HC Deb 13 July 1976 vol 915 cc524-64

'For the purposes of calculating taxable income, the first 50 per cent. of war widow's pension shall be exempt'.—[Mr. Kilroy-Silk.]

Brought up, and read the First time.

Mr. Robert Kilroy-Silk (Ormskirk)

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker

With this we may take the following new clauses: New Clause 2 (War widows' pensions), New Clause 26 (War widows' pensions: 51 per cent. exemption), and Amendment No. 230, in Clause 29, page 16, line 43, at end insert— '(3) In section 8(1) of the Taxes Act, after paragraph (a) there shall be inserted the following paragraph: (aa) in the case of a claimant who is

  1. (i) in receipt of a national insurance widows' pension, a war widows' pension or a national insurance retirement pension; and
  2. (ii) is not entitled to claim relief under section 81(1A) of this Act (age allowance), section 12 of this Act (widower's or widow's housekeeper), or section 14 of this Act (additional relief for widows and others in respect of children)
to a deduction from the income tax with which she is chargeable equal to income tax at the basic rate on £835'.

Mr. Douglas Crawford (Perth and East Perthshire)

On a point of order, Mr. Deputy Speaker. Am I right in assuming that, for those of us who would like to see 100 per cent. exemption from taxation given to war widows, you will allow a vote on our Amendment (a) to New Clause 13?

Mr. Deputy Speaker

The selection has been made by Mr. Speaker and the only vote will be on New Clause 13.

Mr. Kilroy-Silk

If the hon. Member for Perth and East Perthshire (Mr. Crawford) had attended the proceedings in Committee we would have got the 50 per cent. exemption, so it ill becomes him to raise the matter now.

The clause seeks to exempt 50 per cent. of the war widows' pension from tax. It is a small, moderate and very justifiable concession, particularly in view of the fact that this year for the first time the war widows in receipt only of a wat widow's pension have come into the tax bracket.

For example, a war widow's pension is now £17.20. It will go up, admittedly, to £19.60 in November, but that increase will be taxed and the net increase that the war widow will receive in November will be 22p. This I believe to be unjustifiable. It is totally wrong and inappropriate for us to be taxing individuals who were never intended to be taxed and who were never expected to fall within the tax bracket.

11.15 p.m.

The new clause affects 65,000 war widows from the Second World War and 25,000 war widows from the First World War. I believe that war widows have a special case and that they are different. It is an emotional case. I do not apologise for that, because emotion has a place in politics and politics is the better for it.

No amount of money can ever compensate for the unique circumstances of the bereavement suffered by war widows. The sacrifice their men made was a unique and irrevocable sacrifice, and it ill becomes the country to show its gratitude for that sacrifice by giving with one hand a war widow's pension and taking it away with the other by taxing it. I would expect the country to show gratitude by treating war widows as a special case, but that does not happen at the moment.

I do not think that money can adequately compensate a woman for the death of her husband in the First or Second World War, for the loss of companionship, the loss of the opportunity to build a future together and the loss of memories she might have had. That, I accept, is an emotional argument which one either does or does not accept. It is perhaps not susceptible to intellectual argument.

War widows have received a particularly bad deal. There are 5,000 war widows who live on supplementary benefit. That is a poor reflection on a so-called civilised society, let alone an expression of gratitude for the lives that were laid down. The war widow's pension compares ill with the amount paid to the widows of men killed in Ulster. I do not begrudge the £38 a week paid to widows of Service men killed in Ulster, but I do not see how we can value widows at £38 in that context and widows of two world wars at only £17. There is little justice in that kind of distinction.

There is also an anomaly in that the war widow's pension is taxed whereas the war disability pension is not taxed. If a man loses his life, his widow receives a pension which is taxed, but if a man lost a limb or was wounded during the war he receives a war disablement pension which is not taxed, however much he earns. Indeed, the position is even more bizarre, because there are new war widows every year from the Second World War. The man may have been in receipt of a war disability pension tax-free irrespective of his income. When he dies, that war disability pension is commuted into a war widow's pension and becomes taxable.

My hon. Friend the Financial Secretary to the Treasury attempted to explain that discrepancy in a parliamentary reply. He said: War widows' pensions are a form of income like other pensions paid to widows; but a war disablement pension is specifically exempt from tax because it is regarded as compensation for injury suffered by the recipient in the performance of his duties."—[Official Report, 24th May 1976; Vol. 912, c. 94.] Why is a pension awarded for death or permanent loss regarded as income but a pension awarded for disability regarded as compensation? If a disability pension is regarded as compensation and is tax-free, equally a war widow's pension should be regarded as compensation for a life that can never be regained and should similarly be tax-free. It is a strange use of language to attempt to defend that anomaly in that way.

There is also the arugment of comparisons. We alone of the Western industrialised countries treat our war widows in such a peremptory and shoddy fashion. Virtually all the Old Commonwealth countries, and most of the New Commonwealth, exempt war widows' pensions from tax. War widows in Germany are paid a sum equivalent to £50 a week tax-free. I do not accept that we have to do necessarily as other countries do, and I do not accept that international comparisons are always relevant or valid. but I should like to think that we can lead in this area rather than fall behind to such an extent.

The clause affects a relatively small group of elderly women living in their declining years. They could all be accommodated in a fair-sized football ground. They are the forgotten women. The cost would be minimal. My hon. Friend the Financial Secretary will no doubt talk about upwards of £10 million, but the more reliable estimates suggest about £3½ million at the most. If we can spend £10 million to change road signs in Wales I should say that £3½ million for the war widows would be much better value for money and a much more worthy cause.

I began by saying that this is an emotional argument. However, it has a place to play in politics. I am sure many hon. Members will accept and recognise that there are strong feelings outside the House on the issue. They are feelings that perhaps we should take into account. Perhaps we should also take into account that they are feelings that were once supported by my right hon. Friend the Chief Secretary to the Treasury, when he said: If it were not for the lateness of the hour, I am sure that all my hon. Friends would have wished to support the strong case in support of the war widows. He continued: Most of us in our constituencies have received representations about this matter and we know the strong feelings that are justifiably felt by war widow pensioners."—[Official Report. Standing Committee H, 23rd May 1973; c. 706.] I ask for support from both sides of the House for this essentially non-partisan matter. [Interruption.] My hon. Friends laugh mockingly, but I do not see why it is not a non-partisan matter. I do not see why there is any difference in politics between one party and the other on this issue. Every hon. Member is concerned about the position of war widows. I do not see how my hon. Friends can mock.

I accept that there are drawbacks in the clause, and I accept that it would create an anomaly, but there are many other anomalies that bedevil our whole social security and tax structure. What is another anomaly, especially if it is a justifiable one, among friends? I accept, as my hon. Friends have been intimating in their mutterings behind me, that there are other groups who are equally disadvantaged, but I believe that war widows have a special case. That might be because my mother was a war widow.

I accept that there are other categories of individuals and groups in a position that we wish to rectify, but that does not preclude us from doing anything for them if we do something for war widows tonight. Such groups are not mutually exclusive. There are those who insist that if we do something for war widows we shall not be able to do anything for anyone else, but I submit that they are wrong.

My right hon. Friend the Chancellor of the Exchequer has already stated that he will not collect the tax that is already provided for on war widows' pensions this year. Like my hon. Friends, he is alarmed at the distress and confusion that has been caused among war widows by receiving a tax demand notice this year for the first time in their lives. My right hon. Friend has said that he will not collect the tax. If that is the position, I cannot see why there should be any opposition to the clause. Certainly we are creating a confusing and anomalous situation if we say that war widows are eligible for tax but that we shall not collect it.

I believe that we should rectify the present position by accepting the clause. I believe that if it were accepted it would partially resolve the situation.

Mr. Graham Page (Crosby)

It will come as no surprise to the hon. Member for Ormskirk (Mr. Kilroy-Silk) to learn that I wholeheartedly support him in the new clause which he has so efficiently moved. If the vote on tax relief for war widows' pensions were a vote in a national referendum the Ayes would have it, because it is a popular idea in the country. If it were a free vote tonight, the result would be the same.

Those who doubted the proposal in the past will have had their doubts dispelled this year, because the tax threshold means that many war widows receiving only widows' pensions are now, for the first time, paying tax. That is perhaps the reason for the strength of feeling in support of tax relief for war widows' pensions. Those of us who have pleaded for that relief over many years find that this year the arguments have built up, brick by brick, until they are unassailable.

The cost of the relief becomes smaller year by year, death by death, and it becomes cheaper each year to remedy the wrong. In Committee the Financial Secretary said that acceptance of a similar amendment moved by the hon. Member for Ormskirk would cost £10 million. I cannot believe that figure to be right. In November a war widow will receive £19.80 a week. Out of that sum she will pay tax of £2.38. If one rounds up that figure to £1.50, it totals £130 a year.

The Government say that there are 90,000 war widows. That figure must be wrong, because two years ago we were told there were 80,000 war widows and they have been reducing by about 7,000 a year. The present number most, therefore, be nearer 70,000 than 90,000. Simple mathematics shows that if they were given 100 per cent. tax relief it would cost about £9,750,000. Some war-widows pay tax at a higher rate, and the set-off would be the saving to be made from the 5,000 who are now receiving supplementary benefit and the administrative cost of that.

The anomaly of the war disability pension being free of tax and the war widow's pension being taxable came about accidentally in 1919 and we have perpetuated it ever since. But that is not the only anomaly. A war widow can receive the first child dependant allowance and subsequent child dependant allowances free of tax. She can also receive education allowances free of tax.

We can only be ashamed of the comparison which the hon. Member for Ormskirk drew between war widows' pensions and tax in this country and the situation in almost every other country in the world. It is difficult to persuade the war widow in this country that she is so much less worthy than her German counterpart or her counterparts in Commonwealth and other European countries.

Although this may be an emotional issue, I do not think that the argument is any the worse for that. The time has come when the argument for giving tax relief to these widows is so strong that I was hoping that the Minister would say "We accept the argument. We accept it not for 50 per cent., as proposed in the clause, but for the full 100 per cent." In that way we would be doing justice where in the past we have done great injustice to war widows.

11.30 p.m.

Mr. J. W. Rooker (Birmingham, Perry Barr)

I wish to make three points in what will inevitably be a brief debate. The first point is an obvious one. The right hon. Member for Crosby (Mr. Page) was a Minister in the previous Conservative Government, and they did nothing about this problem over the years. In mitigation—it is the only point that can be so made—while war widows were always taxed, for instance when they were working, the current position never existed when the Conservatives were in Government. The tax threshold was not mixed up with the basic pension. All that my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk) is seeking to do is to restore the position to what it was when the Government took office.

My second point brings home the tragedy of the circumstances of these people. I had a bad example of the difficulties. An 85-year-old woman, widowed as a result of the First World War, has just received an income tax form for the first time in 25 years, since she was 60. I had to fill it in for her because she was incapable of reading the explanatory leaflet. It was not printed in type large enough for her to read. That brings home the dilemma facing my hon. Friends who wish to change the situation. That widow asked me what could be done for her. Clearly, something has to be done. To his credit, my hon. Friend has taken the bull by the horns.

My third point concerns the cost of this proposal. On an examination of all the evidence, the cost appears to be about £3½ million to £4½ million per annum. It is a diminishing cost. Earlier this year the Government entered into a commitment to pay a cash Grant of over £4 million to the city of Birmingham to sponsor the Commonwealth Games. That sum was inflation-proofed, and it was not originally in the Government's Estimates. The money is no longer required because there has been a change of political control in the city and the Tory-controlled council has withdrawn the application to sponsor the games. I shall not enter into the argument about there being poorer facilities for the children of Birmingham as a result.

That sum of money, which is no longer required by Birmingham, would pay the cost in the first year of dealing with this anomaly. If we cannot change our economic circumstances in a year, it is a poor reflection on the Government, this House and the country. The money is there for the first year. My hon. Friend will not be alone in the Lobby tonight.

Mr. Philip Goodhart (Beckenham)

The hon. Member for Ormskirk (Mr. Kilroy-Silk), who moved the new clause so attractively, is by no means the first to tread this path. The reasons for pressing the clause so forcefully can be summed up by the case of Mrs. Sarah Gelder, a 92-year-old widow whose husband was killed in the First World War and who retired from her job as a church cleaner 32 years ago. In her working career Mrs. Gelder never earned enough money to pay income tax, but now, at the age of 92, she has received a tax demand for £117 on her annual pension, which, with age relief, comes to £1,010 a year.

What has happened to Mrs. Gelder is happening to tens of thousands of other war widows. As the pensions have been raised by the Government to try to keep pace with the rocketing rate of inflation, so these war widows have tripped over the tax threshold. For the first time, a war widow who has no other income and is, therefore, getting one-third or less than one-third of the average national wage is being dragged into the tax net.

That is not the only reason why this issue is now being pressed with such vehemence by such bodies as the British Legion, the Officers Pension Society, the British Limbless Ex-Service Men's Association and about 40 other ex-Service organisations. There are anomalies in this field, and international anomalies are pressing very deeply. Earlier this month we were remembering the sixtieth anniversary of the Battle of the Somme, when in one day about 50,000 British troops fell as casualties. The widow of a British corporal killed on the first day of the Battle of the Somme receives less than one-third of the war pension of the widow of a German corporal who fell in that same battle—and the German war widow's pension is tax-free. In fact, all our ex-enemies in the last war—Germany, Italy and Japan —pay tax-free pensions to their war widows, and so do the majority of those countries that were our allies in the last war.

In the past, Treasury Ministers have consistently resisted proposals of this sort by claiming that the concession would breach the principle that all income must be taxable. As my hon. Friend reminded us, however, as long ago as 1919 a Select Committee agreed that war widows' pensions should be tax-free, just as disability pensions are. In Committee upstairs, when dealing with a similar new clause moved by the hon. Member for Ormskirk, the Minister, trying once again to draw a distinction between war disability pension, which is tax-free, and war widows' pensions, which are not, said: The situation is that the service disability pension is a compensation, just as workmen's compensation is. The war widows' pension. of course, is an attempt to provide that person with an income."—[Official Report, Standing Committee E, 1st July 1976; c. 1740.] It seems to me that that is a very narrow line indeed on which to try to draw a great Treasury principle.

Then there is the question of cost. In Committee the Minister of State suggested that this concession would cost about £10 million a year. Others who have examined the situation—the British Legion and the Officers Pension Society, for example—suspect that the cost would be half of that. One must remember, of course, that in a way the Government are making a profit out of war widows, because this is an area in which the commitment is declining. Last year the total social security payments went up by some £520 million over the bill for the previous year, but the payment to war widows and disability pensioners went down by £20 million. It went down because the number of war widows was declining rapidly. It is a declining financial commitment.

A number of my hon. Friends have suggested other ways of dealing with this problem. They have suggested household tax allowances. There is, of course, the tax credit scheme, which in the long run would undoubtedly provide the cure for this particular problem. But these are all long-term measures. As Lord Keynes said, in the long-term we are all dead, and, alas, war widows are apt to die even faster than we are.

What we need is not a long-term solution but an answer now. I believe that the best way of giving support to this group of people, who certainly deserve our support, is by supporting the new clause this evening.

Dr. Colin Phipps (Dudley, West)

My hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk), in a deeply-felt speech, moving the new clause in his name and in the names of myself and others of my hon. Friends, spoke of this as being an emotional issue for many people. I suppose that it is also a practical issue for most Members of Parliament. All of us conduct surgeries and all of us, I am sure, in recent weeks have had war widows coming to see us. I have a surgery on Fridays and Saturdays, and three war widows came to see me. I cannot recollect having any war widows coming to see me prior to this problem, but three came to see me on Friday and Saturday, all concerned and extremely worried about the problem of paying the tax. That is a point which has not been touched upon.

The document which all of them are receiving from the Inland Revenue shows how much they have to pay in each quarter as from October. These are sums of money starting at £25 and going up to £36, which for someone receiving the new rate represents an amount which it is almost inconceivable for her to save. This is creating quite genuine and gratuitous worry among a large number of war widows in the population. It seems to me that an aspect which we as parliamentarians really must consider is that we are quite gratuitously causing upset and distress to a large number of our electors.

It seems incredible that we can be talking about not pushing the benefit of a free car in the Finance Bill and yet we are busily clawing back £5 million, or whatever the figure is, from war widows. I should like to know from the Minister just how much we are giving away in the concession we are about to bring forward in respect of the tax which we are now, apparently, not going to charge on the benefit received from a car.

The aspect which is upsetting many of us most on this side of the House is the appalling public relations aspect as far as the Labour Party and the Labour Government are concerned. I am speaking primarily to my own Front Bench on this particular piece of legislation. We appear to be concerned to claw back £4½million from a small group of people, who none the less have sons and daughters, often grandsons and granddaughters, who are able to vote. It is felt strongly in my constituency and no doubt in others that this should not be done.

11.45 p.m.

This public relations aspect appears to stem from the only argument I have heard against giving a concession to war widows: why are we choosing war widows? Why should this not apply to the widows of coal miners and so on? I should be only too delighted—I think this applies to most of my hon. Friends—if the day came when we could extend it to all widows. But should we condone equality of suffering? Can we say that the only reason why we cannot do this is that it would improve the lot of a certain group of people, that that is wrong and that they must suffer as much as everyone else?

Let us consider war widows as a special case. I know that the Treasury abhors an anomaly in much the same way as nature abhors a vacuum. But if we do right by this particular anomaly, no one will begrudge it. Has any hon. Member received one letter expressing opposition to this concession? Is there an uproar in our constituencies about it? It is a totally popular move. It is an anomaly that no one would begrudge.

Mr. Robert Hughes (Aberdeen, North)

Like many other hon. Members, I have been lobbied by war widows. In many cases I have had sympathy and been prepared to support them. My hon. Friend says that there has been no outcry. I suspect that, if we pass the clause tonight, next week there will be one hell of an uproar from people who have lost their husbands in the mines or in other conditions of work. They will not see why, 25 years or even more after the event, this special concession is being made. Can we address ourselves to how we answer those questions next week?

Dr. Phipps

I shall be delighted if that happens, and I hope that my hon. Friends will be delighted. It is about time that there was more pressure from groups of that kind, pressure of which the Government took notice. We have all had pressure from widows of all kinds. But that is no reason for not doing something about one group of widows. This would be an anomaly which no one would begrudge. I hope that the Government will allow it to pass.

Mr. J. Enoch Powell (Down, South)

This is a new clause such as any hon. Member might take pleasure in moving or supporting. I am sure that the right hon. Member for Crosby (Mr. Page) was right to say that if we held a referendum on this matter there would be a heavy vote in favour of such a change in the law.

But this House has a responsibility not only to particular groups who suffer under such disabilities but for the integrity and fairness of our tax system generally. I believe that we should cause more injustice and resentment than we remedied if we were to make this change tonight.

The distinction which is drawn between the war disability pension as a compensation and the war widow's pension as income is not a quibble: it is a very real, indeed fundamental, distinction. The war disability pension compensates the man for the loss of a faculty, of a limb, of power of enjoyment and power of earning. But when we say that the war widow's pension is compensation for the loss of a husband, either we have said something which is equally applicable to every type of widow's pension or else we have deserted the literal use of language for what is mere metaphor.

The hon. Member for Aberdeen, North (Mr. Hughes) has already pointed to one of the crass injustices which would be brought about if we were to make this change as it stands. If the industrial disability pension is compensation, we should also tell ourselves that the widow of a person who is killed in an industrial accident is also in receipt not of income but of a form of compensation.

There is no secure ground once we depart from the principle of treating income—it is as income for maintenance that the war widow's pension is provided —as income for the purposes of taxation.

I am not unfriendly to special treatment for those who serve and for the families of those who serve. It may be that the hon. Member for Ormskirk (Mr. Kilroy-Silk) is fully justified in saying that the war widows have a raw deal. But, if that is so, there is only one proper way to put it right, and that is to put up the pension. That is the only way which does not involve anomaly or unfairness. Indeed, that is the only way which will take the money to the place where it is needed most.

I do not think that it could be done within the scope of the Bill, but if this had been a proposal for increasing the differential as against others in favour of the widows of those who had been killed in the service of their country, I do not believe that any objection could be raised to it. But if we do what is proposed, with however good intentions and with whatever public feeling behind it, we shall be creating that which, as far as possible in a tax system, it is our business to avoid—namely injustice as between one taxpayer and another and as between one person and another in like condition.

We cannot be helped in this matter by looking at the tax behaviour of other countries in this respect. We would have to look at the whole nature of their tax systems and see how their treatment of this category fitted into them. What we know and are responsible for is our own tax system. I believe that the House would not be discharging its duty to taxpayers as a whole if it were to make this change in the law in this way.

Mr. Simon Mahon (Bootle)

Like many hon. Members in the House tonight, I find myself torn on what has been said to be an emotive issue.

I happen to be a war disabled person. I was one of five serving brothers. I was always most disturbed that my mother, who was an orphan at the age of 10, and my father, who was also an orphan at about the age of 10, should produce five sons, who served in some of the best British regiments, one of whom was killed and others of whom were wounded. I often wondered what kind of an anomaly it was that that hard-working woman, who produced five sons, should never have received one penny in compensation for the loss of one son at the age of 22 who was killed at Caen while serving with the Irish Guards. That is the kind of anomaly about which little seems to have been said.

But I should be doing less than my duty if, holding the positions that the Government have sometimes given me and the positions that have been bestowed upon me by other worldly organisations—for instance, as a trustee of the Far Eastern Prisoners of War Fund, as chairman of the Apostleship of the Sea, a world-wide organisation for the welfare of seamen of all faiths, religions and colours, and as a member of an international organisation for the protection of merchant seamen and for the advancement of their welfare and culture—if I said that I was satisfied that this measure should be passed by the House with equanimity, as some people seem to think.

Who in this House is against war widows? Who does not want to make their lives a little easier? Who would not offer them succour, support and consolation for the lonely years before, during and since the war? Let no one on either side of the House think that he has a prerogative for the welfare of, or consideration or sympathy for, this noble band of ladies. That cannot be true. We are all concerned.

I am concerned about all widows, not only war widows. I ask the Government to consider this. I mention the case of a boy who might have married at the age of 22. I wanted him to get married before he was killed, but circumstances prevented that marriage. He was killed at Caen with Captain Hugh Dormer in the last tank going to Brussels. He might have lived. Another of my brothers was almost killed at Nijmegen bridge when it was crossed by the Grenadier Guards. He lived then, but he died later at the age of 36, leaving three children.

However, this is not a materialistic world. Hon Members have heard me say this before. All of us with long experience of public life know of the remarkable fact that widows' children, in spite of all their difficulties, inevitably do well. Do not let us be too pessimistic about this. There is a God. Someone looks after the destinies of people, thank God, besides materialists like us.

I ask what the Government can do for all widows in my constituency. I do not ask what they can do about the sailors in the Merchant Navy who lose their lives so consistently. I know. I have had a life-long interest in this subject. I want to know what the Government intend to do for the widows. I am not satisfied with the performance of any Government in this matter. However, I do not want to pick anyone out, because, as the right hon. Member for Down, South (Mr. Powell) said, we should make a mistake if we pursued that road tonight.

The Government spend a great deal of money on items which are far less important than the welfare of widows and their children. It would be beneficial to the House if we obtained from the Minister a positive statement about what we may do for widows in correlation with what we may do for industrial people.

I was scaling at the Liverpool Docks when I was 14. I know of people who are dying now. I am 62. I know men who died at 35 of sarcoma caused by industrial activity, others who died of asbestosis and silicosis and miners who died of pneumoconiosis. We should challenge our consciences on this matter and ask whether in all these long years we have given sufficient consideration to the position of those who suffer when so many people do so well.

There are so many rich people in the world who do not try half as hard as the lads who sacrificed their lives or the men who man the ships out of Liverpool and Southampton and sail them all over the world, many of whom lose their lives. Let us achieve a balance. I should willingly take this separate issue if I thought I could do it with justice and equanimity, but I cannot. I ask the Government, as I would ask any other Government, to let us know their ideas and ideals about the protection of widows and their families, the children whom they have the obligation to rear.

12 midnight

Sir John Hall

As my right hon. Friend the Member for Down, South (Mr. Powell) pointed out, there is not much fiscal logic about the clause, but there is not much logic about much of our fiscal legislation. Indeed, if we all lived by logic alone life would be a very grey and dreary.

Many of us from time to time attend the gatherings of the British Legion in our constituencies. and we have heard the words of remembrance with which they start: They shall not grow old, as we that are left grow old: Age shall not weary them, nor the years condemn. That is certainly true of those who were killed in war, but what about the widows who were left? Many hon. Members who fought in the last war had the difficult and sad task of going to see the widows of friends and comrades. Some of us have kept in touch with those widows. They have certainly grown old and age has wearied them. Many of them have been condemned to grinding poverty. When we compare the way in which countries against which we fought have treated their widows with the way in which we treat ours. I wonder that we have the face to argue the matter.

In a very interesting speech, the hon. Member for Bootle (Mr. Mahon) said in effect that if we cannot help all widows and unfortunate people we should help none. That is not the kind of policy and philosophy we should adopt. If we took the first step towards helping war widows, it might encourage the Government to go further and help others.

I had the sad experience of attending the funeral of a war widow who was not so very old. who had had little income all her life other than an inadequate pension. Yet she had managed to bring up a family of the kind the hon. Member for Bootle described, all of whom had grown up to be first-class citizens. But life might have been easier for her if she had had rather more generous treatment from the Government. This is not a party point. All Governments of all parties have been at fault.

We talk about remembering those who died. The last lines of the remembrance words I quoted are: At the going down of the sun and in the morning, We will remember them. We may remember the dead, but we do not seem to remember the living. I am staggered that Treasury Ministers can go on refusing to accept what is a very modest request which would cost very little.

I know the arguments. I have heard them so often. I know the arguments advanced by my right hon. Friend the Member for Down, South that we must not do this because it would offend against fiscal purity and be unfair to other taxpayers who might be upset. The taxpayers of the majority of countries which took part in the last war, which pay their widows bigger pensions tax-free, do not seem upset at the unequal treatment of the war widows there. Why should we be different? The Financial Secretary should remember the words about faith, hope and charity and reply to the debate with charity in his heart.

Mr. Robert Hughes

The issue of war widows' pensions and taxation is one of deep emotion on all sides of the House, and we have heard moving arguments on both sides of the question.

None of us can claim purity in this matter. I remember voting in favour of similar new clauses when I was on the Opposition Benches and finding them resisted by the Government, supported by many hon. Members now sitting on the Opposition side. I am not making a party point. The roles are now reversed. The Opposition are willing to support the Government Back Bench new clause and I suspect that it will be resisted by the Financial Secretary, with the support of most hon. Members on this side. The sides have changed, but the issue is the same.

This is not an issue on which to adopt the approach favoured by some Back Benchers of discretion rather than valour, keeping a low profile and hoping that when one does not go through the right Lobby one is on the losing side so that nobody challenges the way one has voted.

I have given my support to war widows' associations in the past and I signed the Early-Day Motion on their pensions. However, having listened to the arguments inside and outside the House about the anomalies that would be created and the difficulties of other widows, I have changed my mind. I shall support the Government. I realise that, like other hon. Members, I shall have to explain my action to my constituents.

I was disturbed at some of the remarks made by my hon. Friend the Member for Dudley, West (Dr. Phipps). They were not made in a pernicious sense, but he referred to the public relations aspect and said that we should have regard to the fact that sons and daughters of war widows might decide how to vote in elections on the basis of our decision tonight. That is the worst possible reason for supporting the new clause. If we vote on a principle, we can stand by it. Many hon. Members who support the new clause do so because of the principle, and they are not being dishonourable.

Dr. Phipps

Would not my hon. Friend accept that when the principle and the public relations aspects are both right we ought to be pressing for them?

Mr. Hughes

I accept that. I am merely suggesting that one of the reasons advanced for the new clause is not the best reason.

I wonder whether the case is not sometimes overdone. The hon. Member for Wycombe (Sir J. Hall) talked about widows living in grinding poverty while paying income tax. There are many widows in more grinding poverty because their earnings do not take them into the tax system.

Two wrongs do not make a right, and we have a responsibility to look at the overall priorities. This is a matter of priorities. We must ask whether we ought to breach the principle of equality in taxation and say that those who earn sufficient, from whatever sources, to take them into the tax system should receive special treatment and not have to pay tax on part of their earnings. I believe that on balance we should stick by the principle that those who earn, from whatever source, should pay their income tax on that source. One reason why I have changed my mind is that of priority. There is never a right time for concessions on taxation any more than there is a right time for concessions on earnings of one kind or another.

When we have already gone through a difficult period of public expenditure constraint—the fashionable phrase for cuts in public expenditure and reduction in services of different kinds—and when we are faced, despite the yawns from the Liberal Bench, with all sorts of constraints which will lead to anomalies for people who have not the ability to articulate their demands in the way in which some of us are able to do, this new clause is not my priority tonight.

My hon. Friend the Member for Dudley, West expressed concern that we were conceding the tax proposal in relation to company cars. I regret that, but it is not the issue we are debating now and my priorities are such that I could not in all conscience take the easy way out and vote for the clause.

Mr. Tony Newton (Braintree)

I spoke on this matter at some length in Committee upstairs, and I shall not repeat here all the arguments which I then advanced.

It is important that several hon. Members have tried in the last few minutes to put a balance to this argument and to weigh up the factors on both sides. The hon. Member for Ormskirk (Mr. Kilroy-Silk) listed fairly and compellingly the arguments in favour of his new clause, and I shall not try to rehearse them, but it is important that in considering this issue we and the Government—who are virtually certain to be defeated unless they make a different response to that which they made upstairs in Committee—should take account of the powerful arguments against meeting this problem in the way proposed.

I should like to ask a few questions revolving around the fundamental question of what we are trying to do. Are we trying to help the war widows in a sensible way which gives them, and not just us, value for money? If we are, I do not think that this is the best way to do it. It would certainly—this was implicit in what the hon. Member for Aberdeen, North (Mr. Hughes) said—be helping the best-off widows most and the worst-off the least.

That is not an argument which I should find particularly compelling if we were talking about a general reduction in taxation, in the context of arguments about incentives and differentials, but those are not arguments we can apply when talking about a limited amount of money to deal with poverty among war widows. There can be no doubt that if we want to help most the war widows who are most in need, the right hon. Member for Down, South (Mr. Powell) was right in saying that any money available should be applied to increasing the pension and not to this form of tax relief. That is an argument which should not be dismissed by the House.

Are we trying to make better sense of our taxation and social security systems? If so, this proposal will not do that either. There has been a good deal of rather loose talk about logic and about not bothering too much about logic in this issue. If we go down the path of making more and more bits of income exempt from tax, we shall never be able to make sense of the taxation and social security systems. That would run wholly counter to everything we on this side were trying to do in moving towards a tax credit scheme and counter to what I hope Labour Members will want to follow on from the child benefit scheme. Are we trying to move to a more rational approach in dealing with hardship in our society? If we are, the new clause does not really meet the case.

12.15 a.m.

Many of us keep in touch with the Disablement Income Group and other organisations concerned with the needs of the disabled. Virtually everyone who thinks and cares about the problems of the disabled thinks that it is nonsense that the income or compensation for disablement should depend on how that disablement arose—whether it was from war, industrial accident, or civil accident. The whole case for a national disability income rests on treating people as being disabled because they are disabled rather than taking account of how they got their disability.

If that argument applies to the disabled, it must in the end apply also to all widows. What matters is the fact that a woman is a widow with hardships and problems, not the circumstances in which her widowhood arose.

Mr. Victor Goodhew (St. Albans)

Surely my hon. Friend will take account of the fact that, whatever one may say about logic, the war widow is usually subjected to widowhood at a much earlier age than other widows. [HON. MEMBERS: "No."] Oh, yes, indeed. I notice that those of the Left Wing do not like this. They are not too keen on it. Perhaps they do not understand. There are those who rush to serve their country and as a result die at a much earlier age than they otherwise would have done. They risk their lives, and the risks to which they are exposed are much greater than in any other sphere—

Mr. Eric S. Heffer (Liverpool, Walton)

This is a speech, not an intervention.

An Hon. Member

Oh, shut up.

Mr. Goodhew

This is something which some Labour Members do not like and do not wish to acknowledge, because they do not like people who serve their country.

Mr. Heffer

Do not be so silly.

Mr. Newton

I do not think I entirely accept the point made by my hon. Friend the Member for St. Albans (Mr. Goodhew). There are many young husbands who are killed in industrial accidents—in factories, on building sites and in mines—at an early age. I accept that there is certainly a sense in which war widows are in a special position. But this is taken account of in the fact that their pensions are higher than those paid to other widows. I am concerned with the taxation system. Should our tax system add to these distinctions? I am doubtful about this.

But the point that sticks in my throat, and no doubt in the throat of the hon. Member for Ormskirk, is that, although many of us doubt that this is the right way to tackle the problem, something must be done about the problem itself. The Government must address themselves to this. If someone came to earth from outer space, he would regard our situation as madness. We employ a vast army of people to collect national insurance and pay incomes to people in need, and then we employ another army of people to claw back part of what we have paid them.

We argue endlessly about the whole tax threshold problem, and we all know that this general problem cannot immediately be solved. But selective action must be taken to rescue widows and others from the tax system in which they have become trapped. We could solve the problem not by exempting the income from tax but by introducing, if necessary, special tax allowances which would have the effect of specifically raising the tax threshold for these people. It could solve the immediate problem without undermining the whole basis on which we can advance with reasonable commonsense towards the long-term improvement of our tax system.

Sir John Hall

I agree with much of what my hon. Friend said, but does he not agree that the kinds of changes he is talking about are very unlikely to be achieved this year or for several years and that in the meantime many widows will have died?

Mr. Newton

That is exactly the point on which I was intending to conclude. I do not believe that we need wait for this. If the Government were determined to do it, the Bill could perfectly well be amended to eliminate this problem, in the case of most widows, without a significant or tremendous cost.

If the Financial Secretary is prepared to say that he will do this, I shall reconsider my position on the clause. If he is not, and if we are to wait any longer for this problem to be tackled, I shall vote for something of which I do not approve in the long term but which would help to tackle a desperate problem, rather than sit around and wait for another year or two. [Interruption.] If Labour Members below the Gangway had been present at some of the other much smaller gatherings on this Bill and earlier Finance Bills, they would know that I have been pressing this in respect not just of war widows but of widows generally for some time. It can be done it should have been done, and it should be done in this Bill. Without that undertaking, the problem being so important, I would rather accept the proposal of the hon. Member for Ormskirk as a short-term way to tackle an intolerable problem than leave it lying where it is.

Mr. Eric Ogden (Liverpool, West Derby)

The hon. Member for Braintree (Mr. Newton) in his earlier remarks forecast the result of this debate. Time will tell whether he is right or wrong. I do not know whether he is right. Certainly the voting will be across the party lines. The result will not be to the credit, as the hon. Member for St. Albans (Mr. Goodhew) suggested, of any particular section of one party, any more than it is right to say that those of any one section alone fought for their country.

This is a debate on how we can help war widows. It is not a debate about how to help all widows. Most of those who have spoken seemed to know in which Lobby they will vote this evening. I came with some doubts. As those doubts were answered by successive speakers, other questions were raised, and I still do not know in which Lobby I shall find myself later this evening. No doubt it will be in diverse company, be it Aye or No.

First, I doubt that this method of choosing a "good cause for the day" and supporting it in this particular way is the best way to get real justice for all good causes in a given order of priority. I certainly doubt, as an ex-Merchant Navy person during the war, whether it is really right and fair that if someone volunteered to join the Merchant Navy and was then lost at sea his widow should be in a less advantageous position now than if he had waited for some time longer, been conscripted into the Armed Forces and then been killed, so that his widow would receive these advantages. If a man had been sent into the mines as a Bevin boy, his widow would be in a worse position than someone conscripted into the Forces or someone volunteered for the Forces and then lost his life.

The argument was summed up to a degree by the hon. Member for Braintree when he said that we are continually concentrating on the result and not on the causes. Pensions, allowances, help and support depend on the cause of the disability and the cause of widowhood, and not the effects of the disability or the results of widowhood. It is said in the coal mining industry that if a man feels ill he should get down below to die and not die on the pit top. If he did that, his widow would be better off. If the pit blows up and there is a national disaster fund, the widows will be much better off. This is an exaggerated way of looking at the business, but the allowances and support we give depend too much on the cause and not the result.

The argument remains that if we cannot help everyone we should help some. That is a persuasive argument. It is not valid to argue that this will cost only £3½ million. Every one of the 630 Members of this place has a favourite good cause which could use £3½ million. Six hundred and thirty multiplied by £3½ million equals nigh on £2,000 million. This is at a time when the Government are desperately trying to cut their expenditure by £1,000 million. This debate has shown example after example of anomalies and difficulties. The Minister has to spell out what has been done and assure us that he has proposals to secure real help for all widows in an effective, speedy manner.

Mr. George Reid (Clackmannan and East Stirlinashire)

The hon. Member for Ormskirk (Mr. Kilroy-Silk) spoke with deep knowledge of the cruel dilemma with which he is faced on this issue, and hon. Members on both sides of the House share his difficulty.

If I had been told a few years ago that a widow whose sole income was a war pension would be subject to tax, I would have found the suggestion ludicrous. If it had been suggested that a person with an income of £17.50—less than one-third of the national minimum wage—received a tax demand, I would have found it incredible. If the Treasury Bench had said that the increase of the pension in November to £19.80 would leave a paltry 22p after tax, I would have found the suggestion risible. But that is the reality.

In recent months I have discussed the real distress that this causes to war widows in Scotland, as elsewhere. They are extremely hurt and frightened. Some are the widows of men who died in Flanders in the First World War, and they are hurt and distressed that they are being pursued by the taxman. It is the supreme example of ever-increasing tax burdens hitting low income groups which everyone agrees are a special case.

The Treasury argues that this is the direct result of pension increases and the effect of inflation on the tax threshold. That is a good technical argument, but try to tell it to 40,000 war widows in Britain whose husbands made a unique and irrevocable sacrifice. Try to explain to them that the widow of a German soldier is twice as well off, and that the same German widow if permanently resident in the United Kingdom would get tax-free benefits. Try to avoid comment on the fact that the United Kingdom, alone of the great Powers of the Second World War—Russia, Germany, United States and Japan—taxes war widows.

I am in a moral dilemma, torn between intellectual belief that the course suggested by the hon. Member for Ormskirk is not the best way to tackle the problem and a straight commitment to the women who have waited for so long. Tonight the House will be judged by the way in which it treats the dependants of the men who sacrificed everything. It is time to recognise that the war widows of this country. They are the only form of of gratitude.

How are we to achieve that? In the United Kingdom we operate two social security systems, one rooted in fiscal measures and the other rooted in social security benefits. With some allowances taxable and some not, we have an anomalous mess. We should develop a system in which all income is taxable and which avoids the means test, and we should rationalise benefits according to individual circumstances. That was the logic behind the Child Benefit Scheme, and that was why I wanted a wider system of tax credits, getting away from means-tested benefits and avoiding the degradation of the poverty trap. I recognise that for practical reasons such measures are not for now.

I ask myself whether war widows are different in kind from other widows. Are they different from miners' widows, for example? Are they in a different position from widowers? I believe that a case can be made for war widows on four simple grounds. The first ground is emotional but it is none the worse for that. I believe that nothing compares with the circumstances of these women's loss. The long lines of cemeteries in France, Italy, North Africa and the Far East bear mute testimony to their loss. No amount of compassion will ever recompense them for the telegram from the War Ministry, for the loss of companionship, the loss of the chance to build a home and family, the loss of opportunity for happiness and security. In those circumstances it is wrong to be giving a war widow a pension with one hand and taking it away with the other in taxation. That is quite wrong.

12.30 a.m.

The second argument concerns the unique situation of war widows' pensions in this country. They are the only form of benefit to be taxed. Various Members have mentioned the peculiar anomaly of disablement pensions paid to soldiers injured in war situations. I think that they were right to do so. If a man loses a leg in war, he receives benefit tax-free. If he loses his life, his widow is taxed on her pension. That seems quite wrong. It is an anomaly that dates back to 1919, but it is not sacrosanct because of that. The tax technicians may he able to find reasons for justifying it, but in common sense the British people recognise that it is wrong.

I am sure the Treasury Bench will argue that the disability pension is compensation for injuries suffered in performance of duty, but a war widow's pension is surely compensation for the loss of companionship, for the loss of a husband. Surely that should be recognised through due tax exemption.

The third argument is simply one of international comparison. I shall not dwell on the argument for long as others have drawn attention to the comparisons. We know that among the Old Commonwealth and the allies in the Second World War we are unique in taxing the pensions of war widows. Is it surprising that our war widows should feel hurt, especially in view of what I find to be the distasteful anomaly of the German widow who lives in this country full-time and enjoys her pension tax-free, and when Government after Government have awarded a non-contributory retirement pension to Australian war widows who live here, who are already in receipt of a tax-free war pension in excess of £26 a week from their own Government.

My last arguments deals with comparative insurance cover. If a woman is widowed as a result of an accident to her husband while at work, there is a fair chance that there is an insurance scheme. In any event the employer can always be sued, as can any person responsible for death in a road accident, for example. That widow can claim that her husband's death was due to criminal injury, but there is no such avenue for the war widow. Once her husband is killed in action, that is that.

I appreciate that the Government have done a great deal for war widows in two years. They have increased the benefit payable to them from a paltry £10.10 to almost £19.80 in November this year. But we must remember that inflation has been biting into the purse of the war widow. I find it appalling that the increase in November will be only 22p a week. That is not enough for a special group of women.

I would rather see the matter resolved through tax credits, but I recognise that that is not a practical course of conduct at this stage. Therefore, I support the new clause. In the course of Finance Bills Government after Government have bypassed clauses of this sort, but opinion in the country now expects results. I believe that by accepting the clause the House would show a small act of practical gratitude to the women who have waited so long.

Mr. W. R. Rees-Davies (Thanet, West)

I shall be brief, but as a member of the British Limbless Ex-Service Men's Association I think it right to put the record straight.

The association and its members find it hard to draw a distinction between its own members and the widows. I must deny what the right hon. Member for Down, South (Mr. Powell) and my hon. Friend the Member for Braintree (Mr. Newton) have said. My hon. Friend does not seem to recognize—there is no reason for him to do so—the feelings of the widows and the men who served in the war. They have deep feelings, but it is not for me to say whether they are right or wrong.

I must tell the House that I am a 90 per cent. disabled person. It is nonsense to suggest that payment is made by way of compensation. There is nothing especially disabling about myself that has ever resulted in my experiencing any difficulty in earning a living in my capacity. There is a yardstick by which 60 per cent. or 70 per cent. is paid for the loss of a limb. It is a yardstick laid down by the Government which produces a certain income and has nothing to do with earning capacity.

Widows say to me "We see no reason why you should be in a position to get your pension tax-free when we cannot". The argument of the right hon. Member for Down, South is spurious and I ask the House not to accept it. It is not true, and it is not the way that we see the case.

It is difficult to see the difference between the case of the war widow and that of others. I concede that there is a sense of pride among those who suffered in the war. When I go abroad I can travel on the trains across Europe with priority. I can cross the borders and go to the top of the queue because I am war disabled. So can the widows, and it applies all over Europe.

It is too late now to go into the fallacious argument put forward by my hon. Friend the Member for Braintree, who tried to say that we should treat paraplegics on the same basis as war widows. It is too late for that. Let us give a special privilege to these few. It is a privilege. I am not suggesting that it is not, but it is one that should be allowed not only to the men but to the women.

Mr. Richard Wainwright

Earlier in the debate, the hon. Member for Birmingham, Perry Barr (Mr. Rooker) carried the House with him when he said that the severe plight of widows occurred only recently when the tax threshold descended to its appallingly low level. Until it became so disgracefully low, the issue was not desperately alive. The logical and full-scale remedy would be to jack up the tax threshold. In all parts of the House, however, we know that on the Report stage of the Finance Bill we have to aim for modest reforms. At this stage it is hopeless to argue for a scheme of improvements that would be fair to everyone. To talk of improving the gross amount of the pension is disgracefully irrelevant.

We must also bear in mind that we are dealing with a class of people which is diminishing in numbers each year. We are not dealing with an anomaly which will remain for ever. We are dealing with people whose needs are urgent, and we cannot talk in terms of improving their lot next year or at some future date. After all, some of them are widows from the First World War. It is sheer hypocrisy to talk as if we were possessed of a tax system of such purity, consistency and all-round fairness that we should not risk the slightest blot. Faced with that position and the opportunity to do a bit of good, there is no doubt that we should support the hon. Member for Ormskirk (Mr. Kilroy-Silk) in his efforts.

Mr. Nicholas Winterton (Macclesfield)

We have had some moving contributions tonight. I refer particularly to the contributions of the hon. Member for Bootle (Mr. Mahon), my hon. Friend the Member for Wycombe (Sir J. Hall) and, recently, my hon. and learned Friend the Member for Thanet, West (Mr. Rees-Davies). My hon. and learned Friend put this whole matter into proper perspective. The hon. Member for Colne Valley (Mr. Wainwright) has highlighted the reason for this debate, namely, the fact that the tax threshold is now far too low. This debate is taking place because, for the first time ever, many war widows come within the tax system which they have never before done.

Perhaps I should declare an interest in that I am president of the Congleton branch of the Royal British Legion. That is a position which I value, a position which I am proud and honoured to hold. The people we are talking about are unique. While I accept the logic of the argument of my hon. Friend the Member for Braintree (Mr. Newton), I believe that he is wrong to advance it in the case of war widows. My right hon. Friend the Member for Down, South (Mr. Powell) states that if we accept the clause we shall be creating an anomaly in our tax system. All I can say is that I shall relish this particular anomaly, because we should be doing justice by a most deserving sector of the community.

Less than 10 days ago, at my last constituency interviews, held in the borough of Congleton where I live, an elderly lady in her late 70s came to see me. She brought with her various tax forms which she had received from the Inland Revenue. This lady was the widow of a soldier who had fought in the battle of the Somme in the First World War. He had been severely gassed while fighting in France. While he lived for many years after the Great War, he suffered ill health for the remainder of his life. For the last 12 years of his life he was bedridden and had to be nursed by his wife. For about the last 12 months of his life he was in hospital and was visited each day by his wife.

The lady came to see me because she had received a tax demand. She had never received one before. She was concerned and upset. This is an atrocious situation. If the Government are unwilling to accept the clause, they should increase the tax threshold to enable that lady, who has worked hard all her life and nursed her husband for the last 12 years of his life, to escape this income tax trap.

This is a moving debate. It is one which will have repercussions outside the House. I plead with the Government.

They have to respond to the feelings not only of hon. Members on both sides of the House but of many hundreds of thousands of people outside. I intend to support the hon. Member for Ormskirk (Mr. Kilroy-Silk). It will be the first occasion on which I have ever done so. I do so because I believe that the category of per[...]ns involved is deserving of support and because I believe that this House wishes to see justice done.

Mr. Cow

When the Financial Secretary replied in Committee to the same new clause, which had been moved by the hon. Member for Ormskirk (Mr. Kilroy-Silk), he concluded his speech resisting the clause with these words: although I have the greatest sympathy for its purpose and objects, I do not believe that this is the way to carry out the intention which he, and every one of us, has at heart."—[Official Report, Standing Committee E, 1st July 1975; c. 1748.] If the Government were coming to the House tonight telling us of some way in which they could meet the objectives of the hon. Member, we might be inclined to vote against the clause. We are faced with a stark choice. Either we vote for the clause—which the hon. Member for Ormskirk admitted was not perfect—or we do nothing. We are faced with this situation: we have a chance to do something to put right an injustice that is widely felt by hon. Members on both sides of the House. The method before us is not perfect, but it is the best and the only course open to us, because the Government have not put forward an alternative.

12.45 a.m.

I find myself in disagreement with the right hon. Member for Down, South (Mr. Powell), who said that we ought not to make a distinction between this category of widow and other categories of widow. I believe that we should. I believe that we should follow the precedent set by successive Governments throughout the whole of our estate duty legislation and capital transfer tax legislation, and notably in the Finance Act of last year. Total exemption was given from estate duty, and there is now total exemption from capital transfer tax in respect of estates of those who are killed on active service or killed in Northern Ireland. If it is right to provide that tax exemption for the estates of the comparatively well-off—for, remember, estate duty and capital transfer tax do not begin to bite until one has an estate of £15,000—how much more is it right to give a benefit to the widows whose capital is well below the figure of £15,000?

In making the journey from Jerusalem to Jericho we may not be able to assist all those who have fallen on hard times, but we have the chance tonight to help one category and we ought to take that chance.

Mrs. Audrey Wise (Coventry, South-West)

Since I do not want to seem to be being led into the Lobby by certain hon. Members on the Opposition Benches. I wish to make the position of myself and some of my hon. Friends quite clear. I am pleased that my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk) put down his new clause, and I shall support it because I believe that the ordinary working-class people are by far the greatest victims of the wars that have afflicted our kind of society.

It seems quite reasonable and logical for us to say that, since society has inflicted premature widowhood on these women and has blighted their lives, we should remit 50 per cent. of the income tax on their pensions. I contend that that is little enough, and to those of my hon. Friends who say "What about the miners' widows, and what about the widows of those killed in industry?" I say that it does not do the widow of someone killed in industry a jot of good to keep the war widows in penury. If there were an amendment to help those who had been widowed because of industrial injury, I should vote for it as well. Since there is not, and since my hon. Friends have had the initiative to table the clause, I shall support it.

We all know that there are some who have made considerable sums of money out of wars, and those who at present make money out of arms production. I am in favour of helping those who have been the victims of wars. Therefore, I shall support my hon. Friend in the Lobby.

Mr. Robert Boscawen (Wells)

I sense that the House wants soon to come to a decision, so I shall be brief. Like some other hon. Members, I have been worried about this debate. I would have found it very much easier to have made the speech that my right hon. Friend the Member for Crosby (Mr. Page) made. War widows are a special case and there is a great deal of emotion about them. I am still worried, however, because "war widows" is a term which refers to the widows of Service men of the Armed Forces only, whereas during the First and Second World Wars many people in uniform of all kinds died with great gallantry in order that this nation should survive. The Merchant Navy has been spoken of, as well as the police, the fire service and many people whose widows are not entitled to a war widow's pension and who certainly would not get tax relief on it if the new clause were passed.

Those of us who served in the Armed Forces—I for one, whose wife would be a war widow should something happen to me very soon—do not have the conceit to think that we gave better service than did many of our fellow citizens. I remember the notice which remained throughout the war on Nelson's Column which said that National Service was the duty of every citizen. So it was, and all the people during those war years acted accordingly.

I would find it difficult to support the clause but for the fact that I am totally appalled that the taxation level should be so low as to strike at an individual widow's pension. The reason for this debate is that the taxation level has not been raised whereas, of course, pensions have had to be increased to keep them in line with prices. For this reason, and because we are at least trying to help a small number of people, I shall support the amendment. I believe, however, that the essence of this evening, and the most important message to be got home to the Government, is that the threshold of taxation on all widows is far too low. Something has to be done about it, otherwise all of us will be marching and voting in the Lobbies to try to ensure that those people are not taxed in the way that the present Government are taxing them.

Mr. Paul Hawkins (Norfolk, South-West)

As so often happens on these occasions, this has been a magnificent debate from both sides of the House. I do not intend to spoil it by standing on my feet for too long. I would like to mention the speech of the hon. Member for Bootle (Mr. Mahon), who always speaks straight from his heart and from his own experience. However, I do not come to the same conclusion as he did.

I would only like to say that in Norfolk, from all the Royal British Legion branches and from the headquarters of the Far East prisoners of war association, with which I am connected, I know of innumerable cases of widows who have come to me and to fellow Members of Parliament and councillors and who have felt that this latest blow of the tax hitting them has really been the final straw. We have to throw logic out of the window on this occasion. I appeal to the hon. Member for Bootle to say that this will be the thin end of the wedge which will permit other widows to reach the same position as we hope to secure for war widows.

Looking at me—seemingly fit and well except for my girth—people would not imagine that I am a war disability pensioner. Meeting war widows, I often feel ashamed to reflect that I do not pay tax on my pension while they pay tax on theirs. For that reason, which may not be logical, I shall certainly support the new clause.

Mr. Nott

This has been a moving debate in which the House has been at its best. It would be invidious of me to single out any speaker, but I am sure that, whatever our views, we are grateful to the hon. Member for Ormskirk (Mr. Kilroy-Silk) for tabling the new clause. Not only did we appreciate the speeches of my right hon. Friend the Member for Crosby (Mr. Page) and my hon. Friend the Member for Beckenham (Mr. Goodhart): we admire them for their persistent advocacy of the case of war widows over many years.

The House wants to move to a conclusion, so I have no intention of deploying all the arguments again. The emotional argument was well put by the hon. Member for Ormskirk and, in a moving speech, by the hon. Member for Bootle (Mr. Mahon).

The distinction which we have made recently between the war disability pension and the war widow's pension has been supported by many Ministers over the years, but the ground is not very secure. It is shifting all the time. As my hon. and learned Friend the Member for Thanet, West (Mr. Rees-Davies) said, it is becoming more and more difficult to support. The speech of my hon. Friend the Member for Norfolk, South-West (Mr. Hawkins) showed the other side of the case very clearly.

When a man who has been receiving a war disability pension tax-free dies and his widow finds that she pays tax on her war widow's pension, it must be difficult for her to make the distinction, even if its logic has often been advocated in this House. There is great strength of public feeling on this matter, and it must sometimes be right for the House to respond to those feelings.

Without wishing to provoke any controversy, I do not think that there is any longer much logic in our fiscal legislation. When the right hon. Member for Down, South (Mr. Powell) was a Treasury Minister, there was probably securer ground and more logic in our fiscal legislation than when I became a Treasury Minister, but, two years on, the ground is now even less secure and certainly the logic is becoming more difficult for all of us to see.

So we come down finally to the new circumstances that the House faces. As many hon. Members have said, the tax thresholds have fallen so dramatically that these people, on one-third of the national average wage, are paying tax on their income. Ministers have been able to say in the past that, although the pension of the war widow was theoretically taxable, she did not pay tax if she had no other income, but it is no longer possible to say that. The war widow with no other income now pays tax for the first time.

There is also a practical point which I do not think has been made so far tonight—that at the moment tax is not being collected from war widows. It is payable, but because of the embarrassment of the whole situation the tax is not being collected. It has been possible to say "In fact, this is de minimis and the Revenue has discretion not to collect minimal amounts of tax". But the war widow's pension is going up. As my hon. Friends have said, it is going up to £19.80. Therefore, £130 tax will be payable—over £2 a week—and it will no longer be possible to say that it is de minimis. No one wants a situation in which tax payable by war widows is not being collected, but that is the practical situation that we now face.

1.0 a.m.

Although many of my lion. Friends might say that they prefer to see the tax thresholds raised, the war widow's pension raised, and even a householder's allowance for a widow and other alternatives to what is proposed in the clause, the fact is that the proposals before us are the cheapest, easiest and most direct way of helping the war widow in this new situation where she is liable to pay a substantial amount of tax when she has no other earnings.

We come back to the question posed by many hon. Members, particularly the hon. Member for Liverpool, West Derby (Mr. Ogden), should we help some if we cannot help all? That is the dilemma with which the House is faced tonight. I think that the answer should be "Yes".

War widows are a very special case. Speaking for myself—not for my party, because this is not a party matter—I hope that the House of Commons will tonight reverse the traditional position of all Governments by supporting the hon. Member for Ormskirk in the Lobby.

Mr. Robert Sheldon

We have heard a number of very moving contributions tonight. I do not want to pick out any particular speech, but I do not think that the House would forgive me if I omitted reference to the contribution made by my hon. Friend the Member for Bootle (Mr. Mahon).

This matter arouses considerable emotions. My hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk) made no apology for that fact, and I understand that too. Having listened to the debate throughout. I am sure most hon. Members will accept that the emotional aspect is not only justifiable but helps us to understand some of the real problems that we witness in our surgeries and in our day-to-day contacts with people involved in these matters.

I should like to establish two facts at the outset concerning the numbers involved. The right hon. Member for Crosby (Mr. Page) asked me about this matter. In fact, there are 90,276 war widows. This information comes from a count at the end of last year.

Sir John Hall

Does that figure include war widows in Northern Ireland?

Mr. Sheldon

It includes all war widows, including officers' widows and those living abroad. That may account for the discrepancy that the right hon. Member for Crosby has noticed and mentioned on a number of occasions.

I should like to mention the matter of the 22p a week which my hon. Friend the Member for Ormskirk said would be the only increase that the war widow would be obtaining this year. I would like to correct him on that matter. On the assumption that a war widow with no income, apart from her pension, paid no tax in 1975–76 because of the concession that my hon. Friend mentioned—I see that he takes the point—she will be better off in 1967–77 by average weekly amounts varying from 51p to £2.55. In November the basic war widow's pension increases by £2.60 a week from £17.20 to £19.80. After a tax at 35 per cent., the increase will be worth £1.69 a week net.

Having disposed of those matters, I should like to deal with the more general and fundamental points that have been made by a number of hon. Members. The problem—this was acknowledged by the hon. Member for St. Ives (Mr. Nott) among others—has been that of revalorising benefits when we do not revalorise tax allowances. This means that each year, according to the commitments that we undertook and in which we now willingly engage, we increase the benefits, including war widows' pensions. They have increased more than the cost of living. This has been the great success of this Government. But the level of inflation has meant that the threshold has not risen. We have seen the threshold going down while the benefits have gone up. We have been faced with that problem.

However, we must accept the successful part of this operation. War widows' pensions have been increased by 70 per cent. from 10.10 when we came to office to £17.20 now, with a further £2.60 to take effect in November. By comparison with when we came to office, war widows' pensions have almost doubled. The real benefit received by war widows is immeasurably greater than anything else that we have seen in recent years. My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) asked me to restore the position of war widows' pensions. We have done more than that. We have increased substantially in real terms the true level of war widows' benefits. We should be proud of that fact and acknowledge it.

We are faced with the choice of increasing the benefits or the tax allowances. For a certain sum of money we may increase the benefits payable to war widows by raising their pensions, or for the same sum we may increase the tax allowance. We must decide what is the best way in which to help those whom we wish to help. We must take fully into account the fact that people with the highest incomes do the best out of tax allowances. That is what it is all about. The tax allowances help most those who earn, or have, the most.

Benefits and pensions may be directed to help most those who have the least. That is the purpose of the benefits. The tax system pre-dated the social security system by a long time. When the tax system was being refined in its earlier years, tax allowances were introduced to take account of the changes. The allowances have remained with us. But with the advent of the social security system and the ability of Ministers and Departments to spend the large sums of money that are available, we now have a much more refined instrument with which to direct money into the pockets and purses of those concerned. The Department of Health and Social Security is far more able to pinpoint that assistance than we are in view of the crude ways that are available to us by way of increasing the tax allowances.

The 50 per cent. mentioned in the clause means that those who pay tax on only a small part of their pension will receive little or, in some cases, no benefit, since in some cases of war widows' pensions the tolerance limits will mean even now that no tax will be collected. The advantage of these tax allowances would have little or no effect on the number of people involved.

Mr. Rees-Davies

Does not the Minister recognise that the war widow is interested in her just rights, not in receiving charity by way of supplementary benefits? That is what this debate is about.

Mr. Sheldon

I am surprised that the hon. and learned Gentleman talks about the pension as charity. We have long passed that stage. The war widows have a right to the pensions. There is no question of charity.

We need to take into account the extra payment which the war widows are entitled to receive. For many years the excess of a war widow's pension over the ordinary national insurance widow's pension has been about 30 per cent. Successive Governments have taken the view that this was justified by the extra problems and the fact that the widows were in that position because of actions by the State. In view of the emotional case and the strong arguments adduced, the House may well come to the conclusion that a 30 per cent. lead is not enough. The matter can then be considered in the normal way.

The difficulty is that year after year we have Finance Bill debates but we do not have benefit debates. Therefore, there is a predisposition to try to help by means of allowances. If we had benefit debates each year, the argument could be advanced that those concerned would do much better through our increasing the benefits. Not only should we have a better debate, but perhaps money would be directed more readily to the areas of need described.

Mr. Graham Page

Is the hon. Gentle. man telling the House that he will increase the benefits?

Mr. Sheldon

These are matters for much wider consideration. Does the right hon. Gentleman believe that such decisions can be announced in a debate such as this? The arguments are best advanced in the context of increasing the pension. I only deplore that our procedure does not allow them to be put forward in the kind of debate best suited to them.

Mr. Heffer

Like many other hon. Members I am torn on the subject, although I did not support the clause. What will happen to these old ladies? One of them aged 73 came to see me. She had never paid any tax before but was now talking about committing suicide. It was very distressing. She was crying on my shoulder. An ordinary working woman, she faces a £61 payment in October. She does not have £61. What will be done to overcome the problem of such people? If there can be an easement of their problems, I shall consider voting for the Government.

Mr. Sheldon

The figure my hon. Friend gave suggests that the lady in question has some other income. We rarely know the whole income of a constituent unless we go into the matter more fully. I shall be happy to take up the case. On the basis of the facts given to me, it seems that the lady is paying too much tax, and it is right that I should be able to offer assistance in making sure that that does not continue.

1.15 a.m.

The clause would cost up to £10 million. In dealing with matters of public expenditure and the public sector borrowing requirement, we must take the maximum likely figure. A figure of 50 per cent. might prove very difficult to administer. If we made it 100 per cent., it would cost up to £20 million.

What concerns me most about this debate is the task put upon me as a Treasury Minister in being asked to decide matters of social security. If we are not careful, we could have a whole systems of social security being built up through the multiplication of various tax allowances. That is not the right way to proceed. The proper way is through the social security system with those who have the knowledge, ability, talents and skills in the Department and who understand these matters far better than I can. For instance, I do not understand these matters in the same depth as my hon. Friend the Minister who is responsible for the disabled. These matters should be dealt with through the expertise in the Department of Health and Social Security.

We spent more time on these matters in Committee then we are able to devote to them tonight, and doubts were expressed by the hon. Members for Braintree (Mr. Newton) and for Norfolk South (Mr. MacGregor) and even by the hon. Member for St. Ives. They said that they did not like the new clause. The hon. Member for St. Ives produced arguments that were consistent with the view he had expressed previously. He showed his embarrassment—not surprisingly—when he continued in an astonishing way: My hon. Friends and I have discussed the matter, and my right hon. Friend the Leader of the Opposition feels particularly strongly on this subject. This is a subject on which doubts were expressed by the right hon. Lady's hon. Friends. She feels that something must be done, and that we should not in this case be over-influenced by the precedent which surrounds these matters. We must recognise that conditions have dramatically changed."—[Official Report, Standing Committee E, 1st July 1976; c. 1735.] The Leader of the Opposition did not listen to the arguments. Her principle is to oppose the Government whenever it is profitable to do so. I suggest that that is not a principle that should commend itself to this side of the House.

Question put, That the clause be read a Second time:—

The House divided: Ayes 190, Noes 170.

[For Division List No. 243 see col. 619] Question accordingly agreed to.

Clause read a Second time, and added to the Bill.

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