hope that my right hon. and hon. Friends will press the amendment to a Division.

Mr. Patrick Cormack (Staffordshire, South-West)

It is extraordinary that the present Government should have become the scourge of the saving classes. That is what they have become. Unless the-Chief Secretary concedes the amendment, or something very much like it, he will be guilty of gross paradox. We have a Government the Ministers of which will stand at the Dispatch Box time after time saying "We must make sure that our old people are properly catered for within the State system, and we must make sure that pensions take account of inflation and that supplementary benefits do likewise". The Government also talk of the need for helping underdeveloped countries. Yet the Government, who will do all of that, are at the same time viciously attacking those of their own citizens who, through thrift, foresight and perseverance, have over decades saved their own money for their retirement. It is a most dreadfully paradoxical situation that this sort of Government may be hitting these people.

It is also rather strange that Socialists who say that they wish to help people to advance themselves should be penalising people who have taken the precautions to make sure that they are not dependent totally upon the State when they retire.

I hope that the Chief Secretary, who is a member of the middle classes and has no doubt got savings, who is an accountant and knows how these things work, will bring his personal experience and knowledge to bear. I hope that if he has some form of distorted brief in front of him he will toss it away and talk with a degree of proper knowledge and compassion when he replies to the debate. Hon. Members on the Government side of the House are very fond of the word "compassion", but it is a sort of selective compassion. It is allowed to apply to only certain sections of society. It is absolutely fatuous that we should allow ourselves to be browbeaten by hon. Members on the Government side of the House into ourselves sometimes adopting an almost guilty stance when we defend capital and inheritance. What is wrong with somebody building up his capital and, through his saving, contributing towards the financial well-being of the country? We need those people at the moment. What is wrong with the ordinary human instinct to try to do a little better for one's children than one has been able to do for oneself and pass on something from the fruits of one's labour, to quote my hon. and learned Friend the Member for Solihull (Mr. Grieve)?

I cannot accept that the type of pernicious and vindictive principle that is enshrined within this Bill is truly British, and I hope that we shall vote against it. Of course, I trust that it will not be necessary to vote against it because I hope that this amendment will he accepted.

Mr. Dafydd Wigley (Caernarvon)

I had no intention of intervening in this debate, but now that I have decided to do so I must say that I do not agree with most of the comments which have emanated from these benches, although there are some with which I do agree. I am not sure whether I follow the hon. Member for Staffordshire, South-West (Mr. Cormack) in that great British tradition to which he referred.

I am pleased to see that the number of Members on the Labour benches has now risen to double figures, because for much of this debate there have been only five Members on those benches. It is incredible that not one spokesman on the Government benches has so far risen to defend the Government's propositions.

Having said that, I find myself probably in greater sympathy with the idea that income should be earned rather than come from investment than are most Members on this side of the Committee, but I ask the Government in all seriousness whether this is the right time to take the measures which they contemplate. People who have saved in order to provide for their retirement, because there were no superannuation schemes available, now find that the value of their savings has been decimated, and some of them may be facing a marginal tax rate of as great as 48 per cent. These people are earning less than £2,000 a year—£40 a week—at a time when the average male industrial worker over 21 is earning about £55 a week, and one must ask whether this is equitable. From the point of view of the timing of these proposals and of fair play to people who have been put into this position, the Government should look again at these proposals.

I wish to refer to another aspect—that of capital formation. Everybody seems to be agreed that capital formation is an essential part of the remedy to our economic situation. But there is a real danger, not only in this Bill but because of other things which have happened to the economy in recent months, that those who might be induced to invest money and save may be scared away. If this happens and the fires in this direction are stoked by such moves, I wonder whether the Government have any alternative for increasing the level of capital formation in the economy. I have not heard any positive proposals in that direction. The references to increased levels of savings in building societies do not go far enough to meet this point.

Finally, may I ask the Chief Secretary to say how much money, at the latest estimates, the Government expect to get from the change proposed in this clause? I think the answer would be very revealing.

Dr. Alan Glyn (Windsor and Maidenhead)

The Chief Secretary will agree with one thing, and that is that this country's economy has been to a large extent built up on the small saver and small entrepreneur. If we are to encourage people of that sort, the type of legislation which it is proposed to put through today will have exactly the reverse effect. What is the good of saying to people "We will encourage you to invest in building societies" when at the same time exactly the reverse is being done by this Bill?

5.45 p.m.

Is there any real difference between the man who all his life contributes towards a pension scheme and the man who has no alternative, because he is self-employed and has his own business, but to save and invest and then at the end of his life to live on that investment? I cannot see the difference.

Coming to my third point, which the hon. Member for Caernarvon (Mr. Wigley) brought out very well, is this the time to penalise savings when we have an extremely high inflation rate and when we ought to be encouraging people to save? This sort of measure is wrong, and in any case it is certainly introduced at the wrong time.

Mr. Nigel Lawson (Blaby)

I, too, had not intended to speak in this debate but I have been very much struck by the eloquence and cogency of the remarks of my hon. Friends who have made various cases for this amendment, and by the equal eloquence of the total silence from the benches opposite. I agree that certain sedentary noises occur on the benches opposite from time to time, but I would not grace them with the description of eloquence.

My first complaint is that this proposal is all of a piece. Everything in this Bill and, indeed, pretty well everything the present Government have been doing, when one thinks of the surcharge—the special tax—on the self-employed, is part and parcel of an attack on independence, self-reliance and individual self-respect. It is an attempt to create a spendthrift society totally dependent on the State and on those who hold temporarily the levers of power in the name of the State. It is also in this context an attack on small savers.

Before going on to the smallness of the savings which are involved, I ask the Chief Secretary to answer a question which puzzles many of my constituents. They want to know why they should pay a surcharge on investment income at all, when they have worked very hard for the savings which they have accumulated. We are talking about very small sums of money. My hon. Friend the Member for Basingstoke (Mr. Mitchell) said that at the current rate of inflation, on undated securities—many people have Consols and War Loan—to be the recipient of the savage increase introduced in this Finance Bill, the saver will have to have saved up no more than £6,000. That is not a large sum. It is nothing like the £20,000 aired by the Chief Secretary and I think also by the Financial Secretary when we debated this matter less than 12 months ago, when the Government then tried to introduce this proposal. Even that yield would not compensate for the rate of inflation.

I do not know whether the small savers are meant to be part of the social contract but one assumes that they are because we are told from time to time that everybody is. The trade unions regard as part of the social contract the necessity for their members' incomes to keep level with the rate of inflation. The small saver's income cannot possibly keep pace with the rate of inflation. But at least he may hope that the value of his small capital will keep pace with the rate of inflation. To do that he will need to have a yield of 21 or 22 per cent. which would mean that we are talking about a capital of only £4,000 being affected by this proposal. Indeed, the capital would be much smaller if one took into account the rate of taxation, because the yield needed to cover both the rate of inflation and the rate of taxation is so high that it does not bear thinking about.

There is a more important social contract than the mythical social contract which the Government talk about, and that is the contract to keep faith with the people over the value of money and the value of people's savings. That is a difficult thing to do. Inflation is a problem which is puzzling and baffling many countries. But to make the situation infinitely worse, in particular for those most vulnerable, is unforgivable and the grossest breach imaginable of the social contract.

I wish to reiterate one point made by my hon. Friend the Member for Eastbourne (Mr. Gow). This is true retrospective legislation, but we have come to expect that from the Government. It was contained in their last Finance Bill on several occasions, and no doubt on examination the same will be seen to be the case in this Bill. It certainly applies on the point we are discussing. It would have been fair enough constitutionally if the Government had said "We fought the election on the basis of clobbering savings, the small saver, the self-reliant and independent, and on the basis of destroying the middle classes. Having got our mandate to do that, we will introduce new taxes to give effect to our plans." But what we have here is far worse. This provision is being introduced five-sixths of the way through the fiscal year and will apply retrospectively. By the time the Bill gets the Royal Assent the retrospection will be that much more acute. There must be serious doubt whether the Bill will receive the Royal Assent in due time—

Mr. Cormack

There may be another Budget.

Mr. Lawson

My hon. Friend may indeed be correct. We are already having great difficulties with the continuous performance of one Finance Bill coming along before another has been enshrined on the statute book.

This subject, along with many other aspects of the Bill, raises the question of indexation. The Opposition have tabled the amendment in an attempt to improve the past situation and to take account of the fall in the value of money, which is a sort of rough and ready indexation. We must, however, look seriously at the whole question of indexation. I hope that we shall look at it more wisely and more responsibly than the Chief Secretary did when the matter came up for discussion during proceedings on a previous Finance Bill when he was tackled on the subject of indexation, tax brackets, tax reliefs and so on. As time passes, smaller and smaller savers are being caught. The trouble occurs lower and lower down the scale. Because certain indirect taxes are not of an ad valorem nature, there is a huge shift of the burden from indirect to direct taxation without any parliamentary sanction or control in the public interest.

When indexation was raised on that occasion, the Chief Secretary said Certainly there will be high levels of inflation, but not in the long distant future, which would be necessary if one were thinking in terms of indexation on a permanent scale—which I am not. We are grateful to the hon. Member for his assurance about the long-distant future, but Keynes said that in the long-distant future we should be dead. If something is not done for the long-distant future, there will be a much more serious economic crisis and catastrophe than even the present Government have been able to devise. It is, therefore, not good enough for the Chief Secretary to say—and I am sure he has no crystal ball to help him—that there will be no inflation in the long-distant future and in that way justify his rejection of indexation. The right hon. Gentleman went on to say But it would be very difficult if large parts of what a Chancellor had to do was taken out of his hands and matters were much more inflexible in that there was this indexation which decided in advance what the levels of tax would be for whole groups of people."—[Official Report, 6th May 1974; Vol. 874, c. 1632–3.] I would have thought that it was elementary justice that the levels of tax whole groups of people should pay should be decided in advance. It is manifestly unjust that people do not know what the effective rate of tax will be on their earnings, and they cannot since no one knows what the rate of inflation will be from one month to the next. This creates total uncertainty. If the Chancellor thinks that this will help him to plan his economy, not that we have seen much sign that it has helped him to succeed so far in dealing with the country's problems, he is thinking manifest nonsense, unless he knows for sure what the rate of inflation will be. He told us before that it was 8.4 per cent., but that did not turn out to be accurate, and I doubt whether he would like to hazard a confident forecast on the rate of inflation over the next 12 months.

Under the present system the Chancellor does not know what the tax yields will be, but he would have a better knowledge of the effect of his measures if there was indexation. The truth is that he has a vested interest in getting additional revenue by the back door and in occasionally handing out phoney cuts—they are phoney because they only restore the statusquo—from time to time to certain groups of people. The amendment seeks to provide for one group, the small saver with an investment income of £1,000 or £2,000, no more than justice and no less than justice. Of course, some people who are better off might benefit, but it is a poor philosophy to say, that because that might happen the small savers who are totally deserving should not be allowed to benefit at all.

Mr. Norman Lamont (Kingston-upon-Thames)

One of the most remarkable things that was said by the Chief Secretary in the speech from which my hon. Friend has quoted was that he was not happy about the present distribution of income. He implied that he was looking to inflation to redistribute income and that he preferred that it should be done by inflation rather than by Parliament.

Mr. Lawson

My hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont) is absolutely right. I am afraid that the truth is that some of the Labour Members—I hope not all of them but certainly the Chief Secretary—relish inflation. We believe that there are people who must be helped, and that is the aim of the amendment. That is why I hope that it will be accepted by the Government, or, if it is not accepted by the Government, that it will be carried by the House.

But it may be said that this will cost £40 million, and people may ask "How will you find that?" We have no difficulty. First, I trust that later this evening we shall eliminate the £10 hand-out to trades unions which unnecessarily subjected their members' funds to the levy of that amount. That would leave £30 million—

Mr. Cormack

Food subsidies can be cut.

Mr. Lawson

As my hon. Friend says, a modest cut in food subsidies would enable justice to be achieved.

I hope that the Chief Secretary will accept the amendment. If he does not, I hope that the Committee will pass it.

6.0 p.m.

Mr. Peter Rees (Dover and Deal)

First, I must apologise to the Committee for not having heard the whole debate. I gather, however that no case—not even an ineffective case from a sitting position by the hon. Member for Feltham and Heston (Mr. Kerr) who is now leaving the Chamber—has been put either for the clause or against the amendment.

With the clause the Labour Party is pursuing its paranoiac obsession with what it would choose to call capital and investment income, and what I would call savings and savings income. So be it, but let the country recognise the quality of government we have at this crisis in our nation's affairs.

Most classes of our community have been hit by inflation. The Chancellor of the Exchequer has told us that we must all accept a diminution in our living standards. Whether the more powerful sections of organised labour have accepted that remains to be seen. But at least those of our community who are still in gainful occupations have the possibility of cushioning themselves to a degree against this shock and have the possibility of climbing back to their present position after we have passed through the crisis.

However, there is one class which will be affected by the clause and which may be cushioned, to a degree, by the amendment. I refer to those who have retired with a small sum saved with which they have calculated they can spend a dignified and comfortable old age. Many of them were, perhaps, in occupations in which there was no pension provision, or inadequate provision. The company pension is a comparatively recent phenomenon, unfortunately. The self-employed were unable to obtain any tax relief for sums put aside for pensions before 1956. They will be hit particularly by the mean-spirited measure embodied in the clause.

It seems to me, as it must seem to many of my right hon. and hon. Friends, that the self-employed in particular have been singled out as sacrificial lambs to appease organised labour and the extreme Left wing. They are people whom I and my right hon. and hon. Friends meet in our constituencies—

Mr. Cormack

We are proud to represent them.

Mr. Rees

Indeed, because they are people who have given their best, sometimes in public positions after a lifetime in their own occupations and businesses. We are entitled to ask the Government to have some regard for them and to recall that they have made their calculations for retirement. They may have a modest car and a modest house. They have budgeted for a modest standard of living. The incomes of people likely to be affected by the clause are not enormous by present standards. In weekly terms, though the Government always prefer to translate these figures into annual terms, their incomes may not be more than £40-£60 a week gross. I challenge the Chief Secretary to say whether he regards that as excessive.

They have faced a diminution not only in their capital but in their standard of living. They have probably seen their capital not halved but quartered. They have seen their standard of living cut by the increases in the price of petrol. Many of them depend on their cars, particularly if they live in the country districts in my constituency, where there may be no bus service to take them to do their shopping in Deal, Dover or Canterbury.

Mr. David Mitchell

Does my hon. and learned Friend realise that in spite of the importance of the subject to the widows, the elderly, the retired and small business men, not a single Member is present on the Government back benches? It is disgraceful.

Mr. Rees

I am grateful to my hon. Friend for re-emphasing the point I made at the start of my speech. The country may recognise that that shows the depth of concern on the Government benches for the people whose interests we have at heart and which we are trying to ventilate in the debate.

I am not often sorry for the Chief Secretary, but I am sorry for him on this occasion, because on his narrow shoulders he carries a great burden. He has to make a strong case. He alone must carry in this debate the burden of defending what I have described, and will continue to describe, as a very mean clause, and for rejecting a modest measure of relief. I hope that this fact will be noted outside the House.

The class about which we are particularly concerned face a considerable diminution in their capital and standard of living because of petrol costs, their rates and the cost of their food, coal and fuel oil. Those of us who—dare we say it?—are in the prime of life may live through this crisis. We may climb back to the position we were in before March 1974. We may be able to resume the march of progress, to catch up with our former expectations. But the people of whom I am speaking will not be able to do that. We must be particularly tender of their interests.

I have not seen a glimmer of understanding or sympathy from the Government benches, but I hope that the Chief Secretary, who I believe has listened to the debate, even though he has been carrying on an intermittent conversation with his hon. Friends on either side of him—he may be looking to them for a little moral support that he is not receiving from behind him—will rise above the obsession of his party and acknowledge that the amendment provides a small but distinct measure of justice to a hardly-used group of our community.

Mr. John Loveridge (Upminster)

Some of us sympathise with the Minister, because he has to raise so much money to pay for the Government's programmes. We know that under a Labour Government taxes always have to rise.

The clause seems to be particularly mean, because it singles out for the imposition of additional tax older people who have saved during their lifetime. Many people who have run, for example, a small grocery business and have sold it for £6,000 or £8,000 to live on the investment will find that their lifetime's savings are so heavily taxed that they will be little better off than their neighbours who have been improvident and have not saved. Their hardships will have been worth nothing.

In my constituency there is a group or old people's flatlets where there is strong resentment between some of the old people and their neighbours. Those who have small savings say "We lose our social security benefits. We are hardly any better off than our next-door neighbour. Why should we have done without all our lives, why should we have worked so hard? We advise our children"—this is what has been said to me—"to take the easy course—namely, not to study, not to work hard and not to save. We tell them that there is little benefit in it when you become old."

Sir John Hall (Wycombe)

Does my hon. Friend agree that the Chancellor has added great weight to that advice by saying that he never saves and that if he has any money he always spends it?

Mr. Loveridge

Yes, the Chancellor's comment adds great weight to the point that I was trying to make.

I hope that the Chief Secretary will reconsider this matter. He must know of elderly people who are in the position that we have described. He must have them in his constituency. They must come to him and attend his advice bureaux. They are people who deserve consideration. The small relief that is offered depends upon the age at which one happens to have chosen to acquire a wife. That is rather a peculiar incidence to choose and scarcely offers much relief in any case. Let the Chief Secretary take this matter back. Let him think about it again. We ask for some concession for the old who have saved. They need encouragement, but, above all, the next generation needs encouragement to work hard.

The Chief Secretary to the Treasury (Mr. Joel Barnett)

I have listened to the whole of the debate and I have found it interesting. I have been described as mean, savage—

Mr. Kenneth Lewis (Rutland and Stamford)

There are not many of the Minister's Friends sitting behind him, anyway.

Mr. Barnett

I cannot blame them for that. I have been described as mean, savage, inhuman, vindictive, evil, vicious, schizophrenic and un-British. I hardly recognise myself. [HON. MEMBERS: "We do."] I am delighted to hear that.

Sir John Hall

rose—

Mr. Barnett

Not now. I shall give way later. The amendments that we are discussing seek to reverse what we are seeking to do in the clause, namely, to bring back the threshold for investment income from £2,000 to £1,000. The second amendment seeks to add another £500 for those over 65 years. I was asked for the cost in a full year. The implementation of the two amendments would extinguish a yield of £40 million and turn it into a loss, in a full year, of £53 million.

Perhaps I should say a little about the background, as did the hon. Member for Guildford (Mr. Howell). The background goes back to the time of unification in 1973–74 when we thought that the then Conservative Chancellor had been far too generous in the relief that he gave to those with investment income. We are now seeking not to remove anywhere near the whole of the reliefs that were then given. For a true comparison we must consider not only the effect of the clause in 1974–75 compared with 1973–74, but the comparison with pre-unification figures before the enormous amount of relief was given by the then Chancellor.

If we take that comparison a single person with an income of £5,000 wholly from investments paid £500 less tax for 1973–74 than for 1972–73. Under the combined effect of the spring Budget and the current proposal such a person's liability will increase by £222, still leaving him with a gain of £278 compared with 1972–73.

There are many more examples of that kind. The comparison is the clear one between what the situation was before such substantial relief was given to those often with substantial investment income and what we are now seeking to do.

Mr. Lawson

Will the Chief Secretary concede that if this hypothetical individual had a constant income—namely, the same income now as in 1972–73—the drop in the real value would be considerably greater than the gain which the right hon. Gentleman is alleging has occurred?

6.15 p.m.

Mr. Barnett

I was going to come to the question of the drop in real income. I now turn to a number of points that have been made on a number of occasions by a variety of Conservative Members in a variety of ways.

Mr. David Howell

rose—

Mr. Barnett

I have not come to them yet.

Mr. Howell

The Chief Secretary spoke of the background to this issue. He is now slipping with agility over the propriety of the Government's overturning retrospectively the clear decision of a previous Government. This is a most unusual departure, to put it at its lowest, and we deserve some comment on it before the right hon. Gentleman goes on to other matters.

Mr. Barnett

I have listened to every Conservative Member who has spoken and I have just started my reply. I had every intention of referring to the retrospective argument. I am sure that the hon. Gentleman would not imagine—but apparently he did—that I would not comment on that issue. I had no intention of not replying to every point in the debate.

Much has been made about what we are doing in the clause that we are discussing. It is said that we are taxing savings income. It seems that it is only savings income that we are taxing. Perhaps some Conservative Members will accept that not all of it will be savings income. There is just a possibility that some of it will be investment income from other sources. I leave it at that. I take it no further.

Another point that has been made frequently is that it is wrong to have an investment income surcharge. That was a point that was made by a number of Conservative Members. I must point out to them that the last Conservative Government, when introducing unification, did not take that view. As far as I know it is not now the view of the Conservative Front Bench. If it is, I shall be interested to hear that there has been a change of mind.

The amendments seek to change the investment income surcharge as between the £1,000 threshold and the £2,000 threshold. That is what we are talking about. We have reduced the 15 per cent. to 10 per cent. That is a maximum of £100 per person. We are not talking about an investment income surcharge. That is not the issue. I hope that we shall not hear anything about clobbering all savings incomes.

I now turn to the effect of the main part of the amendment. The first £1,000 of investment income will obtain relief that was not available before unification. That was when a higher rate than the earned income rate was payable. It has been said that it represents a saving of about £6,000. Of course, it could be £6,000 if it were invested in a certain way. If it were invested in another way it could be less than that or substantially more. Much depends upon the manner of investment. If the investment were in equities of a certain type the amount could be considerably larger. I am sure that that is appreciated. It is £6,000 or more.

Mr. Lawson

Or less.

Mr. Barnett

I am not arguing about the size of the figure. There need not be any investment. The money might be put underneath a person's bed. Perhaps that is where the hon. Member for Blaby (Mr. Lawson) would prefer to put his money. I know that it is difficult for Conservative Members to understand that even £6,000 is a lot of money to the majority of ordinary working people. It is a lot of money. Many working people would love to be able to save £6,000. The hon. Gentleman should ask that question of postmen, railwaymen and the vast array of working people. It gives us an idea of the way the Opposition think, if they find it hard to understand that a working man today is unable to save £6,000 after a lifetime.

Under the amendment we are talking not only about a man who has saved £6,000 throughout his lifetime but about a man with investment income who has only just started to work, or who may never have worked. We are not talking only about men aged 65 and over. Indeed, that is not the purport of the main amendment.

Mr. David Mitchell

Is the Minister aware, when he refers to the enormous sums saved as being outside the scope and ability of ordinary working men to save, that it represents no more than the saving of £2.50 a week. If that is not what he condemns as being outside the scope of the ordinary working man, he is not in the realm of reality.

Mr. Barnett

I was not condemning saving. I think it is marvellous. However, how is a man earning £25 a week, who has a wife and two children to support, to have the chance of saving £2.50 a week? Opposition Members must listen. I listened to every speech made by them. They should do me the courtesy of listening to what I say.

I said that many working people will not be able to save £6,000 by the end of their life. However, we are not talking about the end of their life—we are talking about possibly the beginning of their working life, or even before it starts. Let us be clear what we are talking about.

Given the priorities before us, a concession, in post-unification terms, of £1,000 of investment income being taxed as earned income, is not an unreasonable figure. However, we have recognised a higher figure for those who have saved money throughout their working lives, because we have specified a higher figure for people over the age of 65. The figure of £1,500 is 50 per cent. higher than the figure of £1,000. With that, and with the other relief we have given to the elderly with earned incomes of up to £3,000 a year, we have helped them very substantially. I think that is the way to go about it.

The Opposition made a lot of the question of inflation. I make it clear that inflation and what has happened on the Stock Exchange have harmed many people. Of course one understands that.

In deciding whether we should give £53 million of tax relief to a certain group of people, we have to say whether they should be given the concession because of the inflation which has occurred over the past nine months. We are arguing whether that group should be singled out to be protected against inflation.

Mr. Grieve

The right hon. Gentleman used the expression which one always finds on the lips of Treasury Ministers—"Why should we give something?" We do not ask them to give anything, but to refrain from taking away.

Mr. Barnett

I shall be coming to that. The hon. and learned Gentleman will be happy to know that whether we are giving it or taking it away it will certainly reduce the amount of money available to the Exchequer.

Mr. Peter Rost (Derbyshire, South-East)

A good thing, too.

Mr. Barnett

I shall be coming to that as well. The argument about retrospection was raised by a number of hon. Gentlemen, starting with the hon. Member for Guildford. Let me make it clear that this is a new Parliament. There is nothing unusual in introducing a tax, during the tax year, in a new Parliament.

The fact that the proposal was defeated in the previous Parliament—because the composition of the House was such that it did not carry sensible legislation introduced by the then Government—is not my fault. I am now concerned with the legislation that we are introducing in this Parliament. It is no use saying that this is retrospective, that it is a terrible thing—as if it has never happened before—and that there are no precedents. There are many precedents.

Mr. Lawson

Quote some.

Mr. Barnett

I shall do that, with pleasure. In December 1973 the Conservative Government announced a surcharge which the Labour Government took over eventually in the Spring Budget of 1974 from the then Government, who would have introduced it. It was announced in December 1973 and introduced in the Spring Budget of 1974. That was retrospective legislation, to which, I hasten to add, I did not object.

Mr. Lawson

I thought that the Chief Secretary would quote that example. There is an important difference. That proposal did not reach back to the period of the previous Parliament, whereas this one does. That was also a one-year-only measure. If the Chief Secretary is drawing a parallel, will he assure us that what he is proposing to do in this clause is in fact for one year only?

Mr. Barnett

I might be prepared to give assurances, but not to the hon. Gentleman, and certainly not on that subject. The proposal will have retrospective effect. In a Written Answer in July, during the last Parliament, I said this would be done.

I now turn to those who will be the beneficiaries of the £53 million. The hon. Member for Caernarvon (Mr. Wigley), who raised the matter, said that he spoke with an open mind, although it was not clear at the end of his speech that that was the state of his mind. I know his views on these matters. As regards the beneficiaries, we have had many descriptions of the type of people who would benefit from the £53 million —the modest savers, the elderly, the small business men, men of modest means, and those kinds of people.

First, let me deal with the £40 million which is the basis of the main amendment. Seventy-five per cent. of the £40 million, amounting to £30 million, will go to those with incomes of over £3,000 a year before tax. Before any hon. Member jumps up to tell me that that is not an enormous figure, let me say that I entirely agree with him. Of course it is not enormous. I am pointing only to the beneficiaries who will receive far and away the greater part of the £40 million. Indeed, £17 million of that sum will go to those with incomes of over £5,000 a year. Those are the kinds of priorities that hon. Gentlemen seem to prefer in their amendments. I must tell them that that is not my priority and I doubt whether it is the priority of many of my hon. Friends.

Many of the people with such amounts of investment income, and who would benefit from this relief, are not wealthy. They are hard-working people. Many of them resemble the kind of person spoken about by the hon. Member for Basingstoke (Mr. Mitchell)—small business men who have worked hard throughout their working lives in small shops, and so on. I do not dispute that. That is the case. However, given the economic climate, the Committee must consider whether this is the way in which the priorities should work and the way we should seek to spend £40 million. That is the issue before us—not whether all these people are worthy. Of course many of them are worthy. I do not dispute that. However, that is not the issue.

Mr. Mayhew

The hon. Gentleman says that this is how we should spend £40 million. That is a misleading way of putting it. The question is not whether we should spend £40 million but whether we propose to take £40 million away from those people. It is in that context that we have to look at the circumstances in which those people have amassed the capital producing the investment.

[Sir MYER GALPERN in the Chair]

6.30 p.m.

Mr. Barnett

I grant the hon. and learned Gentleman that we could really give back the whole of our tax receipts if we wanted to. It is taxpayers' money, after all. However, that argument is not worthy of the hon. and learned Gentleman.

One or two hon. Members touched upon the financial and economic situation and expressed their alarm at the size of our public sector borrowing requirement and the size of our deficit. However, these two amendments would add to the borrowing requirement to the tune of £53 million.

I come directly to how they would offset that sum. We are told that the way to offset the £53 million is to cut public expenditure. I can understand that, and I could accept it from many people. But it is a suggestion which comes strangely from the Opposition.

On agriculture, for example, the Opposition would seek a considerably higher level of support. On housing, the right hon. Member for Finchley (Mrs. Thatcher) would seek to reduce the mortgage interest rate to 9½ per cent. and to introduce a home savings grant scheme at a cost of £300 million. On law and order, the Opposition have pressed for priority to be given to increasing police manpower, to improved pensions, to a big city allowance, to rewards for long service and to increased expenditure on recruitment. On education, the Conservative Party manifesto said that the party wanted to make all student grants mandatory, at a cost of £200 million, and to reduce parental contributions, costing £30 million. Those aims are all very fine, but they are not exactly ways of cutting public expenditure. As for social security, nothing could be more dishonest than what is happening at present upstairs in Committee, where the Opposition are voting for amendments which would cost very large sums of money. They are opposed to reducing defence expenditure by £300 million in 1975–76 and by £750 million in 1978–79. However, they would offset the £53 million addition to the public sector borrowing requirement resulting from these amendments by cutting public expenditure. I shall believe that when I hear some serious arguments. We have had none.

Mr. Lawson

What about food subsidies?

Mr. Barnett

That is very interesting. The Opposition would rather give £30 million to those with incomes of more than £3,000 a year, and they would increase the price of bread to do it. If that is the policy of the Opposition, with which the hon. Member for Caernarvon agrees, I am extremely surprised.

Mr. Ioan Evans (Aberdare)

My right hon. Friend has given the Committee a catalogue of the additional public expenditure suggested by the Opposition. However, they also want to increase defence expenditure and to abolish the rating system by putting the cost on to the National Exchequer.

Mr. Barnett

I was trying to save a little time. I hope that my hon. Friend will forgive me if I do not mention all the items on which the Opposition wish to increase public expenditure.

It must be clear that this cannot be the way to increase the public sector borrowing requirement by £53 million. There may be other ways, but this cannot be the one, and therefore I ask my right hon. and hon. Friends—

Mr. Wigley

Those of us who advocate not hitting people who are dependent on investment income and who are in the lower scales, albeit that they will only get a fraction of the money proposed to be spent on these amendments, would not suggest that it be taken from food subsidies. We would propose cutting defence expenditure even further. But, in any event does the right hon. Gentleman believe that this package in total will help increase or decrease capital formation in the economy?

Mr. Barnett

I was about to conclude my remarks. This is an enormous question, and I hope that the hon. Gentleman will forgive me if I do not deal with it in detail. I accept that he does not want to take the money from food subsidies and that he would prefer to take it from defence expenditure. However, that is not the view of the Conservative Party—

Mrs. Kellett-Bowman

Answer.

Mr. Barnett

I have answered the hon. Gentleman, and I believe that I have replied reasonably fully to the debate. I listened carefully to all the speeches. I hope that I shall be forgiven for saying that these amendments have no justification. If the Opposition divide the Committee, I urge my right hon. and hon. Friends to vote against the amendments.

Mrs. Margaret Thatcher (Finchley)

Seldom have I listened to a more unsatisfactory reply to a debate, and seldom have I heard one which angered me more.

First, cannot we get it across to the Chief Secretary that he is taking away £40 million from these people by his action and not giving it to them? He argues about the public sector borrowing requirement. We had the same argument all through our debates on the last Finance Bill, in the course of which Government spokesmen gave the impression that every amendment would add to the borrowing requirement, which was then about £3,000 million. No one revealed at that time that it must have been greatly in excess of £3,000 million. We cannot suddenly have had an additional £3,000 million added between July and November when the Chancellor of the Exchequer announced that it was £6,000 million. No one using that argument to such bad effect then has the right ever to be believed about it again.

Secondly, I return to the argument about retrospection. This is the most savage form of retrospection that I have ever encountered. The precedent which the Chief Secretary gave for it is no precedent at all. I cannot find a precedent, and clearly the right hon. Gentleman has not been able to find one.

Let us consider what has happened. In the last Finance Bill the then Government attempted to fix the rate of tax applicable to these people for this year. That subject was fully and exhaustively debated in this House. It was decided upon, and these people then thought that they knew where they were for their tax this year, and that they could budget. Many of them are used to budgeting. They would not have saved what they have if they had not been. They are also used to forgoing luxuries. They knew where they were, and they could make their budgets accordingly.

There is no precedent that I have been able to find for, within six months of a decision, another Government's saying, in respect of the same tax and the same year, "We intend to put it up. We shall make you pay £40 million more than you budgeted for."

I ask right hon. and hon. Members to consider the time at which the Chief Secretary proposes to exact that additional £40 million. It was in a Budget which put up local rates. My hon. Friends the Members for Bridgwater (Mr. King) and Norfolk, South (Mr. MacGregor) joined me many times in pointing out the greatly increased rates which people in rural areas had to pay. Many of the people whom we are discussing at the moment live in rural areas. Not only have they to pay additional tax; they have also to pay additional rates, and I have received many letters saying that money that had been put aside for additional rates would now have to be used to pay more tax.

The Chancellor of the Exchequer is often very fortunate in the reasonable co-operation that he gets from the Opposition on reasonable economic matters. However, he must understand that this proposal was also in a Budget which increased the rates for gas, electricity and postal charges, because it was necessary to reduce the nationalised industry deficit.

The proposal comes at the very time when people are suffering from inflation, which is a bad enough tax on its own, and many have no thresholds, full or partial, to make it up. They are suffering from a new policy to eliminate nationalised industry deficits. It is at this time that the Chancellor of the Exchequer proposes an additional tax, although this House has already said, this year, that it shall not do so.

Undoubtedly, it is constitutionally technically correct, otherwise we should not be discussing it. I can only say that it is constitutionally amoral, and had it been put to me as a Minister I would not have done it, this House having already decided. The argument that it is technically correct shows that hon. Gentlemen opposite have no argument whatever to suggest. Do they believe that people who have to pay extra rates and extra electricity charges, and who have budgeted not to pay this extra, will be as technical as hon. Gentlemen opposite? Those people will have to pay this out of their pockets.

The Chief Secretary argues that there will be extra relief, but many people who are adversely affected by the clause will not get extra relief. Even that argument is not valid, for they will have to wait till next year for the extra relief, although the extra taxation penalty comes this year and is in respect of this year.

Mr. Joel Barnett

But payable next year.

Mrs. Thatcher

It is in respect of tax this year, even though it does not have to be paid until next year. The Chief Secretary knows that. But there are many people who will never get an age relief who are adversely affected, and particularly badly affected, by this clause. All the disabled who are under 65 will now have their income subject to an extra surcharge if it exceeds their savings income when it is more than £20 per week. All who have had to retire prematurely, or who have been made redundant—widows, deserted wives and others—and who have a savings income of £20 per week in those categories and are under 65 will stand to pay 43 per cent. taxation at the twenty-first pound—and there is no sympathy from the Chief Secretary for those people. We would wish to show them good will and sympathy.

Many times from the Dispatch Box I have seen Treasury Ministers in difficulties when asked to give some extra relief which, apart from a tiny one, we are not asking now; and frequently they have said, "I would like to do this. I recognise that there is inflation and that some people are in difficulty, but I cannot." That is not the position now. The Chief Secretary is being asked not to give extra relief of any significance but to leave things where they are and to stop imposing an extra penalty. When he is asked to defend this tax he has no answer when we say that he is clobbering people who have saved all their lives, or whose fathers saved for them and then did an awful thing—handing those savings to their children. It might have been an owner-occupied house whose value was inherited by the children and which probably came from savings income in the first place.

When we say these people have suffered enough and we ask the Government to help them, the Chief Secretary says, "We intend to make them suffer". That is his only defence. He says, "We intend to impose an extra penalty". There is no reason whatever for doing so. He then says he would like savings income, but the Government will not encourage it. This Government would prefer savings in the form of Government savings—in taxation—and investment or capital formation in the form of Government investment or capital formation, rather than getting property widely distributed in the hands of the people. As a right hon. Gentleman said from the Liberal bench during the debate last year, a society in which savings and investment are carried out through the Government will soon cease to be a free society.

This Government hate the wide distribution of private property and dislike people enjoying the fruits of savings income. We certainly shall press this amendment to a Division. I had hoped we should get a good deal more sympathy from the Chief Secretary than we have had. Indeed, we have not had any at all. If we are not successful with this amendment the Opposition undertake to reverse this clause when returned to power and thereby to keep the present starting point for the imposition of the additional rate of tax on investment income. We shall also consider further relief, together with the wider question of indexing tax levels. I hope that all my hon. and right hon. Friends will show their displeasure with the Chief Secretary's reply and their support for the savers of Britain by voting for the amendment.

6.45 p.m.

Mr. John Pardoe (Cornwall, North)

Having moved the original amendment on 16th July last, an amendment which has already been referred to, I would like to comment on the Chief Secretary's speech, which I found far less than adequate as a reply to the whole wide-ranging case which has been made on the question of investment income.

Although some hon. Members who have spoken from this side of the House have endangered the Conservative Party by making it seem to be a middle-class protection society, I have no intention of going along that road, but the right hon. Gentleman the Chief Secretary replied in just such typical class terms and this is not a class debate. This amendment was not about the middle classes last July, nor is it now.

The Chief Secretary says we are not discussing savings income but investment income. He distinguishes between the two. It used to be called unearned income. We have moved on a pace and have another euphemism. Now he calls it savings income. It may well be that we ought to distinguish between income from inherited wealth and income from wealth which is savings over the course of a lifetime. That is, no doubt, a debate we shall be able to have in the Select Committee on a wealth tax.

There are those who derive their savings not only from private savings under their own auspices during their lifetime but from a bona fide pension fund. I hoped we could persuade the Government, if they will not take a step in our direction on the whole of the amendment, at least to make some concession on that level. I would simply point out to the Chief Secretary that the pension fund of the Association of University Teachers is a pension fund that permits one to take out a lump sum and invest it. The Chief Secretary is saying that anyone who takes out a lump sum will be taxed at an increased rate, whereas the person who leaves it in, drawing it from the pension fund and trustees, will get a lower rate. The Chief Secretary did not even begin to make a justification for investment income as such.

The only argument he advanced is one that, as he will realise, does not appeal to me—that the Conservatives did it, too. That is less than an argument. On the question of retrospection the Chief Secretary is perfectly right to say that one Parliament can change what another has done, but in the course of a financial year I would have thought we could at least leave well alone what is done in that one year. It so happens that Parliament in its wisdom—and it was its wisdom—overruled the executive last time. That was a terrible shock to the system and the establishment. Parliament had got out of the way of controlling the executive, but because, for once, the electoral system worked to the advantage of the British people and of democracy in February last we were able to control the executive, to change legislation, to change the tax legislation of this place, in line with the wish of Parliament rather than that of the executive, and we did so.

The Government now say they have a mandate to change that. They have no such thing. They are denying the sense of the people in this country. But the argument works both ways. When the Leader of the Opposition today tells the Government they have less than 40 per cent. support he really must follow that through.

This legislation is being proposed today by the Government and it will be carried because they will probably win the vote. I shall certainly vote against them, but it will be enacted till all who are to pay this increased investment income surcharge realise why. It is because we have a crazy electoral system. If we had the right electoral system we would not have the kind of class legislation and the Left-wing Trotskyite nostrums we get out of the Labour Party.

Mr. Gwilym Roberts (Cannock)

I am interested in the hon. Gentleman's comments on the electoral system. Would he like to tell me how many Liberal—[Interruption.]

The Deputy Chairman

Order. The hon. Member was making a passing reference to the electoral system. I am not going to permit any discussion of the electoral system on this amendment.

Mr. Pardoe

You are absolutely right, Sir Myer.

I am glad that the Leader of the Opposition is now here. All I was pointing out was, that with an intelligent electoral system we would not have a Marxist dominated Labour Government and we should be able to secure our way today.

The Chief Secretary referred to the borrowing reqirement and said that the Government were all in favour of increasing public expenditure. I remind the right hon. Gentleman that in the debate on 16th July he referred to the Opposition's determination to spend money and to our determination to reduce taxes by an extra £300 million on advance corporation tax. It is within the memory of many right hon. and hon. Members that the Chancellor of the Exchequer thundered in the Chamber about the Opposition's rights to overturn the Government's Budget judgment.

I am glad that the right hon. Member for Carshalton (Mr. Carr) is here. What a pity it was that all of us did not have the courage of our convictions on that day and stand firm on the parliamentary control of the executive, because then many British companies would not be in the mess they are in now and the Government would not have had to eat their words as they have had to since then. So let us not have any nonsense from the Government about increasing the borrowing requirement.

We are talking about a cost of £53 million. It is the Government who are changing the situation, not the Opposition. We changed it last time and we got our way. These people are not wealthy. They do not have to be asked to pay for the social contract, which is really the argument behind the Government's whole case. These are not people who should pay for the social contract.

If priorities are to be put forward as to the use of this money, let me try a priority on the financial sector. It may well be that there are people in this country more deserving of concessions than some of the people who would benefit from this concession, but does the hon. Gentleman really believe that the 614 under-secretaries in Whitehall are more deserving of an increase of £3,000 a year than are the people who would benefit if we were able to carry this amendment today? If we are to deal in the language of priorities, anybody can quote his own.

I am merely saying to the Chief Secretary that it does not seem to me that he has made his case. I ask the Government to leave well alone. It was a good day for Parliament when we carried that amendment on 16th July, and we should be allowed to keep it that way.

Question put, That the amendment be made:—

The Committee divided: Ayes 256, Noes 267.

Division No. 53.]	AYES	[6.54 p.m.
Adley, Robert	Gilmour, Rt Hon Ian (Chesham)	Mayhew, Patrick
Aitken, Jonathan	Gilmour, Sir John (East Fife)	Meyer, Sir Anthony
Alison, Michael	Glyn, Dr Alan	Miller, Hal (Bromsgrove)
Arnold, Tom	Godber, Rt Hon Joseph	Mills, Peter
Atkins, Rt Hon H. (Spelthorne)	Goodhew, Victor	Mitchell, David (Basingstoke)
Awdry, Daniel	Goodlad, Alastair	Moate, Roger
Bain, Mrs Margaret	Gorst, John	Molyneaux, James
Baker, Kenneth	Gow, Ian (Eastbourne)	Monro, Hector
Banks, Robert	Gower, Sir Raymond (Barry)	Montgomery, Fergus
Beith, A. J.	Grant, Anthony (Harrow C)	Moore, John (Croydon C)
Bell, Ronald	Gray, Hamish	More, Jasper (Ludlow)
Bennett, Dr Reginald (Fareham)	Grieve, Percy	Morgan-Giles, Rear-Admiral
Benyon, W.	Grimond, Rt Hon J.	Morris, Michael (Northampton S)
Berry, Hon Anthony	Grist, Ian	Morrison, Charles (Devizes)
Biffen, John	Grylls, Michael	Morrison, Peter (Chester)
Biggs-Davison, John	Hall, Sir John	Neave, Airey
Blaker, Peter	Hall-Davis, A. G. F.	Nelson, Anthony
Body, Richard	Hamilton, Michael (Salisbury)	Neubert, Michael
Boscawen, Hon Robert	Hannam, John	Newton, Tony
Bowden, A. (Brighton, Kemptown)	Harvie Anderson, Rt Hon Miss	Nott, John
Boyson, Dr Rhodes (Brent)	Havers, Sir Michael	Onslow, Cranley
Braine, Sir Bernard	Hawkins, Paul	Oppenheim, Mrs Sally
Brittan, Leon	Hayhoe, Barney	Osborn, John
Brotherton, Michael	Heath, Rt Hon Edward	Page, John (Harrow West)
Brown, Sir Edward (Bath)	Henderson, Douglas	Page, Rt Hon R. Graham (Crosby)
Bryan, Sir Paul	Hicks, Robert	Pardoe, John
Buchanan-Smith, Alick	Higgins, Terence L.	Parkinson, Cecil
Buck, Antony	Hooson, Emlyn	Pattie, Geoffrey
Budgen, Nick	Hordern, Peter	Peyton, Rt Hon John
Bulmer, Esmond	Howe, Rt Hon Sir Geoffrey	Pink, R. Bonner
Burden, F. A.	Howell, David (Guildford)	Powell, Rt Hon J. Enoch
Carlisle, Mark	Howells, Geraint (Cardigan)	Price, David (Eastleigh)
Carr, Rt Hon Robert	Hunt, John	Prior, Rt Hon James
Chalker, Mrs Lynda	Hurd, Douglas	Pym, Rt Hon Francis
Channon, Paul	Hutchison, Michael Clark	Raison, Timothy
Churchill, W. S.	Irving, Charles (Cheltenham)	Rathbone, Tim
Clark, Alan (Plymouth, Sutton)	James, David	Rees, Peter (Dover & Deal)
Clark, William (Croydon S)	Jenkin, Bt Hon P. (Wanst'd & W'df'd)	Rees-Davies, W. R.
Clarke, Kenneth (Rushcliffe)	Johnson Smith, G. (E Grinstead)	Reid, George
Cockcroft, John	Joseph, Rt Hon Sir Keith	Renton, Rt Hon Sir D. (Hunts)
Cooke, Robert (Bristol W)	Kaberry, Sir Donald	Renton, Tim (Mid-Sussex)
Cope, John	Kellett-Bowman, Mrs Elaine	Rhys Williams, Sir Brandon
Cormack, Patrick	Kershaw, Anthony	Ridley, Hon Nicholas
Corrie, John	Kilfedder, James	Ridsdale, Julian
Costain, A. P.	Kimball, Marcus	Rifkind, Malcolm
Craig, Rt Hon W. (Belfast E)	King, Evelyn (South Dorset)	Roberts, Michael (Cardiff NW)
Crawford, Douglas	King, Tom (Bridgwater)	Roberts, Wyn (Conway)
Critchley, Julian	Kitson, Sir Timothy	Rodgers, Sir John (Sevenoaks)
Crouch, David	Knight, Mrs Jill	Ross, William (Londonderry)
Crowder, F. P.	Knox, David	Rossi Hugh (Hornsey)
Dean, Paul (N Somerset)	Lamont, Norman	Rost, Peter (SE Derbyshire)
Dodsworth, Geoffrey	Lane, David	Royle, Sir Anthony
Douglas-Hamilton, Lord James	Latham, Michael (Melton)	Scott, Nicholas
Drayson, Burnaby	Lawrence, Iven	Shaw, Giles (Pudsey)
du Cann, Rt Hon Edward	Lawson, Nigel	Shelton, William (Streatham)
Durant, Tony	Le Merchant, Spencer	Shepherd, Colin
Dykes, Hugh	Lester, Jim (Beeston)	Shersby, Michael
Eden, Rt Hon Sir John	Lewis, Kenneth (Rutland)	Silvester, Fred
Edwards, Nicholas (Pembroke)	Lloyd, Ian	Sims, Roger
Elliott, Sir William	Loveridge, John	Sinclair, Sir George
Emery, Peter	Luce, Richard	Skeet, T. H. H.
Evans, Gwynfor (Carmarthen)	MacCormick, Iain	Smith, Cyril (Rochdale)
Eyre, Reginald	McCrindle, Robert	Smith, Dudley (Warwick)
Fairgrieve, Russell	McCusker, H.	Speed, Keith
Farr, John	Macfarlane, Neil	Spence, John
Fell, Anthony	MacGregor, John	Spicer, Jim (W Dorset)
Finsberg, Geoffrey	Macmillan, Rt Hon M. (Farnham)	Spicer, Michael (S Worcester)
Fisher, Sir Nigel	McNair-Wilson, M. (Newbury)	Sproat, Iain
Fletcher, Alex (Edinburgh N)	McNair-Wilson, P. (New Forest)	Stainton, Keith
Fookes, Miss Janet	Madel, David	Stanbrook, Ivor
Fowler, Norman (Sutton C'f'd)	Marshall, Michael (Arundel)	Stanley, John
Fox, Marcus	Marten, Neil	Steel, David (Roxburgh)
Fraser, Rt Hon H. (Stafford & St)	Mates, Michael	Steen, Anthony (Wavertree)
Freud, Clement	Mather, Carol	Stewart, Donald (Western Isles)
Galbraith, Hon. T. G. D.	Maude, Angus	Stewart, Ian (Hitchin)
Gardiner, George (Reigate)	Mawby, Ray	Stokes, John
Gardner, Edward (S Fylde)	Maxwell-Hyslop, Robin	Taylor, R. (Croydon NW)
Taylor, Teddy (Cathcart)	Walder, David (Clitheroe)	Wigley, Dafydd
Tebbit, Norman	Walker, Rt Hon P. (Worcester)	Wilson, Gordon (Dundee E)
Thatcher, Rt Hon Margaret	Walters, Dennis	Winterton, Nicholas
Thomas, Rt Hon P. (Hendon S)	Warren, Kenneth	Young, Sir G. (Ealing, Acton)
Thompson, George	Watt, Hamish	Younger, Hon George
Townsend, Cyril D.	Weatherill, Bernard
van Straubenzee, W. R.	Wells, John	TELLERS FOR THE AYES:
Viggers, Peter	Welsh, Andrew	Mr. John Stradling Thomas and
Wainwright, Richard (Coine V)	Whitelaw, Rt Hon William	Dr. Gerard Vaughan.
Wakeham, John	Wiggin, Jerry
NOES
Allaun, Frank	Edwards, Robert (Wolv SE)	Lewis, Ron (Carlisle)
Archer, Peter	Ellis, Tom (Wrexham)	Lipton, Marcus
Armstrong, Ernest	English, Michael	Litterick, Tom
Ashton, Joe	Ennals, David	Loyden, Eddie
Atkins, Ronald (Preston N)	Evans, Ioan (Aberdare)	Luard, Evan
Atkinson, Norman	Evans, John (Newton)	Lyon, Alexander (York)
Bagier, Gordon A. T.	Ewing, Harry (Stirling)	Lyons, Edward (Bradford W)
Barnett, Guy (Greenwich)	Faulds, Andrew	Mabon, Dr J. Dickson
Barnett, Rt Hon Joel	Fernyhough, Rt Hon E.	McCartney, Hugh
Bates, Alf	Flannery, Martin	McElhone, Frank
Bean, R. E.	Fletcher, Raymond (Ilkeston)	MacFarquhar, Roderick
Bennett, Andrew (Stockport N)	Fletcher, Ted (Darlington)	Mackenzie, Gregor
Bidwell, Sydney	Foot, Rt Hon Michael	McMillan, Tom (Glasgow C)
Bishop, E. S.	Ford, Ben	Madden, Max
Blenkinsop, Arthur	Forrester, John	Magee, Bryan
Boardman, H.	Fowler, Gerald (The Wrekin)	Mahon, Simon
Booth, Albert	Fraser, John (Lambeth, N'w'd)	Marks, Kenneth
Boothroyd, Miss Betty	Garrett, John (Norwich S)	Marquand, David
Bottomley, Rt Hon Arthur	Garrett, W. E. (Wallsend)	Marshall, Dr Edmund (Goole)
Boyden, James (Bish Auck)	George, Bruce	Marshall, Jim (Leicester S)
Bradley, Tom	Gilbert, Dr John	Mason, Rt Hon Roy
Broughton, Sir Alfred	Ginsburg, David	Meacher, Michael
Brown, Hugh D. (Provan)	Golding, John	Mellish, Rt Hon Robert
Brown, Robert C. (Newcastle W)	Gould, Bryan	Mendelson, John
Buchan, Norman	Gourlay, Harry	Mikardo, Ian
Buchanan, Richard	Grant, George (Morpeth)	Millan, Bruce
Butler, Mrs Joyce (Wood Green)	Grant, John (Islington C)	Miller, Dr M. S. (E Kilbride)
Callaghan, Jim (Middleton & P)	Grocott, Bruce	Miller, Mrs Millie (Ilford N)
Campbell, Ian	Hamilton, W. W. (Central Fife)	Mitchell, R. C. (Soton, Itchen)
Canavan, Dennis	Hamling, William	Molloy, William
Cant, R. B.	Hardy, Peter	Moonman, Eric
Carmichael, Neil	Harper, Joseph	Morris, Alfred (Wythenshawe)
Carter, Ray	Harrison, Walter (Wakefield)	Morris, Charles R. (Openshaw)
Carter-Jones, Lewis	Hattersley, Rt Hon Roy	Morris, Rt Hon J. (Aberavon)
Cartwright, John	Hatton, Frank	Mulley, Rt Hon Frederick
Castle, Rt Hon Barbara	Hayman, Mrs Helene	Murray, Ronald King
Clemitson, Ivor	Heffer, Eric S.	Newens, Stanley
Cocks, Michael (Bristol S)	Hooley, Frank	Noble, Mike
Cohen, Stanley	Horam, John	Oakes, Gordon
Coleman, Donald	Hoyle, Douglas (Nelson)	Ogden, Eric
Colquhoun, Mrs Maureen	Huckfield, Les	O'Malley, Rt Hon Brian
Concannon, J. D.	Hughes, Rt Hon C. (Anglesey)	Orbach, Maurice
Cook, Robin F. (Edin C)	Hughes, Mark (Durham)	Ovenden, John
Cox, Thomas (Tooting)	Hughes, Robert (Aberdeen N)	Owen, Dr David
Craigen, J. M. (Maryhill)	Hughes, Roy (Newport)	Padley, Walter
Cronin, John	Hunter, Adam	Park, George
Crosland, Rt Hon Anthony	Irvine, Rt Hon Sir A. (Edge Hill)	Parker, John
Cryer, Bob	Jackson, Miss Margaret (Lincoln)	Parry, Robert
Cunningham, Dr J. (Whiteh)	Janner, Greville	Pavitt, Laurie
Dalyell, Tam	Jay, Rt Hon Douglas	Peart, Rt Hon Fred
Davidson, Arthur	Jeger, Mrs Lena	Pendry, Tom
Davies, Bryan (Enfield N)	Jenkins, Hugh (Putney)	Perry, Ernest
Davies, Denzil (Llanelli)	John, Brynmor	Phipps, Dr Colin
Davies, Ifor (Gower)	Johnson, James (Hull West)	Prentice, Rt Hon Reg
Davis, Clinton (Hackney C)	Johnson, Walter (Derby S)	Prescott, John
Deakins, Eric	Jones, Alec (Rhondda)	Price, C. (Lewisham W)
de Freitas, Rt Hon Sir Geoffrey	Jones, Barr (cast Flint)	Price, William (Rugby)
Delargy, Hugh	Jones, Dan (Burnley)	Radice, Giles
Dell, Rt Hon Edmund	Judd, Frank	Rees, Rt Hon Merlyn (Leeds S)
Dempsey, James	Kaufman, Gerald	Richardson, Miss Jo
Doig, Peter	Kelley, Richard	Roberts, Albert (Normanton)
Dormand, J. D.	Kerr, Russell	Roberts, Gwilym (Cannock)
Douglas-Mann, Bruce	Kilroy-Silk, Robert	Robertson, John (Paisley)
Duffy, A. E. P.	Kinnock Neil	Roderick, Caerwyn
Dunn, James A	Lambie, David	Rodgers, George (Chorley)
Dunnett, Jack	Lamborn, Harry	Rodgers, William (Stockton)
Dunwoody, Mrs Gwyneth	Lamond, James	Rooker, J. W.
Eadie, Alex	Leadbitter, Ted	Roper, John
Edelman, Maurice	Lee, John	Rose, Paul B.
Edge, Geoff	Lewis, Arthur (Newham N)	Ross, Stephen (Isle of Wight)

Rowlands, Ted	Swain, Thomas	White, Frank R. (Bury)
Ryman, John	Taylor, Mrs Ann (Bolton W)	White, James (Pollok)
Sandelson, Neville	Thomas, Jeffrey (Abertillery)	Whitehead, Phillip
Sedgemore, Brian	Thomas, Ron (Bristol NW)	Willey, Rt Hon Frederick
Selby, Harry	Thorne, Stan (Preston South)	Williams, Alan (Swansea W)
Shaw, Arnold (Ilford South)	Tierney, Sydney	Williams, Alan Lee (Hornch'ch)
Sheldon, Robert (Ashton-u-Lyne)	Tinn, James	Williams, Rt Hon Shirley (Hertford)
Short, Rt Hon E. (Newcastle C)	Tomlinson, John	Williams, W. T. (Warrington)
Silkin, Rt Hon John (Deptford)	Torney, Tom	Wilson, Alexander (Hamilton)
Silverman, Julius	Tuck, Raphael	Wilson, Rt Hon H. (Huyton)
Skinner, Dennis	Urwin, T. W.	Wilson, William (Coventry SE)
Small, William	Wainwright, Edwin (Dearne V)	Wise, Mrs Audrey
Smith, John (N Lanarkshire)	Walden, Brian (B'ham, L'dyw'd)	Woodall, Alec
Snape, Peter	Walker, Harold (Doncaster)	Wool, Robert
Spearing, Nigel	Walker, Terry (Kingswood)	Wrigglesworth, Ian
Spriggs, Leslie	Watkins, David	Young, David (Bolton E)
Stallard, A. W.	Watkinson, John
Stewart, Rt Hn M. (Fulham)	Weetch, Ken	TELLERS FOR THE NOES:
Stoddart, David	Weitzman, David	Mr. James Hamilton and
Stott, Roger	Wellbeloved, James	Mr. John Ellis.
Strang, Gavin

Question accordingly negatived.

Mr. Pardoe

I beg to move Amendment No. 3, in page 4, line 1, after 'more', insert: 'or that she is a widow with children in full-time education'.

The Deputy Chairman

With this we may discuss the following amendments:

No. 5, in page 4, line 1, after 'more', insert 'or (ii) she was a woman not being a married person living with her husband and not being a woman for whom her husband has claimed and been allowed for the higher relief under section 8(1) of the Taxes Act whose age was 60 years or more'. No. 7, in page 4, line 1, after 'more', insert 'or (ii) she was a widow with a child or children in respect of which she was entitled to relief under the Income Tax Acts; or (iii) she was a widow in receipt of National Insurance widow's benefit; or (iv) she was the widow of such a person as is mentioned in paragraph I of Schedule 7 to this Act'.

Mr. Pardoe

We are not here debating the principles of investment surcharge and we can state the debate in more moderate and, I hope, agreed terms, because I am sure that the Financial Secretary could not possibly throw out such a reasonable amendment. We are limiting the amendment considerably. There are 3 million widows in Britain. There are 500,000 widows under the age of 54 with dependent children. We are here talking about widows with dependent children in full-time education. It is a small number of people, but an important section of the community, and one which, in our view, and in the view of many hon. Members, has not always had a fair deal from our taxation system.

One of the problems is that it is often said that widows ought to be able to increase their incomes by going out to work in the same way as single people. If the widow has no dependent children that is perfectly true and there is no reason, certainly with younger widows, why we should feel that they need more generous treatment than single women, but we are concerned with this special group of widows who are not able to go out and earn.

The Government may say—I hope they do not—that widows are still able to go out because the Government have ensured that they can set off the cost of home helps against their tax allowance up to the sum of £100. That is hardly a realistic figure for a home help. In any case, the additional personal allowance of £180 given to single parents looking after children disqualifies the parent from receiving the £100 for the home help. We can see the reason for that, but it means that however the widow arranges her affairs, whether she brings in a home help or looks after the children herself, she is economically a disadvantaged person.

The Government are proposing to give special consideration to those over the age of 65. What we are proposing is that another, small group of people should be considered in the same way as those older people. To put it in context, it may help if we spell out what I calculate is the difference in the tax paid on £2,000 of investment income. The Government's proposals for those under 65 would mean that a person paying income tax at the standard rate would pay £760. Over the age of 65 that person will pay £710. We suggest that widows should be treated in the same way, which means removing £50 from the tax liability of a widow with an investment income of £2,000.

I see no reason why this should be an excessive strain on the borrowing requirement. It cannot cost very much, and I am sure that the Financial Secretary will tell us how much. He must accept in principle that widows are a deserving section of the community, and I hope that he will feel able to accept this limited amendment.

Mr. Cormack

I support what the hon. Member for Cornwall, North (Mr. Pardoe) said. The Financial Secretary, in a letter, dated 9th October, to one of his colleagues, recognised that widows were a special case and that they deserved special consideration, but he did not specify the consideration. The modest proposal outlined should commend itself to the Financial Secretary and I hope that he will at least do something for widows.

The hon. Member for Cornwall, North seemed to accept that it was reasonably fair to treat widows on the same lines as single women, but I do not agree with that. A strong campaign has been mounted by the National Association of Widows on this matter, but it would be out of order for me to expand on that—

Mr. Pardoe

I do not want the hon. Gentleman to run away with the idea that I said exactly what he seems to think I said. The view I expressed was that the younger widow who has no dependent children does not have a strong case to be treated differently. There may be a matrimonial home to be kept up, but that case is not as strong as it is for the older widow and the widow with children.

Mr. Cormack

I am glad the hon. Gentleman has clarified that.

I hope that in a Bill which is not noticeable for its charity to particularly deserving groups of people there will be a melting of the ice. I hope that there will be a smile on the face of the Financial Secretary when he rises at the Dispatch Box, and a little comfort for us when he replies to this amendment and the others which follow.

Mr. Peter Hordern (Horsham and Crawley)

This group of amendments is concerned with the position of widows, in various categories, and single women. We are concerned with the way in which they are affected by the proposal to place a surcharge on investment income. As was made clear in our debate on the previous group of amendments, the general position is that a few months ago the House of Commons increased the level at which the surcharge on investment income would operate from £1,000 to £2,000 for the year 1974–75. The Government propose now to act retrospectively, almost at the end of the current financial year, to reduce the level at which the investment surcharge operates from £2,000 to £1,000.

Meanwhile, nothing that the Government have done in the last few months has worked to the advantage of widows. The measures announced by the Chancellor in his Budget speech on 12th November to improve widows' pensions will not take effect until next April. The Government are deliberately taking a gratuitous swipe at many widows—the people who are least able to fend for themselves.

I recognise that the age allowance will help widows who reach the age of 65, but that allowance does not come into operation until 1975–76. Money is being taken by the Government from widows with children and single women if they happen to have a modest investment income. The Chancellor described the reduction of the level at which the surcharge on investment income operates in these words: This means sacrifices for those at the upper end of the scale."—[Official Report, 12th November 1974; Vol. 881, c. 274.] The Labour Government are living in another world if they think that that is the position. If they believe that people with an investment income of over £1,000 a year form a relatively small, wealthy but diminishing band of people, they are entirely mistaken. I do not have the most recent figures, but in 1970–71 there were more than 4½ million people with investment incomes of over £1,000 a year. The number must have swelled considerably since that time, and the Committee would be interested to know from the Financial Secretary what the figures are now.

7.15 p.m.

The number has grown and will grow in future as the number of new life policies mature. There are more than 16 million ordinary life policies in existence, and 92 million industrial life policies. There are more than 7½ million members of group pension schemes, some of whom may get a capital payment instead of a pension arrangement. Altogether, 78 per cent. of all households have life policies of one kind or another.

The Government would be mistaken to think that the proposal contained in the clause will affect only a relatively small band of people. This large proportion of households would not have tried to protect themselves against inflation and the inadequacy of the present pension unless they felt that it was essential to do so. It is not just a small dwindling band of people who will be affected, but the great majority of people who hope to have a maturing life policy which will be of benefit to themselves and their widows.

It will be argued that the income from many maturing policies will not reach £1,000. That may be the position at the moment, but when one remembers that 78 per cent. of households think it necessary to have life policies independent of anything which the State may provide, the only question is how long it will be before they find any income below £1,000 a year totally inadequate. At the current rate of inflation that will not take long. Even next April, when the widows' flat rate pension is increased to £11.60, widows will still have a pitifully small amount on which to manage.

Whatever happens to the Secretary of State's new pension proposals, everyone will recognise that the new scheme is not a genuinely funded scheme. The money will have to be found by future generations. Few people will be entirely happy about the Government's pension proposals and few will not think it necessary to supplement the Government pension by a life policy. A large proportion of households having already decided that that is the position, they now see what the Government propose to do if the life policy matures and brings in a reasonable income of £1,000 or more.

Let us consider the widows and single women who are covered by the amendment. I shall quote from a letter which a constituent of mine sent to the Chancellor immediately after the Budget. Thinking that she and other single women in her position had been put to some advantage, she said: It was very encouraging to learn from the Budget yesterday that the age allowance for pensioners is to be increased for the single from £810 to £950, but I have been amazed to find that this does not apply to single women until they reach the age of 65 in spite of the fact that the retirement pension can start at age 60. Is not this rather unfair and cannot you do something about it? … I shall be 62 years of age next May and hope to retire from full-time employment after what has been 45 strenuous years. So that lady, who has worked hard all her life, does not get an age allowance even though she has reached retirement age, yet it is probable that she and others like her, who have worked hard all their lives, have saved regularly through an endowment to provide themselves with a capital sum at 60 or whenever they retire. Some may even acquire capital from their firms. They do not regard themselves as being at the upper end of the scale, for in these days it requires an investment of only £6,000 in war loan to produce an income of £1,000. Therefore, by no stretch of the imagination can such people be considered rich. Yet they are the people selected by the Government for this form of higher taxation.

Amendment No. 5 refers to women deserted by their husbands and also to divorced women with maintenance settlements. Amendment No. 7 refers to widows in various categories. All these people will be hit hard by the Government's proposals in this financial year and will gain no extra benefit until the next financial year. They have seen the value of their savings fall drastically in the last year or so, and the effect of inflation has been disastrous. This is the ugly face of the social contract. Although trade unionists will not accept a fall in their standard of living, widows who receive far less money not only face a cut in their standard of living through inflation but are now to pay extra tax.

The National Institute of Economic and Social Research says that consumer prices this year will rise by well over 20 per cent. The price of coal rose by 19 per cent. last November, electricity by 6 per cent. from 1st January this year, and the price of gas increased by 12 per cent. Furthermore, general rates and water rates are going through the roof, and we are told that we are to have a 7½p postage stamp in the spring, and higher telephone charges. What sort of social justice can those proposals bring about?

What of the position of widows whose husbands have been killed on active service in the Armed Forces in Northern Ireland? Some of those women may have received awards under the Criminal Injuries to Persons (Compensation) Act. I understand that payments of £20,000 have been made. When those payments were considered, was the tribunal aware that the income from the award would be taxed at a higher rate? I cannot believe that is the case. Are these the people whom the Government feel should be taxed more heavily? They are the widows of soldiers. Is it not bad enough that forces' widows' pensions are taxed already? I cannot believe the Government are aware of the damage they are doing. Instead of allowing the level at which tax starts to be raised in line with the cost of living, they have reduced the baseline. This will savagely affect thousands of women who have saved much of their earnings over the years, and thousands more widows whose husbands have sought to provide for them in case of their death, the most natural and honourable instinct that man possesses.

The Government have a strange sense of priority. They seem to want to protect the average wage-earner on £50 per week against inflation, while at the same time placing an extra burden on those who have been widowed and are earning far less. For these reasons, I hope that the amendments will be carried.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

I should like to support the remarks made by my hon. Friend the Member for Horsham (Mr. Hordern) in a fair and telling speech. The singling out of this form of income for savage and extra taxation is one of the most obvious signs of class bias which one could have expected of the present Government. The Government have got the situation wrong because a very large number of ordinary people who are far from wealthy will be affected by the tax. If there is one group of persons to whom we have special obligations it is surely women who find themselves single, having been married and very often with children or families to bring up. They may be divorced, separated or widowed, and I believe that they comprise a deserving group of people to whom we should afford the relief that is provided in the amendment.

I do not think the Financial Secretary knows what these people are going through. Many of my constituents have suffered a 50 per cent. increase in their rates and have seen an impost of 20 per cent. on practically everything they have bought in the last year. They have noted various other unfriendly actions by the Government, and they feel despair. Widows and single women with houses to maintain and families to raise are probably one of the hardest hit groups in our society.

I commend the amendments, but I wish to put another suggestion to the Government. Perhaps there is a distinction to be made between a single woman with a family or children to look after and a house or flat to maintain or to pay for and a woman who is single totally in the sense that she has no dependants and can live with her parents or a friend and does not necessarily have to be a householder in her own right. I do not like making such distinctions since they are invidious, but when the Government are determined to oppress people in that category it is possible to point to even worse cases. I refer to widows with young families who cannot go out to work satisfactorily because they have to look after children. They can undertake part-time work, but they still have to maintain their home. That group of women finds it difficult to manage and the difficulties tend to wash off on to their children—and this is what will happen if we do nothing to help them.

It may be that this concession will not be acceptable to the Government. If so, will they look at the possibility of married persons' income tax allowances being made available to single women who are householders? It is surely the ultimate insult that a single person's allowance should apply to a woman whose husband has died and whose income as a result of that death has considerably declined. I put that forward as an alternative suggestion.

There is one other matter which I should like to mention relating to women in this category. Since they are occupied in bringing up families, they have probably severed connections with any job which they had previously. If a single woman is fully involved in bringing up a family, it is difficult for her to go out to work. She has not the opportunity to convert a lump sum pension into a small business or shop since because of family ties she cannot manage such a business. It is particularly obnoxious to treat a women's income from those sources as if it were investment and to suggest that it should be more heavily taxed. A man in a similar income position can often take over a small shop and turn his income into earned income and thereafter get out of the investment income surcharge. It is easier for a man to take such a course than for a woman. The investment income surcharge in the income range which we are now discussing hits a woman in that bracket extremely hard.

I notice the Financial Secretary shrinking deeper and deeper into his seat as he thinks about these arguments. I genuinely urge him to consider the great hardship which many of my constituents are suffering because of the present economic climate. It is quite uncharitable to heap upon them this extra burden. I hope that he will accept this group of amendments as one way of showing our concern for women who find themselves in the situation, which we have sought to outline.

7.30 p.m.

The Financial Secretary to the Treasury (Dr. John Gilbert)

I am grateful to hon. Gentlemen opposite for the spirit of moderation in which they have moved this important group of amendments.

The amendments seek to extend the number of categories for whom the investment income surcharge threshold will start at £1,500 rather than at £1,000, as will be the situation for the main body of taxpayers. They seek to include a number of categories. Amendment No. 3, moved by the hon. Member for Cornwall, North (Mr. Pardoe), seeks to include widows with children in full-time education. Amendment No. 7, moved by the hon. Member for Horsham and Crawley (Mr. Hordern), seeks to cover widowed mothers entitled to tax relief for one or more children, widows in receipt of the national insurance widow's benefit and widows of Service men and others, irrespective of age, who were either killed on active service or died from wounds suffered thereon. Finally, Amendment No. 7 relates to women at 60 years of age separated, divorced or widowed.

I think that I shall carry the Committee with me when I say that the problems of widows attract sympathy from successive Governments and Members of all political persuasions. We could not fail, as ordinary constituency Members of Parliament, let alone from the correspondence that we receive as Ministers, to be aware of the great difficulties facing widows, particularly those with small children. I hope that I shall be able to demonstrate to the satisfaction of the Committee that the Government are not without practical sympathy for women in this position, certainly through no wish of their own, even though—it is as well to disclose this now—I shall not be able to advise my hon. Friends to accept the amendments.

This Government have done a considerable amount for widows. We would wish to do more. Any Government would want to do more. Any Treasury Minister would like to say that the relief shall be greater for every deserving category than it has been so far. Any Minister in the Department of Health and Social Security would like to say that the benefits will be bigger and will cover a wider range of deserving cases than present circumstances allow. I hope to demonsrate that we are not only conscious of these problems but have given practical help right across the board to widows of all grades of means. The help that has been given is by no means confined to widows who are enjoying, if that is the right word, supplementary benefits as their main source of income.

I recognise the particular interest in this subject of the hon. Member for Staffordshire, South-West (Mr. Cormack). I know of his connection with the All-Party Women's Group. The hon. Gentleman and I have had various contacts with widows in Staffordshire, because the National Association of Widows was founded in that part of the country. No doubt Mrs. June Hemer has been in touch with the hon. Gentleman, just as she has been in touch with me. I have received delegations and discussed many problems at great length.

I am sure that the hon. Gentleman and his hon. Friend the Member for Horsham and Crawley will accept that while it is tragic for any woman to become a widow, particularly in view of events in Northern Ireland, the point is not so much how her husband is taken from her but the fact that he is taken from her. That is the real tragedy. However, we should not attempt to construct tax law on the basis of the circumstances in which a woman suffers a tragic loss of that kind. It would be invidious to try to discriminate between the different circumstances which lead to widowhood.

Mr. Hordern

Does the hon. Gentleman accept that a tribunal assessing the invidious and dreadful task of what a widow should get in these circumstances must take account of the tax position? Does he recognise that the tax position has been changed retrospectively after a tribunal has decided what course to pursue?

Dr. Gilbert

I accept that no tribunal can take account of future changes in tax policy. Precisely the same considerations apply where a widow, for example, receives damages as a result of a claim for damages arising from negligent driving. The court will allow damages and the same considerations will apply. I am sure that the hon. Gentleman, who is fair-minded, will recognise that we should not construct tax law to discriminate between various types of unfortunate tragic circumstances which can lead to widowhood.

Mr. Cormack

Surely there is an unanswerable argument for treating specially the kind of lump sum payment that comes to a woman because of the tragic sudden death of her husband, be it in a car crash or in Northern Ireland. It must be wrong to treat such a lump sump payment as if it were an ordinary lump sum producing investment income.

Dr. Gilbert

There are difficulties here. I recognise that the hon. Gentleman and his hon. Friend the Member for Horsham and Crawley are striving to achieve a form of equity. I hope that they will acquit me of deliberately trying not to strive for equity. However, I should point to other equally unfortunate circumstances where a woman may be widowed and it is impossible for her to prove negligence—a hit-and-run driver may have been responsible—and she gets no damages. She is worse off. She is in no way benefiting from the proposals. I am not suggesting that the hon. Member for Horsham and Crawley has deliberately overlooked that situation. I am merely pointing to the difficulties that arise when we try to identify one set of circumstances as particularly deserving of relief where they have created a tragic situation. It is difficult to legislate in that way. It would create a great sense of inequity on the part of many widows who would not benefit from a provision of this kind being enacted.

The hon. Member for Horsham and Crawley asked in parentheses whether I could give him any further up-to-date figures. I cannot without notice. I am sure that he will understand that it is impossible to be briefed on all the statistics that might be asked for on any one amendment. I will endeavour to get the figures for him and will write to him as soon as possible.

Turning to the more general principle on which I was touching in reply to the intervention by the hon. Member for Staffordshire, South-West, by the very nature of things tax relief can help only those widows who pay tax. The hon. Member for Horsham and Crawley said that many people have an investment income of over £1,000 a year. That is quite right. However, a great many widows are far more likely to be in the category of those without investment income of that kind.

Mr. Hordern

With the fall in Stock Market prices in the last two years, a life policy that matures now is more likely to produce an income of £1,000 when that sum is invested than for many years. Consequently, a large and growing number of people will be affected by this increase in tax. Therefore, the hon. Gentleman must tell us not only what the position is in a retrospective way but what he proposes to do about the situation in future.

Dr. Gilbert

I hope that the hon. Gentleman will accept that tax allowances fall to be reviewed in the Chancellor's annual Spring Budget. We have almost got to the point of downgrading the Spring Budget because we have so many Budgets and financial adjustments these days. That is not a bad thing. [Interruption.] Hon. Gentlemen opposite may mock, but I am virtually echoing the words of the Leader of the Opposition. I do not know how much weight he carries with all hon. Gentlemen opposite. Be that as it may, he said that he thought that it was no bad thing if the management of the economy was not confined to a single budgetary occasion each year. I entirely agree with him. The personal allowances still fall to be reviewed once a year, and my right hon. Friend will bring in Budget proposals in the next few weeks. That would be the appropriate occasion on which to debate changes in the present scale of allowances.

These amendments address themselves to those relatively—I emphasise the word "relatively" before anyone jumps down my throat—more fortunate widows who pay tax on an investment income of £1,000 a year or more. They are the only widows helped by this group of amendments. A widow with no, or more modest, investment income gets no relief. Of course I do not say that those who support the amendments are not concerned with all widows, just as I hope that they would acquit me of not being concerned about the widows here affected just because I cannot advise my hon. Friends to support the amendments.

This Government have increased national insurance pensions for all widows entitled to them, regardless of their means. We have increased them by the biggest amounts ever, not solely in money terms but in real terms. I do not seek any great plaudits for that. This is a matter of justice and of distribution of taxpayers' money which I think all taxpayers will welcome. I am sure that I carry all hon. Members with me in that respect.

Amendment No. 3 deals with the special category of widows with children in full-time education. Probably due to a drafting slip, it does not refer to the widow with only one child in full-time education, but I do not rest my defence on that. The Government have given a £50 increase in the additional personal allowances to all single parents, regardless of whether or not the children are in full-time education. In other words, it covers widows with children who are too young to be in full-time education and who are, therefore, inhibited from going out to work. One would have hoped to do more, but at least that fact is another piece of evidence that the plight of single-parent families, including those of widows, is one of which we are very much aware.

Amendment No. 5 introduces a technical difficulty by producing a new element of sex discrimination in the tax system. To short-circuit the argument, it would make available to single women—I know that widows do not like being called single women, but it is just a form of shorthand—the benefit of relief at 60 instead of 65 so as to bring the age trigger into line with national insurance benefits.

Mr. Cormack

Surely the hon. Gentleman could just call them widows. That is shorter than "single women".

7.45 p.m.

Dr. Gilbert

With respect, this debate covers more than widows. That is why I am using the shorthand. I could read out the list, but I am trying to assist the Committee.

There are considerable difficulties about introducing this feature of social security law into the tax system. When the Royal Commission on Taxation last considered this matter, it recommended against such discrimination.

The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) talked eloquently about the need for special help for women who had been, but are no longer, married. I am very attracted to the idea of what I would call a separate head of household allowance, and what he described as a home owner or house owner allowance, and I have been looking into this for some months. I did not need the hon. Gentleman to stimulate my interest. I make no commitments or prognostications but I assure the hon. Gentleman that we are not oblivious to this consideration. If it were decided that something should be done, nothing is likely to be done quickly because there are great technical difficulties, but I do take the point.

The hon. Member for Staffordshire, South-West said that there was nothing in the Bill for anyone, that it was ungenerous. That might be true of some passages, but one of its main features, which may be repugnant to the Conservatives, gives probably the biggest relief to widows that any Finance Bill has ever given—and gives it, moreover, to that category of widow which is far more represented among the constituents of Conservative Members than among mine. Under the capital transfer tax provisions, there will be no tax at all henceforth on assets passing on death from one spouse to another.

I am very proud to be part of a Government who have done that. That is not an occasion which should attract taxation. When a widow—the same consideration applies to a widower—is suffering great distress, she should not simultaneously have to sell up her home and move immediately into far more modest circumstances than her reduced income would require. We saw no social purpose in that feature of our tax system, which has existed for many years.

I do not wish to compete with Conservative Members in this respect, but when they consider what we have done over widows' pensions, in relation to the investment income surcharge as it relates to single, divorced and separated women, and particularly for the more fortunate widows who will benefit from the capital transfer tax, I hope that they will acquit us of any charge of not being conscious of the difficulties of widows and single-parent families.

Mr. Peter Rees

Of course one takes the Minister's point and recognises what he is trying to do in the capital transfer tax, but he does not appear to have grasped that that relief will help only those women who have not yet been widowed. The relief suggested by these amendments would be gained by those who have already been widowed and would get no relief from estate duty. That is the point that he has signally failed to meet.

Dr. Gilbert

I am grateful to the hon. and learned Gentleman, who always makes perceptive interventions. I do not think that he is technically quite right that no woman who has not yet been widowed will benefit from the capital transfer tax provisions. In this respect, as far as widows are concerned, I think that he will find—I speak from memory—that the technicalities of the clause go back to Budget Day last year. But I take his point.

As I have made quite clear throughout my remarks this evening, we wish that we could do more. We have sought to proceed along the line I have indicated. All hon. Members can say that they wish that one could do more, and one would agree with that. But we have done a lot. I regret that I have to advise my hon. Friends to resist these amendments, but I assure the House that it is out of no lack of sympathy whatever for the difficult circumstances of widows or any of those responsible for raising children unaided.

Question put, That the amendment be made:—

The Committee proceeded to Division—

Mr. John Wells (Maidstone)

(seated and covered): On a point of order, Sir Myer. I have been standing in the Members' Lobby for at least 80 seconds, if not for 120 seconds, with other hon. Members, trying to get into the Division Lobby. There has been a total traffic jam in the Central Lobby, and I and other hon. Members have been endeavouring to get in.

Mr. Andrew Bowden (Brighton, Kemptown)

(seated and covered): Further to that point of order, Sir Myer. I, too, was unable to get through.

The Deputy Chairman

The point of order raised by the hon. Member for Maidstone (Mr. Wells) is one that hardly concerns the Chair. It is remarkable in that we have not got a full Committee voting this evening. This difficulty does not arise when there are probably another hundred-odd Members voting. I can only conclude that for some unreasonable circumstance there was that congestion, but I am afraid that I cannot help the hon. Member.

Mr. F. A. Burden (Gillingham)

(seated and covered): Further to that point of order, Sir Myer. While accepting the problems that it would create for the Chair, may I ask whether it would be possible by some means to ensure a little speeding up, because there were many people standing in the Lobby?

The Deputy Chairman

I assure the hon. Gentleman that I shall take every step to ensure that Members get freedom of access to the Lobby.

Mr. Bowden

(seated and covered): Further to that point of order, Sir Myer. I was unable to get through the door to the Lobby because of hon. Members in front of me. There was no question of dawdling. I just could not get through.

8.0 p.m.

The Deputy Chairman

I do not know how far the Chair can deal with that point. It seems to me that if the hon. Member raised the matter with the 1922 Committee he might be able to get a satisfactory answer. I will certainly look into the question of congestion in the Lobby itself.

Mr. J. Enoch Powell (Down, South)

(seated and covered): Is it not an

established point of order, Sir Myer—[Interruption.]

The Deputy Chairman

Order. I appeal to hon. Members to give me an opportunity to hear this point of order.

Mr. Powell

(seated and covered): Is it not an established point of order, Sir Myer, that an hon. Member is not seated and covered for the purpose of raising a point of order during a Division if his head is covered merely by an Order Paper or some similar article?

The Deputy Chairman

I agree that he should be covered with a hat. Had the hon. Member for Brighton, Kemptown (Mr. Bowden) covered his head with an ordinary newspaper I think I would have ruled him out of order. His head seems to have been covered by a piece of cardboard. I dare say the right hon. Member for Down, South (Mr. Powell) is quite right and that the hon. Member should have been covered with a hat.

The Committee divided: Ayes 248, Noes 267.

Division No. 54.]	AYES	[7.50 p.m.
Adley, Robert	Corrie, John	Gorst, John
Aitken, Jonathan	Costain, A. P.	Gow, Ian (Eastbourne)
Alison, Michael	Crawford, Douglas	Gower, Sir Raymond (Barry)
Arnold, Tom	Critchley, Julian	Grant, Anthony (Harrow C)
Atkins, Rt Hon H. (Spelthorne)	Crouch, David	Gray Hamish
Awdry, Daniel	Crowder, F. P.	Grieve, Percy
Bain, Mrs Margaret	Dean, Paul (N Somerset)	Grimond, Rt Hon J.
Baker, Kenneth	Dodsworth, Geoffrey	Grist, Ian
Banks, Robert	Douglas-Hamilton, Lord James	Grylls, Michael
Bell, Ronald	Drayson, Burnaby	Hall, Sir John
Bennett, Dr Reginald (Fareham)	du Cann, Rt Hon Edward	Hall-Davis, A. G. F.
Benyon, W.	Durant, Tony	Hamilton, Michael (Salisbury)
Berry, Hon Anthony	Dykes, Hugh	Hannam, John
Biffen, John	Eden, Rt Hon Sir John	Harvie Anderson, Rt Hon Miss
Biggs-Davison, John	Edwards, Nicholas (Pembroke)	Havers, Sir Michael
Blaker, Peter	Elliott, Sir William	Hawkins, Paul
Body, Richard	Emery, Peter	Hayhoe, Barney
Boscawen, Hon Robert	Evans, Gwynfor (Carmarthen)	Henderson, Douglas
Boyson, Dr Rhodes (Brent)	Ewing, Mrs Winifred (Moray)	Hicks, Robert
Braine, Sir Bernard	Eyre, Reginald	Higgins, Terence L.
Brittan, Leon	Fairgrieve, Russell	Hooson, Emlyn
Brotherton, Michael	Farr, John	Hordern, Peter
Brown, Sir Edward (Bath)	Fell, Anthony	Howe, Rt Hon Sir Geoffrey
Bryan, Sir Paul	Finsberg, Geoffrey	Howell, David (Guildford)
Buchanan-Smith, Alick	Fisher, Sir Nigel	Howells, Geraint (Cardigan)
Buck, Antony	Fletcher, Alex (Edinburgh N)	Hunt, John
Budgen, Nick	Fookes, Miss Janet	Hurd, Douglas
Bulmer, Esmond	Fowler, Norman (Sutton C'f'd)	Hutchison, Michael Clark
Carlisle, Mark	Fox, Marcus	Irving, Charles (Cheltenham)
Carr, Rt Hon Robert	Fraser, Rt Hon H. (Stafford & St)	James, David
Chalker, Mrs Lynda	Freud, Clement	Jenkin, Rt Hon P. (Wanst'd & W'df'd)
Channon, Paul	Galbraith, Hon. T. G. D.	Johnson Smith, G. (E Grinstead)
Churchill, W. S.	Gardiner, George (Reigate)	Joseph, Rt Hon Sir Keith
Clark, Alan (Plymouth, Sutton)	Gardner, Edward (S Fylde)	Kaberry, Sir Donald
Clark, William (Croydon S)	Gilmour, Rt Hon Ian (Chesham)	Kellett-Bowman, Mrs Elaine
Clarke, Kenneth (Rushcliffe)	Gilmour, Sir John (East Fife)	Kershaw, Anthony
Cockcroft, John	Glyn, Dr Alan	Kilfedder, James
Cooke, Robert (Bristol W)	Godber, Rt Hon Joseph	Kimball, Marcus
Cope, John	Goodhew, Victor	King, Evelyn (South Dorset)
Cormack, Patrick	Goodlad, Alastair	King, Tom (Bridgwater)
Kitson, Sir Timothy	Nelson, Anthony	Speed, Keith
Knight, Mrs Jill	Neubert, Michael	Spence, John
Knox, David	Newton, Tony	Spicer, Jim (W Dorset)
Lamont, Norman	Nott, John	Spicer, Michael (S Worcester)
Lane, David	Onslow, Cranley	Sproat, Iain
Latham, Michael (Melton)	Oppenheim, Mrs Sally	Stainton, Keith
Lawrence, Ivan	Osborn, John	Stanbrook, Ivor
Lawson, Nigel	Page, Rt Hon R. Graham (Crosby)	Stanley, John
Le Marchant, Spencer	Page, John (Harrow West)	Steel, David (Roxburgh)
Lester, Jim (Beeston)	Parkinson, Cecil	Steen, Anthony (Wavertree)
Lewis, Kenneth (Rutland)	Pattie, Geoffrey	Stewart, Donald (Western Isles)
Lloyd, Ian	Peyton, Rt Hon John	Stewart, Ian (Hitchin)
Loveridge, John	Pink, R. Bonner	Stokes, John
Luce, Richard	Price, David (Eastleigh)	Stradling Thomas, J.
MacCormick, Iain	Prior, Rt Hon James	Taylor, R. (Croydon NW)
McCrindle, Robert	Pym, Rt Hon Francis	Taylor, Teddy (Cathcart)
Macfarlane, Neil	Raison, Timothy	Tebbit, Norman
MacGregor, John	Ralhbone, Tim	Thatcher, Rt Hon Margaret
Macmillan, Rt Hon M. (Farnham)	Rees, Peter (Dover & Deal)	Thomas, Dafydd (Merioneth)
McNair-Wilson, M. (Newbury)	Rees-Davies, W. R.	Thomas, Rt Hon P. (Hendon S)
McNair-Wilson, P. (New Forest)	Reid, George	Thompson, George
Madel, David	Renton, Rt Hon Sir D. (Hunts)	Townsend, Cyril D.
Marshall, Michael (Arundel)	Renton, Tim (Mid-Sussex)	van Straubenzee, W. R.
Marten, Neil	Rhys Williams, Sir Brandon	Vaughan, Dr Gerard
Mates, Michael	Ridley, Hon Nicholas	Viggers, Peter
Mather, Carol	Ridsdale, Julian	Wainwright, Richard (Colne V)
Maude, Angus	Rifkind, Malcolm	Wakeham, John
Mawby, Ray	Roberts, Michael (Cardiff NW)	Walder, David (Clitheroe)
Maxwell-Hyslop, Robin	Roberts, Wyn (Conway)	Walker, Rt Hon P. (Worcester)
Mayhew, Patrick	Rodgers, Sir John (Sevenoaks)	Walters, Dennis
Meyer, Sir Anthony	Rossi Hugh (Hornsey)	Warren, Kenneth
Miller, Hal (Bromsgrove)	Rost, Peter (SE Derbyshire)	Watt, Hamish
Mills, Peter	Royle, Sir Anthony	Weatherill, Bernard
Mitchell, David (Basingstoke)	Sainsbury, Tim	Welsh, Andrew
Moate, Roger	Scott, Nicholas	Wiggin, Jerry
Monro, Hector	Shaw, Giles (Pudsey)	Wigley, Dafydd
Montgomery, Fergus	Shelton, William (Streatham)	Wilson, Gordon (Dundee E)
Moore, John (Croydon C)	Shepherd, Colin	Winterton, Nicholas
More, Jasper (Ludlow)	Shersby, Michael	Young, Sir G. (Ealing, Acton)
Morgan-Giles, Rear-Admiral	Silvester, Fred	Younger, Hon George
Morris, Michael (Northampton S)	Sims, Roger
Morrison, Charles (Devizes)	Sinclair, Sir George	TELLERS FOR THE AYES:
Morrison, Peter (Chester)	Skeet, T. H. H.	Mr. John Pardoe and
Neave, Airey	Smith, Dudley (Warwick)	Mr. Cyril Smith.
NOES
Allaun, Frank	Cohen, Stanley	Evans, John (Newton)
Archer, Peter	Coleman, Donald	Ewing, Harry (Stirling)
Armstrong, Ernest	Colquhoun, Mrs Maureen	Faulds, Andrew
Ashton, Joe	Concannon, J. D.	Fernyhough, Rt Hon E.
Atkins, Ronald (Preston N)	Cook, Robin F. (Edin C)	Fitt, Gerard (Belfast W)
Atkinson, Norman	Cox, Thomas (Tooting)	Flanneiy, Martin
Bagier, Gordon A. T.	Craigen, J. M. (Maryhill)	Fletcher, Raymond (Ilkeston)
Barnett, Guy (Greenwich)	Cronin, John	Fletcher, Ted (Darlington)
Barnett, Rt Hon Joel	Crosland, Rt Hon Anthony	Foot, Rt Hon Michael
Bates, Alf	Cryer, Bob	Ford, Ben
Bean, R. E.	Cunningham, Dr J. (Whiteh)	Forrester, John
Bennett, Andrew (Stockport N)	Dalyell, Tam	Fowler, Gerald (The Wrekin)
Bidwell, Sydney	Davidson, Arthur	Fraser, John (Lambeth, N'w'd)
Bishop, E. S.	Davies, Bryan (Enfield N)	Garrett, John (Norwich S)
Blenkinsop, Arthur	Davies, Denzil (Llanelli)	Garrett, W. E. (Wallsend)
Boardman, H.	Davies, Ifor (Gower)	George, Bruce
Booth, Albert	Davis, Clinton (Hackney C)	Gilbert, Dr John
Bottomley, Rt Hon Arthur	Deakins, Eric	Ginsburg David
Boyden, James (Bish Auck)	de Freitas, Rt Hon Sir Geoffrey	Golding, John
Bradley, Tom	Delargy, Hugh	Gould, Bryan
Broughton, Sir Alfred	Dell, Rt Hon Edmund	Gourlay, Harry
Brown, Hugh D. (Provan)	Dempsey, James	Grant, George (Morpeth)
Brown, Robert C. (Newcastle W)	Doig, Peter	Grant, John (Islington C)
Buchan, Norman	Dormand, J. D.	Grocott, Bruce
Buchanan, Richard	Douglas-Mann, Bruce	Hamilton, James (Bothwell)
Butler, Mrs Joyce (Wood Green)	Duffy, A. E. P.	Hamilton, W. W. (Central Fife)
Callaghan, Jim (Middleton & P)	Dunn, James A.	Hamling, William
Campbell, Ian	Dunnett, Jack	Hardy, Peter
Canavan, Dennis	Dunwoody, Mrs Gwyneth	Harper Joseph
Cant, R. B.	Eadie, Alex	Harrison, Walter (Wakefield)
Carmichael, Neil	Edelman, Maurice	Hattersley, Rt Hon Roy
Carter, Ray	Edge, Geoff	Hatton, Frank
Carter-Jones, Lewis	Edwards, Robert (Wolv SE)	Hayman, Mrs Helene
Cartwright, John	Ellis, Tom (Wrexham)	Heffer, Eric S.
Castle, Rt Hon Barbara	English, Michael	Hooley, Frank
Clemitson, Ivor	Ennals, David	Horam, John
Cocks, Michael (Bristol S)	Evans, Ioan (Aberdare)	Hoyle, Douglas (Nelson)

Huckfield, Les	Mendelson, John	Shaw, Arnold (Ilford South)
Hughes, Rt Hon C. (Anglesey)	Mikardo, Ian	Sheldon, Robert (Ashton-u-Lyne)
Hughes, Mark (Durham)	Millan, Bruce	Silkin, Rt Hon John (Deptford)
Hughes, Robert (Aberdeen N)	Miller, Dr M. S. (E Kilbride)	Silverman, Julius
Hughes, Roy (Newport)	Miller, Mrs Millie (Ilford N)	Small, William
Hunter, Adam	Mitchell, R. C. (Soton, Itchen)	Smith, John (N Lanarkshire)
Irvine, Rt Hon Sir A. (Edge Hill)	Molloy, William	Snape, Peter
Jackson, Miss Margaret (Lincoln)	Moonman, Eric	Spearing, Nigel
Janner Greville	Morris, Alfred (Wythenshawe)	Spriggs, Leslie
Jay, Rt Hon Douglas	Morris, Charles R. (Openshaw)	Stallard, A. W.
Jeger, Mrs Lena	Morris, Rt Hon J. (Aberavon)	Stewart, Rt Hn M. (Fulham)
Jenkins, Hugh (Putney)	Mulley, Rt Hon Frederick	Stoddart, David
John, Brynmor	Murray, Ronald King	Stott, Roger
Johnson, James (Hull West)	Newens, Stanley	Strang, Gavin
Johnson, Walter (Derby S)	Noble, Mike	Swain, Thomas
Jones, Alec (Rhondda)	Oakes, Gordon	Taylor, Mrs Ann (Bolton W)
Jones, Barry (East Flint)	Ogden, Eric	Thomas, Jeffrey (Abertillery)
Jones, Dan (Burnley)	O'Malley, Rt Hon Brian	Thomas, Ron (Bristol NW)
Judd, Frank	Orbach, Maurice	Thorne, Stan (Preston South)
Kaufman, Gerald	Ovenden, John	Tierney, Sydney
Kelley, Richard	Owen, Dr David	Tinn, James
Kerr, Russell	Padley, Walter	Tomlinson, John
Kilroy-Silk, Robert	Palmer, Arthur	Torney, Tom
Kinnock Neil	Park, George	Tuck, Raphael
Lambie, David	Parker, John	Urwin, T. W.
Lamborn, Harry	Parry, Robert	Wainwright, Edwin (Dearne V)
Lamond, James	Pavitt, Laurie	Walden, Brian (B'ham, L'dyw'd)
Leadbitter, Ted	Peart, Rt Hon Fred	Walker, Harold (Doncaster)
Lee, John	Pendry, Tom	Walker, Terry (Kingswood)
Lestor, Miss Joan (Eton & Slough)	Perry, Ernest	Watkins, David
Lewis, Arthur (Newham N)	Phipps, Dr Colin	Watkinson, John
Lewis, Ron (Carlisle)	Prentice, Rt Hon Reg	Weetch, Ken
Lipton, Marcus	Prescott, John	Weitzman, David
Litterick, Tom	Price, C. (Lewisham W)	Wellbeloved, James
Loyden, Eddie	Price, William (Rugby)	White, Frank R. (Bury)
Luard, Evan	Radice, Giles	White, James (Pollok)
Lyon, Alexander (York)	Rees, Rt Hon Merlyn (Leeds S)	Willey, Rt Hon Frederick
Lyons, Edward (Bradford W)	Richardson, Miss Jo	Williams, Alan (Swansea W)
Mabon, Dr J. Dickson	Roberts, Albert (Normanton)	Williams, Alan Lee (Hornch'ch)
McCartney, Hugh	Roberts, Gwilym (Cannock)	Wlliams, Rt Hon Shirley (Hertford)
McElhone, Frank	Robertson, John (Paisley)	Williams, W. T. (Warrington)
MacFarquhar, Roderick	Roderick, Caerwyn	Wilson, Alexander (Hamilton)
Mackenzie, Gregor	Rodgers, George (Chorley)	Wilson, Rt Hon H. (Huyton)
McMillan, Tom (Glasgow C)	Rodgers, William (Stockton)	Wilson, William (Coventry SE)
Madden, Max	Rooker, J. W.	Wise, Mrs Audrey
Magee, Bryan	Roper, John	Woodall, Alec
Mahon, Simon	Rose, Paul B.	Woof, Robert
Marks, Kenneth	Ross, Rt Hon W. (Kilmarnock)	Wrigglesworth, Ian
Marquand, David	Rowlands, Ted	Young, David (Bolton E)
Marshall, Dr Edmund (Goole)	Ryman, John
Marshall, Jim (Leicester S)	Sandelson, Neville	TELLERS FOR THE NOES:
Mason, Rt Hon Roy	Sedgemore, Brian	Miss Betty Boothroyd and
Meacher, Michael	Selby, Harry	Mr. John Ellis.
Mellish, Rt Hon Robert

Question accordingly negatived.

[Mr. BRYANT GODMAN IRVINE in the Chair]

Sir John Hall

I beg to move Amendment No. 4, in page 4, line 1, after 'more', insert' 'or (ii) he is a disabled person or a registered blind person; and for the purposes of this section a disabled person shall be an individual who suffers at any time in the year of assessment from any physical or mental handicap as a result of any injury or the medical administration of drugs of any kind or has been physically or mentally handicapped since birth and a registered blind person means a person registered as a blind person in a register compiled under section 29 of the National Assistance Act 1948 or under any corresponding enactment for the time being in force in Northern Ireland'. The purpose of this amendment is perfectly clear. It is to give relief to disabled persons and registered blind persons. I agree that the wording may be faulty. The definition of a registered blind person is already used in the Income Tax Acts, following the additional personal allowances which were granted in 1970, but I have searched in vain for a generally and commonly acceptable definition of a blind person, and in consequence of my failure to find such a definition I have had to invent one. This definition which appears in the amendment has been drawn widely enough to include children affected directly or indirectly by drugs such as thalidomide.

The Committee, I think, will agree that this is a very modest amendment. In fact, considering the kind of cases to which it could apply, many hon. Members, perhaps on both sides of the Committee, might think it far too modest. Hon. Members have only to think of the many sad cases of which they know in their own constituencies—those who from birth or from later injury have suffered illness and disablement, are blind or are so totally disabled physically or mentally as to be incapable of making any real contribution towards earning their own livelihood. They include spastics, the mentally retarded, people suffering from muscular dystrophy and others suffering from many crippling and disabling diseases of which we all have knowledge in our work as Members of Parliament in our constituencies and elsewhere.

This amendment will help those who have received, for example, heavy damages because of serious injury sustained as a result of a road accident or an industrial accident. It will help those who are now, or may be at some time later, through their parents' estate, living on an investment income, and all of whom could live in their own homes and not be a total charge on the State whilst their net incomes permit. This is an important point. We all know the pressure on the limited number of homes throughout the county, most of which are run by local authorities, to cater for the really seriously disabled. We surely ought to do everything we can to encourage people suffering from those conditions to continue living in their own homes.

I think the easiest way to deal with this matter is to quote some examples, which I take mainly from my own constituency, of the kind of cases which I have in mind. There is in my constituency a man aged 45, married with two young children, who not long ago sustained a very serious accident as a result of which he was completely paralysed. He is unable to move. He has to be lifted around. He was awarded substantial damages which invested give him an income which enables him to hire medical help to supplement the nursing which is already given to him by his wife. His wife cannot go out to work, for two reasons. First she has two young children; and second, she has to do a good deal of the nursing which her husband requires. They are managing to keep going in their own home on this income, but only by the most careful budgeting.

They were very relieved when this relief of taxation was first introduced, although they have seen it being eaten away month by month by rapidly growing inflation, but they thought that this year at least they would be able to coninue, having found, as a result of the debates in this House on the last Finance Bill, that the concession as it had been granted originally was to be continued. Now, as a result of the proposals before us, if this amendment is not accepted, they will find themselves in a much more difficult position.

The second case is that of a spastic child now 14 or 15 years of age. The parents are denying themselves every little luxury in order to build up in their lifetime some capital sum which they can leave behind them and which, after payment of the appropriate duty, will leave an income which will ensure that the spastic child can be cared for, not in a State home but in a home of their own choosing and with people who they will be certain will look after the child.

The third case is that of a professional woman, a brilliant woman in her day, who is now so crippled at the age of 50 with rheumatoid arthritis that she cannot work. She is living on an investment income which was built up in very small part from inherited money but largely by savings which she accumulated as a result of her professional skills until she could no longer go on working. This income has been rapidly eaten into because of inflation. She feels that this proposed change in the Finance Bill is really the last straw.

Not very much money is involved in this, but when someone is budgeting to the last penny everything counts, and when someone is desperately struggling to keep going in the most appalling physical conditions, of which the Under-Secretary of State for Health and Social Security, who, I am glad to see, is present, is as well aware as anyone, these blows, small though they may be, seem to be the last straw. In some cases they seem to take away the will to continue or the will to live.

Clause 5 unamended will increase the burden of tax on these people. It will deliberately impose another handicap on lives which are already almost totally handicapped, and with inflation at the same time rapidly destroying the modest incomes people like this possess. When I recall the fervent speeches by Labour Members urging repeatedly that greater help should be given to the disabled at all times, when I recall the work of the Under-Secretary in these matters and the considerable work of the hon. Member for Stoke-on-Trent, South (Mr. Ashley) I feel sure that the Chief Secretary will feel prepared to accept the effect of the amendment if not its form. I would be the first to agree that it might be defective in its definition of a disabled person.

No one can deny that disabled people of this kind, too handicapped to look after themselves and requiring constant attention, unable to make any real contribution to their own earnings, should not have to suffer this additional impost because of some abstract political theory of the Government about how investment income should be treated. I am certain that I am not appealing in vain to the Chief Secretary to exercise compassion here.

I have been unable to cost the proposal. It is difficult to cost, but I cannot believe that it will be a great sum. Although it is a modest amount, if the Chief Secretary were to make a concession here it would make a big difference to people whose lives do not have a great deal of sunshine or a great deal of hope.

Sir David Renton (Huntingdonshire)

I must disclose strong personal reasons for hoping that this amendment, or something like it, will be accepted. I disclosed to the House some years ago that the youngest of my three daughters was severely handicapped, mentally and physically. She cannot feed herself, undress or dress herself, and she can walk only if she is supported. She would not know whether she were in a State home or a charitable foundation, where she is, apart from holiday times when we have her at home.

Naturally this is a problem that vie have learned to live with, but I felt it right, several years ago, to make some kind of permanent provision for her. I need not go into all the motives, but I hope that the House will accept that they were worthy. I provided an income from a settlement that I made and that income would exceed the amount with which we are concerned in the amendment. The charitable foundation gets that income. It is not essentially a private home, because a large proportion of the young people there—children and adults—are sent by local authorities, who pay for them. No local authority has to pay for our child.

It came as a real blow to know that we were going to have to pay 15 per cent. or 10 per cent., whatever it is, as a surcharge on the provision we had made—a fairly modest provision, since I am neither a poor man nor a rich man—for our daughter. It was in the interests of her sisters that I thought it right to make this provision for my daughter, so that she would not be a burden when her parents were gone. I felt it was in my youngest daughter's interest and in the interest of the charity concerned. It so happens that it must also be in the public interest—and that stands to reason.

I do not want to labour an essentially personal matters. The example that I have given could be multiplied many times over the country. I speak from experience, as one who is connected with the National Society for Mentally Handicapped Children. All I can say is that I hope that the amendment that my hon. Friend the Member for Wycombe (Sir J. Hall) has moved so clearly and vividly will not be resisted, and that in the spirit of compassion which is possible on both sides of this Committee the amendment will receive a favourable reception from the Treasury bench.

8.15 p.m.

Mr. Robert Boscawen (Wells)

My hon. Friend the Member for Wycombe (Sir J. Hall) and my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) have made moving and eloquent speeches in favour of this modest amendment. The amendment comes against a background of the State's provision for the severely disabled being hopelessly inadequate. If the background had been other than that and the State had been able to provide substantially for all the very severely disabled people one might take a different view of the amendment, but that is not the case. That is all the more reason, therefore, why the State should give encouragement and support, where funds are available, to help the severely disabled.

I fully realise that the vast number of severely disabled people are not able to get help from an invested sum, whether that sum is in the form of damages, a grant, or something from parents. We have seen how the Labour Party has been able to provide only a small amount of money for the very severely handicapped who have never been able to work and build up a contribution to State benefits. It is a miserable and derisory sum of only £11 million. When my party was in Government we were able to do no better, and the programme we put forward at the last election was better than what has been offered now, but not all that much better.

So the background to the amendment is that the State is not able to help a great deal. It can offer practically nothing towards the cost of specialist education that is needed by severely disabled children who can respond to it. I know this very well, because in my constituency there is a remarkable experiment in the education of handicapped young people. I see and know how costly this is and I see the parents who, without help in many cases, struggle to find money to pay for the education of their children. Anything we can do to help, even though it may only be help for a small number, should be done.

The more we can do to help the severely disabled to stay in their own homes, the more we save the cost to the State. This is a vitally important matter, and it is even more important to keep them in their own homes, because that means keeping the family together. My right hon. and learned Friend explained how his own child had to go into residential care for part of the year.

This issue should not divide the Committee. Where funds are available to help severely handicapped people, we should make the best use of them. We should not tax, at a surcharge rate, income that those people receive as a result of settlements. The amendment does not even go so far as to say that; it merely raises the threshold by £500 and brings in a smaller sum.

Those who have become severely disabled through an accident or illness, having built up State benefit contributions throughout their working life, will be drawing about £1,000 a year under the State provisions, if they are married and have one or two children. They will receive that sum through the attendance allowance and the other benefits available to them. That is not taxed. But other people who have not been able to work, probably because they have a congenital handicap, will never be able to receive the attendance allowance at that rate. Under the Bill we are discussing in Committee upstairs they will receive £6.90 a week, which is not even disregarded for supplementary benefit. Therefore the sum in the Bill, which raises the thresh-hold only from £1,000 to £1,500, is miserable. It is little more than the State is providing to those who have been fortunate enough to build up contributions for the State benefit.

The Chief Secretary should carefully consider this modest amendment and, even if its wording is not quite correct, find a way to accept its intention.

Mr. Joel Barnett

Nobody could have failed to be moved by the way in which the hon. Member for Wycombe (Sir J. Hall) opened the debate and then by the other speeches, particularly that of the right hon. and learned Member for Huntingdonshire (Sir D. Renton). We all know of his personal problem, and it is moving to hear of it. The people concerned are those who evoke the greatest sympathy from us all. In that sense, it is nothing like a political issue.

The hon. Member for Wycombe was right to say that it is impossible to estimate what would be the cost of the amendment, because there is no information about the distribution of investment income among the disabled and the blind. In any case, I shall not rest my arguments on the cost.

Similar amendments relating to the disabled have been moved for many years by hon. Members on both sides—[Interruption.]—I could quote speeches by Treasury Ministers in the Government of the right hon. Lady's party, but I do not think that that is appropriate. Amendments relating to the disabled have been answered by Treasury Ministers of successive Governments.

Mrs. Thatcher

What the Chief Secretary is doing in the Bill is wilfully to make the situation worse for this group of disabled people.

Mr. Barnett

I was trying to make the point that tax concessions and relief for disabled people have been debated and answered by successive Governments over many years.

My reply has nothing to do with abstract theory. Nobody can feel happy about having to say that he cannot accept the amendment, which I have to do. There are practical problems. The Opposition have tried hard to meet them in their definitions. I regret to say that, through no fault of their own, it was not possible to do so. The definition is much too wide. I am advised that any individual could claim, even if he had suffered an injury through drugs, or had a sprained wrist or ankle, instead of suffering a serious handicap. Any minor mishap would qualify under the amendment.

The test is much too broad. To refine it would involve all the problems of medical assessment, which it would be almost impossible to impose on the Inland Revenue.

Mr. Boscawen

Does not the right hon. Gentleman agree that the Government already have a mechanism for defining the severely disabled, in the attendance allowance, and will shortly have another one, in the non-contributory invalidity pension? Both cover well-defined small groups of people. Perhaps another amendment could be introduced on Report which would confine the benefits of the amendment to them.

Mr. Barnett

I could always introduce another amendment on Report, but I am advised that those definitions would not cover everybody who should be covered, or would include some who should not be included.

The question of the blind is very different, but the amendment would help only those blind people who happened to have investment income of more than £1,000 a year. It would do nothing to help those who have no investment income, or have investment income of less than £1,000 a year.

Apart from that, there is a serious objection on grounds of principle relating to the tax system. I supported the whole idea of unification introduced by the Conservative Government. I seem to recall having suggested something similar many years previously. I support the system, which was to ensure that the function of graduation in the tax system would be dealt with not against investment income but against income generally, in the normal way, thus benefiting the taxpayer whether or not he had investment income. That is the general principle behind unification.

Therefore, the amendment is the wrong way to help the type of individual concerned. One could think of many categories that one would want to help. The Opposition have tabled amendments dealing with a number of different categories of people whom they seek to help. One can think of many more, but then there would be a duplication of allowances against investment income and against income generally. We would then duplicate the complications that we always have in relation to income generally. That was not what was intended, and that was not the understanding when unification was introduced.

When all that is said, there is the major argument whether the amendment is the appropriate way in which to give assistance to this category of person. There are serious objections against tax reliefs for investment income. I take the point of the right hon. and learned Member for Huntingdonshire that we are not talking very often about wealthy people. I venture to doubt whether tax relief is the best way to help the kind of person that we are discussing.

The amendment seeks to help not all those people with investment income who are disabled but those disabled persons who have an investment income in excess of £1,000 a year. For the reasons that I have set out, the tax system is not the best way of helping the disabled. Successive Governments have had to resist reliefs because of the definition problem. When we consider giving reliefs against ordinary tax—this has nothing to do with investment income—the same arguments apply. For the reasons that I have given, they apply even more to investment income.

The real way out of this difficulty is to help with grants of various kinds. They help the people who have no investment income. I take the point that what successive Governments have been able to do in that direction has been inadequate. I am sure that my hon. Friend the Under-Secretary of State for Health and Social Security, who has responsibility for the disabled, would love to do even more. There is always the question of priorities. As Chief Secretary, I am particularly concerned with priorities and in deciding how much can be spared at a given time. Despite that, we have increased the attendance allowance, we have a new invalidity care allowance, a new noncontributory invalidity pension, and an improved mobility allowance. I hasten to add that none of them provide as much as we would like to offer, but that is surely the best way in which to help.

That argument has always been the one put forward by previous Governments. I regret to have to say that it is right. It is with regret that I have to say that I cannot accept the amendment. I hope that the right hon. Member for Finchley (Mrs. Thatcher) and her hon. Friends will feel that for the reasons I have given it will not be necessary to press the amendment.

Mr. David Howell

Having listened to the Chief Secretary, I am left overwhelmingly with the impression that the Government do not understand what they are doing. Many of the right hon. Gentleman's arguments seem to come out of past briefs used by Treasury Ministers. Tonight they have been addressed to a different situation. We are not arguing for additional relief for a certain group; we are asking that the Government desist in their determination to put an additional burden on the group of people that we are discussing. That is the language in which this matter should be discussed.

The Chief Secretary talks about the amendment's seeking to introduce the wrong method of giving assistance. We say that this is the wrong group to lay an additional burden upon. It is the wrong group from whom to take away assistance. The right hon. Gentleman is turning the argument upside down. He talks about definitions not existing. I do not know what his hon. Friend the Under-Secretary of State for Health and Social Security would say on that. Adequate definitions have been put forward.

The right hon. Gentleman says that he is advised that what is contained in the amendment does not add up, but his arguments are not addressed to the issue that we are debating. We ask the Government at this stage not to put an additional tax impost on disabled people who have an investment income. It is an absurd argument to suggest that for the Government to decide very generously not to put a burden on them would benefit only those with an investment income. That is Alice in Wonderland talk. Only those with investment income are about to be hit by the additional impost that the Government are now retrospectively putting upon them. To say that the Government cannot accept the amendment because only people with investment income would benefit is an absurdity. That is a merry-go-round argument, which contains the circular twist not to face up to a situation which the right hon. Gentleman seems determined to avoid.

I do not believe that the Minister or those who wrote his brief understand what the Government are doing. They are putting an unnecessary and additional burden upon a group of people who, if their income is taken away by taxation and extra costs, will probably run into additional difficulties. That will involve extra costs being put upon the State. I know that that is the philosophy of the Labour Party. It seems that it does not like things being done through the tax system. It wants them to be done through the social security system. It is prepared, in this kind of situation, to go to these lengths, which seem to us to be quite undue, without any feeling of generosity. It is prepared to go to such lengths in the name of its determination to pursue what has been described as a vindictive and additional tax burden laid on a group of people who can least afford to carry it.

The Chief Secretary knows what he is doing when, for 1974, he proposes to lay this additional retrospective burden upon these people. My right hon. and hon. Friends believe that this is the right moment to press this amendment vigorously to a vote, and that it what we now propose to do.

Sir D. Renton

I listened very carefully to the Chief Secretary. However, even were I not involved in the way I have described, I would find three faults in the reply that we have heard.

First, the argument with regard to definition is a very poor one. The cases that the amendment covers are clear enough. However, even though the wording of the amendment leaves something to be desired, parliamentary counsel will have no difficulty in tightening the terms of the amendment, as has to be done so often. Parliamentary counsel have had to oblige Governments and the House time and again in drawing up amendments more tightly. Sometimes I think we ask too much of parliamentary counsel. However, on this occasion I do not think it would be asking too much. I do not think that the drafting point is a good one.

The second fault is that the Chief Secretary relied upon an argument that this is a familiar situation. Never before have we had before the Committee a proposal of this kind for a surcharge upon incomes. Therefore we are faced with an entirely fresh situation—a point overlooked by the Chief Secretary when he made this argument, based on a lengthy precedent as to how the Treasury dealt with matters of hardship.

The third fault in the right hon. Gentleman's reply has a broader economic implication. This Government are making it clear that they do not want or expect people to save and make provision for themselves and their families. They would rather that people either spent their money or had it taxed, so that the gentlemen in Whitehall might decide how provision could best be made. In a free society, I do not consider that this is a sensible or proper attitude. Moreover,

it is an inflationary attitude, because it involves the Government in greater expenditure than necessary at a time when it is accepted that the Government should reduce expenditure and encourage people to take steps which will enable the Government to reduce expenditure. Therefore, on broad economic grounds, that argument and that attitude seem to be contrary to the public interest.

In spite of what the Chief Secretary said, I hope he will think yet again about this matter, whether we vote on it or not, and reintroduce it on Report.

Although I was never one myself, I know the difficulty that Treasury Ministers are always in. Having held their conferences inside the Treasury, and having decided to take a step, they must not, without further consultation, grant a concession once it has been decided that no concession shall be granted. But that does not stop them from going back to the Treasury and having yet another thought. I hope that that is what will happen on this occasion.

Mr. Boscawen

I intervene briefly to raise one small matter which the Chief Secretary does not seem to have appreciated, namely, that many of the people whom we are discussing have only investment income and cannot obtain any other form of income because they are incapable of working. Although some may receive very small incomes from non-contributory invalidity pensions, without their investment incomes they will have to rely upon means-tested supplementary benefit.

Question put, That the amendment be made:—

The Committee divided: Ayes 255, Noes 270.

Division No. 55.]	AYES	[8.43 p.m.
Adley, Robert	Biggs-Davison, John	Carlisle, Mark
Aitken, Jonathan	Blaker, Peter	Carr, Rt Hon Robert
Alison, Michael	Body, Richard	Chalker, Mrs Lynda
Amery, Rt Hon Julian	Boscawen, Hon Robert	Channon, Paul
Arnold, Tom	Bowden, A. (Brighton Kemptown)	Churchill, W. S.
Atkins, Rt Hon H. (Spelthorne)	Boyson, Dr Rhodes (Brent)	Clark, Alan (Plymouth, Sutton)
Awdry, Daniel	Braine, Sir Bernard	Clark, William (Croydon S)
Bain, Mrs Margaret	Brittan, Leon	Clarke, Kenneth (Rushcliffe)
Baker, Kenneth	Brotherton, Michael	Cockcroft, John
Banks, Robert	Brown, Sir Edward (Bath)	Cooke, Robert (Bristol W)
Beith, A. J.	Bryan, Sir Paul	Cope, John
Bell, Ronald	Buchanan-Smith, Alick	Cormack, Patrick
Bennett, Dr Reginald (Fareham)	Buck, Antony	Corrie, John
Benyon, W.	Budgen, Nick	Costain, A. P.
Berry, Hon Anthony	Bulmer, Esmond	Crawford, D.
Biffen, John	Burden, F. A.	Critchley, Julian
Crouch, David	Kershaw, Anthony	Reid, George
Crowder, F. P.	Kilfedder, James	Renton, Rt Hon Sir D. (Hunts)
Dean, Paul (N Somerset)	Kimball, Marcus	Renton, Tim (Mid-Sussex)
Dodsworth, Geoffrey	King, Evelyn (South Dorset)	Rhys Williams, Sir Brandon
Douglas-Hamilton, Lord James	King, Tom (Bridgwater)	Ridley, Hon Nicholas
Drayson, Burnaby	Kitson, Sir Timothy	Ridsdale, Julian
du Cann, Rt Hon Edward	Knight, Mrs Jill	Rifkind, Malcolm
Durant, Tony	Knox, David	Roberts, Michael (Cardiff NW)
Dykes, Hugh	Lamont, Norman	Roberts, Wyn (Conway)
Eden, Rt Hon Sir John	Lane, David	Rodgers, Sir John (Sevenoaks)
Edwards, Nicholas (Pembroke)	Latham, Michael (Melton)	Rossi Hugh (Hornsey)
Elliott, Sir William	Lawrence, Ivan	Rost, Peter (SE Derbyshire)
Emery, Peter	Lawson, Nigel	Royle, Sir Anthony
Evans, Gwynfor (Carmarthen)	Lester, Jim (Beeston)	Sainsbury, Tim
Ewing, Mrs Winifred (Moray)	Lewis, Kenneth (Rutland)	Scott, Nicholas
Eyre, Reginald	Lloyd, Ian	Shaw, Giles (Pudsey)
Fairgrieve, Russell	Loveridge, John	Shelton, William (Streatham)
Farr, John	Luce, Richard	Shepherd, Colin
Fell, Anthony	MacCormick, Iain	Shersby, Michael
Finsberg, Geoffrey	McCrindle, Robert	Silvester, Fred
Fisher Sir Nigel	Macfarlane, Neil	Sims, Roger
Fletcher, Alex (Edinburgh N)	MacGregor, John	Sinclair, Sir George
Fookes, Miss Janet	Macmillan, Rt Hon M. (Farnham)	Skeet, T. H. H.
Fowler, Norman (Sutton C'f'd)	McNair-Wilson, M. (Newbury)	Smith, Cyril (Rochdale)
Fox, Marcus	McNair-Wilson, P. (New Forest)	Smith, Dudley (Warwick)
Fraser, Rt Hon H. (Stafford & St)	Madel, David	Speed, Keith
Freud, Clement	Marshall, Michael (Arundel)	Spence, John
Galbraith, Hon. T. G. D.	Marten, Neil	Spicer, James (W Dorset)
Gardiner, George (Reigate)	Mates, Michael	Spicer, Michael (S Worcester)
Gardner, Edward (S Fylde)	Mather, Carol	Sproat, Iain
Glimour, Rt Hon Ian (Chesham)	Maude, Angus	Stalnton, Keith
Gilmour, Sir John (East Fife)	Mawby, Ray	Stanbrook, Ivor
Glyn, Dr Alan	Maxwell-Hyslop, Robin	Stanley, John
Godber, Rt Hon Joseph	Mayhew, Patrick	Steel, David (Roxburgh)
Goodhart, Philip	Meyer, Sir Anthony	Steen, Anthony (Wavertree)
Goodhew, Victor	Miller, Hal (Bromsgrove)	Stewart, Donald (Western Isles)
Goodlad, Alastair	Mills, Peter	Stewart, Ian (Hitchin)
Gorst, John	Mitchell, David (Basingstoke)	Stokes, John
Gow, Ian (Eastbourne)	Moate, Roger	Stradling Thomas, J.
Gower, Sir Raymond (Barry)	Monro, Hector	Taylor, R. (Croydon NW)
Grant, Anthony (Harrow C)	Montgomery, Fergus	Taylor, Teddy (Cathcart)
Gray, Hamish	Moore, John (Croydon C)	Tebbit, Norman
Grieve, Percy	More, Jasper (Ludlow)	Thatcher, Rt Hon Margaret
Grimond, Rt Hon J.	Morgan-Giles, Rear-Admiral	Thomas, Dafydd (Merioneth)
Grist, Ian	Morris, Michael (N'th'pton S)	Thomas, Rt Hon P. (Hendon S)
Grylls, Michael	Morrison, Charles (Devizes)	Thompson, George
Hall, Sir John	Morrison, Peter (Chester)	Townsend, Cyril D.
Hall-Davis, A. G. F.	Neave, Airey	van Straubenzee, W. R.
Hamilton, Michael (Salisbury)	Nelson, Anthony	Viggers, Peter
Hannam, John	Neubert, Michael	Wainwright, Richard (Colne V)
Harvie Anderson, Rt Hon Miss	Newton, Tony	Wakeham, John
Havers, Sir Michael	Normanton, Tom	Walder, David (Clitheroe)
Hawkins, Paul	Nott, John	Walker Rt Hon P. (Worcester)
Hayhoe, Barney	Onslow, Cranley	Walker-Smith, Rt Hon Sir Derek
Henderson, Douglas	Oppenheim, Mrs Sally	Walters, Dennis
Hicks, Robert	Osborn, John	Warren, Kenneth
Higgins, Terence L.	Page, John (Harrow West)	Watt, Hamish
Hooson, Emlyn	Page, Rt Hon R. Graham (Crosby)	Weatherill, Bernard
Hordern, Peter	Pardoe, John	Wells, John
Howe, Rt Hon Sir Geoffrey	Parkinson, Cecil	Welsh, Andrew
Howell, David (Guildford)	Pattie, Geoffrey	Wiggin, Jerry
Howells, Geraint (Cardigan)	Penhaligon, David	Wigley, Dafydd
Hunt, John	Peyton, Rt Hon John	Wilson, Gordon (Dundee E)
Hurd, Douglas	Pink, R. Bonner	Winterton, Nicholas
Hutchison, Michael Clark	Price, David (Eastleigh)	Young, Sir G. (Ealing, Acton)
Irving, Charles (Cheltenham)	Prior, Rt Hon James	Younger, Hon George
James, David	Pym, Rt Hon Francis
Jenkin, Rt Hon P.	Raison, Timothy	TELLERS FOR THE AYES:
Johnson Smith, G. (E Grinstead)	Rathbone, Tim	Dr. Gerard Vaughan and
Kaberry, Sir Donald	Reea, Peter (Dover & Deal)	Mr. Spencer Le Merchant.
Kellett-Bowman, Mrs Elaine
NOES
Allaun, Frank	Benn, Rt Hon Anthony Wedgwood	Broughton, Sir Alfred
Archer, Peter	Bennett, Andrew (Stockport N)	Brown, Hugh D. (Provan)
Armstong, Ernest	Bidwell, Sydney	Brown, Robert C. (Newcastle W)
Ashton, Joe	Bishop, E. S.	Buchan, Norman
Atkins, Ronald (Preston N)	Blenkinsop, Arthur	Buchanan, Richard
Atkinson, Norman	Boardman, H.	Butler, Mrs Joyce (Wood Green)
Bagier, Gordon A. T.	Boothroyd, Miss Betty	Callaghan, Jim (Middleton & P)
Barnett, Guy (Greenwich)	Bottomley, Rt Hon Arthur	Campbell, Ian
Barnett, Rt Hon Joel	Boyden, James (Bish Auck)	Canavan, Dennis
Bates, Alf	Bradley, Tom	Cant, R. B.

Carmichael, Neil	Huckfield Leslie	Peart, Rt Hon Fred
Carter, Ray	Hughes, Rt Hon C. (Anglesey)	Pendry, Tom
Carter-Jones, Lewis	Hughes, Mark (Durham)	Perry, Ernest
Cartwright, John	Hughes, Robert (Aberdeen N)	Phipps, Dr Colin
Castle, Rt Hon Barbara	Hughes, Roy (Newport)	Prentice, Rt Hon Reg
Clemitson, Ivor	Hunter, Adam	Prescott, John
Cocks, Michael (Bristol S)	Irvine, Rt Hon Sir A. (Edge Hill)	Price, C. (Lewisham W)
Cohen, Stanley	Jackson, Miss Margaret (Lincoln)	Price, William (Rugby)
Coleman, Donald	Janner Greville	Radice, Giles
Colquhoun, Mrs Maureen	Jay, Rt Hon Douglas	Rees, Rt Hon Merlyn (Leeds S)
Concannon, J. D.	Jeger, Mrs Lena (W'st'd & W'df'd)	Richardson, Miss Jo
Cook, Robin F. (Edin C)	Jenkins, Hugh (Putney)	Roberts, Albert (Normanton)
Corbett, Robin	John, Brynmor	Roberts, Gwilym (Cannock)
Cox, Thomas (Tooting)	Johnson, James (Hull West)	Robertson, John (Paisley)
Craigen, J. M. (Merryhill)	Johnson, Walter (Derby S)	Roderick, Caerwyn
Cronin, John	Jones, Alec (Rhondda)	Rodgers, George (Chorley)
Crosland, Rt. Hon Anthony	Jones, Barry (East Flim)	Rodgers, William (Stockton)
Cryer, Bob	Jones, Dan (Burnley)	Rooker, J. W.
Cunningham, Dr J. (Whiteh)	Judd, Frank	Roper, John
Dalyell, Tam	Kaufman, Sir Donald	Rose, Paul B.
Davidson, Arthur	Kelley, Richard	Ross, Rt Hon W. (Kilm'nock)
Davies, Bryan (Enfield N)	Kerr, Russell	Rowlands, Ted
Davies, Denzil (Llanelli)	Kilroy-Silk, Robert	Ryman, John
Davies, Ifor (Gower)	Kinnock Neil	Sandelson, Neville
Davis, Clinton (Hackney C)	Lambie, David	Sedgemore, Brian
Deakins, Eric	Lamborn, Harry	Selby, Harry
de Freitas, Rt Hon Sir Geoffrey	Lamond, James	Shaw, Arnold (Ilford South)
Delargy, Hugh	Leadbitter, Ted	Sheldon, Robert (Ashton-u-Lyne)
Dell, Rt Hon Edmund	Lee, John	Silkin, Rt Hon John (Deptford)
Dempsey, James	Lestor, Miss Joan (Eton & Slough)	Silverman, Julius
Doig, Peter	Lewis, Arthur (Newham N)	Skinner, Dennis
Dormand, J. D.	Lewis, Ron (Carlisle)	Small, William
Douglas-Mann, Bruce	Lipton, Marcus	Smith, John (N Lanarkshire)
Duffy, A. E. P.	Litterick, Tom	Snape, Peter
Dunn, James A.	Loyden, Eddie	Spearing, Nigel
Dunnett, Jack	Luard, Evan	Spriggs, Leslie
Dunwoody, Mrs Gwyneth	Lyon, Alexander (York)	Stallard, A. W.
Eadie, Alex	Lyons, Edward (Bradford W)	Stewart, Rt Hn M. (Fulham)
Edelman, Maurice	Mabon, Dr J. Dickson	Stoddart, David
Edge, Geoff	McCartney, Hugh	Stott, Roger
Edwards, Robert (Wolv SE)	McElhone, Frank	Strang, Gavin
Ellis, John (Brigg & Scun)	MacFarquhar, Roderick	Swain, Thomas
Ellis, Tom (Wrexham)	Mackenzie, Gregor	Taylor, Mrs Ann (Bolton W)
English, Michael	McMillan, Tom (Glasgow C)	Thomas, Jeffrey (Abertillery)
Ennals, David	Madden, Max	Thomas, Ron (Bristol NW)
Evans, Ioan (Aberdare)	Magee, Bryan	Thorpe, Rt Hon Jeremy (N Devon)
Evans, John (Newton)	Mahon, Simon	Tierney, Sydney
Ewing, Harry (Stirling)	Marks, Kenneth	Tinn, Jamas
Faulds, Andrew	Marquand, David	Tomlinson, John
Fernyhough, Rt Hon E.	Marshall, Dr Edmund (Goole)	Torney, Tom
Fitt, Gerard (Belfast W)	Marshall, Jim (Leicester, S.)	Urwin, T. W.
Flannery, Martin	Mason, Rt Hon Roy	Variey, Rt Hon Eric G.
Fletcher, Raymond (Ilkeston)	Meacher, Michael	Wainwright, Edwin (Dearne V)
Fletcher, Ted (Darlington)	Mellish, Rt Hon Robert	Walden, Brian (B'ham, L'dyw'd)
Foot, Rt Hon Michael	Mendelson, John	Walker, Harold (Doncaster)
Ford, Ben	Mikardo, Ian	Walker, Terry (Kingswood)
Forrester, John	Millan, Bruce	Watkins, David
Fowler, Gerald (The Wrekin)	Miller, Dr M. S. E. (Kilbride)	Watkinson, John
Fraser, John (Lambeth, N'w'd)	Miller, Mrs Millie	Weetch, Ken
Freeson, Reginald	Mitchell, R. C. (Soton, Itchen)	Weitzman, David
Garrett, John (Norwich S)	Molloy, William	Wellbeloved, James
George, Bruce	Moonman, Eric	White, Frank R. (Bury)
Gilbert, Dr John	Morris, Alfred (Wythenshawe)	White, James (Pollok)
Ginsburg David	Morris, Charles R. (Openshaw)	Whitehead, Phillip
Golding, John	Morris, Rt Hon J. (Aberavon)	Willey, Rt Hon Frederick
Gould, Bryan	Mulley, Rt Hon Frederick	Williams, Alan (Swansea W)
Gourlay, Harry	Murray, Ronald King	Williams, Alan, Lee (H'church)
Grant, George (Morpeth)	Newens, Stanley	Williams, Rt Hn Shirley (Hertford)
Grant, John (Islington C)	Noble, Mike	Williams, W. T. (Warrington)
Grocott, Bruce	Oakes, Gordon	Wilson, Alexander (Hamilton)
Hamilton, W. W. (Central Fife)	Ogden, Eric	Wilson, Rt Hon H. (Huyton)
Hamling, William	O'Malley, Rt Hon Brian	Wilson, William (Coventry SE)
Hardy, Peter	Orbach, Maurice	Wise, Mrs Audrey
Harrison, Walter (Wakefield)	Ovenden, John	Woodall, Alec
Hattersley, Rt Hon Roy	Owen, Dr David	Woof, Robert
Hatton, Frank	Padley, Walter	Wrigglesworth, Ian
Hayman, Mrs Helene	Palmer, Arthur	Young, David (Bolton E)
Heffer, Eric S.	Park, George
Hooley, Frank	Parker, John	TELLERS FOR THE NOES:
Horam, John	Parry, Robert	Mr. Joseph Harper and
Hoyle, Douglas (Nelson)	Pavitt, Laurie	Mr. James Hamilton.

Question accordingly negatived.

Mr Norman Lamont

I beg to move Amendment No. 6, in page 4, line 1, after 'more' and insert 'or (ii) he was retired from an occupation in which persons customarily retire before attaining the age of 65, or (iii) he was retired and his retirement was caused by redundancy, or (iv) he was retired and upon his retirement he received a lump sum from such a scheme or fund as is mentioned in sections 208, 218, subsection (1) or subsection (2) of section 221 or section 226 of the Taxes Act or from an exempt approved scheme or statutory scheme as defined in Chapter 2 of Part 2 of the Finance Act 1970 or under such policies or contracts as are mentioned in the proviso to section 19(3) of the Taxes Act, or (v) he was retired and upon his retirement he received a lump sum in consideration or in consequence of or otherwise in connection with the termination of an office or employment'. The Chief Secretary will find it difficult, even at his most bland, to refuse the logic of the modest demands made in the amendment. It is designed to help various specific categories of retired people and to raise the point at which the 10 per cent. surcharge begins to bite from £1,000 to £1,500. In other words, the amendment would put the people listed in the amendment in the same position as the over-65s.

The Chief Secretary cannot argue that the amendment would help the rich, because it is specifically confined to the categories of people mentioned. He cannot argue that it would go very wide and give money to people who have inherited investments, because it is confined to retired people as defined in the amendment. He cannot argue that it would help the relatively well off, those with investment income as compared with those without.

The amendment is designed to put those who have retired either without a pension or with a reduced pension in the same position that they might have been in had they been drawing a pension from a pension scheme. The categories referred to in the amendment are, first, those who have taken a lump sum as part of an authorised pension scheme; secondly, those who have taken a lump sum on retirement, even if the lump sum was not actually from a pension scheme but was connected with their job; thirdly, those who have been made redundant and who have an income from investments; and, fourthly, those who have retired early under the age of 65 and have an income from investments.

With the last two categories the logic of the case is fairly obvious. Here we have groups of people who have retired early, who have been retired early, and who are faced with unexpected misfortune. They have had less time to save and plan their affairs and they have not been getting the full benefit of pension arrangements which they might otherwise have had.

There are more particular reasons for supporting the relaxation of the investment income surcharge for the first two categories. These reasons relate to the treatment of people drawing pensions from authorised pension schemes as compared with those who have no such pensions and simply have an income from investments. The first of those two categories are those I referred to earlier, people who have taken a lump sum as part of a pension, as they are allowed to do under certain types of pension schemes. They may buy an annuity: they may simply invest money and live in their retirement on the investment income. Either way they would be subject to the investment income surcharge and either way they would be taxed more severely than they would be if they were drawing a regular pension from a regular pension scheme.

One example of this kind that has been drawn to the attention of many members of this Committee is the FSSU scheme for retired university teachers. This is a scheme which allows retired university teachers to take a lump sum in lieu of pension. Such people will find themselves at a disadvantage compared with other people who continue to draw a retirement pension. Those people will find themselves paying the surcharge if their investment income, which is in place of a pension, is over £1,000 or £1,500 if they are over 65. Such people have already made their retirement plans. They made them to take advantage of the legislation as it existed at the time. Now they will be penalised by these measures which the Chief Secretary is putting forward.

I hope that one of the arguments that he will not put forward will be the hoary argument about annuities being tax free. We all know that they are not tax free in any meaningful sense. It is merely that a person is given something back to invest it in another way. I do not think that that justifies the use of the term "tax free".

The fourth category comprises those who have retired and who may not have had a lump sum as part of the formal arrangements of their penson scheme but who have been given a lump sum, perhaps as compensation for loss of job or loss of office. Those people, too, have had to live off the investment income of that lump sum. Some months ago I wrote a letter to a newspaper about a number of people in this category. I received a large number of letters from people who found themselves hit by the investment income surcharge in this way.

9.0 p.m.

I remember particularly one from a gentleman who does not work very far from this House and who had been in the Colonial Service and who had been retired early, without having the opportunity to complete his full career. He had been given a lump sum in lieu of pension and had had to take it because the Government could not guarantee the payment of his pension. He had to take a large part of his pension as a lump sum because the regulations specified that the remaining pension would be paid only if he did so. When that person returned to the United Kingdom he was, like many people who had been in the Colonial Service, ineligible to join the National Insurance Scheme. He was without a State pension and without a pension from his job. He had to live on the investment income from the lump sum which was specifically given to him for loss of office.

Many people are in this category, and they manage their own investments instead of having pensions from their jobs. Surely their tax treatment should be analogous to that which is accorded to people who draw pension from an approved scheme. Pensions are treated as earned income, yet the income from the lump sum which has been invested is treated as unearned income. The two situations are similar, and it is unfair that that category should be treated differently.

Many of these people have been particularly hard hit by inflation, by the collapse of the Stock Market in the past few months and by dividend restraint, which has directly hit their incomes. It is one thing to be told that one has unearned income which will be taxed at a higher rate, and it is another thing to be told that the income will be restricted by an amount that is well below the level of inflation.

It is clear that the Government feel a little guilty about retired people because of the distinction they have made between the over-65s and the under-65s and the £1,000 surcharge and the £1,500 surcharge. The £1,500 is hardly generous when one considers national average earnings. There are strong arguments for making wider and more far-reaching demands than are made in the amendment.

I hope that the Chief Secretary will consider the amendment carefully and sympathetically, because it is very restricted and modest. I hope that he will not tell us about the personal allowance, because that applies to next year and we are talking about this year. I hope that he will not tell us about annuities and pretend that handing back to people their own money is giving them a tax bonus. The people who are covered by the amendment have been particularly hard hit and they are not rich people. The amendment does not go very wide, and I hope that the Chief Secretary will find it acceptable.

Mr. Tim Renton (Mid-Sussex)

I fully support the amendment which has been moved so lucidly by my hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont). After my hon. Friend's catalogue of the things which he hopes the Chief Secretary will not tell us I get new heart in believing that on this occasion, despite the performance so far, the Chief Secretary will accept the amendment.

I wish to speak to the amendment particularly in relation to those who either purchase an annuity when they retire or, when they retire early, decide to commute part of their pension to buy an annuity. If a pension is commuted to buy an annuity only a certain portion of the income is treated as a return of interest and treated as unearned income.

There are many valid reasons why people decide on retiring early to commute part of a pension and buy an annuity instead. One instance is that of a person who retires early, perhaps after work overseas. Another instance is that of a person who may find that the widow's provision in an old-fashioned pension scheme is inadequate and he may decide to commute as much of that pension as he can to buy an annuity in which the widow's provision will be considerably more generous. It is that person who is now to be clobbered by the reduction in the threshold of investment income. I want to see that threshold left at £2,000, but if that is impossible I ask that these people be given the small degree of relief sought in the amendment.

I hope the Committee will forgive me if I read an extract from a letter written by a constituent who left the Navy in 1947 with no job, no pension and no house, and who is now paying the full rate of tax on every penny of his income from savings which he has made since then. He writes: When I retired I commuted part of my pension small as it was with the intention of using capital together with the money from an insurance policy which had just matured to purchase an annuity for my wife and myself. However, I was advised to wait until I was 70 before doing so and in the meantime to use the money to purchase Funding Loan stock. I had hardly done so when the value of stock fell drastically and it has reached a level where it would be folly now to sell in order to purchase an annuity. The rest of my money is tied up in equities so I cannot sell them in order to live on capital, and in any case I must be in a position to leave my wife as much capital as I can. That is a letter from a man who never quite reached the point of buying an annuity, but there are many others who have been advised that the only way to provide for their old age and for their wives in future is to purchase an annuity. They budgeted carefully and now find themselves on low earnings having to pay considerably more tax. In view of the pace of inflation it is these people whom this amendment seeks to cover, who are caught in an unpleasant poverty trap. These have to pay more for the necessities of life, they find that their equities have fallen in value, and now, at this late stage in the financial year, they are being asked to budget for further amounts of tax.

The Financial Secretary in an earlier discussion wept crocodile tears over the situation of widows. I hope that on this occasion the Chief Secretary will see fit to accept the amendment which seeks to help a small band of people.

Mr. MacGregor

I, too, support the amendment. I have met a number of people in the past few months, both in my constituency and elsewhere, who find themselves in the situation outlined in the amendment. This applies especially to people in their fifties who have retired because of natural wastage in their companies, because of the necessity for their companies to keep down wage and salary costs, or because their companies have gone into liquidation.

I do not expect to receive much sympathy from the Chief Secretary. No doubt we shall hear all the usual noises. However, I hope that the Chief Secretary will not say that there are other, more deserving cases. We are well aware of that. We are concerned to assist this particular deserving case.

The amendment is justified, first, on the ground of fairness. I accept that many of the people covered by the amendment are former managers or executives, but they comprise deserving cases. If they have a slightly higher-than-average income, or have had in the past, and if they have higher expenditure commitments, they will continue to have to meet those commitments. Therefore, in their situation they are a deserving case.

I remind the Chief Secretary that we are not asking for any extra benefits for these people. We are asking that their net income should not be reduced from what they expected before the advent of the Bill. It is a sad fact of life that in the present economic situation many people find themselves redundant—and I fear that there will be more of them in the next few months.

These people would normally expect to be in an earned income situation until retirement at 60 or 65 years of age. They would not expect to be caught by the investment income surcharge which the Bill seeks to impose upon them. Yet, particularly if the sad fact of redundancy has hit them in the last few months, their budgets are already planned on the basis of their earned incomes and their investment incomes without this surcharge, which has hit them even harder. Some of them have contracted second marriages and still have young children to educate. Another fear is that at 60 or 65 years of age it is difficult to get back into a job situation with the earned incomes that they had been receiving before.

I suggest that this special, small group is deserving of consideration. These people are already suffering a dramatic decline in their incomes, with all the prospects of inflation and higher costs which we discussed in the earlier part of the debate, and they are certainly suffering a big decline in morale. We are asking that they should not be hit further through the Bill.

Mr. Joel Barnett

I congratulate the hon. Member for Kingston-upon-Thames (Mr. Lamont) on his elevation to the Opposition Front Bench. It has taken him a long time, compared with what I expected, to get there. I thought that he would have got there much quicker. I have certainly long recognised the need for him to be there. I say that in the nicest possible way.

What I like about the hon. Gentleman is the way that he always tells me in advance what I should not say and answers in advance what he thinks I will say. This time he has missed a few points that I can tell him.

I turn now to the group of people to whom the amendment refers. It is not possible to estimate the cost, as I am sure the hon. Gentleman and others realise. The amendment groups together a variety of categories of people for whom relief is sought for retirement before the age of 65, for those who retire before the age of 65 because of redundancy, for those who retire and upon retirement receive lump sum benefits from approved occupational pension schemes, or for those who retire and upon retirement receive lump sum payments.

The amendment suffers from a basic weakness in that it rests on a test of retirement which is not defined. Frankly, are simply "was retired". Frankly, it is not possible to use such a definition. I doubt whether it would be possible successfully to have legislation on the basis of the words "was retired".

First, I want to deal with those who retire before the age of 65. That class of beneficiary comprises those who retire from an occupation in which persons customarily retire before attaining the age of 65". They include, amongst others, civil servants, who may retire on pension at the age of 60, members of the armed forces and all but the most senior grades in the police force. The concession would help an Army officer who retired with a Service pension and gratuity at the age of 50 and has an investment income sufficient to bring him within the liability to the surcharge. Those who retire from such occupations in middle age cannot be said necessarily to have finished any gainful employment. They may go on to take other employment later. It cannot be said that a man who retires at the age of 50 because that is the customary age of retirement in his particular job will not—indeed, it is likely that he will—go on to do some other work. It is not a real retirement in the accepted sense of the word. Many such men will want to work again and will actively seek other employment.

9.15 p.m.

So the "customary age of retirement" would open up endless arguments. For example, the customary age of retirement for a cricketer or footballer is, comparatively, very early, but I imagine that that is no reason to give them a special concession. I know that hon. Members opposite think that everybody should have had that concession, but the amendment seeks to bracket that type of person for a special concession with a man who has worked all his life to the age of 65. That is not a definition to which we could agree.

One would have sympathy with the next category, that of retirement caused by redundancy, but this is sometimes voluntary before the age of 65, with acceptance of the lump sum payment. But a more important argument is that under the Redundancy Payments Act 1965 the maximum lump sum is £2,400 tax-free. The investment income from that is hardly likely to exceed £1,000 per annum. So, from the redundancy payment itself no question of the investment income surcharge would arise.

Mr. John Nott (St. Ives)

With great respect, redundancy payments are not geared to the Redundancy Payments Act. A good employer may pay much more than an employee was entitled to under the Act.

Mr. Barnett

I intended to come to that argument. I am dealing now with redundancy via the Act. The maximum is £2,400, so special relief would apply not to any income from the lump sum but only from the person's other investment income. I hasten to add that this does not mean that such an employee is not a deserving case. He may be: all that I am saying is that that is not a category for which one would want to provide special relief before the age of 65.

Then there is the person who is in an approved superannuation scheme and takes a lump sum payment. There is some misunderstanding here. Fully approved schemes under the old or new codes cannot normally begin paying annuities to someone who is aged less than 60. The same is broadly true of an approved retirement annuity contract under Section 226 of the Taxes Act. The fact that a company can provide an employee with a larger tax-free benefit cannot be an argument for classing that person at the age of 40 or 50 for relief under any Act with a man or woman aged 65. Yet that is what the amendment seeks to do.

The other major category to which the hon. Member referred concerned lump sum payments on retirement. This final category presumably would include golden handshakes as well. With a golden handshake a person can get £5,000 tax-free at any age. I can hardly believe that the hon. Gentleman would want to give that kind of person, who has got his £5,000 tax-free, the same relief as a man who retires after a full working life at the age of 65. It cannot be a reasonable proposition.

Therefore, I am afraid that for those reasons I could not accept that argument or, indeed, any of the arguments which hon. Members have put to me. The four

alternative tests which the hon. Gentleman seeks to persuade the committee to accept for special relief are, for the reasons I have given, defective. It would not be right to give the same concession for those categories of people as one gives for a man who has worked all his life to the age of 65. For those reasons, therefore, I cannot accept the amendment. I hope that the hon. Gentleman will realise its defectiveness and feel able to withdraw it.

Mr. David Howell

I have only a few comments to make at the end of this debate, which I am afraid has taken a remarkably similar course to the earlier debate, and they are, simply, these. Before the Bill was put forward, we started with all these categories—many of them in difficulties and many of them, as the Chief Secretary recognises, deserving—with a £2,000 exemption threshold. As a result of what the Government would like to do and will, clearly, attempt to do now, that is lowered to £1,000. We have put forward a modest plea that the Government desist and hold their hand in putting this additional burden at this time on these people. Clearly, the Government will resist that plea.

It is not a question of concessions or reliefs. It is a question of holding back from placing an additional burden on a group of people who can ill afford it. On both this and previous amendments, all I can say is that I hope that the political bosses of the Left, who seem to run policies of this kind, feel that they have done a good evening's work in bringing home to these people, both the disabled and these categories, an additional burden. I hope that they feel good inside. We are sickened by this approach, and we shall once again register our protest and our deep feeling by voting.

Question put, That the amendment be made:

The Committee divided: Ayes 254, Noes 271.

Division No. 56.]	AYES	[9.25 p.m.
Adley, Robert	Baker, Kenneth	Biggs-Davison, John
Aitken, Jonathan	Banks, Robert	Blaker, Peter
Alison, Michael	Beith, A. J.	Body, Richard
Amery, Rt Hon Julian	Bell, Ronald	Boscawen, Hon Robert
Arnold, Tom	Bennett, Dr Reginald (Fareham)	Bowden, A. (Brighton Kemptown)
Atkins, Rt Hon H. (Spelthorne)	Benyon, W.	Boyson, Dr Rhodes (Brent)
Awdry, Daniel	Berry, Hon Anthony	Braine, Sir Bernard
Bain, Mrs Margaret	Biffen, John	Brittan, Leon
Brotherton, Michael	Hicks, Robert	Peyton, Rt Hon John
Brown, Sir Edward (Bath)	Higgins, Terence L.	Pink, R. Bonner
Bryan, Sir Paul	Hooson, Emlyn	Price, David (Eastleigh)
Buchanan-Smith, Alick	Hordern, Peter	Prior, Rt Hon James
Buck, Antony	Howe, Rt Hon Sir Geoffrey	Pym, Rt Hon Francis
Budgen, Nick	Howell, David (Guildford)	Raison, Timothy
Bulmer, Esmond	Howells, Geraint (Cardigan)	Rathbone, Tim
Burden, F. A.	Hunt, John	Rees, Peter (Dover & Deal)
Carlisle, Mark	Hurd, Douglas	Rees-Davies, W. R.
Carr, Rt Hon Robert	Hutchison, Michael Clark	Reid, George
Chalker, Mrs Lynda	Irving, Charles (Cheltenham)	Renton, Rt Hon Sir D. (Hunts)
Channon, Paul	James, David	Renton, Tim (Mid-Sussex)
Churchill, W. S.	Jenkin, Rt Hon P.	Rhys Williams, Sir Brandon
Clark, Alan (Plymouth, Sutton)	Johnson Smith, G. (E Grinstead)	Ridley, Hon Nicholas
Clark, William (Croydon, S.)	Kaberry, Sir Donald	Ridsdale, Julian
Clarke, Kenneth (Rushcliffe)	Kellett-Bowman, Mrs Elaine	Rifkind, Malcolm
Cockcroft, John	Keishaw, Anthony	Roberts, Wyn (Conway)
Cooke, Robert (Bristol W)	Kilfedder, James	Rodgers, Sir John (Sevenoato)
Cope, John	Kimball, Marcus	Rossi, Hugh (Hornsey)
Cormack, Patrick	King, Evelyn (South Dorset)	Rost, Peter (SE Derbyshire)
Corrie, John	King, Tom (Bridgwater)	Royle, Sir Anthony
Costain, A. P.	Kitson, Sir Timothy	Sainsbury, Tim
Crawford, Douglas	Knight, Mrs Jill	Scott, Nicholas
Critchley, Julian	Knox, David	Shaw, Giles (Pudsey)
Crouch, David	Lamont, Norman	Shelton, William (Streatham)
Crowder, F. P.	Lane, David	Shepherd, Colin
Dean, Paul (N Somerset)	Latham, Michael (Melton)	Shersby, Michael
Dodsworth, Geoffrey	Lawrence, Ivan	Silvester, Fred
Douglas-Hamilton, Lord James	Lawson, Nigel	Sims, Roger
Drayson, Burnaby	Lester, Jim (Beeston)	Sinclair, Sir George
du Cann, Rt Hon Edward	Lewis, Kenneth (Rutland)	Skeet, T. H. H.
Durant, Tony	Lloyd, Ian	Smith, Cyril (Rochdale)
Dykes, Hugh	Loveridge, John	Smith, Dudley (Warwick)
Eden, Rt Hon Sir John	Luce, Richard	Speed, Keith
Edwards, Nicholas (Pembroke)	MacCormick, Iain	Spence, John
Elliott, Sir William	McCrindle, Robert	Spicer, James (W Dorset)
Emery, Peter	Macfarlane, Neil	Spicer, Michael (S Worcester)
Evans, Gwynfor (Carmarthen)	MacGregor, John	Sproat, Iain
Eyre, Reginald	Macmillan, Rt Hon M. (Farnham)	Stainton, Keith
Fairgrieve, Russell	McNair-Wilson, M. (Newbury)	Stanbrook, Ivor
Farr, John	McNair-Wilson, P. (New Forest)	Stanley, John
Fell, Anthony	Madel, David	Steel, David (Roxburgh)
Finsberg, Geoffrey	Marshall, Michael (Arundel)	Steen, Anthony (Wavertree)
Fisher, Sir Nigel	Marten, Neil	Stewart, Donald (Western Isles)
Fletcher, Alex (Edinburgh N)	Mates, Michael	Stewart, Ian (Hitchin)
Fookes, Miss Janet	Mather, Carol	Stokes, John
Fowler, Norman (Sutton C'f'd)	Maude, Angus	Stradling Thomas, J.
Fox, Marcus	Mawby, Ray	Taylor, R. (Croydon NW)
Fraser, Rt Hon H. (Stafford & St	Maxwell-Hyslop, Robin	Taylor, Teddy (Cathcart)
Freud, Clement	Mayhew, Patrick	Tebbit, Norman
Galbraith, Hon. T. G. D.	Meyer, Sir Anthony	Thatcher, Rt Hon Margaret
Gardiner, George (Reigate)	Miller, Hal (Bromsgrove)	Thomas, Rt Hon P. (Hendon S)
Gardner, Edward (S Fylde)	Mills, Peter	Thompson, George
Gilmour, Rt Hon Ian (Chesham)	Mitchell, David (Basingstoke)	Townsend, Cyril D.
Gilmour, Sir John (East Fife)	Moate, Roger	van Straubenzee, W. R.
Glyn, Dr Alan	Monro, Hector	Vaughan, Dr Gerard
Godber, Rt Hon Joseph	Montgomery, Fergus	Viggers, Peter
Goodhart, Philip	Moore, John (Croydon C)	Wainwright, Richard (Colne V)
Goodhew, Victor	More, Jasper (Ludlow)	Wakeham, John
Goodlad, Alastair	Morgan-Giles, Rear-Admiral	Walder, David (Clitheroe)
Gorst, John	Morris, Michael (N'th'pton S)	Walker Rt Hon P. (Worcester)
Gow, Ian (Eastbourne)	Morrison, Charles (Devizes)	Walker-Smith, Rt Hon Sir Derek
Gower, Sir Raymond (Barry)	Morrison, Peter (Chester)	Walters, Dennis
Grant, Anthony (Harrow C)	Neave, Airey	Warren, Kenneth
Gray, Hamish	Nelson, Anthony	Watt, Hamish
Grieve, Percy	Neubert, Michael	Weatherill, Bernard
Grimond, Rt Hon J.	Newton, Tony	Wells, John
Grist, Ian	Normanton, Tom	Welsh, Andrew
Grylls, Michael	Nott, John	Wiggin, Jerry
Hall, Sir John	Onslow, Cranley	Wigley, Dafydd
Hall-Davis, A. G. F.	Oppenheim, Mrs Sally	Wilson, Gordon (Dundee E)
Hamilton, Michael (Salisbury)	Osborn, John	Winterton, Nicholas
Hannam, John	Page, John (Harrow West)	Young, Sir G. (Ealing, Acton)
Harvie Anderson, Rt Hon Miss	Page, Rt Hon R. Graham (Crosby)	Younger, Hon George
Havers, Sir Michael	Pardoe, John
Hawkins, Paul	Parkinson, Cecil	TELLERS FOR THE AYES:
Hayhoe, Barney	Pattie, Geoffrey	Mr. Spencer Le Marchant and
Henderson, Douglas	Penhaligon, David	Mr. Michael Roberts.

NOES
Allaun, Frank	Fitt, Gerard (Belfast W)	Marshall, Dr Edmund (Goole)
Archer, Peter	Flannery, Martin	Marshall, Jim (Leicester, S.)
Armstong, Ernest	Fletcher, Raymond (Ilkeston)	Mason, Rt Hon Roy
Ashton, Joe	Fletcher, Ted (Darlington)	Meacher, Michael
Atkins, Ronald (Preston N)	Foot, Rt Hon Michael	Mellish, Rt Hon Robert
Atkinson, Norman	Ford, Ben	Mendelson, John
Bagier, Gordon A. T.	Forrester, John	Mikardo, Ian
Barnett, Guy (Greenwich)	Fowler, Gerald (The Wrekin)	Millan, Bruce
Barnett, Rt Hon Joel	Fraser John (Lambeth, N'wd)	Miller, Dr M. S. E. (Kilbride)
Bates, Alf	Freeson, Reginald	Miller, Mrs Millie
Bean, R. E.	Garrett, John (Norwich S)	Mitchell, R. C. (Soton, Itchen)
Benn, Rt Hon Anthony Wedgwood	Garrett, W. E. (Wallsend)	Molloy, William
Bennett, Andrew (Stockport N)	George, Bruce	Moonman, Eric
Bidwell, Sydney	Gilbert, Dr John	Morris, Alfred (Wythenshawe)
Bishop, E. S.	Ginsburg, David	Morris, Charles R. (Openshaw)
Blenkinsop, Arthur	Golding, John	Morris, Rt Hon J. (Aberavon)
Boardman, H.	Gould, Bryan	Mulley, Rt Hon Frederick
Boothroyd, Miss Betty	Gourlay, Harry	Murray, Ronald King
Bottomley, Rt Hon Arthur	Grant, George (Morpeth)	Newens, Stanley
Boyden, James (Bish Auck)	Grant, John (Islington C)	Noble, Mike
Bradley, Tom	Grocott, Bruce	Oakes, Gordon
Broughton, Sir Alfred	Hamilton, W. W. (Central Fife)	Ogden, Eric
Brown, Hugh D. (Provan)	Hamling, William	O'Malley, Rt Hon Brian
Brown, Robert C. (Newcastle W)	Hardy, Peter	Orbach, Maurice
Buchan, Norman	Harper Joseph	Ovenden, John
Buchanan, Richard	Harrison, Walter (Wakefield)	Owen, Dr David
Butler, Mrs Joyce (Wood Green)	Hattersley, Rt Hon Roy	Padley, Walter
Callaghan, Jim (Middleton & P)	Hatton, Frank	Palmer, Arthur
Campbell, Ian	Hayman, Mrs Helene	Park, George
Canavan, Dennis	Heffer, Eric S.	Parker, John
Cant, R. B.	Hooley, Frank	Parry, Robert
Carmichael, Neil	Horam, John	Pavitt, Laurie
Carter, Ray	Hoyle, Douglas (Nelson)	Peart, Rt Hon Fred
Carter-Jones, Lewis	Huckfield Leslie	Pendry, Tom
Cartwright, John	Hughes, Rt Hon C. (Anglesey)	Perry, Ernest
Castle, Rt Hon Barbara	Hughes, Mark (Durham)	Phipps, Dr Colin
Clemitson, Ivor	Hughes, Robert (Aberdeen N)	Prentice, Rt Hon Reg
Cocks, Michael (Bristol S)	Hughes, Roy (Newport)	Prescott, John
Cohen, Stanley	Hunter, Adam	Price, C. (Lewisham W)
Coleman, Donald	Irvine, Rt Hon Sir A. (Edge Hill)	Price, William (Rugby)
Colquhoun, Mrs Maureen	Jackson, Miss Margaret (Lincoln)	Radice, Giles
Concannon, J. D.	Janner Greville	Rees, Rt Hon Merlyn (Leeds S)
Cook, Robin F. (Edin C)	Jay, Rt Hon Douglas	Richardson, Miss Jo
Corbett, Robin	Jeger, Mrs Lena (W'st'd & W'df'd)	Roberts, Albert (Normanton)
Cox, Thomas (Tooting)	Jenkins, Hugh (Putney)	Roberts, Gwilym (Cannock)
Craigen, J. M. (Merryhill)	John, Brynmor	Robertson, John (Paisley)
Cronin, John	Johnson, James (Hull West)	Roderick, Caerwyn
Crosland, Rt. Hon Anthony	Jones, Alec (Rhondda)	Rodgers, George (Chorley)
Cryer, Bob	Jones, Barry (East Flint)	Rodgers, William (Stockton)
Cunningham, Dr J. (Whiteh)	Jones, Dan (Burnley)	Rooker, J. W.
Dalyell, Tam	Judd, Frank	Roper, John
Davidson, Arthur	Kaufman, Gerald	Rose, Paul B.
Davies, Bryan (Enfield N)	Kelley, Richard	Ross, Rt Hon W. (Kilm'nock)
Davies, Denzil (Llanelli)	Kerr, Russell	Rowlands, Ted
Davies, Ifor (Gower)	Kilroy-Silk, Robert	Ryman, John
Davis, Clinton (Hackney C)	Kinnock Neil	Sandelson, Neville
Deakins, Eric	Lambie, David	Sedgemore, Brian
de Freitas, Rt Hon Sir Geoffrey	Lamborn, Harry	Selby, Harry
Delargy, Hugh	Lamond, James	Shaw, Arnold (Ilford South)
Dell, Rt Hon Edmund	Leadbitter, Ted	Sheldon, Robert (Ashton-u-Lyne)
Dempsey, James	Lee, John	Silkin, Rt Hon John (Deptford)
		Silverman, Julius
Doig, Peter	Lestor, Miss Joan (Eton & Slough)	Skinner, Dennis
Dormand, J. D.	Lewis, Arthur (Newham N)	Small, William
Douglas-Mann, Bruce	Lewis, Ron (Carlisle)	Smith, John (N Lanarkshire)
Duffy, A. E. P.	Lipton, Marcus	Snape, Peter
Dunn, James A.	Litterick, Tom	Spearing, Nigel
Dunnett, Jack	Loyden, Eddie	Spriggs, Leslie
Dunwoody, Mrs Gwyneth	Luard, Evan	stallard, A. W.
Eadie, Alex	Lyon, Alexander (York)	Stewart, Rt Hn M. (Fulham)
Edelman, Maurice	Lyons, Edward (Bradford W)	Stoddart, David
Edge, Geoff	Mabon, Dr J. Dickson	Stott, Roger
Edwards, Robert (Wolv SE)	McCartney, Hugh	Strang, Gavin
Ellis, John (Brigg & Scun)	McElhone, Frank	Swain, Thomas
Ellis, Tom (Wrexham)	MacFarquhar, Roderick	Taylor, Mrs Ann (Bolton W)
English, Michael	Mackenzie, Gregor	Thomas, Jeffrey (Abertillery)
Ennals, David	McMillan, Tom (Glasgow C)	Thomas, Ron (Bristol NW)
Evans, Ioan (Aberdare)	Madden, Max	Thorne, Stan (Preston South)
Evans, John (Newton)	Magee, Bryan	Tierney, Sydney
Ewing, Harry (Stirling)	Mahon, Simon	Tinn, James
Faulds, Andrew	Marks, Kenneth	Tomlinson, John
Fernyhough, Rt Hon E.	Marquand, David	Torney, Tom

Urwin, T. W.	White, Frank R. (Bury)	Wilson, William (Coventry SE)
Varley, Rt Hon Eric G.	White, James (Pollok)	Wise, Mrs Audrey
Wainwright, Edwin (Dearne V)	Whitehoad, Phillip	Woodall, Alec
Walden, Brian (B'ham, L'dyw'd)	Willey, Rt Hon Frederick	Woof, Robert
Walker, Harold (Doncaster)	Williams, Alan (Swansea W)	Wrigglesworth, Ian
Walker, Terry (Kingswood)	Williams, Alan, Lee (H'church)	Young, David (Bolton E)
Watkins, David	Williams, Rt Hon Shirley (Hertford)
Watkinson, John	Williams, W. T. (Warrington)	TELLERS FOR THIS NOES:
Weetch, Ken	Wilson, Alexander (Hamilton)	Mr. James Hamilton and
Weitzman, David	Wilson, Rt Hon H. (Huyton)	Mr. Walter Johnson.
Wellbeloved, James

Question accordingly negatived.

Amendment proposed: No. 7, in page 4, line 1, after 'more', insert 'or

1. (ii) she was a widow with a child or children in respect of which she was entitled to relief under the Income Tax Acts; or
2. (iii) she was a widow in receipt of National Insurance widow's benefit; or

(iv) she was the widow of such a person as is mentioned in paragraph 1 of Schedule 7 to this Act'.—[Mrs. Thatcher.]

Question put, That the amendment be made:—

The Committee divided: Ayes 255, Noes 271.

Division No. 57.]	AYES	[9.35 p.m.
Adley, Robert	Durant, Tony	Hutchison, Michael Clark
Aitken, Jonathan	Dykes, Hugh	Irving, Charles (Cheltenham)
Alison, Michael	Eden, Rt Hon Sir John	James, David
Amery, Rt Hon Julian	Edwards, Nicholas (Pembroke)	Jenkin, Rt Hon P. (Wanst'd & W'df'd)
Arnold, Tom	Elliott, Sir William	Johnson Smith, G. (E Grinstead)
Atkins, Rt Hon H. (Spelthorne)	Emery, Peter	Kaberry, Sir Donald
Awdry, Daniel	Evans, Gwynfor (Carmarthen)	Kellett-Bowman, Mrs Elaine
Bain, Mrs Margaret	Eyre, Reginald	Kershaw, Anthony
Baker, Kenneth	Fairgrieve, Russell	Kilfedder, James
Banks, Robert	Farr, John	Kimball, Marcus
Beith, A. J.	Fell, Anthony	King, Evelyn (South Dorset)
Bell, Ronald	Finsberg Geoffrey	King, Tom (Bridgwater)
Bennett, Dr Reginald (Fareham)	Fisher, Sir Nigel	Kitson, Sir Timothy
Benyon, W.	Fletcher, Alex (Edinburgh N)	Knight, Mrs Jill
Berry, Hon Anthony	Fookes, Miss Janet	Knox, David
Biffen, John	Fowler, Norman (Sutton C'f'd)	Lamont, Norman
Biggs-Davison, John	Fox, Marcus	Lane, David
Blaker, Peter	Fraser, Rt Hon H. (Stafford & St)	Latham, Michael (Melton)
Body, Richard	Freud, Clement	Lawrence, Ivan
Boscawen, Hon Robert	Galbraith, Hon. T. G. D.	Lawson, Nigel
Bowden, A. (Brighton, Kemptown)	Gardiner, George (Reigate)	Lester, Jim (Beeston)
Boyson, Dr Rhodes (Brent)	Gardner, Edward (S Fylde)	Lewis, Kenneth (Rutland)
Braine, Sir Bernard	Gilmour, Rt Hon Ian (Chesham)	Lloyd, Ian
Brittan, Leon	Gilmour, Sir John (East Fife)	Loveridge, John
Brotherton, Michael	Glyn, Dr Alan	Luce, Richard
Brown, Sir Edward (Bath)	Godber, Rt Hon Joseph	MacCormick, Iain
Bryan, Sir Paul	Goodhart, Philip	McCrindle, Robert
Buchanan-Smith, Alick	Goodhew, Victor	Macfarlane, Neil
Buck, Antony	Goodlad, Alastair	MacGregor, John
Budgen, Nick	Gorst, John	Macmillan, Rt Hon M. (Farnham)
Bulmer, Esmond	Gower, Sir Raymond (Barry)	McNair-Wilson, M. (Newbury)
Burden, F. A.	Grant, Anthony (Harrow C)	McNair-Wilson, P. (New Forest)
Carlisle, Mark	Gray Hamish	Madel, David
Carr, Rt Hon Robert	Grieve, Percy	Marshall, Michael (Arundel)
Chalker, Mrs Lynda	Grimond, Rt Hon J.	Marten, Neil
Channon, Paul	Grist, Ian	Mates, Michael
Churchill, W. S.	Grylls, Michael	Mather, Carol
Clark, Alan (Plymouth, Sutton)	Hall, Sir John	Maude, Angus
Clark, William (Croydon S)	Hall-Davis, A. G. F.	Mawby, Ray
Clarke, Kenneth (Rushcliffe)	Hamilton, Michael (Salisbury)	Maxwell-Hyslop, Robin
Cockcroft, John	Hannam, John	Mayhew, Patrick
Cooke, Robert (Bristol W)	Harvie Anderson, Rt Hon Miss	Meyer, Sir Anthony
Cope, John	Havers, Sir Michael	Miller, Hal (Bromsgrove)
Cormack, Patrick	Hawkins, Paul	Mills, Peter
Corrie, John	Hayhoe, Barney	Mitchell, David (Basingstoke)
Costain, A. P.	Henderson, Douglas	Moate, Roger
Crawford, Douglas	Hicks, Robert	Monro, Hector
Critchley, Julian	Higgins, Terence L.	Montgomery, Fergus
Crouch, David	Hooson, Emlyn	Moore, John (Croydon C)
Crowder, F. P.	Hordern, Peter	More, Jasper (Ludlow)
Dean, Paul (N Somerset)	Howe, Rt Hon Sir Geoffrey	Morgan-Giles, Rear-Admiral
Dodsworth, Geoffrey	Howell, David (Guildford)	Morris, Michael (Northampton S)
Douglas-Hamilton, Lord James	Howells, Geraint (Cardigan)	Morrison, Charles (Devizes)
Drayson, Burnaby	Hunt, John	Morrison, Peter (Chester)
du Cann, Rt Hon Edward	Hurd, Douglas	Neave, Airey
Nelson, Anthony	Rodgers, Sir John (Sevenoaks)	Taylor, Teddy (Cathcart)
Neubert, Michael	Rossi Hugh (Hornsey)	Tebbit, Norman
Newton, Tony	Rost, Peter (SE Derbyshire)	Thatcher, Rt Hon Margaret
Normanton, Tom	Royle, Sir Anthony	Thomas, Datydd (Merioneth)
Nott, John	Sainsbury, Tim	Thomas, Rt Hon P. (Hendon S)
Onslow, Cranley	Scott, Nicholas	Thompson, George
Oppenheim, Mrs Sally	Shaw, Giles (Pudsey)	Townsend, Cyril D.
Osborn, John	Shelton, William (Streatham)	van Straubenzee, W. R.
Page, John (Harrow West)	Shepherd, Colin	Vaughan, Dr Gerard
Page, Rt Hon Ft. Graham (Crosby)	Shersby, Michael	Viggers, Peter
Pardoe, John	Silvester, Fred	Wainwright, Richard (Colne V)
Parkinson, Cecil	Sims, Roger	Wakeham, John
Pattie, Geoffrey	Sinclair, Sir George	Walder, David (Clitheroe)
Penhaligon, David	Skeet, T. H. H.	Walker, Rt Hon P. (Worcester)
Peyton, Rt Hon John	Smith, Cyril (Rochdale)	Walker-Smith, Rt Hon Sir Derek
Pink, R. Bonner	Smith, Dudley (Warwick)	Walters, Dennis
Price, David (Eastleigh)	Speed, Keith	Warren, Kenneth
Prior, Rt Hon James	Spence, John	Watt, Hamish
Pym, Rt Hon Francis	Spicer, Jim (W Dorset)	Weatherill, Bernard
Raison, Timothy	Spicer, Michael (S Worcester)	Wells, John
Rathbone, Tim	Sproat, Iain	Welsh, Andrew
Rees, Peter (Dover & Deal)	Stainton, Keith	Wiggin, Jerry
Rees-Davies, W. R.	Stanbrook, Ivor	Wigley, Dafydd
Reid, George	Stanley, John	Wilson, Gordon (Dundee E)
Renton, Rt Hon Sir D. (Hunts)	Steel, David (Roxburgh)	Winterton, Nicholas
Renton, Tim (Mid-Sussex)	Steen, Anthony (Wavertree)	Young, Sir G. (Ealing, Acton)
Rhys Williams, Sir Brandon	Stewart, Donald (Western Isles)	Younger, Hon George
Ridley, Hon Nicholas	Stewart, Ian (Hitchin)
Ridsdale, Julian	Stokes, John	TELLERS FOR THE AYES:
Rifkind, Malcolm	Stradling Thomas, J.	Mr Spencer Le Marchant and
Roberts, Wyn (Conway)	Taylor, R. (Croydon NW)	Mr. Michael Roberts.
NOES
Allaun, Frank	Davies, Bryan (Enfield N)	Hamilton, James (Bothwell)
Archer, Peter	Davies, Denzil (Llanelli)	Hamilton, W. W. (Central Fife)
Armstrong, Ernest	Davies, Ifor (Gower)	Hamling, William
Ashton, Joe	Davis, Clinton (Hackney C)	Hardy, Peter
Atkins, Ronald (Preston N)	Deakins, Eric	Harper Joseph
Atkinson, Norman	de Freitas, Rt Hon Sir Geoffrey	Harrison, Walter (Wakefield)
Bagier, Gordon A. T.	Delargy, Hugh	Hattersley, Rt Hon Roy
Barnett, Guy (Greenwich)	Dell, Rt Hon Edmund	Hatton, Frank
Barnett, Rt Hon Joel	Dempsey, James	Hay man, Mrs Helene
Bates, Alf	Doig, Peter	Heffer, Eric S.
Bean, R. E.	Dormand, J. D.	Hooley, Frank
Benn, Rt Hon Anthony Wedgwood	Douglas-Mann, Bruce	Horam, John
Bennett, Andrew (Stockport N)	Duffy, A. E. P.	Hoyle, Douglas (Nelson)
Bidwell, Sydney	Dunn, James A.	Huckfield, Les
Bishop, E. S.	Dunnett, Jack	Hughes, Rt Hon C. (Anglesey)
Blenkinsop, Arthur	Dunwoody, Mrs Gwyneth	Hughes, Mark (Durham)
Boardman, H.	Eadie, Alex	Hughes, Robert (Aberdeen N)
Bottomley, Rt Hon Arthur	Edelman, Maurice	Hughes, Roy (Newport)
Boyden, James (Bish Auck)	Edge, Geoff	Hunter, Adam
Bradley, Tom	Edwards, Robert (Wolv SE)	Irvine, Rt Hon Sir A. (Edge Hill)
Broughton, Sir Alfred	Ellis, John (Brigg & Scun)	Jackson, Miss Margaret (Lincoln)
Brown, Hugh D. (Provan)	Ellis, Tom (Wrexham)	Janner Greville
Brown, Robert C. (Newcastle W)	English, Michael	Jay, Rt Hon Douglas
Buchan, Norman	Ennals, David	Jeger, Mrs Lena
Buchanan, Richard	Evans, Ioan (Aberdare)	Jenkins, Hugh (Putney)
Butler, Mrs Joyce (Wood Green)	Evans, John (Newton)	John, Brynmor
Callaghan, Jim (Middleton & P)	Ewing, Harry (Stirling)	Johnson, James (Hull West)
Campbell, Ian	Faulds, Andrew	Johnson, Walter (Derby S)
Canavan, Dennis	Fernyhough, Rt Hon E.	Jones, Alec (Rhondda)
Cant, R. B.	Fitt, Gerard (Belfast W)	Jones, Barry (East Flint)
Carmichael, Neil	Flannery, Martin	Jones, Dan (Burnley)
Carter, Ray	Fletcher, Raymond (Ilkeston)	Judd, Frank
Carter-Jones, Lewis	Fletcher, Ted (Darlington)	Kaufman, Gerald
Cartwright, John	Foot, Rt Hon Michael	Kelley, Richard
Castle, Rt Hon Barbara	Ford, Ben	Kerr, Russell
Clemitson, Ivor	Forrester, John	Kilroy-Silk, Robert
Cocks, Michael (Bristol S)	Fowler, Gerald (The Wrekin)	Kinnock, Neil
Cohen, Stanley	Fraser, John (Lambeth. N'w'd)	Lambie, David
Coleman, Donald	Freeson, Reginald	Lamborn, Harry
Colquhoun, Mrs Maureen	Garrett, John (Norwich S)	Lamond, James
Concannon, J. D.	Garrett, W. E. (Wallsend)	Leadbitter, Ted
Cook, Robin F. (Edin C)	George, Bruce	Lee, John
Corbett, Robin	Gilbert, Dr John	Lestor, Miss Joan (Eton & Slough)
Craigen, J. M. (Maryhill)	Ginsburg, David	Lewis, Arthur (Newham N)
Cronin, John	Golding, John	Lewis, Ron (Carlisle)
Crosland, Rt Hon Anthony	Gould, Bryan	Lipton, Marcus
Cryer, Bob	Gourlay, Harry	Litterick, Tom
Cunningham, Dr J. (Whiteh)	Grant, George (Morpeth)	Loyden, Eddie
Dalyell, Tam	Grant, John (Islington C)	Luard, Evan
Davidson, Arthur	Grocott, Bruce	Lyon, Alexander (York)

Lyons, Edward (Bradford W)	Pavitt, Laurie	Strang, Gavin
Mabon, Dr J. Dickson	Peart, Rt Hon Fred	Swain, Thomas
McCartney, Hugh	Pendry, Tom	Taylor, Mrs Ann (Bolton W)
McElhone, Frank	Perry, Ernest	Thomas, Jeffrey (Abertillery)
MacFarquhar, Roderick	Phipps, Dr Colin	Thomas, Ron (Bristol NW)
Mackenzie, Gregor	Prentice, Rt Hon Reg	Thorne, Stan (Preston South)
McMillan, Tom (Glasgow C)	Prescott, John	Tierney, Sydney
Madden, Max	Price, C. (Lewisham W)	Tinn, Jamas
Magee, Bryan	Price, William (Rugby)	Tomlioson, John
Mahon, Simon	Radice, Giles	Torney, Tom
Marks, Kenneth	Rees, Rt Hon Merlyn (Leeds S)	Urwin, T. W.
Marquand, David	Richardson, Miss Jo	Varley, Rt Hon Eric G.
Marshall, Dr Edmund (Goole)	Roberts, Albert (Normanton)	Wainwright, Edwin (Dearne V)
Marshall, Jim (Leicester S)	Roberts, Gwllym (Cannock)	Walden, Brian (B'ham, L'dyw'd)
Mason, Rt Hon Roy	Robertson, John (Paisley)	Walker, Harold (Doncaster)
Meacher, Michael	Roderick, Caerwyn	Walker, Terry (Kingswood)
Mellish, Rt Hon Robert	Rodgers, George (Chorley)	Watkins, David
Mendelson, John	Rodgers, William (Stockton)	Watkinson, John
Mikardo, Ian	Rooker, J. W.	Weetch, Ken
Millan, Bruce	Roper, John	Weitzman, David
Miller, Dr M. S. (E Kilbride)	Rose, Paul B.	Wellbeloved, James
Miller, Mrs Millie (Ilford N)	Ross, Rt Hon W. (Kilmarnock)	White, Frank R. (Bury)
Mitchell, R. C. (Soton, Itchen)	Rowlands, Ted	White, James (Pollok)
Molloy, William	Ryman, John	Whitehead, Phillip
Moonman, Eric	Sandelson, Neville	Willey, Rt Hon Frederick
Morris, Alfred (Wythenshawe)	Sedgemore, Brian	Williams, Alan (Swansea W)
Morris, Charles R. (Openshaw)	Selby, Harry	Williams, Alan Lee (Hornch'ch)
Morris, Rt Hon J. (Aberavon)	Shaw, Arnold (Ilford South)	Wlliams, Rt Hon Shirley (Hertford)
Mulley, Rt Hon Frederick	Sheldon, Robert (Ashton-u-Lyne)	Williams, W. T. (Warrington)
Newens, Stanley	Silkin, Rt Hon John (Deptford)	Wilson, Alexander (Hamilton)
Noble, Mike	Silverman, Julius	Wilson, Rt Hon H. (Huyton)
Oakes, Gordon	Skinner, Dennis	Wilson, William (Coventry SE)
Ogden, Eric	Small, William	Wise, Mrs Audrey
O'Malley, Rt Hon Brian	Smith, John (N Lanarkshire)	Woodall, Alec
Orbach, Maurice	Snape, Peter	Woof, Robert
Ovenden, John	Spearing, Nigel	Wrigglesworth, Ian
Owen, Dr David	Spriggs, Leslie	Young, David (Bolton E)
Padley, Walter	Stallard, A. W.
Palmer, Arthur	Stewart, Rt Hn M. (Fulham)	TELLERS FOR THE NOES:
Park, George	Stoddart, David	Mr. Thomas Cox and
Parker, John	Stott, Roger	Miss Betty Boothroyd.
Parry, Robert

Question accordingly negatived.

Clause 5 ordered to stand part of the Bill.

[Mr. OSCAR MURTON in the Chair]