HC Deb 16 July 1980 vol 988 cc1646-70
Mr. John Garrett (Norwich, South)

I beg to move amendment No. 9, in page 16, line 5, leave out clause 25.

Mr. Deputy Speaker (Mr. Bryant God-man Irvine)

With this we may take the following amendments:

  • No. 10, in page 16, line 16, leave out '£165' and insert '£365'.
  • No. 11, in page 16, line 20, leave out `£135' and insert '£335'.
  • No. 12, in page 16, line 21, leave out '£100' and insert '£330'.
  • No. 13, in page 16, line 23, leave out `1981–82' and insert '1983–84'.

Mr. Garrett

The clause was debated at length in Committee and therefore I shall do no more than summarise the broad arguments for what is a fairly clear case. In April 1977, child benefits replaced child tax allowances, which were payable only in respect of children resident in the United Kingdom, as family allowances had previously been.

The change affected thousands of children whose parents were taxpayers in this country but who themselves were resident overseas. Most were waiting to join their parents from India, Pakistan and Bangladesh. In April 1978, the Labour Government said, in response to many representations from the immigrant community and representative bodies concerned with immigrants, that the special tax relief should be continued, pending a review of some other form of child support for those children, because if child tax allowances had been ended at that time those children would have been treated unfairly, in that their parents would have lost benefits in respect of the children, even though the failure of the children to join the parents was often due to delays in the Governments allowing them to come here.

The effect of the clause is to reduce child tax allowances in respect of children overseas by about £200 in the coming year. They will be ended altogether in 1981–82. The children affected are overwhelmingly of Asian racial origin and it is widely held, clearly with justification, that the effect of the clause is discriminatory on the basis of race—in effect, if not in intent.

In answer to questions about the racial discrimination effects of the clause, the Minister of State said: The clause is not designed in any racialist spirit whatever."—[Official Report, Standing Committee A, 10 June 1980; c. 353.] Indeed, the hon. and learned Gentleman man even evinced in support his own family's long service on the Indian Subcontinent as evidence of his understanding of the problem. I have no doubt that the intent of the clause is not basically racialist, but it seems to me to be drawn up simply because of a crude enthusiasm for administrative tidiness by the Treasury, and an attempt to save a very small sum compared with some of the sums that we have discussed on other amendments.

On 13 April 1978 my right hon. Friend the Member for Llanelli (Mr. Davies) said that these child tax allowances would continue for the foreseeable future, pending the Government's consideration of representations about alternative ways of helping parents who were entitled to some relief. Among the alternatives put to the Government by various bodies representative of the immigrant community are paying child benefit in respect of the children, setting up an arrangement for deeds of covenant to give relief on maintenance payments that have been made by taxpayers in this country to their children overseas, or continuing the child tax allowances—the remedy that we have chosen in the amendment.

It is clear that the allowances' benefit would diminish as the children grew too old to qualify or were admitted to this country. Anyway, if the amendment were carried, inflation would whittle away its value.

It is essential that the allowance in respect of overseas children be continued. It may be up to five years before children eligible to come to this country are allowed in, because of the rate at which the entry queue is being cleared. In other words, we are penalising families for our own bureaucratic delays. Many of the children were entitled to come here the day the clause was announced and will take about five years to join their parents. About 150,000 children are eligible. Claims are made in respect of 75,000 of them. The difference between the two figures is accounted for by parents who do not understand what their entitlement is, or by the delays caused by the stringent checking on eligibility.

The saving as a result of the clause is a mere £7 million, and about 150 Inland Revenue staff will be redeployed. In speaking to the clause in Committee, the Minister of State dwelt almost exclusively on the saving as being its justification. He did not dwell on fraud. We had a brief discussion on fraud, in which we showed that the Inland Revenue's estimates of fraud in the past were based on an unsatisfactory sample, and that now the risk was that the procedures as to entitlement were so tight that many parents were not getting their entitlement to child tax allowance, except after protracted delays.

We believe that taxpayers in good standing in this country should continue to have the right to this tax relief. The Minister tried to say, I think unfairly, that in some way the parents were on notice of withdrawal of the allowance, and had been for some years. That is not true. In the Labour Government my right hon. Friend undertook that the allowances would be continued until a substitute could be found, in the way of family support.

We shall penalise a group who already feel discriminated against and threatened. The saving is minimal compared with the damage that can be done to race relations as a result of the enactment of the clause.

Mr. Alexander W. Lyon (York)

The clause, which we seek to delete, would bring to an end a concession to people with children overseas, a concession arising out of the change in practice between child benefit and child allowance.

I noticed that in Committee the Minister of State relied on some words of mine and tried to force a wedge in the Opposition case. It was a typical legalistic quirk by the hon. Gentleman. There never was any disparity between the reasoning that I adopted on Second Reading and the reasoning adopted by my hon. Friends in Committee.

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The argument is that ever since the Select Committee reported on child benefit it has been accepted that it would not be possible to pay child benefit to children living abroad in normal circumstances. But a difficulty arose because, in particular, there was a substantial number of Asian children—far more than with other foreign parents—still in India, Pakistan and Bangladesh whom it was intended to bring to live here. Therefore, there is a basic injustice in taking away their parents, rights either to child benefit or to tax allowances before we have allowed the children into this country.

Once the choice has been exercised and a parent who has come to live here decides that he will not bring his child here for a long time to come—or perhaps ever—it may be fair to say that the administrative difficulties are such that we can make no concession to that parent. But we cannot force that choice upon a parent who wishes to bring his child here but who has been prevented from doing so as quickly as he would wish by British immigration controls.

That argument was advanced when the original child benefit scheme was brought forward. It won favour with the previous Government and that is why the cut-off day for child tax allowance was postponed indefinitely. Tonight we ask not that there should never be a time when child tax allowance comes to an end but that that time should, at any rate, be beyond the time at which the queue ends in India, Pakistan and Bangladesh.

At present there are 27,000 people waiting in the queue, of whom about two-thirds are children. If the Government were to say tonight that we would take the whole 27,000 next year, I would not offer any resistance to this clause. But the Minister is not about to say that. He will not say that, because he will claim that the issue is nothing to do with immigration. He will not say that, because it is not Government policy to get this queue ended as quickly as possible. If the reduction of the queue carries on at the present rate, the end will come within the next few years. The figures have fallen consistently since 1976. About 17,000 children came from the sub-continent in 1976 and that figure was down to 13,000 last year. It will be fewer this year and the figure will go on reducing until the queue ends. That end will probably be some time in 1985–86.

The question is why the Government cannot allow the concession to continue until that time. In this clause the Government make the concession end in 1981–82. Why not allow it to continue until 1985–86? The difference is four or five years at the outside and on the figures given in Committee it would be at a total cost to the Exchequer of about £28 million.

Compared with the cost of the Polaris replacement, that figure is chicken-feed for the country as a whole but for the people affected a most important impost will be put upon them if the clause is approved.

We would not be here calmly talking about this issue and completely accepting these proposals if we were dealing with white children waiting to come here from Australia, America or Rhodesia. There would be a seething expression of indignation from Conservative Members if it was proposed that such children should not be allowed to come in.

I say to hon. Gentleman who declare that there is nothing racialist in this measure that there is nothing racialist in the sense that the concession had to come to an end at some time. We recognise that at that stage people who had left their children abroad would enjoy neither tax allowances nor child benefit. However, it is racialist if we make the sacrifice now, without compassion for the Asian children, when we know that the argument would not be the same if the children were white. In that sense, the Government's argument is racialist. It will be seen as such by the black people of this country.

It is no good the Minister of State writing placid articles for The Guardian telling us how wonderful is the Government's racial policy when tonight he supports a clause which denies the justice which should be given to a few thousand Asians. For them it is a serious imposition on their family standards. I hope that even at this late stage the Government will relent.

Mr. Hooley

On a point of order, Mr. Deputy Speaker. I understand that amendments Nos. 10 to 13 are being discussed with amendment No. 9. May I speak to my amendment?

Mr. Deputy Speaker

The hon. Gentleman is in order in discussing the amendment, but he has not caught my eye. Since he has drawn himself to my attention, perhaps that can be remedied fairly soon.

Mr. Tristan Garel-Jones (Watford)

I am sorry that the hon. Member for York (Mr. Lyon) saw fit to raise the racialist question again. I hope that he will do his best to assure the minority communities that this is not a racially based measure. I am sorry that he and many of his hon. Friends seem to take advantage of opportunities as this to instil fear into the immigrant community.

We are talking about British subjects who are working in Britain in full employment and whose children, for reasons beyond their control, are unable to come into this country. Everyone accepts that child tax allowance should be phased out. Because of the introduction of child benefit, to which the people whom we are discussing are not entitled, and the phasing out of tax allowance they will be penalised. That is why some of my hon. Friends feel that it is unfair to an already disadvantaged minority.

The arguments against continuing with the present system will be precisely the same as the arguments used when the Labour Party was in Government—the cost. It is referred to as chicken-feed by Opposition Members, but I do not accept that £7 million and 150 Revenue employees is chicken-feed.

Mr. Cormack

It will feed a lot of chickens.

Mr. Garel-Jones

My hon. Friend is right. We should be making such savings.

The questions of fraud and low take-up have been mentioned. The hon. Member for Norwich, South (Mr. Garrett) gave good reasons for the low take-up. The Minister of State will say that notice of the phasing-out has been given. I doubt whether hon. Members will be convinced by that argument. I am not. The arguments in favour of allowing the situation to run for another two or three years are strong. First, it is by definition a diminishing problem. The children involved will grow up and become adults outside the United Kingdom or they will enter this country. It will not be an on going expense. Secondly, we are talking about an ultimate protection for the family, which most hon. Members on both sides of the House would regard as a good thing.

Finally, we are discussing a disadvantaged minority. I do not have a large immigrant population in my constituency. However, the number of immigrants who attend my surgeries is totally out of proportion to the number of immigrants in my constituency. The reason for that is simple. They are new arrivals. They face many difficulties that other citizens do not have. Despite the cost and the administrative untidiness, it would be a greatly appreciated step if the Government were able to consider an extension beyond 1981–82.

Several Hon. Members

rose—

Mr. Deputy Speaker

I call the hon. Member for Sheffield, Heeley (Mr. Hooley). It is now clear that the hon. Gentleman was screened from my view by the hon. Member for York (Mr. Lyon).

Mr. Hooley

I did not wish to give the impression that I was complaining, Mr. Deputy Speaker. I admit that I was slightly puzzled.

I accept entirely the arguments of my hon. Friend the Member for York (Mr. Lyon). The objection to the clause is that it is racialist in fact, though not technically so, as it applies to children overseas of whatever nationality. It discriminates largely against the children of immigrants from India and Pakistan.

There are two main issues. The first concerns money—the savage reduction this year in the value of the tax allowance. I have heard nothing in Standing Committee or in the Chamber to justify the vicious cut in the value of the allowance. In each instance there is a cut of £200. The real cut is more than that because of the effect of inflation. The cut is about 75 per cent. in real terms.

I do not know of any other tax allowance this year of any sort that is being slashed to that extent. As the Government are accepting that there should be a tax allowance in respect of these children, how do they propose to justify slashing the allowance by 75 per cent. without putting anything in its place? They are not giving any compensatory children benefit. They are giving no compensation. They are merely slashing the allowance from the current £365 to £165, from £335 to £135, and in any other instance to £100.

Leaving aside all the other arguments about racial origin and place of domicile, how on earth can the Government justify cutting a tax allowance on such a scale? I know of no other allowance in the current financial year that is being reduced in such a fashion. Three of my amendments are intended to restore the cash value of the allowance, although in real terms the value will diminish because of inflation. We have 22 per cent. inflation already and we may well have a higher rate before the end of the financial year.

The Government owe the House an explanation. They are not proposing to scrap the allowance. It is to stay for the current financial year. They owe it to the House to explain why the allowance in favour of the children of a class which is not wealthy and which comes from overseas is to be cut drastically. As far as I know, no compensatory payment will be made. Why should the allowance in respect of children who are, largely for bureaucratic reasons, unable to join their Indian and Pakistani parents here be cut in this Draconian fashion? If there is to be some saving, why should this small group of people be, singled out to take on the burden with no compensatory payment?

11.15 pm

The further issue that arises is of the transitional arrangement. Here I agree with my hon. Friend the Member for York. I do not envisage the arrangement by which a child benefit is paid in this country with a tax allowance applying overseas carrying on for ever. In amendment No. 13 I have suggested that it should finish in 1984. My hon. Friend has suggested 1985 or 1986. I do not quarrel seriously with that. If it ended in 1984, that would be a seven-year transition from the original change in 1977. That would be reasonable.

Thereafter, if parents have children abroad and do not bring them back to this country they could not seriously claim the allowance. It is harsh and discriminatory to cut the allowance by £200—it is more in real terms. In humanitarian terms it would be fairer and more reasonable to extend the transition period to 1984 or 1985. To cut it off in 1981, given the waiting list that still applies, which is in no way the fault of the parents, would be harsh and unjustifiable, and would certainly lay the Government and the country open to a charge of racialism on this issue.

Mr. Nick Budgen (Wolverhampton, South-West)

I am sure that we can all agree that, to people who believe that they have a just claim for tax reliefs, the loss of them is a serious matter. The public sector borrowing requirement may be as much as £9 billion, and in those terms £7 million may not be a great deal. Here I may find myself in substantial agreement with the hon. Member for York (Mr. Lyon). Although he and I approach these matters in different ways, we agree on the importance of certainty and clarity. We believe in the importance of letting the British people of all races know the size of the problem. I remember well that when 14 of us in this House voted in favour of an ethnic question in the 1981 census, the hon. Member was among those 14. He is therefore, I am sure, in favour of certainty, and of finding out as clearly as possible what is happening.

The Government's problem here is plain. It is widely believed that the new Commonwealth and Pakistani ethnic group in this country has a propensity to make false claims in respect of nonexistent children. That matter has been most carefully investigated on at least one occasion. I see the hon. Member for Workington (Mr. Campbell-Savours) in his place. In the discussion in Standing Committee, as reported in column 339 of the Official Report for 10 June, the hon. Gentleman quoted most helpfully at length from a report made by the Inland Revenue at the request of the Public Accounts Committee in 1967. He said, quite rightly, that the sample inquiry into 1,000 different cases was stopped after 638 cases had been investigated. He said that, of the 638 cases, 306 were not fraudulent and 332 were fraudulent. It would be wrong to say that 52 per cent. of the claims were fraululent. For the sake of argument, let us concede that if the remaining 362 cases had been investigated and found to have been true and lawful claims, it would still show that about one-third of the claims were fraudulent.

The Government have to hand quickly and obviously an instrument to deal with the unfortunate allegation so often made against the new Commonwealth and Pakistani ethnic groups. The Government promised in the most specific terms that a register would be compiled in the countries of origin. They made that promise through my right hon. Friend the Home Qecretary in his Leicester speech two years before the general election. I have no doubt that the clever and diligent gentlemen in the Home Office noted that speech and had all the necessary machinery for a register prepared long before we won the general election more than a year ago. I expect that register to be introduced soon, because we have received the most specific and clear undertakings from my right hon. Friend the Home Secretary that it is still a proper and clear part of our proposals on immigration. Once the register is introduced, it will be possible to check the names of dependants in the countries of origin against the register.

Mr. Cormack

What about "Patel?"

Mr. Budgen

I accept that a register would not be a complete guide.

Mr. Douglas Hogg (Grantham)

Will my hon. Friend say why the register should be any more accurate than the claims to the Inland Revenue?

Mr. Budgen

My hon. Friend makes a fair point.

Mr. Chris Patten

My hon. Friend the Member for Grantham (Mr. Hogg) has bowled out my hon. Friend the Member for Wolverhampton, South-West (Mr. Bugden).

Mr. Budgen

He has not bowled me out. Perhaps my hon. Friends who laugh so uproariously think that I am bowled out. Perhaps they wish to distinguish their position from that of the Tory Party at the last general election. If it was so obvious that the register was nonsense, no doubt they made it absolutely plain to their electorate that they would have no part of the register. I understand that.

On many occasions I have stood at general elections and made it plain that I disagreed with a part of the campaign of my party. I have the deepest respect for my hon. Friends who told their electorate that the register was nonsense. But if they agreed with the idea of a register but now say that it is nonsense because that is the way that the wind is blowing, that would be despicable. I am sure that my hon. Friends would not wish to make fun of me if they were in that position.

There is to hand a mechanism to deal with the problem, namely, the register. I am sure that the hon. Member for York would agree that the register would make a small, perhaps inaccurate—

Mr. Cormack

On a point of order, Mr. Deputy Speaker. What on earth has that to do with the Bill?

Mr. Budgen

It has everything to do with the Bill. The problem that confronts those who wish to see the continuance of the tax relief is the belief that, regrettably, there may be fraudulent claims. I am suggesting the mechanism by which that allegation can be dealt with.

Mr. Garel-Jones

Of course, it is not for me to advise my hon. Friend on whether he is in or out of order. No doubt he will come to this matter later in his speech. Are we to understand that, if such a register were introduced, and if my hon. Friend were to be convinced that such a register was at least in some degree accurate, we should continue to allow these tax allowances?

Mr. Budgen

We want the register to be introduced. If my hon. Friends feel that the register would be no use, we want that problem dealt with—[Interruption.] I understood that my hon. Friends were making the attack upon the Tory Party's official position. I understood that they were saying that they thought that it would be no good. In my simple way as a party loyalist, I was saying that I still believed in the things on which I specifically campaigned. I am saying that once this register is introduced it will be a useful way of dealing with the unfortunate allegations which are so often made against those who wish to make these claims for tax allowances.

Mr. R. C. Mitchell (Southampton, Itchen)

I hope that the hon. Member for Wolverhampton, South-West (Mr. Budgen) will pardon me if I do not follow his argument, because I do not have the faintest idea where he was going. So far as I could see, it had very little to do with the subject under discussion. He mentioned fraudulent claims. If there are such claims—and I suspect that there are—the Inland Revenue has the means to deal with them. It does so when it detects that fraudulent claims exist. I have plenty of evidence from my own constituency that where there have been fraudulent claims the Inland Revenue has dealt with them.

I do not wish to set any date for the abolition of these tax allowances. I believe that they should be abolished when, and only when, the problem itself no longer exists. I very much agree with the hon. Member for Watford (Mr. Garel-Jones), who said that this is a diminishing problem and that it will decrease year by year. How long that problem exists will depend largely on the Government's immigration policy.

There is no doubt in my mind that the Government are using administrative delays as a method of immigration control. There is no doubt whatever that they are doing so indirectly by administrative delay. Not only do we have the long delay in obtaining an interview in the first instance, but there are now long delays in interviewing the parents at this end. Whereas this used to be done over a short period, it is now taking six or nine months, and sometimes a year, between the time the children have their interview in India and the man has his interview over here. In my view, the immigration procedure is being lengthened.

While that is the position, and while the Government are deliberately delaying the joining of children and their parents—by making it two or three years instead of a year or so, as it was in the past—it is only fair and just that tax allowances should continue. My argument is simply that tax allowances should be allowed to continue in their present form until such time as the problem no longer exists. It may be 1985. 1986 or even later, but that depends purely and simply on the attitude of the Government with regard to immigration control.

11.30 pm
Mr. Jim Marshall (Leicester, South)

If I have sensed the feeling of the House correctly, it is that hon. Members wish to make rapid progress. [Interruption.] It ill becomes Tory Members to cheer that statement in view of the way they responded to the speech of the hon. Member for Wolverhampton, South-West (Mr. Budgen). It is my intention to be brief.

My hon. Friend the Member for Norwich, South (Mr. Garrett) was correct to say that the current difficulty arises from the Labour Government's decision to phase out child tax allowance and introduce child benefit. It was incorrect of the Minister of State to read into the Labour Government's subsequent change of mind a feeling that the phasing out of child tax allowance would be over a short period rather than a long one. Having spoken to those who were Treasury Ministers at the time, and having read what they said then, it is clear to me that their intention was to continue the allowance until such time as all the children who had a right to come to the country were here, or until some suitable, alternative arrangement could be made.

That is not the situation now and the Government are misleading the House and country if they suggest that what they are doing is continuing the policy of the Labour Government. We have to show that that is untrue. In Committee the Minister of State said—and I accept that he is an honourable man and means what he say—that the phasing out of tax allowance affects all groups, irrespective of racial origin. However, whether by design or accident, the effects of the phasing out are racially discriminatory. It is what people perceive as the effect of policy changes which counts, not the intentions of the Government.

If the Government are to allay the fears of the Asian community—and they have done a great deal to arouse the fears of that community—they can do so by accepting the amendment to delete clause 25. It will mean a little extra expenditure, but it will be money well spent in allaying the genuine fears and suspicions held by the Asian community.

Mr. Alfred Dubs (Battersea, South)

The hon. Member for Wolverhampton, South-West (Mr. Budgen) spent some time suggesting that frauds associated with this allowance are on such a large scale that a register was the only way of pinning down such frauds. I wonder whether he knows, or would like to hazard a guess, how many prosecutions have been brought by the Inland Revenue in the last two and a half years. If he cares to venture a guess, I shall gladly give way and let him tell the House.

Mr. Budgen

I do not know. I should be grateful if the hon. Gentleman would inform the House, if he knows.

Mr. Dubs

Between I January 1978 and 1 July 1980 a total of nine prosecutions were brought for this offence. I should have thought that, given the attention that has been paid to the allegations of fraud, if there had been more instances there would have been more prosecutions. The accusation that fraud is taking place on such a large scale is one for which there is no significant evidence.

This is a shabby, nasty little measure, representing for a handful of people what is effectively the biggest cut in social security benefits of any that have been brought about by the Government. We are talking about a relatively small number of people. Hon. Members have said that we are talking about an estimate of 75,000 children, probably fewer by now, and 22,000 taxpayers. The only way in which we can reconcile the figures quoted now and on previous occasions is to suggest that the amount of under-claiming must be significant. This measure is unjust because we are punishing a group of people twice over: we are punishing them because we are not allowing families to be united, and we are punishing them by denying them benefits which they have earned through the tax they are paying, benefits that are available to all other people in this country whose children are not here with them.

It is because of that manifest injustice that we on this side are complaining and submit that this measure should be withdrawn by the Government. Even if it is not racially discriminatory in intent, it is certainly seen as being racially discriminatory in effect, in that it is penalising some of the poorest people in this country and penalising people whose children are living in some of the poorest countries. I therefore hope that the Government will, even at this late hour, think again and withdraw this nasty little measure.

Mr. Peter Rees

In Standing Committee we had a debate which was marked by a certain passion, although the amendment was not then pressed to a Division. Tonight we have had a rather far-reaching debate, which has been characterised, except in one or two regards, by a greater degree of moderation. I should like to think that that is because hon. Members opposite have had a chance to reflect a little on some of the considerations which were deployed by Government Members in Committee. It may be presumptuous of me to imagine that anybody bothers to read the reports of our debates in Standing Committee, but we proceed on the basis that what we say has some effect outside the Committee Room in which we held our discussions.

I wish at the outset to emphasise two points. I hope that I do not need to review at this hour, because I am not particularly qualified to do so, the immigration policies of either this or the previous Administration. With all respect to my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), I hope that I do not have to pause to consider whether I am a party loyalist, although I like to think that I am. I shall confine myself a little narrowly—some hon. Members opposite might say too narrowly—to the fiscal considerations.

Before doing that, I wish to emphasise once again—although I like to think, after having listened to the interventions tonight, that this basic point was accepted, albeit with a little reluctance, by some hon. Members opposite—that this Government certainly have no intention to discriminate racially or in any other way. Equally, I will accept that the consequences of this may be more widely felt in the immigrant community than among some of our fellow countrymen.

I emphasise that the phasing out of child tax allowance will affect a number of other people who by no test could be regarded as members of the immigrant community. Equally, as it was suggested—I think not so much tonight as upstairs in Standing Committee—that this would bear very hard on the economic and social conditions of the immigrant community and on such of their families as are left behind in their countries of origin, I remind the House of the figures, although I gave them in Standing Committee. On the best estimates available to us, in 1978–79 there may have been some 50,000 parents who would have been eligible to claim in respect of some 150,000 children.

Here I move on to firmer ground as to actual claims in 1979 and 1980–81. There have been claims on behalf of 22,000 taxpayers in respect of 75,000 children. I do not say that too much weight can be attached to that, but it does not seem to demonstrate that there is a massive take-up—it is slightly under 50 per cent. That suggests that this is not a dominant issue in the immigrant community or any other section of our community. That it is important to individuals and individual families I of course accept.

Naturally we thought long and hard before reaching the conclusion which, I suspect, the previous Administration reached when they announced at the end of 1976 that they would introduce a system of child benefits and that in parallel with it they would phase out the system of child tax allowances. I hope that both sides of the House will recognise that it will be an anomaly, although it may be an anomaly that some hon. Members would be prepared to accept, to carry through both systems of relief—if that is the way to describe it—for children.

We thought about the problems and we were encouraged by the fact that the first intention of the previous Administration—it was very easy to glean, and I say that with no disrespect to the right hon. Member for Llanelli (Mr. Davies)—was to phase it out completely. They were no doubt influenced by powerful representations made by their right hon. and hon. Friends, and perhaps by quarters outside the House, to defer it "for the time being". Those were the precise words of the right hon. Member for Llanelli. We can all debate what he meant by "for the time being". I have no doubt that he had no very clear impression. He obviously wanted to review the position. We are all entitled to review our first impressions and I am glad that the previous Administration were so open-minded. I hope that we have also been reasonably open-minded.

The hon. Member for York (Mr. Lyon) accused me of taking a lawyer's point—who could be better qualified than he to make that charge against me?—and of distorting his words. When we were debating the Bill on Second Reading he said: It has always been recognised that there would come a time when the allowance would cease."—[Official Report, 8 May 1980; Vol. 984, c. 614.]. Although in form the amendment which stands in the name of the official Opposition, as opposed to that standing in the name of the hon. Member for Sheffield, Heeley (Mr. Hooley), suggests an indefinite postponement of the phasing out, I hope that at the end of the day what lies between the two sides of the House is the period over which the child tax allowances should be phase out.

Mr. John Garrett

Or replaced.

Mr. Rees

The hon. Member for Northwich, South (Mr. Garrett) says "Or replaced", but I have not heard from the Opposition Benches—or indeed from the Government Benches—any practical and satisfactory alternative. It was suggested that we should devise a system of child benefits which could be paid outside the United Kingdom. Having listened to the tenor of the debate from each side, I feel that that is not really a practical conclusion. It is certainly not one that commends itself to me.

It was put to me that there are some possible alternatives other than a gradual phasing out. It was canvassed, but rather faintly, from the Opposition Benches in Committee—probably originally from the Government Benches—that there should be some form of covenanted relief and that parents should be entitled to convenant in favour of their children overseas. In listening to the debate tonight, I do not believe that any hon. Member on either side of the House really believes that that is, either in principle or in practice, a very satisfactory conclusion.

All that lies between the two sides of the House is the period over which we should phase out the child tax allowances. My hon. Friend the Member for Watford (Mr. Garel-Jones) joined Opposition Members in suggesting that we should perpetuate the child tax allowances until the problem is resolved. But I do not think that any hon. Member would be able to say with complete confidence over what period the problem could be resolved. I do not put it on the ground of the amount of tax at stake or to be saved; I put it on administrative grounds. I know that these are perhaps rather odious considerations, but it is perpetuating an anomaly for an indefinite period until, as some hon. Members say, the problem is resolved.

Mr. R. C. Mitchell

During the time before the problem is resolved, it is in the direct control of the Government, so that the Government can decide how long the problem will take to resolve it self.

Mr. Rees

I do not know whether I should respond to that invitation. Is the hon. Gentleman really suggesting that my right hon. Friend the Home Secretary should say "No further immigration of dependants"? Some of my hon. Friends might say that that would provide a definite solution to the problem, but I am not certain that it is a solution that would commend itself to the Opposition or, indeed, to many of my hon. Friends. So on grounds of practicality one is left with the question: when will the problem resolve itself? I do not believe that it will be resolved nearly as quickly as Opposition Members would suggest.

Mr. Alexander W. Lyon

The number of children who have the right to come is finite and the number is decreasing each year. It seems almost inevitable that they will end in the middle 1980s. No one can be exactly sure about which year. The Minister has caught the essential injustice. If those people want to bring in their children but are not allowed to do so because of an administrative delay in the system, surely it is wrong to take away their tax allowance at the same time.

11.45 pm
Mr. Rees

That point has been made several times and the hon. Gentleman has made it again powerfully. Given the hon. Gentleman's experience at the Home Office, one must respect his views, even if one does not always share them. I am not persuaded that the problem is self-liquidating. It will go on for some time, although I accept that it will do so on a diminishing scale. I am not as confident as the hon. Gentleman. If he wishes to raise further questions about the Government's immigration policy, he should address himself to the Home Secretary.

I approach the problem from a slightly different point of view. Those who wish to come to our shores with their families have been on notice since the end of 1976 that there was the possibility that child tax allowances for their children would be phased out.

Mr. Lyon

They cannot get them in.

Mr. Rees

Apart from a few exceptional cases, I do not accept that those in the queue at the end of 1976 did not come in with their children.

Those who chose to enrol subsequently, and to join the queue, were on notice. It was up to them to make their calculations. I do not wish to speak harshly. The hon. Gentleman's point cannot apply to more than a fraction of those involved. The point was made in 1976. Those who joined the queue subsequently should have appreciated that notice had been given. I accept that that is a theoretical point. I am not sure that people go round India and Pakistan thinking about the minutiae of our taxation system. I suspect that the debate has been given an undue significance.

I am sorry that one or two people will feel disadvantaged. I hope that the House will accept that the provision was not introduced because of any animus against the immigrant community. I hope that we have demonstrated clearly that others will be affected, and perhaps for a longer period. A person may work abroad, and return to Britain having left his children abroad for some years. Parents may get divorced. If the father returns, he may be responsible for the maintenance of his children, who live abroad with his former wife. They will not get tax relief. The Opposition have not advanced such cases.

Immigrants have been on notice since the end of 1976. The Labour Administration were overborne by the representations that were made. We

have taken full account of the issue. Indeed, that is demonstrated by the fact that we did not seek to cut off the allowances immediately. They are to be phased out over two years. If I do not succeed in carrying Opposition Members with me, I hope that those outside who study reports of our debates will recognise the practicality and ultimate fairness of our proposals. Whatever the outcome of the debate, I hope that hon. Members—even if they do not accept that our solution is right—will not muddy the waters outside by pretending that we were activated by any dishonourable or hostile motives directed at the immigrant community.

The previous Administration recognised that there was a sound case for phasing out the child tax allowances. We have had the courage to carry through what they intended and planned.

Mr. John Garrett

The Minister of State has thoroughly misjudged this issue. He has given the answer of a Treasury technocrat. He just does not understand the effect of this clause on the immigrant community, and has shown himself to be grossly insensitive throughout the debate.

The Labour Government said that they would phase out child tax allowances when some alternative form of family support had been found for these children. Thousands will see this clause as racist. It overwhelmingly affects people who are poor and black. I urge my right hon. and hon. Friends to support the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 231, Noes 289.

Division No. 408] AYES [11.50 pm
Abse, Leo Boothroyd, Miss Betty Coleman, Donald
Adams, Allen Bray, Dr Jeremy Concannon, Rt Hon J. D.
Allaun, Frank Brown, Hugh D. (Provan) Conlan, Bernard
Alton, David Brown, Robert C. (Newcastle W) Cook, Robin F.
Anderson, Donald Brown, Ronald W. (Hackney S) Cowans, Harry
Archer, Bt Hon Peter Brown, Ron (Edinburgh, Leith) Cox, Tom (Wandsworth, Tooting)
Armstrong, Rt Hon Ernest Buchan, Norman Crowther, J. S.
Ashley, Rt Hon Jack Callaghan, Jim (Middleton & P) Cryer, Bob
Ashton, Joe Campbell, Ian Cunliffe, Lawrence
Atkinson, Norman (H'gey, Tott'ham) Campbell-Savours, Dale Cunningham, George (Islington S)
Bagler, Gordon A. T. Canavan, Dennis Cunningham, Dr John (Whitehaven)
Barnett, Guy (Greenwich) Cant, [...]. B. Dalyell, Tam
Barnett, Rt Hon Joel (Heywood) Carmichael Neil Davidson, Arthur
Beith, A. J. Carter-Jones, Lewis Davies, Rt Hon Denzil (Llanelli)
Benn, Rt Hon Anthony Wedgwood Cartwright. John Davies, Ifor (Gower)
Bennett, Andrew (Stockport N) Clark, Dr. David (South Shields) Davis, Clinton (Hackney Central)
Bidwell, Sydney Cocks, Rt Hon Michael (Bristol S) Davis, Terry (B'rm'ham, Stechford)
Booth, Rt Hon Albert Cohen, Stanley Deakins, Eric
Dean, Joseph (Leeds West) Jones, Rt Hon Alec (Rhondda) Roberts, Albert (Normanton)
Dempsey, James Jones, Barry (East Flint) Roberts, Allan (Bootle)
Dewar, Donald Jones, Dan (Burnley) Roberts, Ernest (Hackney North)
Dixon, Donald Kaufman, Rt Hon Gerald Roberts, Gwilym (Cannock)
Dobson, Frank Kerr, Russell Robertson, George
Dormand, Jack Kilroy-Silk, Robert Robinson, Geoffrey (Coventry NW)
Douglas, Dick Lambie, David Rodgers, Rt Hon William
Douglas-Mann, Bruce Leighton, Ronald Rooker, J. W.
Dubs, Alfred Lewis, Arthur (Newham North West) Roper, John
Duffy, A. E. P. Lewis, Ron (Carlisle) Ross, Ernest (Dundee West)
Dunnett, Jack Litherland, Robert Ross, Stephen (Isle of Wight)
Dunwoody Mrs Gwyneth Lofthouse, Geoffrey Rowlands, Ted
Eadie, Alex Lyon, Alexander (York) Sandelson, Neville
Eastham, Ken Lyons, Edward (Bradford West) Sever, John
Ellis, Tom (Wrexham) McCartney, Hugh Sheerman, Barry
English, Michael McDonald, Dr Oonagh Sheldon, Rt Hon Robert (A'ton-u-L)
Evans, Ioan (Aberdare) McElhone, Frank Shore, Rt Hon Peter (Step and Pop)
Evans, John (Newton) McKay, Allen (Penistone) Silkin, Rt Hon John (Deptford)
Faulds, Andrew McKelvey, William Silkin, Rt Hon S. C. (Dulwich)
Field, Frank Mackenzie, Rt Hon Gregor Silverman, Julius
Fitch, Alan Maclennan, Robert Skinner, Dennis
Flannery, Martin McTaggart, Robert Smith, Rt Hon J. (North Lanarkshire)
Fletcher, L. R. (Ilkeston) McWilliam, John Soley, Clive
Fletcher, Ted (Darlington) Magee, Bryan Spearing, Nigel
Foot, Rt Hon Michael Marshall, David (Gl'sgow, Shettles'n) Spriggs, Leslie
Ford, Ben Marshall, Dr Edmund (Goole) Stallard, A. W.
Foster, Derek Marshall, Jim (Leicester South) Steel, Rt Hon David
Foulkes, George Martin, Michael (Gl'gow, Springb'rn) Stoddart, David
Fraser, John (Lambeth, Norwood) Mason, Rt Hon Roy Stott, Roger
Freeson, Rt Hon Reginald Maynard, Miss Joan Strang, Gavin
Garrett, John (Norwich S) Meacher, Michael Straw, Jack
George, Bruce Mikardo, Ian Summerskill, Hon Dr Shirley
Gilbert, Rt Hon Dr John Millan, Rt Hon Bruce Taylor, Mrs Ann (Bolton West)
Ginsburg, David Miller, Dr M. S. (East Kilbride) Thomas, Jeffrey (Abertillery)
Gourlay, Harry Mitchell, Austin (Grimsby) Thomas, Mike (Newcastle East)
Graham, Ted Mitchell, Ft. C. (Soton, Itchen) Thomas, Dr Roger (Carmarthen)
Grant, George (Morpeth) Morris, Rt Hon Alfred (Wythenshawe) Thorne, Stan (Preston South)
Grant, John (Islington C) Morris, Rt Hon Charles (Openshaw) Tilley, John
Hamilton, James (Bothwell) Morris, Rt Hon John (Aberavon) Torney, Tom
Hamilton, W. W. (Central Fife) Moyle, Rt Hon Roland Urwin, Rt Hon Tom
Hardy, Peter Newens, Stanley Varley, Rt Hon Eric G.
Harrison, Rt Hon Walter Oakes, Rt Hon Gordon Walker, Rt Hon Harold (Doncaster)
Hattersley, Rt Hon Roy Ogden, Eric Watkins, David
Haynes, Frank O'Halloran, Michael Weetch, Ken
Healey, Rt Hon Denis O'Neill, Martin Welsh, Michael
Heffer, Eric S. Orme, Rt Hon Stanley White, Frank R. (Bury & Radcliffe)
Hogg, Norman (E Dunbartonshire) Owen, Rt Hon Dr David Whitehead, Phillip
Holland, Stuart (L'beth, Vauxhall) Paisley, Rev Ian Whitlock, William
Home Robertson, John Parker, John Williams, Rt Hon Alan (Swansea W)
Homewood, William Parry, Robert Wilson, Gordon (Dundee East)
Hooley, Frank Pavitt, Laurie Winnick, David
Horam, John Pendry, Tom Woodall, Alec
Howell, Rt Hon Denis (B'ham, Sm H) Penhaligon, David Woolmer, Kenneth
Howells, Geraint Powell, Raymond (Ogmore) Wrigglesworth, Ian
Huckfield, Les Prescott, John Wright, Sheila
Hughes, Mark (Durham) Price, Christopher (Lewisham West) Young, David (Bolton East)
Hughes, Robert (Aberdeen North) Race, Reg
Janner, Hon Greville Radice, Giles TELLERS FOR THE AYES:
Jay, Rt Hon Douglas Rees, Rt Hon Merlyn (Leeds South) Mr. James Tinn and
John, Brynmor Richardson, Jo Mr. George Morton.
Johnson, James (Hull West)
NOES
Adley, Robert Blackburn, John Budgen, Nick
Aitken, Jonathan Blaker, Peter Bulmer, Esmond
Alexander, Richard Body, Richard Butcher, John
Alison, Michael Bonsor, Sir Nicholas Butler, Hon Adam
Ancram, Michael Boscawen, Hon Robert Carlisle, Kenneth (Lincoln)
Arnold, Tom Bottomley, Peter (Woolwich West) Carlisle, Rt Hon Mark (Runcorn)
Atkins, Rt Hon H. (Spelthorne) Bowden, Andrew Chalker, Mrs. Lynda
Atkins, Robert (Preston North) Boyson, Dr. Rhode Channon, Paul
Atkinson, David (B'mouth, East) Braine, Sir Bernard Chapman, Sydney
Baker, Kenneth (St. Marylebone) Bright, Graham Churchill, W. S.
Baker, Nicholas (North Dorset) Brinton, Tim Clark, Hon Alan (Plymouth, Sutton)
Beaumont-Dark, Anthony Brittan, Leon Clark, Sir William (Croydon South)
Bendall, Vivian Brocklebank-Fowler, Christopher Clarke, Kenneth (Rushcliffe)
Bennett, Sir Frederic (Torbay) Brooke, Hon Peter Clegg, Sir Walter
Benyon, Thomas (Abingdon) Brotherton, Michael Colvin, Michael
Benyon, W. (Buckingham) Brown, Michael (Brigg & Sc'thorpe) Cope, John
Berry, Hon Anthony Browne, John (Wincheser) Cormack, Patrick
Best, Keith Bruce-Gardyne, John Corrie, John
Bevan, David Gilroy Bryan, Sir Paul Costain, A. P.
Biffen, Rt Hon John Buchanan-Smith, Hon Alick Cranborne, Viscount
Biggs-Davison, John Buck, Antony Critchley, [...]ulian
Crouch, David Kitson, Sir Timothy Renton, Tim
Dean, Paul (North Somerset) Knight, Mrs Jill Rhodes James, Robert
Dorrell, Stephen Knox, David Rhys Williams, Sir Brandon
Dover, Dershore Lang, Ian Ridley, Hon Nicholas
du Cann, Rt Hon Edward Langford-Holt, Sir John Ridsdale, Julian
Dunn, Robert (Dartford) Latham, Michael Rifkind, Malcolm
Durant, Tony Lawrence, Ivan Roberts, Michael (Cardiff NW)
Dykes, Hugh Lawson, Nigel Roberts, Wyn (Conway)
Eden, Rt Hon Sir John Lee, John Ross, Wm. (Londonderry)
Edwards, Rt Hon N. (Pembroke) Le Marchant, Spencer Royle, Sir Anthony
Eggar, Timothy Lennox-Boyd, Hon Mark Sainsbury, Hon Timothy
Elliott, Sir William Lester, Jim (Beeston) St. John-Stevas, Rt Hon Norman
Eyre, Reginald Lloyd, Peter (Fareham) Scott, Nicholas
Fairbairn, Nicholas Loveridge, John Shaw, Michael (Scarborough)
Fairgrieve, Russell Lyell, Nicholas Shelton, William (Streatham)
Faith, Mrs Sheila MacKay, John (Argyll) Shepherd, Colin (Hereford)
Farr, John Macmillan, Rt Hon M. (Farnham) Shepherd, Richard (Aldridge-Br'hills)
Fell, Anthony McNair-Wilson, Michael (Newbury) Shersby, Michael
Fenner, Mrs Peggy McNair-Wilson, Patrick (New Forest) Silvester, Fred
Fisher, Sir Nigel McQuarrie, Albert Sims, Roger
Fletcher, Alexander (Edinburgh N) Madel, David Smith, Dudley (War. and Leam'ton)
Fletcher-Cooke, Charles Major, John Speed, Keith
Fookes, Miss Janet Marland, Paul Spence, John
Forman, Nigel Marshall, Michael (Arundel) Spicer, Jim (West Dorset)
Fowler, Rt Hon Norman Marten, Neil (Banbury) Spicer, Michael (S Worcestershire)
Fox, Marcus Mates, Michael Sproat, Iain
Fraser, Peter (South Angus) Mather, Carol Squire, Robin
Fry, Peter Mawby, Ray Stainton, Keith
Galbraith, Hon T. G. D. Mawhinney, Dr Brian Stanbrook, Ivor
Gardiner, George (Reigate) Maxwell-Hyslop, Robin Stanley, John
Gardner, Edward (South Fylde) Mayhew, Patrick Steen, Anthony
Glyn, Dr Alan Meyer, Sir Anthony Stevens, Martin
Goodhart, Philip Mills, Iain (Meriden) Stewart, Ian (Hitchin)
Goodlad, Alastair Mills, Peter (West Devon) Stewart, John (East Renfrewshire)
Gow, Ian Miscampbell, Norman Stokes, John
Grant, Anthony (Harrow C) Mitchell, David (Basingstoke) Stradling Thomas, J.
Gray, Hamish Moate, Roger Tapsell, Peter
Greenway, Harry Monro, Hector Taylor, Robert (Croydon NW)
Grieve, Percy Montgomery, Fergus Taylor, Teddy (Southend East)
Griffiths, Eldon (Bury St Edmunds) Moore, John Tebbit, Norman
Griffiths, Peter (Portsmouth N) Morris, Michael (Northampton, Sth) Temple-Morris, Peter
Grist, Ian Morrison, Hon Charles (Devizes) Thomas, Rt Hon. Peter (Hendon S)
Grylls, Michael Morrison, Hon Peter (City of Chester) Thornton, Malcolm
Gummer, John Selwyn Mudd, David Townsend, Cyril D. (Bexleyheath)
Hamilton, Hon Archie (Eps'm&Ew'll) Murphy, Christopher Trippler, David
Hamilton, Michael (Salisbury) Myles, David Trotter, Neville
Hampson, Dr Keith Neale, Gerrard van-Straubenzee, W. R.
Hannam, John Needham, Richard Vaughan, Dr Gerard
Haselhurst, Alan Nelson, Anthony Viggers, Peter
Havers, Rt Hon Sir Michael Neubert, Michael Waddington, David
Hawkins, Paul Newton, Tony Wakeham, John
Hawksley, Warren Normanton, Tom Waldegrave, Hon William
Heddle, John Nott, Rt Hon John Walker, Rt Hon Peter (Worcester)
Henderson, Barry Onslow, Cranley Walker, Bill (Perth & E Perthshire)
Hicks, Robert Oppenheim, Rt Hon Mrs Sally Walker-Smith, Rt Hon Sir Derek
Higgins, Rt Hon Terence L. Osborn, John Wall, Patrick
Hill, James Page, John (Harrow, West) Waller, Gary
Hogg, Hen Douglas (Grantham) Page. Rt Hon Sir R. Graham Walters, Dennis
Holland, Philip (Carlton) Page, Richard (SW Hertfordshire) Ward, John
Hooson, Tom Parkinson, Cecil Warren, Kenneth
Hordern, Peter Patten, Christopher (Bath) Wells, Bowen (Hert'rd & Stev'nage)
Howe, Rt Hon Sir Geoffrey Patten, John (Oxford) Wheeler, John
Howell, Rt Hon David (Guildford) Pattie, Geoffrey Whitelaw, Rt Hon William
Howell, Ralph (North Norfolk) Pawsey, James Whitney, Raymond
Hunt, David (Wirral) Percival, Sir Ian Wickenden, Keith
Hunt, John (Ravensbourne) Pink, R. Bonner Wiggin, Jerry
Irving, Charles (Cheltenham) Pollock, Alexander Wilkinson, John
Jenkin, Rt Hon Patrick Porter, George Williams, Delwyn (Montgomery)
Jessel, Toby Powell, Rt Hon J. Enoch (S Down) Winterton, Nicholas
Johnson Smith, Geoffrey Price, David (Eastleigh) Wolfson, Mark
Jopling, Rt Hon Michael Proctor, K. Harvey Young, Sir George (Acton)
Joseph, Rt Hon Sir Keith Pym, Rt Hon Francis Younger, Rt Hon George
Kaberry, Sir Donald Raison, Timothy
Kellett-Bowman, Mrs Elaine Rathbone, Tim TELLERS FOR THE NOES:
Kershaw, Anthony Rees, Peter (Dover and Deal) Lord James Douglas-Hamilton and
Kimball, Marcus Rees-Davies, W. R. Mr. John MacGregor.
King, Rt Hon Tom

Question accordingly negatived.

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