§ 12. For the purposes of this schedule section 184(3)(a) (duties of any office or employment under the Crown treated as performed in the United Kingdom) shall not apply to any duties performed outside the United Kingdom if in respect of the period which those duties were performed the person performing the duties was not entitled to an allowance to which section 369 of the Taxes Act applies. In applying this paragraph any area designated under section 1 (7) of the Continental Shelf Act 1964 shall be treated as part of the United Kingdom".'.—[Mr. Hal Miller.]
§ Brought up, and read the First time.
§ Mr. Hal Miller (Bromsgrove and Redditch)
I beg to move, That the clause be read a Second time.
This is in some senses a re-run of an effort made last year to remedy an anomaly from which civil servants are suffering. I should declare an interest because I am the honorary adviser to the First Division Association of the Civil Service.
The anomaly arises from the Finance Act 1977, which purported to give some tax relief to those who it was thought were exporting for the country and who needed some recognition in a tangible form of their arduous efforts and the uncomfortable conditions often encountered. However, there were others similarly affected 1818 by that tax offset provision. I am referring not to the 100 per cent. relief for those who spend 365 days a year abroad but to the 25 per cent. relief for those who clock up 30 days or more in one year.
As a result of what was enacted—I do not think that it was intended—there is a unique discrimination against civil servants whose tasks take them abroad. Relief has by no means been confined to those engaged in the export trade. It is extended to those attending conferences. Therefore, it is given to professionals, trade union officials or anyone else who spends the requisite 30 days a year abroad. It is noteworthy that ships' crews and airline pilots were put in the same position under section 181 of the 1977 Act. They were relieved in schedule 7. That is exactly what this rather tortuous clause is seeking—to put civil servants in the same position.
The language of the clause is admittedly obscure, but I hope that I have made plain its intention. I hope that I have also expressed the feeling of discrimination that arises when civil servants, for instance, attend international conferences on Government business and find themselves disadvantaged compared with others on the same conference delegation.
In the similar debate that took place last year I made the suggestion that the Civil Service Department should review eligibility for the foreign service allowance. There is no question of the civil servants uniquely discriminated against in this context trying to obtain double benefit. There is no question of them being able to obtain the foreign service allowance and tax relief. That was an objection raised by the previous Government. That is why the clause appears today in a different form.
I hope that the intention is clear. I believe that the object is honourable and I hope that my hon. and learned Friend will be able to give an indication that the issue is being sympathetically considered, however it is finally to be treated.
§ Mr. Peter Rees
I respectfully congratulate my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) on the way in which he moved the new clause. I should not describe the clause as tortuous, but equally I should not say that it is lucidly clear. It is referential and one has to return 1819 to the original clauses. For those of us who have to apply ourselves to amendments, new clauses and original clauses, the intention of the new clause is clear. I accept that the intention is entirely honourable.
As my hon. Friend has reminded the House, there was a somewhat similar new clause debated last year. I recall my hon. Friend's intervention and that of the hon. Member for Thornaby (Mr. Wrigglesworth). It was on that occasion that the former Financial Secretary was privileged to reply. I am not certain whether the debate has moved a great deal since last year, elegant though the Financial Secretary's reply was. I shall try to approach the problem with a fresh eye and in a fresh light. The context is now rather different, as I hope my hon. Friend and the House will recognise.
Last year the extension of the relief was to depend on the receipt or non-receipt of overseas allowances; this year my hon. Friend proposes that it should depend on eligibility. He mentioned those who are disadvantaged in that they cannot take advantage of either the 100 per cent. relief which is conceded to those who spend 365 days in a year abroad or the 25 per cent. relief if they spend 30 days abroad. The disadvantaged are not only civil servants. Ministers of the Crown are similarly disadvantaged, although Members of this honourable House are not. Whether hon. Members would feel it consistent with their duty to their constituents to spend as many as 30 days abroad I leave to their consciences. I am aware that in my present position I should be unable to spend 30 days abroad. That demonstrates that the problem is slightly wider than my hon. Friend suggested. I did not consider the new clause with any more or less sympathy on those grounds.
The difficulty that I find this year is that the rates of direct taxation have been reduced. As for the 25 per cent. reduction, it is right to speculate whether it is correct to encumber the statute book with a variety of small reliefs that are always difficult to calculate and administer. I have no concluded view on that, but I ask the House whether it is right that we pursue this sort of relief and extend its scope against the background of reduced rates of tax. I remind the 1820 House that my right hon. and learned Friend said in his Budget speech that we hope that this is only the first of many tax-cutting Finance Bills to be introduced by the Government.
Against that background I am diffident about saying to my hon. Friend "Yes, we shall consider the clause sympathetically." I am moved to recall that my hon. Friend said in the similar debate last year that he was not wholeheartedly in favour of the present system. That happened against a background of higher tax rates. My hon. Friend's reservations on that occasion are more acute now.
We shall review the question, although I cannot give my hon. Friend any commitment that we shall come up with a sympathetic answer. We have taken his point on board, I hope that hon. Members will reconsider their attitude, position and and approach to the problem against the altered fiscal climate that I hope the Finance Bill has engendered. I congratulate my hon. Friend on raising a worthwhile point in ventilating the matter again. I hope that what I have said will commend itself to the House and that my hon. Friend will feel able to withdraw the new clause.
§ Mr. Dalyell
I have heard strong comments from one or two of those involved who feel aggrieved. I do not understand why the Minister cannot make up his mind. If he said that there was no case, some of us would understand that. Equally, if he admitted the case made by the hon. Member for Bromsgrove and Redditch (Mr. Miller), we should equally understand that. Why does the Minister need extra time to review the matter? Surely the case goes either one way or the other—either those involved are disadvantaged or they are not. Which is it?
§ Mr. Rees
I accept the hon. Gentleman's reproof. Perhaps there was not sufficient precision or starkness in my reply about the disadvantaged. The class of Crown servants, other than Ministers of the Crown, to which my hon. Friend referred are not totally disadvantaged. They receive tax-free allowances from the Government to cover their extra costs. In contrast with people working in the private sector, they are rarely, if ever, liable to another country's taxes. To give a direct answer, they are not totally disadvantaged.
1821 I concede that they do not receive the tax reliefs given to those in the private sector if they are abroad for the requisite period. Equally, they have some compensating advantages.
I was not disposed summarily to brush aside the new clause—I have never done so with any of my hon. Friend's new clauses—because my hon. Friend made a genuine point. Although there is force in some of the arguments, the disadvantages in this matter, such as they are, under which civil servants labour diminish every year that a Conservative Administration are enabled to bring down the rates of direct taxation.
§ Mr. Dalyell
I do not want to weary the House with this matter. I heard complaints from people I sat next to on the aircraft to Brussels from time to time when I attended committees of the European Assembly. I understood that they had to make arrangements where they should be—either in the United Kingdom or outside—according to their tax position. It is absurd that busy people should have their itinerary determined by whether their tax position fits special circumstances. They may be unusual eases and not exactly related to this matter. That is why I asked the question.
§ 5.15 p.m.
§ Mr. Hal Miller
I must apologise for returning to the subject before we reach a conclusion. I was much happier with my hon. and learned Friend's earlier remarks than with his later ones, which carried an echo of the previous Minister's comments that led me to suppose that he had not fully appreciated the position. I was given to understand that those whom I had in mind were not eligible for the tax-free allowance. I refer to the foreign service allowance.
I shall not go into the rigmarole of how people are decreed to be United Kingdom-based under section 184(3)(a) whereas ship and aircraft crews are covered by section 184(3)(b) of the Taxes Act. They were given the relief under schedule 7. Therefore, a clear precedent was established for what I proposed. I thought that there was a definite point to be made.
Those involved represent the interests of the country abroad. No one suggests that the interests they represent are any 1822 less than those of exporters. However, they find themselves in a totally different financial position from other people in the same delegation at a conference, for example, who come from a nationalised industry or profession. That is an unfortunate position.
I appreciate the Government's attempt to reduce taxation and the fact that the first steps have been taken. Philosophically, I am opposed to reliefs of this kind. When I had the privilege to be a member of a parliamentary delegation abroad I was given to understand by embassy officials that business men were spinning out their trips unnecessarily—to the inconvenience of the embassy—to take advantage of the tax relief.
An industry has sprung up in the form of business conferences abroad to enable business men to qualify for the relief. That is far from the original activities that were supposed to be covered. Indeed, I would cast a suspicious eye on the relief. I would much rather have an amendment—which I was not privileged to be able to put down—removing the relief altogether. However, as the relief is there and is established, and as it discriminates uniquely against civil servants, I take in good spirit my hon. and learned Friend's remark that he will review the matter. His predecessor failed to review it, although he gave an elegant undertaking to do so.
On my understanding of my hon. and learned Friend's remarks, I leave the matter there for this year. I beg to ask leave to withdraw the motion.
§ Motion and clause, by leave, withdrawn.