HC Deb 13 May 1976 vol 911 cc741-58
Mr. Lawson

I beg to move Amendment No. 61, in page 15, line 15, at end add£ '(3) In section 10 of that Act (children), for any reference to £115 there shall be substituted a reference to £300'.

Mr. Deputy Speaker

I understand that it will be convenient to discuss at the same time the following amendments:

No. 62, in page 15, line 15, at end insert: '(3) In section 10(5) of that Act (children) for "£115" there shall be substituted "£365"'

No. 93, in page 15, line 15, at end insert: '(3) In section 10 of that Act (Children) for any reference to £115 there shall be substituted a reference to £320'

No. 88, in page 15, line 15, at end insert: '(3) For the purpose of paragraph (a) of subsection (2) of section 14 of that Act, subsection (5) of section 10 of that Act shall be interpreted as if "the appropriate amount" were the sum of the appropriate amount and the amount on which the deduction under subsection (2) of section 14 of that Act is calculated'.

Mr. Lawson

I am delighted that we now have the Chief Secretary in the Chamber. I assume that he will answer this debate. I am delighted not merely because of my affection for him, which I am sure is reciprocated, but also because this is a particular point that was raised by myself at this stage of our proceedings on last year's Finance Bill and by my hon. Friend the Member for Norfolk, South (Mr. MacGregor) in the debates on the Finance Bill of the year before that.

When my hon. Friend raised the matter, the Chief Secretary replied in a most encouraging way. Last year, when the Financial Secretary replied, he was very curmudgeonly. Now, we have the Chief Secretary again, and we can hope that this amendment, for which there is an overwhelming case, will receive the sympathetic welcome that it thoroughly deserves from the Government.

My hon. Friend the Member for Hertfordshire South-West (Mr. Dodsworth) brought this point into play when speaking on another amendment earlier. As I am sure the Committee will be aware, the fact of the matter is that at the present time, if a child has an income, earned or unearned—I will go into the distinction between the two a little later—of more than £115, which is less than what can be earned in a paper round these days, the parent's allowance for that child is reduced by £1 for every £1 over £115 that that child earns in his earned income.

This is a most distressing anomaly. Front 1952 to 1963, this amount—the maximum that a child could have in income before the child allowance was reduced—had been exactly the same each year as the allowance for a child under 11. Then it was frozen where it was in 1963–64 for year after year, presumably because we had a Labour Government in for the first six of those years—although I readily concede that the Conservative Government who followed did nothing about this, and now, so far, the Labour Government who followed them have done nothing.

The child allowance for a child under 11 has risen to as much as £300 in this latest Finance Bill, whereas the amount a child can earn before there is a reduction in allowance is still set at £115. The amendment cannot cost very much—the Chief Secretary will probably tell us that it will cost about £15 million—and it will bring the £115 limit up to £300, in line with the child allowance for children under 11. Had the allowance been increased from 1963–64 in relation to the declining purchasing power of the pound, it would be more than this. It would be £335. But the amendment is modest and seeks to fix it at £300

The Chief Secretary must be aware—I am talking now particularly of earned income—of the great sense of injustice and hardship that exist in many cases. particularly among those parents whose children are students who try to earn some money during the vaca- tion. It is not difficult to earn more than £115 and, as a result, the parent's child allowance is reduced and considerable hardship results. The child feels that he is doing the parents an injustice, or, if he is prepared to reimburse the parent—there would be problems, no doubt, about the capital transfer tax if he did that now—he is being taxed so highly, in effect, on the extra earnings, that it is not worth his doing it.

It is curious that the whole direction of this Government's policies is to assist those who do not work or do not wish to work, and to hit those who do. In the case of students, those who do not wish to work get looked after very well, in many cases, but those who try to earn a little in the vacation are hard hit, and their parents are. This is thoroughly inequitable and it is something which the Chief Secretary himself has conceded is inequitable. One of the grossest forms of injustice is the student on a sandwich course, because, as part of the course, the student is obliged to work. As a result, hardship follows. The cost and the number of people affected may be small, but for those involved it is a monstrous injustice.

In earlier debates the Chief Secretary and the Financial Secretary have sought to resist this. They argue that it applies not merely to a child's earned income but to a child's unearned income. I hope that the Chief Secretary will tell us how much of the total cost occurs as a result of earned income and how much as a result of unearned income. We asked for that breakdown last year but did not get it. I am sure that the Treasury must have come up with the answer by now. Even if they are not prepared to accept it for unearned income, I hope that the Government will move an amendment of their own, accepting it for earned income.

In the case of earned income, one other objection was given last year by the Financial Secretary, when he said that we were just about to go away from child allowances and move to a whole new system of child benefits. That is not an argument for not acting now. Something needs to be done this year. There is no excuse for having an injustice for the whole of this coming year just because something may be introduced in future years.

The new system of child benefits will be based on the levels of the old system. We know how these things work. If we do not get it right this year, the new system will come in on the wrong basis. The Chief Secretary may wish to separate earned income and unearned income and bring in an amendment of his own, because we know of the loathing for any investment income that is felt on the Government side of the House.

On unearned income the Government have argued that they are just about to aggregate children's investment income and that therefore they do not want to do anything in the opposite direction now. They said that they were going to do that in the second Budget of 1974, but they did not do it. They then said that they were going to do it in 1975, but did not do it. Last year they said they were going to do it in this Budget, but they still have not done it. It is no good going on saying that. Of course they are not going to aggregate children's investment income, because it would be too iniquitous even for them.

It would be iniquitous because under the capital transfer tax children are separated from parents. Capital passing from parents to child is a chargeable transfer. It would be illogical and unfair for it to be held that parents and children are two for the purposes of capital but one for the purposes of the income that flows from that capital. The Government can have it only one way or the other, but not both. That is why aggregation is not on.

The Chief Secretary has been extremely sympathetic to the amendment in the past. I hope that this time, at long last, he will show an even greater sympathy, because of the persistence of the Opposition in raising the matter on each successive Finance Bill.

In 1974, the Chief Secretary said: I should like to see the allowance increased because it has been well overtaken by inflation over the years."—[Official Report, 10th June 1974; Vol. 874, c. 1287.] There has been quite a bit more inflation since June 1974 as the Chief Secretary must be aware. I am sure that he is well aware of our case and that he will see fit to accept the amendment so that we do not have to put it to the vote.

7.15 p.m.

Mr. Graham Page (Crosby)

I warmly support the amendment in the name of my hon. Friend the Member for Blaby (Mr. Lawson). It is anomalous that the figure of £115 above which it is to be taken into account in the "appropriate amount" has remained for so long. It is significant that the "appropriate amount" for a child not over 10 was fixed at £115 and has gone up over the years. I cannot understand why the figure for earned income has not gone up.

I shall address my remarks to Amendment No. 88, which is related to the points raised by my hon. Friend but has a specific purpose. It relates not to the ordinary child allowance under Section 10, but to the additional allowance under Section 14. The present entitlement to the additional allowance lies with the person who has care of a child, who is a widow or widower, or any other person not in receipt of the married person's allowance—ple, a divorced or separated spouse or a married man with an incapacitated wife.

In addition to coming within one of those groups the person has to prove other things. Before such persons receive the benefit of an allowance they must prove that neither they nor anyone else is entitled to any relief under Section 13—that is, for taking care of unmarried persons, such as a brother or sister. They must also prove that they are entitled to child allowance under Section 10. The rub is that if they are entitled to child allowance under Section 10 they must prove that they have living with them a dependant child under 16 or taking full time instruction, and that the child's income does not exceed £115

If we assume an example of a person not entitled to a married person's allowance, having charge of a child whose income is such that there is no entitlement to the ordinary allowance under Section 10, that person is not entitled to the additional relief.

What is the figure of the child's income that deprives that person or the person in loco parentis of child allowance? It is calculated by reference to the amount of the child allowances under Section 10 of the 1970 Act. Under the Bill the figures will be—over 16, £365; over 11 and under 16, £335, and in other cases, £300. Section 10(5) of the 1970 Act reads: If the child's income exceeds that £115 the excess is deducted from the appropriate amount". Let us take the example of an income of £200 per year for a 10-year-old child. The child allowance would be £200 minus £115, which leaves £85, and £300 minus £85, which leaves £215. If the 10-year-old child's income is £115 plus £300—£415 per annum—the entitlement to the ordinary child allowance has gone. So also, strangely enough, has the entitlement to the additional allowance. This is where the anomaly arises. By losing entitlement to the ordinary child allowance, the person in loco parentis also loses the entitlement to the additional relief. If there is merit in giving the additional relief at all, it should not be cut off just because the child's income comes up to the ordinary child allowance figure plus the small margin of £115

What the amendment seeks to do is to provide that in such a case, instead of taking that ordinary child allowance as the cut-off figure one should add to it the additional relief figure. Additional relief allowance for 1975–76 is £280. Therefore, taking my previous example and putting it into figures, the cut-off figure should be the £280, plus the £300, plus the £115—making a total of £695. At present, if the child's income is £414 a year, the divorced wife, for example, looking after the child, will get the £280 additional relief. If the child's income is £415, she gets nothing—neither the ordinary child allowance nor the additional allowance.

If it is right that there should be an additional allowance, it should be taken at a higher cut-off figure than the ordinary allowance.

Mr. MacGregor

As my hon. Friend the Member for Blaby (Mr. Lawson) said, two years ago I moved an amendment similar to that before us at present, and I supported my hon. Friend last year. I am bound to say, however, that my amendment of two years ago was in the days before Labour inflation, and that the figure that we were looking at then was much more reasonable. I hope that our persistence will gradually win over the Chief Secretary, and not only our persistence but our reasoned and reasonable arguments.

I want to put three points in favour of the main amendment. As to the figure, it may look like a big jump up, but not only is it more nearly indexed to the old figure of £115 as it was in 1963–64; it is a very reasonable figure in relation to the earnings that a child can have. Taking the figure of £115, which is the only figure allowed, it takes only about three weeks' earnings for students in university education to go over the top. When I was at university and working my way through by vacation earnings, perhaps £115 was a figure that one did not very often reach during the six weeks that one was working; but today it is reached.

My second point is related to the position of parents with children at university. This point is particularly important, because while parents who privately educate their children and make a parental contribution at school level can be said to do so voluntarily, that cannot be said when they get to university level. Then all parents above certain income must make the parental contribution if they want their children to attend university at all. There is no other way out.

From looking at the figures one begins to see the scale of the problem facing many parents. On Tuesday we were talking of the tremendous difficulties that middle to senior managers were finding because their net income was failing to keep pace, by a long way, with inflation, and beyond that, as compared with those with lower incomes, they very often had to make hidden taxation contributions, as they do with the hidden contribution to university education.

Taking the first group that the Chancellor has been saying he wants to do so much to help—the £4,500 to £8,500 a year men—many in that position will have children at university and will have to make a parental contribution, which is, in effect, a tax. If one takes what is described under the parental contribution rules as the "residual" income, that adds some £1,000, so one is talking about earnings between £5,000 and £9,000. At a residual parental income level of £4,000, or some £5,000 gross, a person is compelled to pay a contribution of £330 towards the cost of his child's education at university, and if his income level is £8,000 he is compelled to contribute £730. The sum of £730, taken out of income that has fallen already because of inflation, is a very large slice. So the money that the child can earn—if it is right to call him a child at the age of 18—is very welcome. It is quite appalling that once they reach a limit of £115, the parents cease to benefit at all.

The third argument makes the matter so much worse. That is the university student decides not to earn himself but, instead, to go on social security. The difference between our argument two years ago and our argument today is that many more university students, because of the National Union of Students campaign, know the benefits of going on social security. There is additional benefit to the parent, because if the child earns more than £115 the parent immediately loses, but if the child goes on social security above £115 there is no loss to the parent, because social security benefits, being untaxed, are not subject to this clause.

We are now in a ridiculous situation in which there is positive encouragement to all parents, especially high earning parents, to tell their children not to work during the vacations because the parents' income will be badly affected, and to tell them, instead, to go on to social security. This seems to be absolute nonsense. It is an example of the tax system encouraging people in precisely the wrong direction. This is a further argument, that was not too apparent two years ago, for a change of the sort proposed in the amendment.

Mr. Dodsworth

I want to refer to the record of the income limit over the last few years. For 10 years the income limit that related to the child allowance was exactly the same sum as the child allowance itself. It was an income limit of £60 in 1947–48. It remained the same as the child allowance until 1957–58, when it was increased to £100. In 1963–64 the income limit was increased to £115, and since then it has remained static. Child allowances have continued to increase. The logic of the original arrangement would be that we had an allowance of at least £300 now. We have slipped behind.

I very much support the observation of my hon. Friend the Member for Norfolk, South (Mr. MacGregor) about the anomaly that he illustrated. I hope that we get some sense from the Treasury on this occasion about this long outstanding problem.

Mr. Joel Barnett

On this occasion the case has been put rather more briefly than it has in the past, because of the intervention of the Opposition Deputy Chief Whip. I suppose that all of us should be obliged. He has not asked me to make my contribution briefly, but I note his actions over the last few moments.

The hon. Member for Blaby (Mr. Lawson) opened this brief debate on what was for him an unusually modest note. Amendment No. 61 seeks to increase the limit from £115 to £250. Other amendments seek to increase it to a larger figure.

Mr. Lawson

I think that the right hon. Gentleman has misread the Notice Paper. Amendment No. 61 would raise it from £115 to £300. That is the amendment to which I spoke.

Mr. Barnett

I am sorry. I should have realised the position and never expected the hon. Gentleman to be quite as modest as I imagined. I apologise to him.

The hon. Gentleman presented his case, as ever, so charmingly that I find it very difficult to resist it. The case was supported by the hon. Member for Norfolk, South (Mr. MacGregor). I shall come shortly to the case presented by the right hon. Member for Crosby (Mr. Page)

The hon. Member for Blaby fairly pointed out that on previous occasions I had indicated that in my view there was some justification for the case for increasing this limit, because it had not been increased for so many years—not only during the course of Labour Governments but under a Conservative Government as well. However, it is important that we should understand the reason why successive Governments have kept this limit as low as it is. The case was made by one of my predecessors—the right hon. Member for Wanstead and Woodford (Mr. Jenkin). He argued that the existence of a child's income limit of £115 for child allowance purposes provided a defence against the abuse of covenants in favour of children. We all know the kind of abuse to which the right hon. Member was referring, with the grandparents making covenants to grandchildren. This meant, when there was no aggregation, a substantial saving of tax.

7.30 p.m.

The reason it was felt necessary to have the child income limit at a low level was to remove at that time the provisions for aggregation. I agree that that is very important, because a comparatively small number of wealthy families were able to contrive to put investment income into the hands of children solely for tax saving purposes.

Mr. Lawson

Not since the capital transfer tax.

Mr. Barnett

Hon. Members did not realise the foresight of the Government in introducing the capital transfer tax. [Interruption.] I do not know how the hon. Member for Blaby would feel if he sat on these Benches as a Minister and had to put up with the sort of comment we have to accept from him. If he had to deal with them I cannot imagine how long it would take. The Deputy Chief Whip would be at him constantly.

I accept, nevertheless, that in current circumstances there is a case for some increase in child income limit, but there is the problem of the difference between investment income and earned income of the child. The hon. Member who was asking about the difference in cost between the two, will realise that the reason it is not possible to answer is that we do not have the information. At the moment there is no need to have information as to how the income is divided between investment income and earned income.

I shall return shortly to the question how it might be possible to deal with the problem raised in this brief debate, but first I want to deal with the point raised by Amendment No. 88, in the name of the right hon. Member for Crosby. It is impossible to state what would be the cost of his amendment, because of the kind of taper arrangement he suggested in the case of the single-parent family, for which we all have the greatest sympathy. His point is a very good one, concerning the way in which the single parent—it is frequently a widow, but it can also be a widower—loses the child tax allowance in the kind of situation he described.

I cannot say what the cost would be. I recognise that it would not be very costly, but there are practical problems. I am not suggesting that they are insuperable, but I should like to explain them briefly so that the Committee will realise the situation.

The right hon. Gentleman referred to the single-parent family as if we were dealing with the single-parent family with one child. Where there is more than one child there is a considerable difficulty in working out a tapering system on the amount of income. There is a substantial problem here, which I want to examine. I do not believe it is insuperable, and I hope it will be possible to find a way of dealing with it.

I assure the right hon. Gentleman and the House that, although I cannot give a firm commitment, I shall look very closely at the point he has made in the debate, particularly about the practical problems. If it is possible to do something in this direction I shall see that it is done on Report.

Mr. Graham Page

I am very grateful to the Chief Secretary for what he has said. Will he be good enough to write to my right hon. Friends and myself a sufficient time before Report? I quite appreciate the difficulties in devising anything, but I should be very grateful if we could have a look at it in time, whatever he decides.

Mr. Barnett

I am obliged to the right hon. Gentleman, I shall see that that is done.

I return to the point that I was making earlier on the main amendments, and again I should like to consider some way of helping. I think there is a case for some increase. The point made by the hon. Member for Norfolk, South is perfectly valid. There has been a massive increase in the claims made by students for supplementary benefits during the long vacation, but I hope that the House will be prepared to consider—as we are always having to consider to a greater and greater extent these days—the staff costs as well as the revenue costs involved in any amendment. Particularly in this area the staff costs tend to be comparatively large in relation to the amounts involved.

The hon. Gentleman seemed to be arguing that there is a more powerful case far raising the limit for earned income only, because then the question of covenant and investment income would not apply. In that case there would be a requirement for an additional 100 staff in 1976–77. I am not suggesting that that is a massive figure, but it is for a quite modest scheme. On the other hand, if we were to restrict it in the way that both hon. Gentlemen argued, there would be an additional 55 staff required. In the case of students over 18, which is the strongest case, frequently the students working in the long vacation have an earned income in excess of £115. The hon. Member for Blaby felt, as did other hon. Members, that the strongest case of all was in this area. I agree that that is the strongest case.

Although I do not wish to give a firm commitment, I would want to consider whether it is possible to deal with this case of the over-18s in this year. It would be a smaller revenue cost and a smaller staff cost. I will, if at all possible, introduce an amendment on Report. With that, I hope it will be possible for the hon. Gentleman to ask leave to withdraw the amendment.

Mr. David Howell

The Chief Secretary has made helpful noises over both the main amendment and the amendment to which my right hon. Friend the Member for Crosby (Mr. Page) referred. I think the Chief Secretary's words were, "I promise as far as it is possible", so there was some qualification in it. Even so, I think it is fair to us to take this as a fairly firm commitment that he will bring back an amendment designed to ease the situation for students.

This still leaves the absurdity of the situation in which a young child can easily generate an income of more than £115 per year by doing a newspaper round. That situation is unsatisfactory, and we shall be pressing the matter again. But the Chief Secretary seems prepared to move in the direction that we have sought in the debate. For that reason I suggest that my hon. Friend should not necessarily press the amendment to a vote.

Mr. Lawson

I heard a few moments ago from the Chief Secretary's lips the magic words "bring forward an amendment on Report", and that makes a great deal of difference. We know the right hon. Gentleman and can accept it as an undertaking. He would not have given it otherwise. He said that it might be difficult to confine it to students over the age of 18. I hope that, if he find it is too complicated, he will bring forward an amendment which covers a wider category of children and will certainly not rule it out altogether.

In the light of the Chief Secretary's assurance, I beg to ask leave to withdraw the amendment.

Amendment by leave, withdrawn.

Mr. John Hannam (Exeter)

I beg to move Amendment No. 90 in, page 15, line 15, at end add:

'(3) In section 10(5) of the Income and Corporation Taxes Act 1970 after the words "or other similar education endowment" shall be added "or of a mobility allowance awarded under section 37A of the Social Security Act 1975"

(4) After section 16(5) of the Income and Corporation Taxes Act 1970 shall be added the following subsection:— (6) In calculating the income of any such person as is mentioned in subsection (1) above, no account shall be taken of a mobility allowance awarded under section 37A of the Social Security Act"'.

The previous debate related, to some extent, to the amendment. If the Chief Secretary had intimated that the £115 disregard was to be lifted for all age groups of children to a figure above the level of the mobility allowance, I should have had some difficulty in supporting the amendment. However, a point of principle arises, regardless of the level to which the disregard is adjusted, that relates to the mobility allowance. The objective of the amendment is to correct what seems to be an apparent error on the part of the Government.

When the Government decided to provide the mobility allowance for disabled people, be they drivers or passengers, the decision was given a general welcome throughout the country. The Government obviously intended to provide enough cash to enable dependence upon Government issued vehicles to be phased out. Without going into all the pros and cons of the subsequent restrictions placed upon the mobility allowance, it is generally agreed that the amount payable of £5 per week is insufficient to provide for the purchase of a vehicle or its upkeep. It is also generally agreed that its removal at pensionable age is harsh and cruel to people whose disabilities are becoming worse at that age.

The fact that the allowance is taxable means that the worthwhile objective of encouraging the disabled to get out to work will be defeated, the taxation being applied to the small allowance itself. However, those are all arguments for another time and another day.

The argument employed by the Government in defending the taxation of the mobility allowance was that if any taxation was to be applied it would be applied only to the income of the recipient child or adult, and only if that disabled young person's income exceeded the usual level of personal allowances. But that is not the case, for unless the amendment is accepted all that part of the mobility allowance which exceeds the £115 childs disregard—that means £145 of the £260—will be deducted from the parent's child allowance of £300 as proposed in the Bill.

The exact amount of tax payable depends on the father's or parent's tax status, but the present state of affairs makes nonsense of any statement that the £260 mobility allowance is being given each year to help with the needs of a disabled child.

As an example, I shall describe the effect of taxation on the low-income parent earning £40 a week when the mother is not earning. If the father has an income of £2,000 a year, and there is a child under the age of 11 in receipt of the mobility allowance, with no other taxable income, there is a salary of £2,000 plus the mobility allowance, making a total of £2,260. The married man's allowance and the child's allowance is £1,195. The married man's allowance plus the child's allowance produced by the mobility allowance is £1,050. The net family income without the mobility allowance is £1,718.25, and the net family income with the mobility allowance is £1,83650, a difference of £118.25. That is because of the application of taxation to the mobility allowance.

The Central Council for the Disabled is receiving a flood of complaints from the parents of disabled children who are receiving their tax forms with a requirement that they must state any mobility allowance that is paid to their child. That is the requirement, regardless of the statement on the Government's own leaflet on the mobility allowance—Leaflet 211—which states: children will qualify in their own right

A specific case was referred to me only a few moments before the debate started—a case involving a self-employed man living in Hounslow with a severely disabled dependent adult of 25 who is eligible for the £260-a-year mobility allowance. He finds that his son's income from the allowance is being included in his own parental assessment, resulting in £65 being lopped off the mobility allowance. That reduces the minimal £5 a week allowance to under £4 a week, despite the fact that his son is unable to work and is not earning any taxable earnings. The effect is a very high rate of tax both on unemployable disabled adults and on disabled children.

7.45 p.m.

I could quote many other cases, but I hope that the Financial Secretary will concede the inequality of the present situation and accept the principle of the amendment, which would ensure that the mobility allowance is taken into account in assessing the income of a child or adult dependent relative for the purposes of calculating the tax allowances of the supporting relative.

I know that my final argument does not seem to carry much weight in these bureaucratic days, but when we consider the cost of administering the complex mobility allowance, making it taxable and bringing in all the disregards, surely those costs far outweigh the cost of relieving the allowance from taxation. I hope that the Minister will take into account the fact that he is creating an anomaly with the allowance by making it taxable, and I hope that he will accept the amendment.

Mr. Newton

I rise briefly to support my hon. Friend's amendment. It seems that there is a scandalous situation on the facts that he has put before us. Surely it cannot have been the intention of anyone concerned that a family which has a child receiving the mobility allowance should be subject, assuming it is paying tax, to a marginal tax rate of over 50 per cent. on the child's mobility allowance. I do not see how anyone can defend the present situation. I hope that the hon. Gentleman will undertake to look at this matter again.

It is a pity that the Chief Secretary has left the Chamber because it is clear that this problem arises partly from the self-same cause that we discussed in the previous debate—namely, the low limit on the income of children. If that limit was set, for example, at the same level as the mobility allowance, the problem would vanish and we would have done something. The Chief Secretary went half-way towards accepting the argument put forward on the income limit, which would eliminate the problem altogether as the mobility allowance would be within the new limit.

The more I have listened to these debates the stronger the case seems to be for resolving the problem by taking the action that the Chief Secretary was talking about in the previous debate—namely, by creating a general increase in the child income limit and, perhaps, taking the mobility allowance as the new reference level.

Mr. David Weitzman (Hackney, North and Stoke Newington)

I express support from the Government side of the Committee for the amendment moved by the hon. Member for Exeter (Mr. Hannam). I know that Oppositions always move amendments of this sort and that Governments always say that they are terribly sorry but they do not have the money, or that there are other ways of dealing with the problem. They always take that approach in opposing this sort of amendment.

The amendment is important for the disabled. In my view the hon. Member for Exeter has made a powerful case. I hope that the Government will be a little more sympathetic towards this matter than Governments generally are, and will not put forward the usual excuses.

Mr. Robert Sheldon

I am always happy to listen to a plea from my hon. and learned Friend the Member for Hackney, North and Stoke Newington (Mr. Weitzman), especially when he points out the nature of Government and Opposition. They are frequently changing sides on a number of provisions in the social security sphere that are covered by tax allowances.

It was decided by the House of Commons that the mobility allowance should be taxable. The net cash benefit has been fixed at £5 a week for providing greater mobility. That is taxable. That was the decision of the House of Commons. The problem is that if the amendment were accepted it would provide that the mobility allowance remains taxable in the hands of the recipient. But if the person for whom the mobility allowance was paid happened to be a child, and it was paid into the hands of the parent, that would be taken into account in assessing the child's tax allowance.

Perhaps I should mention the cost to parents. We know from the debate on an earlier amendment that the child tax allowance starts off at £115. Up to £115 the child tax allowance is payable in full. It is only when the child's income, from whatever source, increases to about £450 a year that the child tax allowance is withdrawn by stages on the basis of £1 for each £1. It runs out at £450. At that level the benefit of the child tax allowance is extinguished. Unless the child's income is above that sum, there is still some benefit. It is sometimes large—sometimes less large—depending on the child's income.

It would be a mistake, without further investigation, to say that the child tax allowance should take account of the taxable features of the mobility allowance and at the same time maintain that the mobility allowance should remain taxable. We could be in danger of setting at cross-purposes the two features. That might be the intention of the House of Commons.

I believe that most of these allowances, if they are not taxable, will meet problems of the kind that we discussed previously concerning the differences between social security payments, on the one hand, and tax allowances, on the other.

I believe that it would be wrong to make that change. However, this is an amendment of a kind which has not previously been considered. I should be happy to receive further representations on this matter. For reasons known to the Committee, we are under pressure of time. I understand that the Opposition want to make some progress. If, because of that, the debate has been shortened rather more than it would otherwise have been, and has not, therefore, allowed sufficient time for all the points which hon. Members would have made, I am prepared to consider further representations on the matter. With those comments, perhaps we might make further progress.

Mr. Hannam

This is an important matter, which should be looked at again by the Government. I do not think that they are fully aware of the implications of taxation on the child mobility allow- ance. I have not been arguing the principle of taxation on the adult allowance, but purely of applying it to the child recipient. The tax should be applied to the income of the recipient, not the parent. We feel strongly about this matter. Exemption is already given under the 1970 Act for education endowments, for example. I hope that the Minister will look at this matter and enable us to pursue it on another occasion.

Mr. Graham Page

Before my hon. Friend leaves this matter, I want to put one point to the Financial Secretary. Earlier we discussed the one-parent family. The one-parent family that is receiving a mobility allowance for a child is in an extremely difficult position. I hope that the Minister will include that matter in his further consideration of the amendment.

Mr. Hannam

I should certainly like to take the opportunity of bringing the full details of this matter to the Minister's notice. In view of his assurance that he will consider this matter carefully, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 26 ordered to stand part of the Bill.

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