ALTERATION OF PERSONAL RELIEFS

HC Deb 13 May 1976 vol 911 cc682-741

4.1 p.m.

Mr. Tony Newton (Braintree)

I beg to move Amendment No. 46, page 15, line 8, leave out £1,555, £1,010' and insert £1,600, £1,060 '.

The Deputy Chairman

With this we shall also take the following Amendments:

No. 47, in page 15, line 8, leave out £1,555, £1,010 and £3,250' and insert £1,620, £1,040 and £3,375'.

No. 91, in page 15, line 8, at end insert: 'and £1,865, £1,210 and £3,600, respectively, in cases where the individual concerned is aged over 70'.

Mr. Newton

I shall come to the details of the figures in a moment but perhaps I might first of all say that I think this is a very important amendment in justice to many of the older people in our country, and I am particularly pleased that the Front Bench on this side of the House have added their support to it.

The amendment seeks to raise the age allowance for people over 65—the special fixed allowance which gives them an additional slice of income over and above the rest of us which is exempt from tax. This allowance was introduced last year and we on this side of the House welcomed it very much, having pressed very hard for it in the previous year.

The figures I have put into the amendment were not just plucked out of thin air. Equally, they were not born out of any kind of general good will towards the older part of the population or out of soft-heartedness, although I for one would not mind being charged with either in relation to the over-65s. Nor is this an inexation amendment of the kind with which we have become fairly familiar in our debates on the Finance Bill over the past year or two.

What the figures seek to do is remedy what is a clear injustice in the Budget proposals in so far as they affect retired people. I should like to take a moment or two to comment that it seems to me that one of the least remarked features of the Government's actions and some of the Government's financial, economic and social policy is the extent to which they have involved a number of what I would call confidence tricks on many retired people. Some of those have been carried out by neglect—for example, the failure to raise the extra slice of retired people's income which is exempt from the full rate of investment income surcharge. The failure to do anything about that at a time when prices are rising so fast means that the real burden on many old people has been increased.

But some of those confidence tricks have been carried out by who I can only call, for want of a better phrase and without being too rude, sleight of hand. In the Chancellor's Budget speech, in his remarks about pensioners and retired people, the pensions increase was announced in terms that implied that it was an act of wholly unparalleled generosity. It was only when people started to look at the small print that they found that the formula for the pensions increase, far from containing any element of generosity, succeeded in not compensating old people for the rise in prices in the past for which they had every reason to expect to be compensated. I hope that the Government will pay a proper political price for that piece of what can only be regarded as cheating.

But the Budget and the Finance Bill themselves contain another piece of action, or inaction, which in my view is closely parallel to that, and that is the feature which this amendment concerns. I am referring to the failure to increase the old-age allowance, that slice which is exempt from tax, by the same amount as the pension itself has been increased, because the effect of that undoubtedly will be to increase the tax on many retired people.

In these two respects, what was done over the pensions increase and what is proposed over the tax allowance increase, the Chancellor seems to me to have presented us with a new and rather discreditable version of the iron fist in the velvet glove. Lest anyone think I am exaggerating, I should like to quote what the right hon. Gentleman the Chancellor of the Exchequer said about the age allowance in his Budget speech: I propose to increase the age allowance for single people by £ 60 to £ 1,010 and for married people by £ 130 to £ 1,555 and also to raise the ceiling for the allowance by £ 250 to € 3,250. These increased allowances will be substantially above the rates of retirement pension which will be payable after the up-rating in November, and this will enable old people to continue to supplement their pension without paying tax."—[0fficill Report. 6th April, 1976; Vol. 909, c. 274.] The only normal interpretation of these words and that paragraph would be that something generous was being done in respect of retired people. But in fact, because the tax allowance is going up by significantly less than the pension increase, many old people will pay additional tax.

Let me just spell out the figures. A married couple's pension is going up by £3.30 per week, which on my arithmetic is £171 per year, but the age allowance is going up by only £130 per year. This means that on any additional earnings, any additional pension or any additional savings income which these old people have, there will be tax now falling on £40 that was previously untaxed.

In the case of single people the figures are an increase in pension of £2 per week, making £104 per year, with an increase of only £60 in the tax exempt allowance. Again there is a sum of additional earnings, additional pension or additional savings income which will fall to be taxed and which would not otherwise have been taxed.

The only purpose of my amendment is to raise these new proposed figures for the tax allowances by an amount which would mean that at least there would be no additional tax payable as a result of the proposed increase in the pension. That is, if anything, a very modest proposal, because of course it would do nothing whatever to give retired people over 65 any additional help in respect of extra earnings, extra pensions or extra savings income at a time when many of them have been hard hit by inflation.

Let me make one other thing clear, having made clear the basic purpose and figures of the amendment. The consequence of my amendment not being accepted will be that many retired people, far from getting a benefit from the tax proposals in this Budget, will pay additional tax. If they have any significant amount of additional earnings, any significant amount of savings income, any significant amount of additional pension over and above the national insurance pension, they will find themselves paying additional tax. It will be tax on these additional things, but to many of them it will appear to be a direct tax clawback from the pension increase which they have allegedly been given. That will be seen—rightly, I believe—as an act of meanness and ungenerosity on the part of the Chancellor.

As an aside, I might observe that this problem will be even worse because of what the Government are proposing to do about the earnings rule and the quite disgraceful way in which they have said that it is the intention to go back on proposals accepted by this House last year for phasing out the earnings rule. We can do nothing about the earnings rule in this Bill, and of course my amendment will not resolve that problem, but it will at least help to avoid the problem being even worse in respect of those elderly and retired people who have earnings over and above their pensions. This is a modest amendment. It does nothing to improve the position of retired people, except in the sense that it seeks to prevent the Chancellor from taking additional tax from them.

Let me say a few words about the cost of the amendment. I have not been able to carry out a calculation in detail, and no doubt the Financial Secretary will give the House the actual cost, which must be fairly substantial. However, I deduce from the figures given in the Budget speech that the Government's own proposals will cost about £70 million. Any additional cost arising from my amendment must be a good deal less than that, but will certainly be more than a few million.

If the Financial Secretary wishes to argue about the cost, I shall seek to put two matters to him. First, when the Chancellor in the Budget speech spoke about negotiations with the TUC on a pay deal, the Chancellor was prepared to leave himself about £700 million as room for a manoeuvre. That may be right or wrong, but I am saying that since the Chancellor can allow £700 million worth of leeway to deal with the TUC, surely he can allow less than a tenth of that amount of leeway in doing justice to retired people.

The second point I wish to emphasise is that my proposal does not mean a tax reduction for old people, but aims only at preventing any increase in the tax demanded of older people. We have surely not reached a stage, whatever the economic situation, where we have to seek to deal with our problems by increasing taxation for the retired section of the community.

If the Financial Secretary wants to know where we would look for additional revenue, he has only to look at the debate on VAT in the House on Tuesday, when we gave a clear indication where the Government can obtain additional revenue if they feel they need it.

Let me say a word or two about the general background—and let us leave aside the consideration whether the figure should be £1 or £2 per week, because this amendment seeks to go to the heart of the matter. A growing number of retired people feel that they are being victimised because of the fact that they continue to put something back into the community by the work they undertake, merely because they saved while they were at work and did not go in for some of the consumption which they could have enjoyed. In other words, because they practised the virtues and put something back into the community, the benefits are now being taken away from them in tax.

The consequences of people's willingness to save, invest and to seek social justice is becoming increasingly damaging. Therefore, it is necessary for this House to respond to the situation. This amendment seeks to help us to respond. It is a simple straightforward amendment which would increase the amount of tax exemption for the retired person. I am sure that the amendment will command' the support of the Committee.

Mr. Hugh Fraser (Stafford and Stone)

I wish to support the hon. Member for Braintree (Mr. Newton) in his cogent arguments on this amendment. I appreciate that the provisions of the amendment will cost a certain amount of money. However, I am sure that my hon. Friend's argument must win accord on all sides of the Committee. It is obvious that elderly people feel hard done by following the increase in inflation. It now appears that if those people—an addition to their modest means from a pension from, say, employment on the railways, a nationalised industry, or whatever it may be—carry out a little extra work to help industry and the nation's productivity, they are to be made to suffer a claw-back of that income.

The Government can change the situation merely by accepting a proposal along the lines suggested by my hon. Friend The Member for Braintree. That will be greatly to the benefit of the people concerned and will bring a sense of justice to the Government's dealings with elderly people. Elderly people take the view that because they live alone and do not combine, they are attacked on every hand by bureaucracy. They are attacked because they seek to practise the virtues which used to be encouraged, and indeed still are. Those virtues involve thrift, hard work and responsibility, but are being grievously undermined by the principles put forward by the Chancellor. Those deficiencies could be remedied if the Government decided to accept this simple amendment.

I know that the Financial Secretary to the Treasury, who is to reply to 'he debate, is an honourable man. Therefore, I believe that he will see to it that this injustice is put right for the benefit of the older people in the nation. That means that the Government should accept the amendment.

4.15 p.m

Mr. John MacGregor (Norfolk, South)

I warmly support the amendment and congratulate my hon. Friend the Member for Braintree (Mr. Newton) on moving it so eloquently. I feel extremely strongly about the elderly citizen and his difficulties in the current state of the nation. Members of that group have suffered most from the ravages of inflation in the past two years and certainly deserve more consideration than they have up to now enjoyed.

I detect a growing sense of unhappiness, bitterness and resentment among those groups as they see what is happening to them compared with other groups. They believe that inflation has hurt them most, particularly in the past year. Undoubtedly inflation and rising prices have hit the elderly with a vengeance. Many of them can no longer afford to run a car. Therefore, they are forced to use public transport, and the great increases in rail fares in the past year have hit them particularly hard.

Elderly people are especially vulnerable to increases in fuel prices because of the need for extra heat in the home, and so on. It is in that very area that charges have been highest in the past year. I understand why elderly people feel more and more resentment. They resent the fact that although they have taken no part whatever in the discussions on wage policy, not merely in the past year but in the past two years, they suffered the most as a result of the ravages of the social contract because it was that contract which led to an increase in the cost of living in the last two years. They had no part in the consultative process whatever.

Elderly people also resent the fact that other groups in the community are benefiting from the present events much more than are the elderly. Some groups in the community have been awarded enormous wage increases. Certain groups of immigrants—and I make no comment on the justice of this issue—have been able to obtain substantial benefits by way of social security payments and in other ways in recent months. Therefore, the groups of people for whom I wish to speak in this debate feel that the savings which they built up for their retirement are being eroded and that many people in society receive more in one week than some retired people receive in one year.

I know that there are arguments on both sides of the problem. However, it is true to say that the sense of injustice among retired people is increased when they see what is happening in individual cases. The Minister will remember the debates on Tuesday evening about the investment income surcharge. It is difficult to justify the present situation to one's constituents, who complain that having worked hard for a lifetime to build up enough capital on which to retire—a sum which they originally thought would see them through—they now see their income being considerably undermined and are losing out to younger groups of people. They have had appallingly shabby treatment over the past few years and it is right that we should try to do something for them.

I recognise that in last year's Finance Bill the Chancellor introduced a new benefit which was greatly welcomed. I hope that he will go a little further. In my constituency, an association has just been formed covering the whole of Norfolk. It is one of those little groups of outraged citizens which is formed from time to time and it is called the Association for the Fair Treatment of Senior Citizens. This was an involuntary gesture by some of those who no doubt felt particularly badly done by. When they planned a meeting in Norwich recently they had such a response from all over the country that they had to move from the hall they had chosen to the largest hall in the city, and they have since been actively working.

Recently they made certain points to me, one of which I am sure has been made to hon. and right hon. Members on either side of the House, that there should be no taxation of the State pension. I had to explain why, in the current situation, I could not accept that proposal, though I entirely understand their feelings. It is not a practical proposition at this time. We then talked of another matter on which there is a case to be made, about which we could do something in this debate—the position of the senior citizens at the upper end of the age scale, those over 70, or over 75, or whatever band one takes.

It was for that reason that I put down Amendment No. 91 to which I should like to speak in conclusion. That Amendment seeks to increase the age allowance for the senior citizen over the age of 70. I do not regard 70 as a particularly magic figure. If the cost were too great the age could be 75 or any gradation between. Secondly, the figures I have put in the amendment are not figures to which I would like to hold in all circumstances. I simply added 20 per cent. to the existing age allowance in the present Finance Bill. One could take any figure in between, or a greater figure.

The reason for the amendment must be clear: older senior citizens have much heavier costs in many respects than those who have only recently retired. Many of their belongings, particularly clothes. shoes and so on, which they were able to have during the latter part of their working life, will have become shabby or worn out over the period, and they face extra costs because the older one gets, the greater one's requirement for extra heating, and there has been an enormous increase in the cost of heating and fuel over the past 12 months. They have greater need for medical treatment and other aids which in many cases cost heavily of their own money where supplementary benefit and other assistance does not meet the full cost. All this means that these groups have extra requirements.

It was for that reason that I put down Amendment No. 91. I imagine, taking perhaps not the figures here but certain other figures, that it would be a much less expensive amendment than one applying to all senior citizens. I believe that my hon. Friend was entirely right to propose his amendment which I will most warmly support in the Lobby. I do not expect that my own amendment will be pressed today but the arguments for it are strong and I hope that the Financial Secretary will give consideration to some special treatment for that group.

Mr. Robert Boscawen (Wells)

I should like to congratulate my hon. Friend the Member for Braintree (Mr. Newton) on this valuable amendment which, in justice, ought to be passed by the Committee this afternoon. He drew attention to the fact that the pensioner had been tricked three times in this Budget, and how very true that is. Scores of times we have had to endure being told by hon. Members opposite, and Ministers, that they intended fully to protect pensioners against the rising cost of living, but the first time it is inconvenient for the Government to do so, the first time they have to face up to the promises they have given over two elections, they renege on it and go back on their word which they have given over and over again. That is the first trick.

The second trick to which attention has rightly been drawn is the investment income surcharge, and we have the third trick shown in this amendment—the failure to raise the age allowance. This cuts right across the Government's own policy. It is their policy to encourage individuals while working to accept a lower rate of pay and to put more aside, to get later a better occupational pension, or what will be a second State pension. But if they are to do that, why make it harder for them to get the benefit by failing to raise the age allowance in line with the higher basic pension to come in the autumn? That does not make sense.

As my hon. Friend rightly said, all those who are in receipt of a very small occupational pension of any kind will be paying more tax in the autumn than they would have been paying before this Budget. I sincerely hope the Government will think hard on some of the promises they gave before those two elections in 1974 and have given scores of times since—promises to protect pensions against the ravages of their policies and the highest inflation we have ever had in this country.

Mr. John Nott (St. Ives)

On a point of order, Mr. Irvine. I do not want to delay the Committee but perhaps it would be for the convenience of the Committee, and I hope that it might be for the convenience of the Government, if in debating this group of amendments we could also discuss the two groups of amendments starting with Amendments No. 49 and 58, so that we can go straight on and debate the first three groups now. I have checked this with my hon. Friends, and if that would be for the convenience of the Committee we would carry the debate straight through those three groups of amendments. I do not know whether this is procedurally possible but it would suit my hon. Friends and myself.

The Deputy Chairman

Before I ask the Government's view I should point out that it is Amendment No. 56 in the third list, not Amendment No. 58.

The Financial Secretary to the Treasury (Mr. Robert Sheldon)

I accept that the amendment is No. 56. I will certainly accept what the hon. Gentleman has suggested and am prepared to discuss the first three groups of amendments together.

Mr. Newton

I have no personal objection although several of the other amendments are in my name, which would mean my speaking again. I understand that there is no problem about that but I wonder whether there are any means of making this procedure clear to other hon. Members around the House who may have studied the selection list. Unless they keep a very keen eye on the annunciator they may find that subjects in which they are interested have been debated without their even being aware of this change.

Mr. Nott

My hon. Friend the Member for Braintree (Mr. Newton) has made a very valuable point. In view of what he has said perhaps I should withdraw my suggestion. It was intended to be helpful but perhaps it would be better if we were to continue as we are.

Mr. Peter Bottomley (Woolwich West)

Would it perhaps be possible to ring a bell four or five times and have put on to the board a notice which would make the position clear to everyone in the building?

Mr. Robert Sheldon

Without wishing to comment on these new ideas, I am happy to accept the revised view of the hon. Member for St. Ives (Mr. Nott).

The Deputy Chairman

I am entirely in the hands of the Committee. It would appear that we go back to square one.

4.30 p.m.

Sir John Eden (Bournemouth, West)

I should like briefly to support what my hon. and right hon. Friends have been saying on these amendments. I am sure that every hon. Member would like to do so although perhaps, as we shall see towards the conclusion of this debate, some will be required not to do so. However, in the spirit of a debate of this kind it is fair to say that all hon. Members recognise the strength of the case advanced by my hon. Friend the Member for Braintree (Mr. Newton) in moving this amendment.

4.30 p.m.

Hon. Members will know from their own personal experience the types of hardship and difficulty with which elderly people in particular have to contend in times of high inflation. Some of these difficulties have been described by my hon. Friends in their speeches and I will not attempt to add to them for that would merely delay the progress of the debate. I would, however, underline one point which I think every hon. Member, particularly those who speak for, or act on behalf of, the Government should have in mind. All too often in this House we tend to respond to pressure groups. We react to effectively mounted and organised lobbies and, obviously, those who are engaged in finding a way through the conflicting, and often competing, claims presented to them tend to pay greater heed to those which appear to have the stronger voice outside.

From time to time we respond to the mass lobbies organised on behalf of old-age pensioners' organisations of various kinds and, shortly afterwards, there is an increase in the basic rate or some allowance. However, in this case, it is essential to bear in mind the needs and circumstances of the individual. The individual is more difficult to categorise in terms of a Finance Bill.

I am thinking now of the large numbers of people who have made representations to me in my own constituency, which, as hon. Members know, rejoices in the fact that large numbers of people go there to retire. I have seen the way these people have been adversely affected by the advance of inflation and the persistent rise in prices of all the essential commodities on which they depend for their sustenance and livelihood. I have also seen the dispiriting effect on them of the fall in the purchasing power of their money. As my hon. Friends have said, those who put something aside to serve them in their old age find that it can no longer adequately meet their needs because the value of the currency has fallen to the point at which it is worth much less than it was when they saved it.

This is having a damaging effect on the morale and even the health of the individual. This, in its turn, puts pressures on other public services which are ill equipped to meet such pressures. We have a national problem here, made up of a multiplicity of individual cases of hardship and distress, accentuated by the increase in inflation, which in turn has been precipitated and aggravated by the policies of this Government. Those people who so often try to avoid having to turn to the State for help deserve some genuine and effective response from the Government. I see no benefit coming to the nation from continually making it more difficult for the individual to look after himself and then taking more from the taxpayer in order that the State can provide for the individual.

This is an absurd and destructive policy, the pursuit of which has been the particular hallmark of Socialism, but which, I regret to say, has been practised by Governments of all complexions since the war. We must now seek to reverse that trend. The amendment gives us a chance to do so by making it possible for the individual to keep more of his own earnings and savings and to spend more of his own money in his own way, for his own needs, as he chooses. I hope that will be the result of the amendment.

Obviously, an amendment of this kind involves further expenditure. It costs money in the sense that revenue is forgone. I do not know the order of magnitude of the proposal by my hon. Friend but no doubt the Minister will say what it would be. Perhaps it is about £50 million or £70 million but I do not know. In terms of one's own individual spending that may seem a large sum of money but, as my hon. Friend has said, there are obviously ways and means in which the Government can protect the revenue in a case such as this, particularly by following some of our advice on taxation, especially on indirect taxation and VAT.

The cost in terms of revenue forgone is not a convincing argument for turning down this proposition. There is a case in equity here which well merits a sympathetic reception. I hope that the Minister will give a clear indication that he understands why we are putting it forward. I hope that he understands how disheartening and deeply worrying it is for individuals to go on seeing their hard-earned savings continually eroded by inflation. I hope that the Government will agree to take this practical, modest but realistic step, which would be of great benefit and encouragement to those we have in mind. For these reasons I have great pleasure in supporting the amendment, and I hope that the Minister will accept it.

Mr. Douglas Crawford (Perth and East Perthshire)

I support Amendments Nos. 46 and 91. As an industrial journalist, I used to cover the annual conferences of the TUC and the Scottish TUC. A hardy annual on the agenda was a resolution about the need to increase old-age pensions in real terms. I hope that the Chancellor will discuss this subject with the TUC and the Scottish TUC. He seems to have discussed other things with them, and I hope that he will discuss this.

We all have many retired constituents who write to us about this matter. Many people come to my lovely constituency to retire, as they do in that of the right hon. Member for Bournemouth, West (Sir J. Eden). We all know how inflation eats into increased pensions. We are not just talking about figures in this respect, but about real people. We are talking about human beings, not mindless statistics. We are talking about people who have saved and forgone consumption, as the hon. Member for Braintree (Mr. Newton) has said. We are not talking about speculators and vast amounts of money.

If I briefly refer to Scotland, I am not making a political point. However, it is well known that people in Scotland save a little more per capita and per pound earned than people south of the border. For this reason people in my country will be penalised relatively more heavily than their counterparts in England. This is another example of the poverty trap for old people.

Mrs. Margaret Bain (Dunbartonshire, East)

Would my hon. Friend not agree that one of the best things the Government could do to help elderly people is to abolish the earnings rule?

Mr. Crawford

I agree entirely. That point makes it all the more important for the Minister to give us some figures. I doubt whether they will convince me that the amendment should be withdrawn, however. I doubt whether any figures could convince me or my party that the Treasury has a case for not accepting it.

Mr. John Wakeham (Maldon)

I congratulate my hon. Friend the Member for Braintree (Mr. Newton) on moving the amendment. Old people are still a minority group but a large and increas- ing minority group and any proposal to give them further relief should be carefully considered, because it will cost money—and an increasing amount. Not only must we do justice; it must be seen to be done.

In my constituency, there is a growing feeling that we are not treating our old people as well as we should. People recognise that this Government have increased pensions and given additional relief, but these measures have been substantially eroded by inflation. There is genuine concern. I notice that concern in the concessionary arrangements drawn up by those who are concerned about the welfare of old people. I see growing numbers of such arrangements and they are commendable, but I would much prefer schemes which allowed old people to retain more of their own savings. A further relief from tax is much the better answer.

It is not only helping old people which is important but the way in which we help them. Many of them have enormous pride and wish to maintain their independence. It is perfectly acceptable to assist old people of limited means by giving them tax relief. There is no suggestion of charity about allowing someone to keep what he considers to be the income from his hard-earned savings during his lifetime.

As this feeling of injustice grows, so the demands for more relief of this kind should be encouraged. If we do not do it today, the Committee will soon have to do something about this problem.

Mr. Robert Sheldon

The hon. Member for Perth and East Perthshire (Mr. Crawford) said that he doubted whether any figures I gave would convince him that the amendment was not desirable. I know that the irresponsibility of Opposition shows itself occasionally, but the irresponsibility of the Scottish National Party, which is prepared to accept an amendment almost irrespective of the figures, goes further. Perhaps I could give the figures, nevertheless. Hon. Members may not think that they are very large—that depends on how they view these matters. The cost is £28 million.

As the right hon. Member for Bournemouth West (Sir J. Eden) said, Governments are always responsive to pressure groups and prepared to learn from their arguments. But that means that there is a further responsibility on the Government to achieve equity among the demands placed upon the resources that they must control.

4.45 p.m.

Mr. Crawford

I am grateful for the figure of £28 million. That is less than the equivalent of four days' revenue from Scottish oil, or almost nothing.

Mr. Sheldon

I know that the hon. Member thinks of North Sea oil as an endless gusher which will fill our pockets with liquid gold for ever and ever. But that is not an opinion I share. When the oil becomes attenuated through use, he may share my opinion. A country's wealth increases in geometric proportion year by year. The wealth from oil is a steady flow; it will reach its maximum and thereafter diminish. If the hon. Member compares the one with the other, he may learn that it is unwise to stake all one's future on that argument.

As always, I listened to the arguments of the hon. Member for Braintree (Mr. Newton) with great interest, because I know the amount of work that he puts into them, but I was sorry to hear him use excessive language about "confidence tricks" and velvet fists in iron gloves. At a time of economic difficulty, the Chancellor raised the age allowance in a way which could not have been taken for granted. I am sure that some Chancellors, faced with the problems of this year, would have been less forthcoming.

I would take issue with the hon. Member on his statement that the purpose of the amendment is to raise the age allowance so that no additional tax becomes payable. So far as we are all anxious to assist old people with the problems that the hon. Gentleman outlined so well, we would all have the same end in view, if it could be achieved. But part of the problem is the increase in the retirement pension.

It is precisely because one increases the retirement pension that one frequently increases the tax payable on a person's total income. That should never be used as an argument for not increasing the pension when it is clearly right to do so. If it were to become possible to increase the pension at some stage by much more than the amount by which in fact it has been increased, the argument could be used against that proposal that the amount of tax payable would be even greater. That is a modest, and for those affected an acceptable, price to pay for trying to help them as best we can.

The hon. Gentleman pointed out the possible leeway in the agreement with the TUC for making money available for tax allowances in other ways. But there are many claims on Government resources. The hon. Member himself has put down amendments suggesting alternative uses for any such money. I welcome his interest and the information he gives, but I am taken by the argument of the right hon. Member for Stafford and Stone (Mr. Fraser), which was also used by the right hon. Member for Bournemouth, West—that the severest problems facing the old have arisen in dealing with inflation.

Inflation for those with little opportunity for increasing their income in the years to come in the ways open to younger people present particular problems—not just in financing their requirements but in the increasing uncertainties and anxieties which this must cause them. We all know of many such people who have made sensible provision, in some cases generous provision, for their old age and who have found their resources inadequate because of inflation.

That brings me back to the main argument. The best way to assist not only the economy but those people particularly is by reducing the rate of inflation to the levels which we regarded as acceptable and for which such prudent people made their arrangements. It was laid down unconditionally in the legislation that the age allowance should be increased from £950 to £1,010 for a single person and from £1,425 to £1,555 for the married couple—an increase of £60 for the single person and £130 for the married couple. The incomes ceiling has been increased from £3,000 to £3,250 and the benefit of the age allowance is now to be fully withdrawn only at levels of £3,662 for the single person and £3,955 for the married couple. Those increases are unconditional. Those changes, together with the increase in the retirement pension, have shown that our commitment to assist old people remains undiluted.

Whereas the retirement pensions help all pensioners, including those with substantial investment incomes, the age allowance affects only certain people. They all obtain benefit from the retirement pension and we have continued our commitment to improve pensions in line with earnings.

I do not want to repeat the argument that there have been three increases while the Labour Government have been in office, or to state the percentage increases since February 1975. But as a result, an increase in funds has rightly gone to these people. The threshold for the elderly, as a result of unconditional tax changes, now stands at 37 per cent. higher than that of the single person of working age and 43 per cent. higher than that for a married couple. That shows how matters which have been brought to the attention of the House have been understood. Changes have not gone as far as some hon. Members wish, but I reckon to learn something from such debates. They are not the least valuable of our debates and the Chancellor of the Exchequer's actions show that he listens to arguments, even if they are not fully accepted.

Mr. MacGregor

Can the Minister explain the principle behind the proposition that pensioners above a certain age should not get extra relief for the reasons which I have suggested? I am not suggesting that the actual figures in the amendment should be accepted because I accept that they might be too costly.

Mr. Sheldon

I was about to come to that issue but I am grateful to the hon. Member for Norfolk, South (Mr. MacGregor) for reminding me about it. He dealt with the case for a variety of gradations based on age. It is an interesting proposition which is aired from time to time but it is rarely explained so adequately. I listened to his speech with interest. I had to master a new idea when I first saw the amendment on the Order Paper. Perhaps I gave it more reflection after seeing his name attached to it. But I could not help thinking of the wide variety of the circumstances of the people concerned. There are a number of other instances where gradation might be thought necessary but the tax system is not a sufficiently precise instrument to use in this way. That is a personal view.

If we are to refine much more the ways in which certain sections of our population are accorded an income greater than they would otherwise receive, it would be better to use the greater precision available to the Department of Health and Social Security rather than the tax system. The tax system can never deal with the multiplicity of cases that are dealt with by the Department of Health and Social Security. I know that the hon. Gentleman feels doubt about that argument. But he will recall the tax credit system, which is relevant. It confuses the need of the person and the means of the person. It is difficult to achieve the right relationship between the two.

If graduation proved to be desirable, although I am not even certain about that despite the arguments, it would be better to use Social Security. There are many instances of fit and active 75-year-olds and sick and ailing 68-year-olds. The subject has been given a useful airing and perhaps we can return to it again.

Mr. David Howell (Guildford)

The Financial Secretary to the Treasury has returned to the arguments which both he and his predecessors have used before. The are, broadly, that they do not think that the tax system is useful for meeting the needs and problems about which we have been hearing so eloquently from my hon. Friend's. The Financial Secretary said that the "greater precision" of the Department of Health and Social Security was required.

That view, which never had any validity, is now completely out of date. It has been made out of date by the interaction of high taxation policies followed by high public expenditure combined with the high inflation rates of the last 18 months. The net effect is that we are now faced with such a preposterous overlapping between income tax and social security benefits that no amount of emphasis on the Department of Health and Social Security and appeals about the greater precision of that Department will begin to untangle the mess.

We have reached the stage—and it does not arise directly in the case of the elderly although they receive the backwash—where a man on about £32 a week has to pay over £2 a week in national insurance contributions and over £2 a week in income tax. That shows more clearly than any statistics—and we have heard some bizarre statistics—how far the tangle between income tax and benefits has gone.

There has been a modest increase in the age allowance but it has not kept pace with pensions. That means that anyone with a small savings income which takes him into the levels over the age allowance is paying a tax which results from the deeply prejudiced and old-fashioned attitude of the Treasury to investment income. The income from savings takes them into the surcharge level as well, the additional level of 10 per cent. above £30 a week of investment income, raising the marginal rate to 45 per cent., and the level of 20 per cent., raising the marginal rate to 50p in every pound above the £40 a week of investment income for the elderly person. When one considers the bands with which we are dealing, one finds it extraordinary that these levels of tax should be permitted to bite on such people with these levels of income.

5.0 p.m.

One often feels that Treasury Ministers and many Labour Members below the Gangway are still living in a world in which £2,000 a year and this even comes over sometimes in the way in which "£2,000 a year" is said by Labour Members—is a lot of money. It is £40 a week. That is considered a very modest wage indeed. It is well below two-thirds of the average weekly wage. Here the Government are proposing these very high levels of tax, and because of the failure of the age allowance to rise by the full amount to compensate for inflation or to keep pace with pensions, levels of tax are beginning to bite only a little above pension level. This situation must be corrected.

Treasury Ministers have said—we shall hear much more of this in the coming debates—that to correct this requires such a vast lifting of the tax thresholds all along the line that it cannot be done. They do not go on specifically to say why it cannot be done, but there are two reasons in their minds. The first—which is a very proper reason in a sense—is that they already owe all the money elsewhere. There are not the funds available to make the colossal increase in tax thresholds that is required. We are talk- ing not merely about the £700 million for the TUC deal. We are talking about much more substantial sums.

The Government do not have the money because they have spent it or owe it elsewhere. Why do they owe it elsewhere? It is because public expenditure is still being kept at astronomically high levels, with large increases being built into the system for the coming year. It is part of the Government's general balance, attitude and posture towards the deal with the trade unions.

The other line of thought in their minds is also a cul-de-sac, ending in the same place. They cannot raise thresholds because they cannot shift tax on to indirect taxation. Why can they not do that? They cannot do that because they are nervous of raising VAT, as they said in the debates on VAT. Why can they not raise VAT? They cannot do that because they would upset the Retail Price Index, which would upset the General Council of the TUC, and that, in turn, would imperil the delicate balance that has been achieved on the deal.

Therefore, one way and another, the Government, by their decision not to cut public expenditure, their reluctance to make major shifts in the tax system necessary to raise the thresholds, and the whole attitude to the place of the deal in the counter-inflation strategy, have locked themselves into a strongly built room, turned the key in the door and thrown away that key. This leaves them in a situation in which they cannot even compensate with the necessary amount for the aged and lift the allowances in the way that we suggest. Also, as we learned on Tuesday, they are still prepared to countenance a situation in which—it is hardly credible—they will administer a 50 per cent. tax rate on an elderly lady with £40 a week of investment income on top of her pension.

That is an incredible situation. It is a very heavy price to pay for the posture that the Government have taken up on their broad economic strategy. It is, of course, only one of the many prices which are now beginning to appear on the invoice as it rolls out of the machine and we see more and more items as being necessary to throw into the balance to secure the deal.

For that reason, I suggest to my hon. Friends that, as in other areas in which we think that the price is unfair, too heavy and unnecessary, we should express our view on this matter by pressing the amendment to a vote.

Mr. Newton

It is always tempting not to reply to the Financial Secretary's endearing flatteries with which he tries to disguise the fact that he has said "No" to what we are proposing. However, I want to make one or two comments as the Member who moved the amendment.

First, the Financial Secretary suggested that I had used rather strong language. That is a matter of judgment. I can only say that in the autumn, when some of those who will be affected by this proposal discover what is happening to them, the language used in the country will be a great deal stronger than any that I have used here today.

Secondly, I had made a private guess that the cost would be about £30 million. I was not confident of that guess even to put it forward publicly. However, I am interested to see that the cost turns out to be £28 million. I do not want to spend much time arguing about that, but I have two observations to make. First, that sum is significantly less than the sum that the Government are proposing to spend on abolishing paybeds. Secondly, it is significantly less than what has been tossed away since the Budget on going back on the proposals for school meal charges.

We need not talk about the £700 million in the Budget leeway for dealing with the trade unions, or the £35 million that has suddenly been plucked out of the desperately tight financial situation in the few weeks since the Budget, to find that when it came to doing a deal with the TUC the Government were in no difficulty about finding another £30 million or £40 million. However, when it comes to fundamental fairness to the retired population, we are told that the country's finances would sink through the floor if something were done.

Whatever may be said about the tax position of pensions, which we all know are taxable, it has been understood for many years that in practice the tax allowances have invariably—if not invariably, almost invariably been increased in a way that ensures that pensions increases do not necessitate an increase of tax. There has now been a departure from that policy, which is wrong. It will cause great resentment in the country that there has been this departure.

I pick up something said by my hon. Friend the Member for Guildford (Mr. Howell). We have heard from the Financial Secretary, in debate after debate, about the extent to which he believes that it is better to do these things through the social security system rather than the tax system. Let me tell the Government that people do not regard social security benefits as being the same thing as tax reliefs. They regard a tax relief as allowing them to keep more of their own money, which they have in some way earned or for which they have qualified by their own efforts.

Believe it or not, and rightly or wrongly, there are still large numbers of people who think that they are entitled to keep more of their own money through the tax system and who feel almost affronted—I am not arguing about whether they are right, but many feel like this—if they are told that what they should do is to claim money in the form of supplementary benefit or social security benefit. They resent that—especially when they feel that if only they were allowed to keep more of their own money they would not need to do that.

I do not want to argue the morality of this, but that is the social reality of how people feel. The Government should take full account of that. I hope that we shall not hear much more of the Government's argument on the subject, because it does not correspond with people's feelings.

I am delighted with what was said by my hon. Friend the Member for Guildford. I hope that my right hon. and hon. Friends, other Opposition Members and, indeed, Labour Members will come into the Lobby with me to vote for the amendment.

Question put, That the amemdment be made:—

The committee divided: Ayes 148, Noes 153.

Division No. 135.	AYES	5.10 p.m.
Arnold, Tom.	Hampson, Dr. Keith.	Penhaligon, David.
Atkins, Rt Hon H. (Spelthorne)	Harrison, Col Sir Harwood (Eye)	Percival, Ian.
Bain, Mrs Margaret.	Hastings, Stephen.	Price, David (Eastleigh)
Baker, Kenneth.	Henderson, Douglas.	Raison, Timothy.
Banks, Robert.	Hooson, Emyln.	Rees, Peter (Dover & Deal)
Beith, A. J.	Hordern, Peter.	Rees-Davies, W. R.
Bennett, Sir Frederic (Torbay)	Howe, Rt Hon Sir Geoffrey.	Reid, George.
Benyon, W.	Howell, David (Guildford)	Renton, Rt Hon Sir D. (Hunts)
Berry, Hon Anthony.	Howells, Geraint (Cardigan)	Ridley, Hon Nicholas.
Biffen, John.	Hunt, David (Wirral)	Roberts, Michael (Cardiff NW)
Biggs-Davison, John.	Hurd, Douglas.	Roberts, Wyn (Conway)
Body, Richard.	Jessel, Toby.	Rodgers, Sir John (Sevenoaks)
Boscawen, Hon Robert.	Johnston, Russell (Inverness)	Ross, Stephen (Isle of Wight)
Bottomley, Peter.	Jones, Arthur (Daventry)	Rossi, Hugh (Hornsey)
Bowden, A. (Brighton, Kemptown)	Joseph, Rt Hon Sir Keith.	Sainsbury, Tim.
Boyson, Dr Rhodes (Brent)	Kilfedder, James.	Scott, Nicholas.
Braine, Sir Bernard.	Knight, Mrs Jill.	Shersby, Michael.
Brittan, Leon.	Knox, David.	Silvester, Fred.
Brown, Sir Edward (Bath)	Lamont, Norman.	Sims, Roger.
Budges, Nick.	Lane, David.	Sinclair, Sir George.
Burden, F. A.	Langford-Holt, Sir John.	Smith, Dudley (Warwick)
Chalker, Mrs Lynda.	Latham, Michael (Melton)	Speed, Keith.
Churchill, W. S.	Lawrence, Ivan.	Spicer, Michael (S Worcester)
Clark, William(Croydon S)	Lawson, Nigel.	Stanbrook, Ivor.
Clarke, Kenneth (Rushcliffe)	Lester, Jim (Beeston)	Steel, David (Roxburgh)
Clegg, Walter.	Loveridge, John.	Stewart, Donald (Western Isles)
Cockcroft, John.	Loyden, Eddie.	Stewart, Ian (Hitchin)
Cope, John.	Luce, Richard.	Stonehouse, Rt Hon John.
Costain, A. P.	McAdden, Sir Stephen.	Stradling Thomas, J.
Crawford, Douglas.	MacCormick, Iain.	Tapsell, Peter.
Crowder, F. P.	MacGregor, John.	Taylor, R. (Croydon NW)
Davies, Rt Hon J. (Knutsford)	Macmillan, Rt Hon M. (Farnham)	Thompson, George.
Dodsworth, Geoffrey.	Mates, Michael.	Townsend, Cyril D.
Eden, Rt Hon Sir John.	Maude, Angus.	Tugendhat, Christopher.
Edwards, Nicholas (Pembroke)	Maxwell-Hyslop, Robin.	Wainwright, Richard (Colne V)
Emery, Peter.	Meyer, Sir Anthony.	Wakeham, John.
Farr, John.	Miller, Hal (Bromsgrove)	Walder, David (Clitheroe)
Fell, Anthony.	Mitchell, David (Basingstoke)	Walker, Rt Hon P. (Worcester)
Finsberg, Geoffrey.	Moate, Roger.	Walters, Dennis.
Fisher, Sir Nigel.	Moore, John (Croydon C)	Weatherill, Bernard.
Fookes, Miss Janet.	Morris, Michael (Northampton S)	Welsh, Andrew.
Forman, Nigel.	Morrison, Charles (Devizes)	Whitelaw, Rt Hon William.
Fowler, Norman (Sutton C'f'd)	Morrison, Hon Peter (Chester)	Wiggin, Jerry.
Fraser, Rt Hon H. (Stafford & St)	Neave, Airey.	Wilson, Gordon (Dundee E)
Freud, Clement.	Nelson, Anthony.	Winterton, Nicholas.
Gilmour, Rt Hon Ian (Chesham)	Newton, Tony.	Wood, Rt Hon Richard.
Gow, Ian (Eastbourne)	Nott. John.
Grimond, Rt Hon J.	Onslow, Cranley.	TELLERS FOR THE AYES:
Grylls, Michael.	Page, Rt Hon R. Graham (Crosby)	Mr. Carol Mather and
Hall, Sir John.	Pardoe, John.	Mr. Spencer Le Marchant.
Hamilton, Michael (Salisbury)	Parkinson, Cecil.
NOES
Abse, Leo.	Cronin, John.	Flannery, Martin.
Anderson, Donald.	Cryer,Bob.	Fletcher, Raymond (Ilkeston)
Armstrong, Ernest.	Cunningham, Dr J. (Whiteh)	Foot, Rt Hon Michael.
Atkinson, Norman.	Davidson, Arthur.	Ford, Ben.
Bagier, Gordon A. T.	Davies, Bryan (Enfield N)	Fowler, Gerald (The Wrekin)
Barnett, Guy (Greenwich)	Davies, Derzil (Llanelli)	Garrett, John (Norwich S)
Barnett, Rt Hon Joel (Heywood)	Davis, Clinton (Hackney C)	George, Bruce.
Benn, Rt Hon Anthony Wedgwood.	Deakins, Eric.	Gilbert, Dr John.
Blenkinsop, Arthur.	Dean, Joseph (Leeds West)	Ginsburg, David.
Booth, Rt Hon Albert.	Dormand, J. D.	Golding, John.
Boyden, James (Bish Auck)	Douglas-Mann, Bruce.	Gould, Bryan.
Butler, Mrs Joyce (Wood Green)	Duffy, A. E. P.	Graham, Ted.
Callaghan, Rt Hon J. (Cardiff SE)	Dunn, James A.	Grocott, Bruce.
Cant, R. B.	Dunnett, Jack.	Hamilton, James (Bothwell)
Cartwright, John.	Edge, Geoff.	Hardy, Peter.
Castle, Rt Hon Barbara.	Edwards, Robert (Wolv SE)	Harper, Joseph.
Clemitson, Ivor.	Ellis, John (Brigg & Scun)	Hayman, Mrs Helene.
Cocks, Michael (Bristol S.	English, Michael.	Healey, Rt Hon Denis.
Colquhoun, Ms Maureen.	Evans, loan (Aberdare)	Hooley, Frank.
Corbett, Robin.	Ewing, Harry (Stirling)	Horam, John.
Cox, Thomas (Tooting)	Faulds, Andrew.	Howell, Rt Hon Denis
Hughes, Rt Hon C. (Anglesey)	Marquand, David.	Sheldon, Robert (Ashton-u-Lyne)
Irvine, Rt Hon Sir A. (Edge Hill)	Marshall, Dr Edmund (Goole)	Short, Rt Hon E. (Newcastle C)
Irving, Rt Hon S. (Dartford)	Marshall, Jim (Leicester S)	Silkin, Rt Hon John (Deptford)
Jackson, Miss Margaret (Lincoln)	Maynard, Miss Joan.	Silkin, Rt. Hon S. C. (Dulwich)
Janner, Greville.	Mellish, Rt Hon Robert.	Silverman, Julius.
Jay, Rt Hon Douglas.	Mendelson, John.	Small, William.
Jenkins, Hugh (Putney)	Miller, Dr M. S. (E Kilbride)	Snape, Peter.
Jenkins, Rt Hon Roy (Stechford)	Miller, Mrs Millie (Ilford N)	Spearing, Nigel.
John, Brynmor.	Molloy, William.	Stallard, A. W.
Jones, Barry (East Flint)	Moonman, Eric.	Stoddart, David.
Judd, Frank.	Morris, Charles R. (Openshaw)	Strauss, Rt Hon G. R.
Kelley, Richard.	Mulley, Rt Hon Frederick.	Taylor, Mrs Ann (Bolton W)
Kilroy-Silk, Robert.	Newens, Stanley.	Thomas, Mike (Newcastle E)
Kinnock, Neil.	Noble, Mike.	Thomas, Ron (Bristol NW)
Lamborn, Harry.	O'Halloran, Michael.	Tinn, James.
Latham, Arthur (Paddington)	Ovenden, John.	Tomney, Frank.
Leadbitter, Ted.	Owen, Dr David.	Urwin, T. W.
Lever, Flt Hon Harold.	Palmer, Arthur.	Walker, Harold (Doncaster)
Lipton, Marcus.	Park, George.	Walker, Terry (Kingswood)
Litterick, Tom.	Pavitt, Laurie.	Ward, Michael.
Loyden, Eddie.	Peart, Rt Hon Fred.	Weitzman, David.
Luard, Evan.	Prentice, Rt Hon Reg.	White, Frank R. (Bury)
Lyon, Alexander (York)	Radice, Giles.	Willey, Rt Hon Frederick.
Lyons, Edward (Bradford W)	Richardson, Miss Jo.	Williams, Alan Lee (Hornch'ch)
McCartney, Hugh.	Robinson, Geoffrey.	Williams, Rt Hon Shirley (Hertford)
Macfarquhar, Roderick.	Rodgers, George (Chorley)	Wise, Mrs Audrey.
McMillan, Tom (Glasgow C)	Rooker, J. W.	TELLERS FOR THE NOES:
McNamara, Kevin.	Roper, John.
Madden, Max.	Rose, Paul B.	Mr. Alf Bates and
Magee, Bryan.	Sandelson, Neville.	Mr. Donald Coleman.
Mallalieu, J. P. W.	Sedgemore, Brian.	Question accordingly negatived.
Marks, Kenneth.	Shaw, Arnold (Ilford South)

Question accordingly negatived.

The Deputy Chairman

Before I call the next amendment, it may be for the convenience of the Committee if I mention that Amendment No. 88 will be grouped with Amendments Nos. 61, 62 and 93.

Mr. Geoffrey Dodsworth (Hertfordshire South-West)

I beg to move Amendment No. 49, in page 15, line 11, leave out '£365' and insert '£395'.

The Deputy Chairman

With this it is proposed to take the following amendments:

No. 50, in page 15, line 11, leave out '£365' and insert '£433'

No. 51, in page 15, line 13, leave out '£335' and insert '£365'

No. 52, in page 15, line 13, leave out '£335' and insert '£384'

No. 53, in page 15, line 15, leave out '£300' and insert '£330'

No. 54, in page 15, line 15, leave out '£300' and insert £327'.

Mr. Dodsworth

The amendment refers to the child allowance and seeks to increase the increased figure contained in Clause 26(2)(a). The associated amendments have a similar effect.

I draw to the Committee's attention an important section of the community, namely, the families who have been incurring particular expense and suffering from inflation and from the problems of incomes policies. As an individual, I felt that the proposal for some agreement on incomes was a desirable move and of benefit to the community, but I notice that there has been a change in the terms of the deal that was proposed at the time of the Budget Statement. If there can be a change of one sort there can be a change of another.

The proposals contained in the clause would increase the child allowances in the three different categories by £60. My proposal is for a further increase of £30, making a total increase of £90. That seems to be entirely consistent with a pay proposal of 3 per cent., which in the event, is likely to be 4½ per cent. We were assured that the pay proposal was a conditional arrangement. That meant that it is open to change. The amendment proposes a change that we should make in the interests of all wage and salary earners.

The change in differentials that the Minister was kind enough to draw to our attention in the debate earlier this week illustrates the point very well. He referred to the differential between average earnings net and top earners net as a ratio of 3.88:1. We should seize the opportunity to improve some of the differentials, in the interests of all taxpayers and especially in the interests of those who were not included in the pay negotiations. At least half the wage and salary earners were not included. Their interests should be taken into account. That can usefully he done by improving their net tax situation.

We do not have a very happy child allowance record. In 1963–64 the allowance for a child under the age of 11 was £115. It has been increased slowly and reluctantly, in steps of £40. It remained static for eight years under various forms of Labour tutelage until it was increased in 1971–72, to £155. It was increased again in 1973–74, to £200. The last increase was to £240. That in no way reflects the increased costs that the ordinary family has had to bear in bringing up young children at a time of income difficulties.

The amendment proposes a form of justice that we should propose and maintain. It also assists me in drawing attention to another anomaly that has not been rectified and which, I believe, is much worse. We find that there has been no change—and no change is proposed—since 1963–64, to the income limits which are applied to child allowances. The income limit is £115.

This is a ludicrous situation. In these inflationary times it is a simple matter for young people over the age of 16 to earn over £115 when they take on temporary jobs. They can be in full-time education beyond the age of 18 and in command of their own affairs and existence, earning money outside parental authority and control, but there is a limitation on the tax allowance that is made available to the parent because of the incomes limit. In these inflationary times there is a need to review the incomes limits on a number of fronts.

Sir George Young (Ealing, Acton)

The Financial Secretary may be alarmed to see members of the Opposition social security team poaching on the Finance Committee, but we have a vital interest in Clause 26, because it relates to child tax allowances. Next year the allowances are to be phased out and replaced by child benefit.

I shall speak particularly to Amendments Nos. 53 and 54, which deal with the tax allowances for a child not over the age of 11. We understand that these allowances are to be phased out entirely in April of next year, to be replaced by the new child benefit, whereas the other allow- ances may be retained as residual allowances to reflect the extra costs of children over 11.

I endorse what has been said by my hon. Friend the Member for Hertfordshire, South-West (Mr. Dodsworth). The value of the allowances has been eroded over the past 10 years. Next year we shall establish a base level for future debates on family poverty. If the base level established next year is merely the level of the child allowances that are fixed this year, we shall be starting off on entirely the wrong footing. If that is done we shall not have restored the value of the tax allowances for children which were established about 10 years ago.

This debate is taking place in a vacuum, because neither the Treasury nor the Department of Health and Social Security will tell us what is to be the level of child benefits next year. This is a matter of enormous concern to families throughout the country, because the benefit will replace not only the tax allowances but family allowances. There has been recent Press speculation that the child benefit will be fixed at the level of £2.50, which will involve the Treasury in a small extra cost. If that is to be the level, it appears that many families with children will be. substantially worse off, £2.50 in no way restoring the value of the existing tax allowance and the family allowance combined.

5.30 p.m.

We should like an assurance from the Treasury that if the child benefit scheme is to be the means for tackling family poverty, the burden will be borne equally by all taxpayers, not just those who have children. This is an important matter of principle on which we should like some reassurance.

I hope that the Financial Secretary will assure us that the erosion in the value of the tax allowances, to which my hon. Friend referred will be restored—if not this year, at least next year—so that families which have been discriminated against over the past 10 years may receive the justice to which they are entitled.

Mr. Kenneth Clarke (Rushcliffe)

I entirely support what was said by my hon. Friend the Member for Ealing, Acton (Sir G. Young). I hope that in his reply the Financial Secretary will put his explanations of the level of child allowances fixed by this year's Finance Bill in the context of the changeover to Child Benefits expected from the Government in April next year.

The Government have committed themselves to phasing out child tax allowances by April 1977 and replacing both tax allowances and family allowances by the new system of child benefit. That declaration by the Government might indicate some clear policy on their part about the financial problems of families and the future of assistance to working families. But the lack of information and clarity on how they propose to set about introducing the new system indicates to me that they have no such clear policy. I suspect that this year's changes in the tax allowances are a small holding operation, as it were, while they contemplate how to get the new child benefit scheme into action by April 1977.

The Child Benefit Act is outside the scope of this debate. When the Bill went through the House, we expected it to be followed by changes in this year's Finance Bill which would make clear the future of child tax allowances—whether child tax allowances for children under 11 were to be phased out entirely and what residual tax allowances would remain for older children. We hoped to have some important policy decision on the future of child benefits or tax allowances, whatever we have after April next year, for instance, in the case of a child living abroad whose parents are resident in this country.

I base what I say about the expectation that this year's Finance Bill would shed some light on the Government's policy and intentions after April next year on what was said by the then Minister of State in proceedings on the Child Benefit Bill. The Minister tried to reassure the Opposition that there was plenty of time for full information to be given about the details of the new scheme regarding future support for families. He said: It is nearly two years before the child benefit scheme comes into operation in April 1977. Therefore, there is ample time for this matter to be examined in detail. The Bill is not a rigid instrument and there is considerable flexibility to operate through regulations. The legislation affecting child tax allowances will not come before the House until next year's Finance Bill."—[Official Report, 7th July 1975; Vol. 895, c. 262.] The Minister of State was referring to this Bill. It was expected that features in this Bill would make clear the future of child tax allowances. But there are no such provisions in the Bill, and the Government do not seem disposed to take matters much further now.

I have raised this matter today because my attempts to get it clarified by Questions to the Department of Health and Social Security have got me nowhere. I received a Written Answer today from the Secretary of State in reply to a Question asking when these legislative changes might come, in view of previous assurances that they would come in this year's Finance Bill. The right hon. Gentleman said: I have nothing to add to earlier statements. There have been no earlier statements to which I understand that to have any reference. The only statement was by the Minister of State who said that there would be provisions in this year's Finance Bill. There are no provisions. Decisions are delayed. There has been no announcement about the future of child tax allowances or the position of child benefits.

There have been leaks—probably well-informed leaks—in the Press. Certainly the social services correspondent of The Times seems consistently to know more about the Government's intentions than Members of Parliament do. The leaks indicate that the Government are locked in conflict about what to do regarding the future of child tax allowances and child benefits.

If, following this Finance Bill, next year's child benefits are introduced at nil cost to the Treasury—that is, using the same level of public expenditure as on the present family allowances and the present child tax allowances—the level of child benefits next year will have to be set at £ 2.34 for each child, including the first. The Times indicates that £2.50 is being contemplated, and that has been supported by a later leak in The Guardian.

As the Minister will know—I hope that he will acknowledge this in reply—such a figure would be totally inadequate if that were the only change that the Government proposed to make. I say that for two reasons. First, such a figure would mean that standard rate taxpayers with more than two children would be worse off than they are under present arrangements. Secondly, standard rate taxpayers with families would have to bear the entire cost of giving additional support to lower income families and to families with fewer than two children. That is clearly unsatisfactory. Leaks are the best information that we have so far. I hope that the Minister will take this opportunity to dispel those leaks or to make clearer what the Government have in mind.

These are important matters. It is pointless having a short debate on child tax allowances without some indication where they fit into the Government's strategy. If, as I suspect, the Government have no strategy regarding family poverty and do not know what to do about child benefits, I hope that the Financial Secretary will acknowledge that situation. This debate will then have served as a suitable vehicle to make the Government get a move on and to reach clear decisions which must be reached in a short space of time.

Mrs. Bain

Like the hon. Members for Ealing, Acton (Sir G. Young) and Rushcliffe (Mr. Clarke), I served on the Child Benefit Bill Committee. I am greatly concerned that the Government have not clarified their overall policy and attitude towards a major question—the poverty trap.

The Scottish National Party is deeply concerned because of the high level of poverty in Scotland. We want the poverty trap to be eradicated. The West of Scotland has 97.5 per cent. of the worst areas of multiple deprivation. We are keen to support measures which will give people there a reasonable standard of living and rid us of the heritage that we have had for so long.

The amendment goes part of the way to achieving that aim, because it offsets rising costs and inflation. We should bear in mind that children are now staying on at school after the statutory school-leaving age. We support the amendment.

Mr. Peter Bottomley

I support the amendment. I should declare that I am perhaps slightly in advance of the Conservative Party in arguing that the child tax allowance should be raised by not just £60 or £90, but £430. Doing that for the first child would have the effect of bringing all families with working parents up to the level of the FIS allowance.

In the pamphlet "The New Corporate Interest" issued by the Child Poverty Action Group, using pre-Budget figures, we see how the tax threshold for families with a member of the household at work compares with the FIS entitlement. If the Government take seriously the problem of child benefit and child poverty and the balance between people on supplementary and State benefits and income from work, they must tell us why they are not taking this form of action now.

Earlier today I asked the Chancellor of the Exchequer about the relationship between the cost to the Government of a rise in State sector pay, which does not take account of a person's family responsibilities. I received an answer that showed that the Government appear not to have acknowledged this matter in public. If they acknowledged in public what the situation now is. they would no doubt fear an uprising or a division in the country which would make it difficult for them ever to be elected again. If any political party had stood up two years ago and said that it was going to reduce the value of the child tax allowance and the age-related allowance in pensions, certainly it would not have been elected.

In the last General Election all the major political parties, including the five or six represented in the House at the moment, talked about raising the level of child benefits, tax credits, child benefits, or interim benefits. This has not happened. The Government have a great deal of explaining to do. Just to have inflationary pay increases, without any regard to family responsibilities is continuing a system, which we have had for the past six years, of re-distributing resources away from people with children to those without them.

Mr. Robert Sheldon

I thought that the debate started off on a very good note when the hon. Member for Hertfordshire, South-West (Mr. Dodsworth) said he welcomed the incomes deal. In view of the reluctance of so many right hon. Members on his Front Bench to give that degree of welcome to the deal, I thought that the debate had started well. However, my agreement with the hon. Member did not last long.

The hon. Member then pointed out that there could be some change in the terms, and one of the changes he wanted to see was in child tax allowances. He went on about the income limit of the child, but as there is an amendment on this matter later, I shall wait until then to deal with it.

The hon. Member for Ealing. Acton (Sir George Young) pointed out that we have one or two Members of the social security team of the Opposition present, and this is not unnatural in such a debate.

I was asked about the general intention of the Government for future tax allowances and the child benefit scheme. Clearly I am not able to assess these tax allowances, which will not be decided on until next year and will not be coming into force next year, so I must be excused from making any estimates. The allowances will depend on a whole number of factors, many of which will not be known for some time yet. I urge the hon. Member for Rushcliffe (Mr. Clarke) to curb his impatience.

Mrs. Bain

I am a member of the social security team of my party. There are many of us who are concerned that there should not be a repetition of the situation which we had on interim family benefit with one-parent families when the parents were not, in fact, benefiting.

Mr. Sheldon

I urge the hon. Lady to be patient. Her patience will be rewarded. However, I note that she and her party have insatiable appetites, and I do not believe that any Government, even one formed by her party, would be able to satisfy them.

Mr. Crawford

A Scottish one would.

Mr. Sheldon

I note the dreams of the hon. Gentleman. They are always refreshing, particularly in a Committee which consists of a fair but limited number of realists. I take note of his observation.

5.45 p.m.

Mr. Kenneth Clarke

As the Financial Secretary appears to be saying that the timetable has slipped somewhat compared with last year and therefore he cannot help us today, would he confirm that there is still adequate time to legislate in next year's Finance Bill about the future of child tax allowances to enable the Government to bring in child benefits by April 1977? Will the delay lead to the introduction of child benefits being put back?

Mr. Sheldon

There is no question of child tax allowances not coming into force in the Finance Bill. This timing is a common feature of our Finance Bills when we legislate for the introduction or changes of child tax allowances.

In these child tax allowances there has been a substantial increase of £60 on all the rates. The hon. Member for Blaby (Mr. Lawson), did not speak to his amendment, which had a consequence of varying the relationship between the various age groups, and the tax relief of the age groups of such children.

Mr. Nigel Lawson (Blaby)

Since the Financial Secretary has mentioned my amendment, I point out that his Government have changed the relationship. The Minister will see it he does his calculations that this amendment increases the various child allowances by the rate of inflation which has occurred since April 1973, when we had the last Conservative Budget. The amount by which child allowances in this year's Budget fall short is the amount by which the Government have cheated—perhaps that is too strong a word—or deprived the children as a result of inflation.

Mr. Sheldon

That surely begs the question why it was an ideal arrangement in April 1973. Since the hon. Member has put a date of this kind on it, one must infer that he believes that there was a state of, if not perfection, something much more in accordance with his taste in the relationships between the rates.

Mr. MacGregor

Will the Financial Secretary acknowledge that one of the reasons for doing this is that older children are rather more expensive to keep and look after than younger children? The same applies to older senior citizens.

Mr. Sheldon

That is what I thought was the intention of the amendment. The arbitrary date is a rather less important reason than the more fundamental one put forward by the hon. Member for Norfolk, South (Mr. MacGregor)

In these matters I find it very difficult to lay certain guidelines as to why these children at certain ages should receive more in the way outlined in the amendment. Social conditions have changed very considerably in the past dozen or so years. One big change has been the increase in the number of women working, even those who have quite young children.

It seems to me—and I am not an expert in social security matters—that the biggest drop in income arises when the mother leaves her employment and not only loses her income but increases her responsibility and expense on the birth of her first child. For a long time this has not been considered as a matter worthy of support in any way. Those parents who both work—and when the children are older, both work full time—are not necessarily the most difficult cases. There is less justification in some of these cases for an increase because of their parental circumstances and the advantages in having two incomes.

I certainly do not have enough knowledge of this problem to attempt to say what should be done with any degree of finality. When we are talking about tax allowances, we must bear in mind that we are looking at these problems in a very superficial way. This is one of the arguments which can be made about the problem of tax allowances—so many of the changes appear to be hit and miss affairs.

Mr. David Price (Eastleigh)

Does the Financial Secretary admit that one of the great advantages of the tax credit scheme is that it gets nearer than the present system to being less hit and miss and to solving some of the difficulties bothering him?

Mr. Sheldon

The hon. Member makes a point about tax credits, but that system has disadvantages. The social security system in general—and I am constantly being upbraided by Conservatives about it—is able to produce the much greater precision which is required and which is missing from the hit and miss affair which is involved in income tax allowances.

Mr. J. Enoch Powell (Down, South)

The Minister is deploying a very difficult argument when he appeals to the assumed higher family income when the children are older. Here we are considering the admittedly rough and ready flat-rate tax allowance which theoretically takes account in the broadest possible way of costs and which is based on the assumption of rising costs. It seems to me illogical to invoke into that argument an assumption of rising income, for the essence of a tax allowance is that it is to meet, however crudely, the expenditure which the taxpayer must surmount before he can enjoy his income. We shall be in great confusion in considering the tax system if whenever we are talking about tax allowances we start invoking considerations relating to income itself.

Mr. Sheldon

I understand the purist nature of that argument perfectly well, but ultimately what matters is not the purity of the argument but how much money people have in their pockets and how that sum accords with justice. If the right hon. Member is seeking to import into this discussion fundamental differences of principle, so be it. My arguments relate to the amount of money which finds its way into people's pockets, and how that money relates to their needs.

Mr. Lawson

It is the Financial Secretary who is importing a whole new principle into the argument. What does he believe, on the basis of his principle, should he the allowances for these three age groups? Clearly, the allowances which the Government are proposing—£365 for the child over 16, £335 for the child aged 11 to 16, and £300 for the child under 11—cannot possibly follow from the principles he has enunciated.

Mr. Sheldon

Our present child allowances do not take into account the problems which would arise if we were to go along the way suggested by the hon. Member for Norfolk, South. The hon. Member for Blaby put his name to the same amendment, but for entirely different reasons. His reasons are that there existed at some time in the past a basis which was right and proper and from which everything else must follow. That is not much of a principle. The principle advanced by the hon. Member for Norfolk, South had something to commend it, and I have tried to point out some of the difficulties and obstacles.

In these child tax allowances we have tried to concentrate help on the families with children by including them in the non-conditional part of the Budget package. That, together with the increases in the family allowances undertaken last year, has brought about an improvement in their position over what it would otherwise have been. It should be accepted in these difficult circumstances as showing that my right hon. Friend the Chancellor has undertaken

Division No.136.1	AYES	[5.57p.m.
Dodsworth, Geoffrey.	Johnston, Russell (Inverness)	Stonehouse, Rt Hon John.
Evans, Gwynfor (Carmarthen)	Kilfedder, James.	Thompson, George.
Fell. Anthony.	MacCormick, Iain.	Welsh, Andrew.
Fookes, Miss Janet.	Pardoe, John.	Wilson, Gordon (Dundee E)
Freud, Clement.	Penhaligon, David.
Grimond, Rt Hon J.	Reid, George.	TELLERS FOR THE AYES:
Henderson, Douglas.	Ross, Stephen (Isle of Wight)	Mrs. Margaret Bain
Hooson, Emyln.	Steel, David (Roxburgh)	and Mr. Douglas Crawford.
Howells, Geraint (Cardigan)	Stewart, Donald (Western Isles)

	NOES
Abse, Leo.	Golding, John.	Morris. Charles R. (Openshaw)
Anderson, Donald.	Gould, Bryan.	MuIley, Rt Hon Frederick.
Armstrong, Ernest.	Graham, Ted.	Newens, Stanley.
Atkinson, Norman.	Grocott, Bruce.	Noble, Mike.
Bagier, Gordon A. T.	Hardy, Peter.	O'Halloran, Michael.
Barnett, Guy (Greenwich)	Harrison, Walter (Wakefield)	Ovenden, John.
Barnett, Rt Hon Joel (Heywood)	Hayman, Mrs Helene.	Palmer, Arthur.
Bates, Alf.	Healey, Rt Hon Denis.	Park, George.
Blenkinsop, Arthur.	Hooley, Frank.	Pavitt, Laurie.
Booth, Rt Hon Albert.	Horam, John.	Pearl. Rt Hon Fred.
Boyden, James (Bish Auck)	Howell, Rt Hon Denis.	Prentice, Rt Hon Reg.
Butler, Mrs Joyce (Wood Green)	Hughes, Rt Hon C. (Anglesey)	Radice, Giles.
Callaghan, Rt Hon J. (Cardiff SE)	Irvine, Rt Hon Sir A. (Edge Hill)	Richardson, Miss Jo.
Cant, R. B.	Irving, Rt Hon S. (Dartford)	Robinson, Geoffrey.
Cartwright, John.	Jackson, Miss Margaret (Lincoln)	Rooker, J. W.
Castle, Rt Hon Barbara.	Janner, Greville.	Roper. John.
Clemitson, Ivor.	Jay, Rt Hon Douglas.	Rose, Paul B.
Cocks, Michael (Bristol S)	Jenkins, Hugh (Putney)	Sandelson, Neville.
Coleman, Donald.	Jenkins, Rt Hon Roy (Stechford)	Sedgemore, Brian.
Colquhoun, Ms Maureen.	John, Brynmor.	Shaw, Arnold (Ilford South)
Corbett, Robin.	Jones, Barry (East Flint)	Sheldon, Robert (Ashton-u-Lyne)
Cox, Thomas (Tooting)	Judd, Frank.	Short, Rt Hon E. (Newcastle C)
Cryer,Bob.	Kelley, Richard.	Silkin, Rt Hon John (Deptford)
Cunningham, Dr J. (Whiteh)	Kilroy-Silk, Robert.	Silkin, Rt. Hon S. C. (Dulwich)
Davidson, Arthur.	Kinnock, Neil.	Silverman, Julius.
Davies, Bryan (Enfield N)	Lamborn, Harry.	Small, William.
Davies, Denzil (Llanelli)	Latham, Arthur (Paddington)	Snape, Peter.
Davis, Clinton (Hackney C)	Leadbitter, Ted.	Spearing, Nigel.
Deakins, Eric.	Lever, Rt Hon Harold.	Stallard, A. W.
Dean, Joseph (Leeds West)	Litterlck, Tom.	Stoddart, David.
Dormand, J. D.	Luard, Evan.	Strauss, Rt Hon G. R.
Douglas-Mann, Bruce.	Lyon, Alexander (York)	Taylor, Mrs Ann (Bolton W)
Duffy, A. E. P.	Lyons, Edward (Bradford W)	Thomas, Mike (Newcastle E)
Dunn, James A.	McCartney, Hugh.	Thomas, Ron (Bristol NW)
Dunnett, Jack.	Macfarquhar, Roderick.	Tinn, James.
Edge, Geoff.	McMillan, Tom (Glasgow C)	Tomlinson, John.
Edwards, Robert (Wolv SE)	McNamara, Kevin.	Walker, Harold (Doncaster)
Ellis, John (Brigg & Scun)	Madden, Max.	Walker, Terry (Kingswood)
English, Michael.	Magee, Bryan.	Ward, Michael.
Evans, Ioan (Aberdare)	Mallalieu, J. P. W.	Weitzman, David.
Ewing, Harry (Stirling)	Marks, Kenneth.	White, Frank R. (Bury)
Faulds, Andrew.	Marquand, David.	Whitehead, Phillip.
Flannery, Martin.	Marshall, Dr Edmund (Goole)	Willey, Rt Hon Frederick.
Fletcher, Raymond (Ilkeston)	Marshall. Jim (Leicester S)	Williams, Alan (Swansea W)
Foot, Rt Hon Michael.	Maynard, Miss Joan.	Williams, Alan Lee (Hornch'ch)
Fowler, Gerald (The Wrekin)	Mellish, Rt Hon Robert.	Williams, Rt Hon Shirley (Hertford)
Garrett, John (Norwich S)	Mendelson, John.	Wise, Mrs Audrey.
George, Bruce.	Miller, Dr M. S. (E Kilbride)
Gilbert, Dr John.	Miller, Mrs Millie (Ilford N)	TELLERS FOR THE NOES:
Ginsburg, David.	Molloy, William.	Mr. James Hamilton
	and Mr. Joseph Harper.

Question accordingly negative.

to put money where he feels it to be of greatest use. We have been striving to get a kind of balance of advantages between those with children and others, and I believe that we have struck a pretty reasonable balance.

Question put, That the amendment be made:—

The Committee divided: Ayes 22, Noes 147.

6.0 p.m.

Mr. Newton

I beg to move Amendment No. 56, in page 15, line 15, at end add— '(3) In paragraph (b) of Section 8(IA) of the Taxes Act, after "upwards", there shall be added "or by a person who proves that she was at any time in the year of assessment a widow"'

The Deputy Chairman (Sir Thomas Williams)

With this we are to discuss the following amendments:

No. 57 in page 15, line 15, 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 a widow and an employed or self-employed earner, to a deduction from the income tax with which she is chargeable equal to income tax at the basic rate on £860 ".'

No. 60, in page 15, line 15, at end add— '(3) In section 16 of that Act (dependent relative), for the reference to £ 145 there shall be substituted a reference to £250'

No. 83, in page 15, line 15, at end add— '(3) In section 16 of the Act (Dependent relatives) for "£100" there shall be substituted "£145" throughout'.

No. 84, in page 15, line 15, at end add—

'(3) After subsection (2) of section 12 of that Act (Widower's or widow's housekeeper) there shall be inserted the following subsection:— (3) This section shall also apply to any other person entitled to relief under section 14 below".'

No. 92, in page 15, line 15, at end add— '(3) In paragraph (b) of section 8(IA) of the Taxes Act, after "upwards", insert "or in the case of a woman that she was at any time within the year of assessment of the age of sixty or upwards."'.

Mr. Newton

This group of amendments is essentially concerned with the position of women within the tax system in one guise or another—as widows, single women over 60, or single women caring for dependent relatives.

I refer first, as it is particularly relevant to these amendments, to what the Financial Secretary said in reply to the last debate about the general problem of tax allowances. I took it that he was accepting the proposition which I would support—that the situation regarding personal tax allowances of all kinds within our tax system is on the verge of becoming a complete and utter shambles.

This is not simply because of the interaction of child tax allowances and the proposed child benefits, or the situation with the main personal allowances, but also because so many of the small personal allowances, some of which are included in the amendments and others, such as the allowance for the blind and the housekeeper allowance, which are not even covered by amendments on the Order Paper, have been amended ad hoc over the last few years in a way which bears no relation to a coherent approach to helping people through the tax system or to a balance between one kind of allowance and another. They seem rather to have been decided by a bias for the groups we are concerned about, or other groups, or by pressure leading to something being done on one of the allowances as, for example, with the allowance for the blind last year.

Whatever else may be said about our tax system and whether we go along with the argument of the Financial Secretary that we should look to the social security system rather than to the tax system to solve these difficulties, it cannot be sensible to allow this muddle to continue without seeking a coherent look at this set of tax allowances and deciding whether some of them might be scrapped and replaced by social security benefits, as the Financial Secretary believes, or, alternatively, bringing them up to date, putting them into coherent balance and trying to keep them in line with inflation. But we should not allow the present muddle to continue.

Over the period since becoming a Member of this House early in 1974, I have spoken many times during the passage of three successive Finance Bills on each of the issues raised in these amendments. For that reason, I shall not take up a great deal of the Committee's time today.

The issues on which I wish to comment are four in number. The first arises in Amendment No. 56, which would extend the existing age allowance which we were discussing just now to widows. The second arises in Amendment No. 57, which again concerns widows and would have the effect of extending to widows with earnings over and above their pensions a personal allowance which is in effect half way between the single personal allowance and the married personal allowance after the Chancellor of the Exchequer has implemented his conditional tax allowances later in the passage of the Bill.

The third issue concerns Amendment No. 60, which would raise from £145 to £250 the allowance for single women caring for dependent relatives. The fourth issue arises on Amendment No. 92, which would extend the age allowance which at present goes only to taxpayers, whether male or female, over 65, to women between the ages of 60 and 65 who are past the normal retirement age for women but who have not yet reached the age of 65 and do not at present qualify for the allowance.

There are two strands in the argument in respect of widows. One is the broad argument about the social position of widows. This is a matter which divides me and the Financial Secretary, though I suspect that most other hon. Members are of my view. It is that, although widows technically are single people, they are not for any realistic, practical social purposes in the same position as single people.

They have been married and have acquired a pattern of married life with the housing which has probably gone with married life and with the social commitments and other aspects of their pattern of life related to their status of being married. When they become widowed, they are not back in the situation of a single person.

That is not recognised by our tax system, and it should be because, especially in terms of housing, many widows will have larger financial commitments arising from their former married state than if they had always been single. It is arguable whether the tax system should recognise this, and it is not a matter which can be proved. But I believe that the tax system should recognise it, and I should like to see it go down this path.

That brings me to Amendment No. 56, which is the broadest and certainly the most expensive of the amendments. It would extend to widows as a class the same benefits at present going to people over the age of 65 as a class. There are strong arguments for this, and they were advanced powerfully on Second Reading by a Government supporter, the hon. Member for Gravesend (Mr. Ovenden). I thought that he put the case very well, and this amendment would implement his suggestion.

6.15 p.m.

But I can appreciate, if it is expensive and because it is so broad, that the Financial Secretary may feel that the worries of the country's financial position preclude him from being generous in this respect. That being so, I press on him even harder Amendment No. 57, which is directed to the second strand in the argument about widows. It is not a broad one about their position as widows. It is a narrow and specific argument about their tax position as soon as they earn any additional income.

What happens is that, if they earn additional income, they go straight into the full standard rate of tax. On every £1 that they earn, they lose the full 35 per cent. Their tax position appears to be markedly worse because of the operation of the tax system than that, for example, of married women or other single people alongside whom they work. It is a situation which causes great bitterness amongst many widows. There is no doubt that it discourages many of them from bothering to work. It leads to many of them feeling that it is virtually pointless to work, and they feel extremely bitter about the way that the system treats them if they decide to work and help themselves rather than rely on social security benefits or whatever else the Financial Secretary sees as an alternative.

At the risk of being accused again by the Financial Secretary of using excessively strong language, I wish to make a very strong comment about the way that the Chancellor of the Exchequer dealt with this matter in his Budget Statement. I apologise in advance for reading a rather lengthy extract from it.

The right hon. Gentleman was obviously aware of the kind of argument which I have been advancing, and he sought to meet it. He said: The single allowance is given to widows as well as to single women pensioners under the age of 65 and, if I am able to increase it as I hope, it will be sufficient to cover the standard rate of national insurance pension payable in 1976–77. If not, when these women have only the standard pension and no other income, they will still be kept out of tax liability. This is because the Inland Revenue does not in these cases assess small amounts of tax, and to save administrative costs it is now proposing to increase the limit of this assessing tolerance from £10 to £30. The new limit will be sufficient to cover the difference between the standard pension and the single allowance. This will mean in practice that, even if I am unable to make the proposed increase in the single allowance, assessments will not be made on this class of pensioners if they have no other income. So these widows and single women pensioners under the age of 65 with no other income will have their tax anxieties relieved."—[Official Report, 6th April 1976; Vol. 909, c. 275–6.] The only word for that is "rubbish", and there are three comments to be made about it. The first is that those words bring out more clearly than any other part of what the right hon. Gentleman has said or done the extent to which the TUC, as a result of this pay deal, has been handed power to determine tax allowances which should have been decided on their own merits because they affect people who have no part in the negotiations with the TUC. That their position in this matter should be left dependent on the outcome of these negotiations is one of the more deplorable aspects of the way that this matter has been handled.

Having put it in that form, for the Chancellor of the Exchequer to say that, if the TUC does not allow widows and single women under the age of 65 to have the necessary tax reliefs to cover the increase in their pensions, as an act of administrative charity by the Inland Revenue the Government will let them off small amounts of tax is to add insult to injury. It is not the kind of approach to which any Chancellor of the Exchequer should lend himself.

To suppose that this will resolve the tax anxieties of many widows and single women aged between 60 and 65 is sheer nonsense. It will still mean that they will be facing an extremely discouraging burden of tax as soon as they begin to earn a penny over and above their pensions.

For those reasons and many others, which I will not touch upon, I believe that this amendment, which would extend specifically to widows an additional per- sonal tax allowance calculated to be half way between the normal single allowance and the married allowance, should be considered seriously. I hope that it will be received sympathetically by the Government.

I want to say a word about the other groups covered by my amendment—women with dependent relatives, that group of people in our community who have made great sacrifices, very often over many years, to look after a relative who may be very ill or very elderly, who have forgone many advantages they should have had as a result, and whose position has been recognised in the tax system by the special allowance which is at present £145

That allowance has not been altered for many years. I have not attempted to calculate my own figure on the basis of inflation. It is simply an increase designed to mark the fact that it has been a long time since there was a change. This group deserves special consideration from this House. It has had it in the past, but not often enough in recent years, and I put forward my view that this allowance should now be increased to mark the passage of time and the erosion of inflation. It is a very modest increase I am proposing. It would by no means solve the problem, but there is a very strong case to be made for it.

Finally, there is the position of women over 60. Amendment No. 92 relates to the same issue that I discussed when we were talking about the investment income surcharge on Tuesday evening. The Financial Secretary and most people present in the Committee know my view that there is no justification for withholding from women over 60, the normal retirement age for women, the benefits which go to other retired taxpayers at the age of 65. The more I think about this, although the Financial Secretary has resisted it in the past, the more convinced I am that it is right.

There can be no other justification for this age allowance than the fact of retirement. There is no point in a tax allowance solely related to age. If one argued that, one could say that the problems of young married couples with children are greater than the problems of those reaching the age of 65. It is the fact of retirement, not the age of 65, which justifies an additional tax allowance. Once one accepts that the concept of retirement and not the fact of the age of 65 as the retirement age is one of the crucial factors in this, it is impossible to justify a situation in which we are not paying this same benefit to women at their present retirement age of 60

I am not convinced by the argument that this is something which is wrong with the social security system and that we ought to change the retirement ages. That may be right and I think that we should move towards a common retirement age in time. The biggest piece of discrimination in the whole tax and social security system is the discrimination in favour of women by earlier retirement, but this will not be changed this year or next; it will be some time before we can decide the right way to solve this problem.

Meanwhile, what we do between the social security system and the tax system is drop single women between the age of 60 and 65 into a sort of hole in the tax system in which they are neglected and forgotten in terms of their real needs until they reach the magic age of 65. I do not believe that this is satisfactory or right, and I hope that the Financial Secretary will find it possible to say something sympathetic about it today.

Mr. Kenneth Clarke

I have added my name to that of my hon. Friend the Member for Braintree (Mr. Newton) on Amendments Nos. 56, 57, 60 and 92. As he so ably and effectively said in presenting them, the first thing which they have in common is that they all concern categories of women taxpayers—widows, single women with aged dependants, and women pensioners over the age of 60 but below the age of 65. These people also have a further feature in common other than their sex. That is that they have been chosen because they are hit acutely, more than the generality of taxpayers, by the low threshold for tax and the high standard rate of tax from which the whole taxpaying public is suffering to a considerable extent at the moment.

Another feature which they have in common is that most of the taxpayers within these three female categories are also single, and I should like to relate my remarks first to the choice which the Chancellor and the Government have made in their present Finance Bill between the married taxpayer on the one hand and the single taxpayer on the other.

As I acknowledged in the brief debate we had a few moments ago, I feel there is a very good case to be made for helping further the family taxpayer. One could make a compelling case that in recent years the position of the taxpayer with family responsibilities and children has been changed disadvantageously compared with that of single taxpayers, who have got away comparatively lightly in very difficult times. Therefore I accept that in looking for tax changes and concessions it is right at the moment to seek to give priority to families, but if the whole Committee, or substantial parts of it, agrees with that judgment, that priority is on the whole to go to families and not so much to the single taxpayer, that choice can only be applied in practice if one discriminates very carefully among those who are now treated as single taxpayers, and tries to do something for that minority of them who would be unfairly affected.

Those single taxpayers who can still take a greater share of the burden than married taxpayers are the young, the unmarried, often living at home with their parents, with smaller commitments, and who on the whole have been less affected than many others by rising economic difficulties and the increasing burden of taxes.

These three categories—widows, single women with aged dependants, often parents for whom they are caring, and women pensioners over the age of 60 and below the age of 65—are not people to whom to look to take a greater share of the burden. If we are to remove part of the tax burden to the single and young from the family, then that seems to me to make the case for special and careful treatment for these categories of people, who are single taxpayers at the moment.

My hon. Friend the Member for Braintree made the point about widows, a case he has urged before, indicating why he feels that these people should perhaps not be treated as single taxpayers at all, certainly if the single are not to be favourably treated in the next Budget or two. It seems to me that, in addition to the general case which he has already made, the position of widows does highlight the problem that is arising with the increase in national insurance pensions and benefits now bringing many benefits up to and beyond the level of tax thresholds at which people start paying income tax.

The gap between national insurance benefits and tax thresholds has narrowed very rapidly, and it is among widows and women over 60 that the gap has almost, if not completely, closed. That means that a widow receiving a national insurance widow's pension finds that the pension exhausts almost her entire tax allowance, so that every penny she earns above her pension, or every penny that comes from savings which may have been set aside, is immediately charged the full standard rate of tax, 35 per cent.; and if she is working she is also subject to earnings-related national insurance contributions, which take the level well over 40 per cent. That is felt as a special injustice by widows.

The Chancellor tried to deal with the possibility that this Budget would, for the first time, take widows' pensions above the tax threshold. He did so in the absolutely nonsensical passage which my hon. Friend the Member for Braintree has just read and which I had marked as quite the silliest passage in the very long Budget Statement. It is no consolation at all to those who find their national insurance benefit is at the tax threshold or above it to say "If you have no other earnings we will not bother to collect the small amount of tax that your pension has now made you liable for". The pension for widows would have exceeded the tax threshold if the trade union negotiations had broken down completely, and this approach to that situation will not succeed because the problem will recur.

National insurance benefits are inflation proof; they are related to prices automatically each year by statute; and every Budget includes an announcement that these national insurance benefits are being raised by certain amounts to compensate for inflation. Tax allowances are not similarly inflation-proofed.

6.30 p.m.

The result is that widows and women pensioners over 60 are the first of the national insurance beneficiaries who will go through the tax threshold if this process continues. Apart from the punitive effect on widows, since every penny of their earnings above the pension is subject to the standard rate of tax, it is also nonsense because it leads to the State giving with one hand in terms of national insurance pension, and with the other hand taking away in tax. They are treated as single people when, in reality, they require special treatment. Since the tax credit scheme is not now to come into operation something must be done to make sure that widows are given special tax allowances to create a gap between the allowance and national insurance benefits.

My hon. Friend the Member for Braintree has made the general case for special treatment for widows. Widows inherit certain commitments from their spouses and are in no way similar to single people. It must also be remembered that widows of 40 or 50 have been off the labour market for a considerable period of time. If they are suddenly faced with the prospect of having to go back to work following bereavement it is difficult for them to obtain employment and they tend to drift into lower-paid employment. This is the case for paying national insurance widows' pensions. It is not possible to say in logic that there is a case for paying them a pension but no case for giving any special treatment to them on tax. I emphasise that widows are not on all fours with other single people, and the case for special treatment is acute.

I should like to give one illustration as it affects a widow living in my constituency. Problems of this nature are brought home to me week by week and involve widows who do not understand the tax situation and who are enraged by their treatment. The widow of whom I speak has a widow's pension and a small occupational pension arising from her former husband's previous earnings. That gives her a certain amount of additional income. In 1972, in addition to her national insurance pension, her occupational pension brought her in a sum of £370 each year. In 1972 she paid no income tax whatever because in 1972 she was below the tax threshold. That annuity has now been raised to £591 per year, but she now pays on it income tax of £160 per annum. The result is that in the last four years her occupational pension has been raised by £221, but only £61 has been left to her after tax. The increase in occupational pension is supposedly inflation proof, but the effect of tax thresholds and tax increases has been such that, in reality, she receives no benefit from that inflation proofing. I submit that that case, which is not an isolated one, creates great resentment among such widows.

I do not want to dwell on the case of the single woman and her dependants whose allowance has not risen in line with inflation and who has been badly hit because the case has been so well made and amply illustrated by my hon. Friend the Member for Braintree. Obviously, people whose tax allowances are not keeping in line with inflation find themselves hard hit by the present standard rate of taxation.

Let us also consider the situation of the pensioner who is over 60. Such pensioners do not receive the age allowance till they are 65. Obviously, the age of 65 is chosen because it is the retirement age for pension purposes. One is saddled with the situation that in this respect difficulties arise because the age of 65 is not the retirement age for women but only for men, so that women below the age of 65 feel themselves quite unfairly taxed on any savings that might supplement their pensions.

I accept that in all these debates it is possible to single out a category of taxpayer and to emphasise how hard those taxpayers are being hit by taxation. Indeed, the generality of taxpayers at present are being badly affected, and it is easy to pick upon individual cases. Surely, however, in the categories that we are now discussing, particular problems are being experienced and the Government should face them and do all they can to help. The Government surely should seek to help widows as opposed to the single taxpayer in general.

The truth is that widows are now being forced into that growing number who feel that it is pointless to carry on working in order to provide for themselves or to try to be thrifty. Therefore, I hope that the Government will try to give special help to them and to the other limited categories of people specified in the amendments.

Mr. Lawson

My hon. Friends the Members for Braintree (Mr. Newton) and Rushcliffe (Mr. Clarke) have spoken cogently on these amendments. I should like to deal briefly with one or two points to which they have not addressed themselves.

I wish to draw attention to Amendment No. 83 which, in turn, bears on Amendment No. 60. My hon. Friend the Member for Braintree suggested that dependent relatives should be assisted by raising the figure from £145 to £250. My amendment seeks to underline the needs of men who support dependent relatives.

I wish to draw attention to certain anomalies in the present system. I have before me the case of a constituent who happens to be a servant of this House and who is now maintaining his elderly widower father. He feels that it is wrong that he should be given an allowance of only £100 when a woman who maintains an elderly dependent relative receives £45

It will be remembered that the present Prime Minister in 1967, as the then Chancellor of the Exchequer, introduced the differential rate between men and women who supported dependent relatives. The right hon. Gentleman then said that most of the people who found themselves in this situation were women. That is true to a large extent, but it is a little unfair that no attention is paid to those men in our community who have the task of looking after dependent relatives.

The other argument deployed at that time was that women's wages were generally less than men's and therefore it was said that women needed the extra allowance. I believe that it is a somewhat odd principle in these days of the Equal Pay Act, the Sex Discrimination Act and the Equal Opportunities Commission, that there should be a differential between the situation of men and women in caring for dependent relatives. Therefore, I hope that the Minister will be able to accept my modest amendment.

The other amendment to which I should like to draw attention is Amendment No. 84, which the Minister may feel is a trifle obscure. I must reassure the Minister that, if the amendment were to be accepted, on Report we should need to table a consequential amendment to delete Section 12(1)(iv) of the Taxes Act. I am sure that the hon. Gentleman knows what I am talking about.

Amendment No. 84 is of a probing nature, but its purpose is to extend the housekeeper relief to a hard-hit category of people. It includes not merely widows but also single-parent families, divorced parents with children, and so on. I must tell the Minister that the situation in the United States in this respect is very much more generous than is the situation in this country. I understand that in the United States the single-parent family, in cases where the parent is in full-time work, is allowed to deduct from tax the cost of child care. Will the Minister comment on the possibility of such a process being introduced into our taxation system?

There seems to be a curious anomaly between Section 12 and Section 14 of the Taxes Act, I hope that the Minister will be able to explain it. Section 14 contains reliefs for widows and widowers with children, parents with an incapacitated spouse, divorced parents with children, and single parents in full-time work. Section 12 relief applies only to widows and widowers and is not extended to these other categories, so there is an inconsistency and an anomaly on which I hope the Minister can shed light.

Finally, on the general point lying behind the amendments in the group, first, we suggest relief for particular categories of people. A good case has been made out for the hardship they suffer, and there should be an improvement for them in money terms, at least in the relief they get, merely to keep pace with inflation. Within our tax system we have a whole range of reliefs for different sorts and conditions of men and women and at the present time, with inflation, in each Budget the Government picks on one or two categories. One year there will be an increased allowance for the blind and another year one for widows, or the age allowance may be increased a little.

In the Finance Bill we tend to concentrate on those things which have been increased, but, in real terms, in each Finance Bill that comes along a whole group of allowances is cut. We should be focusing on those, because unless they were really necessary they would not be in the tax system. I hope that the Minister will appreciate that this is a very good reason for having a system under which everything is automatically index-linked, with all reliefs, allowances and discretionary changes above this being justified by the Chancellor.

On a general point, the Minister has said that he is in favour of dealing with all these problems through the social security system and not through the tax system because, he says, the tax system is a hit-or-miss affair, whereas the social security system has greater precision. I am not sure what he means. In our taxation system we have a considerable array—a battery—of reliefs for different sorts and conditions of men and women, and this is no less precise than the social security system. I suspect that the hon. Gentleman is thinking about the supplementary benefit system, in which an attempt is certainly made to tailor everything precisely. The hon. Gentleman shakes his head. There is no reason why the tax relief for, say, the blind should be any less precise than a social security benefit other than supplementary benefit.

The difficulty over precision under the supplementary benefit system has been well set out by the present Chairman of the Supplementary Benefit Commission, Professor Donnison, who said recently: Though supplementary benefits account for only 13 per cent. of all social security payments, the staff allocated to dealing with it at local level accounted for about half of those administering the entire social security system. It is not merely the public expenditure involved in the highly complex, very detailed and tailored social security, which we have to bear in mind we cannot afford; there comes a certain point beyond which the more precise and tailored a system is, the more people believe it to be unfair. Few people consider that the tax allowance system for children is unfair, but when they see a system in which everything seems to be very precisely detailed and tailored to a particular instance, and find there are very arbitrary dividing lines, on one side of which benefit is secured under social security while on the other it is not, they feel that the system is thoroughly unfair. There is a great deal of resentment and feeling against the social security system in this country today, much of it justified. The hon. Gentleman and the Government he represents ought to take that on board before considering that the right way to proceed is to have more done through the social security system and less through taxation.

Mr. Richard Luce (Shoreham)

I want briefly to support my hon. Friends who have moved amendments seeking to improve the position of widows. The main burden of the argument so well put by my hon. Friend the Member for Braintree (Mr. Newton) is that when a husband dies the widow maintains exactly the same commitments—particularly if there are children—as a married woman, without having the benefit of her husband's salary. In all likelihood she is going to have to maintain a larger house than the ordinary single woman. She is in all likelihood going to have to pay the mortgage, rent or rates of a married woman, electricity and gas bills, insurance for the house, the cost of running a car, and the expenses of a child—which a single woman does not have to undertake. This is really the key part of the argument. It is true that on top of her personal allowance she will get an additional allowance designed for single parents, and if she has a child she will get the child allowance, but then one has to look at the tax threshhold—and, as my hon. Friend the Member for Braintree has said, the moment she starts to work, part-time or otherwise—if she can manage to do so—she is penalised in terms of taxation.

6.45 p.m.

The evidence shows that the widow's position in relation to, for example, the working married woman is an extremely unfair one. This is the key part of the argument put forward by my hon. Friends the Members for Braintree and Rushcliffe (Mr. Clarke), because, looking at the position of an earning married woman, we find, first, that the married man's allowance is based on an allowance for two people. We also find—I do not argue against it—that if a married woman wishes to go out to work, she gets an earnings allowance for doing so. Therefore, the widow, particularly if she wishes to go out to work, is unfairly treated compared with the married woman. In all likelihood, she has the same commitments, particularly if there are children, and yet she is penalised in relation to a married woman. For that reason the very powerful argument put forward by my hon. Friend should be accepted by the Government.

Mr. MacGregor

I do not wish to add to the general argument that has been so admirably put by my hon. Friend, except to say that on this point, like my hon. Friend the Member for Rushcliffe (Mr. Clarke), I very much agree that one of the difficulties with which we are increasingly faced is that of the widow trying to stand on her own feet and to earn her own income by going out to work and then wondering why she bothers. Many widows write to me pointing out that they could as easily get from social security almost as much as the net income they get from working. They cannot see the point of a system that brings about such a situation. These women go to work because they have pride and wish to stand on their own feet, but theirs is certainly a problem to which we should address ourselves more and I am glad that the amendments raise this point.

On Amendment No. 84, the point I wish to make follows one made by my hon. Friend the Member for Blaby (Mr. Lawson), because it is in the context of an age in which equality of sex treatment is to be admired and sex discrimination is to be deplored. I do not expect the Financial Secretary to be able to say much about it at this time, but I hope he will take it on board and think about it. My point relates to widows and widowers, and the housekeeper allowance. Last year I discovered for the first time that a widower's allowance is given if the housekeeper is female but not if the housekeeper is male. In other words, it is not given if a widow has a man living in the home doing the kind of work that the husband had previously done.

The position was put rather well by one of my constituents, who said a male widow receives preferential treatment in that he gets an allowance for a woman around the house, but a woman does not get an allowance for having a man about the house; she can have only another woman. She adds: You must agree that having two women in a kitchen never works. I had not appreciated this. I took the matter up with the Chairman of the Inland Revenue, who explained the historical situation. The housekeeper allowance was originally meant for men with families where there was no mother—where a housekeeper was needed to look after the children.

In this day and age, when there is supposed to be no sex discrimination, this is an anomaly that ought to be put right. I hope that the Financial Secretary will not put it right by withdrawing the housekeeper allowance for widows or widowers. I understand that the Royal Commission on Taxation advocated this in 1955. In an age when many widows and widowers find that they need such help, the allowance enables them to continue to afford it.

Will the Minister address himself to the point that widows are surely entitled to have a housekeeper, too, and if they choose to have a male one it is reasonable to give an allowance for this? I am sure that such a concession would cost only a minimal amount.

Mr. Robert Sheldon

We have had a wide-ranging debate and have discussed many amendments. Perhaps I may start by referring to the hon. Member for Rushcliffe (Mr. Clarke), who pointed out a number of problems that followed from the interaction between benefits and tax thresholds. I could not agree with him more. This is a problem that the House has to face when, particularly at times of Finance Bills, it asks for further allowances to meet individual specific cases.

The hon. Member for Blaby (Mr. Lawson) is guilty of this when he asks in Amendment No. 84 for a housekeeping relief to everyone with single-handed responsibility for a child. He wants the additional personal allowance to be augmented by a household allowance, which was essentially for domestic service. I understand this argument, but the Government have to face the problem that if we were to proceed along this path we could end up having two social security systems side by side, one of which was precise and more exact, because of the greater information that the social security people have on the problems in this area, and the other which was inexact and was concerned only with the tax allowance aspect.

Mr. Lawson

Not on the general point, but on the narrow point that the Minister raised in regard to Amendment No. 84, he said that there was a danger of having two different social security systems side by side. Does he agree that, in a sense, there are two different tax systems side by side, because the coverage of Section 12 reliefs is different from the coverage of Section 14 reliefs? Can he explain why this is so?

Mr. Sheldon

The hon. Gentleman is trying to obtain both reliefs for the same individuals. That is the problem.

Mr. Lawson

Why is it a problem?

Mr. Sheldon

The additional personal allowance was given for precisely the kind of problems covered by the hon. Gentleman—that is, single people with children and responsibility for children. The hon. Gentleman is seeking to provide extra money for such people. If that is his intention there are two simple ways of meeting his objective. He could either do something about the child tax allowance or table amendments concerned with additional personal allowance. These are open to him, but he has chosen not to do so on this occasion.

This proposal would lead to an incredible increase in complexity. In view of the other kind of amendments that are frequently put forward, we could, if we were not careful, have two parallel social security systems, one of which was extremely imperfect, arbitrary and imprecise in its impact, and the other which was tailor-made.

When I talked about precision in social security the hon. Member for Blaby said that there was precision only in supplementary benefits. He went on to say that precision is bad and that this is the trouble at the moment, whereas previously he was arguing that there was no precision at all in supplementary benefits. I leave it to the hon. Member to sort out his differences with himself. What I am concerned about is to make sure that we have one social security system which provides for the special needs of these people and, also, a tax system that is organised on the basis of ability to pay tax.

Mr. Lawson

rose—

Mr. Sheldon

If the hon. Gentleman will let me get a little further I shall gladly give way. I am always happy to give way to him, but not every two minutes.

Mr. Lawson

The Minister is attacking me.

Mr. Sheldon

The hon. Gentleman suggests that I am attacking him. I am only pointing out the inadequacy of his arguments. He has had plenty of time to put them to the Committee this afternoon.

If I could make some progress, I would turn to the point made by the hon. Member for Norfolk, South (Mr. MacGregor). The hon. Gentleman made a particular point about the historical bases for some of these allowances. I agree with him that many of them are historical, and that some are not quite so relevant today as they were when first introduced. I understand perfectly clearly the problems that the hon. Gentleman has in mind, but a number of the allowances that we have been discussing have to do with the element of domestic service, and this was something that was extremely important and relevant in the years when those allowances were first introduced. Their importance and impact have declined during the passage of the years and, as a result, a number of these allowances have not been increased for this very reason.

Amendment No. 56 calls for the age allowance to be made available to the widow under 65 years of age. The anomaly is cited of the widow who, at the age of 60, gets her retirement pension but is not eligible for the age allowance until she reaches the age of 65, whereas a man is eligible for both the age allowance and the retirement pension at the same time. I know the problem that this causes. However compassionate we may wish to be, there is a difficulty about discussing matters concerning widows. We all know of extremely difficult and heartrending cases and yet, at the same time, we know full well of the inability of the tax system, as we have it, to meet these precise problems.

One of the first aspects of this problem arises in making the comparison between widows and widowers. This is the sex discrimination aspect, mentioned by the hon. Member for Norfolk, South. We have all had experience of men who have recently lost their wives and who find it difficut, sometimes impossible, to continue their way of life and to look after themselves. The comparison between the widow and the widower is one that has to be made. There are those who say that the final solution must be the narrowing of the gap between the treatment accorded to one and the treatment accorded to the other. We must also consider the problems of divorced, separated and single women and of those whose husbands have left them, sometimes in harrowing circumstances. Our sympathy and understanding for widows is undiminished, but I find it impossible to accept the amendment.

7.0 p.m.

Amendment No. 60 would cost only £4 million, but the case for increasing the dependent relative allowance has not been accepted for a long time. There has been no increase for the past nine years, and this allowance is not generally regarded as quite so relevant as it once was. First, the State pension occupies a more prominent part in the income of those concerned. Second, there are more opportunities for work for those concerned. The change in the social scene has had its impact on this allowance. This has impressed upon the present Government and previous Governments the smaller degree of importance that should be attached to it. So there has been no increase during this period.

Amendment No. 83 refers again to the problem of men being treated the same as women. I referred to this in what I said about the hon. Member for Norfolk, South. There is not much more that I can add. The dependent relative allowance for a claimant other than a single woman who supports a dependent relative will, if the amendment is accepted, increase from £100 to £145 and will be the same as that for the single woman. There is a little more to commend this, because there would be equality of treatment, but the cost would be £12 million, which is rather higher than the arguments for the amendment might have suggested. For that reason, and the general reasons that I have given, it cannot be accepted. I hope that the House will reject all these amendments.

Mr. Kenneth Clarke

The Minister has not dealt with the case of women pensioners under 65 and their inability to have the age allowance. He began on that subject but immediately changed to talking about widows and widowers—a subject that seemed to relate to a separate amendment.

Mr. Lawson

The Minister seemed to think that there was confusion in my mind because I said that there was a sense of great unfairness about certain parts of the social security system and that the reason was greater precision. If he is not aware that the greatest sense of unfairness concerns the workings of the supplementary benefits system, which is where the attempt at precision is greatest, he is aware of nothing in the whole area of social security payments.

Amendment negatived.