PERSONAL RELIEFS

HC Deb 05 May 1981 vol 4 cc26-83

4 pm

Mr. Robert Sheldon (Ashton-under-Lyne)

I beg to move amendment No. 16, in page 13, line 8, leave out subsection (1).

The First Deputy Chairman

With this we shall take the following amendments: No. 17, in page 13, line 9, after '1981–82', insert 'except for age allowance'.

No. 18, in page 13, line 9, after '1981–82', insert `except for income limit for age allowance'. No. 56, in page 13, line 9, at end add 'except for women aged 60–64 years the personal relief shall be £1,425'.

Mr. Sheldon

The debate centres on the Rooker-Wise amendment, or, as some people might call it, the Rooker-Wise-Lawson amendment, if the right hon. Member for Blaby (Mr. Lawson) wants to claim responsibility for his earlier actions. In attributing credit or responsibility, the great credit goes to Mr. Rooker and Mrs. Wise because it is easy for an Opposition to oppose such matters; the greatest difficulty is for Government Back Benchers. I recall the assiduous attendance of my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) in Committee four years ago. I said on that occasion that if inflation were to be high and were to be continuous, indexation would necessarily come about. However, at that stage, it was not so easy to foresee with certainty that inflation would be high and continuous, as we have come to observe.

The Rooker-Wise amendment was not about uprating personal allowances, because that had gone on for many years. If we look at the period since the early 1970s when inflation started reaching higher levels than during the previous decade, we can see that in 1975 the single person's allowance was increased by about 8 per cent., and the married allowance was increased by about 10 per cent. in 1976. Rather higher increases in personal allowances were made. In 1977 there was the Rooker-Wise amendment and in 1978 there were further increases in the personal allowances. Those form a feature of the levels of taxation, almost since there were first personal allowances in income tax. That had to take into account the inflation which existed even before modern times. Therefore, there was nothing new about that aspect of the Rooker-Wise amendment.

The Rooker-Wise amendment went further than that. It was not just about increasing the personal allowances but about the principle of indexing them in line with the cost of living. If there were that situation today, perhaps the Financial Secretary would consider the tax and prices index. He would be faced with a higher index than the one on which Rooker-Wise is based.

When the Rooker-Wise amendment was discussed in Committee, I recall saying to our Whips that that move by my two distinguished hon. Friends was likely to cost the Revenue about £500 million. I confess that I underestimated both the determination and the ability of my hon. Friend for Perry Barr, who produced a revenue loss of £1,000 million, for good reasons. The Rooker-Wise annual indexation was modified by the Financial Secretary, who introduced the question of an order which allowed the decision to be modified. I never thought that the order was all that important. In fact, we see it as part of a Finance Bill because once a Chancellor of the Exchequer comes to any view he has the instrument ready to hand, which is the current year's Finance Bill, which he can use and which we see is being used on this occasion.

If we had had the Rooker-Wise amendment, we would have had an increase in the single person's allowance from £1,375 to £1,585 and in the married allowance from £2,145 to £2,475 with all the other allowances to which the Rooker-Wise amendment refers also being similarly uprated. Today we are seeing the first denial of that uprating, which is written into our legislation. It is interesting that that denial comes through a Government who wanted not an uprating, but the full indexed uprating, or possibly even now—if they were free to consider the matter in that way, assuming that their views are the same—they would want the full tax and price index uprating.

Three attitudes could have been detected when we engaged in those indexation arguments. The first was that at that time the Government looked to personal allowances as a Budget judgment. They were not concerned so much with future Finance Bills, because those could take care of themselves, as we have seen on this occasion. Secondly, my hon. Friend the Member for Perry Barr rightly wished to help the lower paid and to show his commitment to them. He was successful in both objectives.

Thirdly, the Conservative Opposition were conducting a spurious—perhaps it was a little more plausible at that time—moral crusade about the truth in taxation. One only has to read those debates to see fully their commitment to the principle of uprating those personal allowances, not by some arbitrary amount, but by the full amount shown to be necessary by the retail price index. A faint echo of that anger was shown by the present Chancellor of the Exchequer, who said on the Report stage of the Finance Bill in 1977: That is why truth in taxation is important. By failing to keep personal allowances in line with the dreadful ravages inflicted by inflation, the Government have extended the range of disincentives and deepened the proverty trap. Social benefits have risen with full indexation, while personal tax thresholds have not. Therefore, more people are moving into the band where their earnings in work hardly exceed their earnings out of work. He went on to say that the real thief is inflation. It is the promoter of this increased burden of taxation and we are angry"— in those days, it was rare for the right hon. and learned Gentleman to use that word— because, due to the Treasury's failure to change the tax system in line with inflation, the Treasury itself becomes the main body to profit from the inflation that it has failed to check. The House should feel quite entitled to impose the indexation obligation on the Government".—[Official Report, 25 July 1977; Vol. 936, c. 70.] My goodness, times have changed. The Government have failed not only to index, but to raise allowances at all. That is wholly out of line with what was practised before that great morality descended upon us. Before then it was normal and standard practice to increase allowances year by year. There has been a failure to uprate at all, even by a small amount. When I think of the lofty and pious words used in Committee Room No. 10 in 1977, I do not understand why the Government did not use a fig-leaf of at least a few per cent., which would still have been one of the lowest increases in modern times, to show concern for the lower income groups.

The failure to raise the ceiling affects not only those in work, which is the worst aspect of it. As the Chancellor said, some people in work have had fairly reasonable pay increases, although others have not. The Chancellor argues that, as some people have done fairly well, it is reasonable not to give everyone the anticipated uprating. That argument is unacceptable, especially when we consider old people.

This is also the first time that the Government have failed to increase the age allowance, which was introduced in November 1974 to replace the old age exemption. It is a useful allowance. It is given to those over 65 with a yearly income of between £2,895 and £5,900. With the ordinary personal allowance for a married couple at only £2,145, it was a great help. Many old people naturally expected a full uprating. Some might have been sufficiently misguided to believe that a Government who believed in reducing taxation would make even more available. However, the level of their taxation was not even kept the same—and they do not even come into the categories mentioned by the Chancellor.

In his Budget Statement, the Chancellor said that under normal circumstances he would have had to increase all allowances by 15 per cent. He went on The incomes of most people have been rising in both money and real terms, but many companies have seen their profits virtually disappear, with serious implications for jobs and investment. In these circumstances it will not be possible this year to make any increases in the income tax allowances or rate bands."—[Official Report, 10 March 1981; Vol. 1000, c. 774.] Old people have not been getting those big increases. People in work may be fortunate enough to have received a considerable wage increase or they may be able to work overtime or to do a part-time job, but most old people do not have those options. They can only hope to maintain their standard of living by an increase in their State pension, by a reduction in income tax or by an increase in the age allowance.

The Government may argue that the Budget applies only to this year, but they must recognise that a number of old people will not be alive next year to take advantage of anything that may be offered. The Government could at least have maintained the level of income tax for old people, and they should not have clipped the edges of the pension, which is another unhappy feature of what they have done. It is one of the more shameful aspects of a shameful Finance Bill not to give anything to old people.

4.15 pm

The report on low pay from which I quote is well presented and will provide consderable material for further investigation by the Government and others interested. It considers a number of issues resulting from the income tax changes or lack of changes. It states: the level of income at which a typical family starts to pay tax has fallen from 44.7 per cent. of average earnings to an estimated 38 per cent. in November 1981… the proportion of a low paid family's earnings taken in income tax and national insurance contributions has increased from 21.9 per cent. to 23.6 per cent… the number of families with children in the 'poverty trap' has increased by 40 per cent. Those are terrible indictments of the Government. The Government's action has resulted in a substantial decline in net pay.

Taking the tax threshold as a percentage of average earnings, in the 1950s it was almost 100 per cent. It declined to about 70 per cent. in the 1960s and to 50 per cent. in the 1970s. It is now estimated to be only 38 per cent. Who does that affect? A married couple with two children—the example that I have already given—will find that this is the harshest Government so far in post-war years in taxing those with modest incomes.

The Conservatives claimed that they would be a Government of low taxation. As the figures and statistics continue to pour out and as they become more widely understood, the full implications of what the Government are doing will become more apparent.

Governments normally take steps to diminish particular disadvantages of certain groups. Amendment No. 56 concerns women between the ages of 60 and 64. Even when trying to obtain as much revenue as possible, Governments normally take care when fixing benefits and income tax to keep such people out of income tax. They are aware that the shamefulness of taxing them is clear to everyone. As a result of the Government's failure to uprate, women with a State and earnings-related pension may find themselves subject to tax—and not a small amount. We are concerned with the tolerance level available to those who just come into tax. For example, if a person's income took him into a tax bracket by only £100, the tolerance level would allow him to keep the £30 tax.

The average graduated pension contribution for a woman was 52p a week. Women between 60 and 64 will not pay tax on the difference between their retirement pension and the graduated personal allowance but the graduated pension may require them to pay the tax on this and lose also the income tax tolerance of £100. That is what we are being asked to accept. We are being asked to ensure that such people will not just pay that small amount extra but will be liable to pay tax on the whole £100 of income, which is an additional £30. I hope that that was not the intention of the Ministers who framed this provision. If it was, perhaps they will tell us how they justify it and whether they intend to make changes on Report.

The amendment does not seek to deal with the many details. It deals merely with the general issue in this way because we know that more complicated requirements will need to be inserted in the Bill than this simple, two-line amendment. I hope that the Minister, when he replies, will tell us how the Government intend to deal with this matter.

All this presents a very sorry and a very different picture from the one that we were given to expect when it was first announced in 1977 and reaffirmed at the time of the 1979 election. Two years further on, we come to the ultimate reality of a Government who are trying to get money out of these people and failing to revalorise even to the slightest extent. We must all regard that as shameful, because it is the lower paid and the old who will suffer.

I therefore ask my hon. Friends to support the amendment.

Mr. Richard Wainwright (Colne Valley)

As has been made clear, the clause which the Liberal Party seeks radically to amend would increase the income tax yield by some £2¼billion per year, because it is the vehicle for the Government's refusal to alter personal allowances in accordance with the rate of inflation over the past 12 months. For example, the allowance for a married man is to remain unchanged at £2,145 whereas, to take account of inflation, it should be £2,465.

The Committee should bear in mind the fact that at the same time as this blow is suffered, the rates of national insurance, which constitutes a tax, have also been raised. All this is completely contrary to the Prime Minister's solemn pledges, both during and after the election. Taken together with last year's deplorable abolition of the reduced rate of income tax, a subject to which I am glad that we shall return later today, the income tax increase under the clause means that pay, or indeed bare pension, of as little as £28 per week will be hit by 38 per cent. combined income tax and national insurance on its top slice.

Yet even now, some Conservative Members are still so brazen as to talk about incentives. I and my hon. Friends were motivated to table our amendment immediately the Bill had its Second Reading because, with national insurance, it constitutes a double attack on employment and the provision of jobs. As I have pointed out, pay as low as £28 per week—part-time pay and child's pay—will be hit by the clause, while at the same time 7¾ per cent. is payable under the increased national insurance contribution by the employees. That accounts for a total rate of 37¾ per cent. tax on the extra pounds earned by people on very low rates of pay. At the same time, the tax is made a double offence because of the huge 13¾ per cent. that the employer must pay in national insurance for those jobs. It cannot be right for a double tax on jobs to aggravate the present remorseless trend of increasing unemployment.

In case voices are raised about the possible need to replace the £2¼ billion which would be lost if the amendment were carried, I make it quite clear, as I tried to do both in the Budget debate and on Second Reading, that in our view a restoration of £2¼ billion to demand in the economy is a necessity at this time and should be welcomed. Any talk of trying to replace that tax yield is therefore entirely inappropriate.

I said that there is a double tax on jobs. One might legitimately speak of a treble tax on jobs, because the removal of £2¼ billion demand from the economy at this time will clobber trade and thus further aggravate unemployment. To take a random example, an enormous amount of textiles and clothing will go unbought if this huge amount of demand is deliberately sucked out of the economy. It is bound to result in a further loss of jobs in an already demoralised industry. As everyone knows, however, it goes further than that through the multiplier. When manufacturing businesses cannot even keep their older plant occupied, they have no reason and no funds to keep their machinery up-to-date and the demand for machinery suffers in its turn.

It is a descending spiral. The clause will reduce the tax base because industry will suffer, so that there will be less employment and thus a smaller tax base in the coming year.

I hope that the Government will eventually pause, although they have shown no sign so far of doing so, to realise the consequences in terms of erosion of industry and jobs for their own fiscal policy. Some may try to inject a little courage and to improve morale by saying "Never mind, it can be put right next year". I hope that the Committee will not fall for such a total delusion. In their own Red Book, issued with the Budget this year, the Government confess with brazen frankness that the scope for what is delicately called "implied fiscal adjustment" in 1982–83 is only £1 billion. The Committee should realise that if this year's indexing of personal allowances is lost, it will be lost forever. That thought should be intolerable to those who believe that there should be incentive and that low pay and bare pensions should not be subject to confiscatory raids of this kind.

Liberal Members therefore hope to be part of a considerable force of hon. Members who will support amendment No. 16 at the conclusion of the debate. For my part, considering the author of all this mischief, I agree with the Yorkshireman who said to me at the weekend, "Chancellor Howe should take an early bath".

4.30 pm

Mr. John Horam (Gateshead West)

This is probably the most serious debate that we shall have on the Finance Bill. In this area the Government and Parliament can directly affect the lives of ordinary citizens. They can at a stroke in a Finance Bill clause reduce the standard of living. It is rare for Parliament to have such a dramatic effect on the lives of ordinary people. It behoves us, therefore, to tread carefully.

By their failure to index the tax threshold the Government are behaving in the worst possible way to increase poverty. They are putting the burden of a fiscal adjustment almost exclusively on the shoulders of the poor and those who are near to poverty. If a hard choice of this kind had to be made, it would have been better to increase the standard rate of income tax than to fail to index the threshold.

I agree with the hon. Member for Colne Valley (Mr. Wainwright) that, given the Government's public sector borrowing requirement, it will not be necessary to compensate for all this tax loss if we do not go down the avenue that the Government have chosen.

I quote from the Financial Times leader of 11 March: The decision to override Rooker-Wise in order to avoid a rise in nominal tax rates is deplorable. It is regressive, and therefore widens the poverty trap; it means that those who have made realistic pay settlements do not get the advantage an honest change might have offered of some tax relief". As the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) said, there is a point about honesty in taxation that the Financial Secretary should consider. I understand that his defence against past failures to index taxation in the way implied by the Rooker-Wise amendment in 1977 is that there is no expectation that indexation will be full and complete in every year. The burden of the amendment was honesty in taxation, that a Government should be compelled to show the extent to which inflation had increased the tax burden on ordinary people.

It is abundantly plain that in this clause the Government have chosen the dishonest course. It would have been far more honourable for them to continue to increase the nominal rate of taxation. If the Government are to have any chance of winning the next general election they must show that they have reduced the nominal rate of taxation. That is their strategy. Nevertheless, there has been a real increase in the total tax burden since the Government took office, contrary to all the pledges given at the general election.

As we know from the Financial Secretary and from answers to questions since the Budget, the tax burden has been considerably increased since the Government came to power. The Government's calculations given in a reply in March suggest that the tax burden as a percentage of gross domestic product at market prices has increased from 35 per cent. in 1978–1979 to 40 per cent., in the current financial year. That estimate is lower than many others that have been made. Many hon. Members will have seen The Times' estimate which suggests that 47 per cent. to 48 per cent. is the real tax burden as a percentage of GDP. Others have made calculations between those two figures. I do not complain of that. There are different ways of making the calculations, but there is no doubt that there has been a substantial increase in the real burden of taxation, and the Government are compelled to admit that.

Mr. Walter Eltis, who is not particularly pro-Opposition, said in an article that, looked at in another way, the tax burden has increased by one-eighth, or 12 per cent., in relation to the national income. As he said, for a Labour Government that would be amazing but for a Conservative Government it is staggering.

The effect of the increase in the burden of taxation is threefold. All workers earning less than two and a half times the average wage are now paying proportionately more tax than they were before the 1979 Budget. Secondly, the level of earnings at which the low paid start to pay tax is lower and the rate at which they pay is higher than in 1979. Thirdly, the number of families with children in the poverty trap has increased by 40 per cent., and the "why work?" syndrome has considerably worsened. Those are the effects of this Budget and its predecessor on the poor over the past two years and they add up to a considerable increase in real poverty.

The effects are not confined to the low paid. Those on average earnings have also suffered an enormous increase in the real tax burden. The Times calculated in an article last week that those on average earnings have had a 9 per cent. increase in the tax burden compared with three years ago. Monetarists will argue that that is not significant; that that sort of pressure for increased wages resulting from increased taxation will not necessarily be translated into increased prices. They argue that inflation is a matter of the supply of money and nothing else. I do not agree.

Apart from the enormous increase in the tax burden, the consequence will be increased resentment on the part of ordinary workers of the extra burdens they have to carry and of the reduction in their living standards which have been brought about. Pressure will be generated for higher wage demands in the forseeable future. This can lead to one of two results. It can lead to higher inflation. The Government, who have been boasting about the decreasing rate of inflation, will find during the next 12 months in the next pay round that the rate will stabilise and perhaps go up by this time next year. Alternatively there will be an even greater increase in the unemployment level to batter down the workers to prevent their putting in wage claims to compensate for tax increases. Either way, the Government are building up trouble for the future on inflation or on unemployment as a result of the enormous tax burden that is being loaded on to the ordinary worker, let alone those who are on a lower than average income.

This points to the central failure of the Governments strategy. At no time have they got their broad economic strategy in line with taxation strategy. That was a mistake made by the last Conservative Chancellor of the Exchequer, Lord Barber. He made many mistakes, from some of which the Government have learned, but they have learned nothing from this mistake. His approach on taxation was totally at variance with his approach to the general macro-economic problems, and it is the same with this Government.

This debate has shown the Government's callousness in loading so much on the low paid and the average paid worker and also their strange indifference to a logical and coherent economic policy which fits together to give the country some hope of progress. The Social Democratic Party will support the amendment.

Mr. Dennis Skinner (Bolsover)

This debate is on what is known colloquially as Rooker-Wise; at one time it used to be Rooker-Wise-Lawson. At least it was claimed to be so, but it seems that the man in question backed off. I think that the popular name for him among the Tory wets is Niglet. It is rather appropriate. I was about to say that I felt sorry for the Financial Secretary, but I do not; I cannot feel sorry for any of the Tories. He has had a double blow. Not only has he seen the right hon. and learned Member for Cleveland and Whitby (Mr. Brittan) jump right over his back and get a plush job in the Cabinet, but he has had to suffer the indignity of watching the amendment which he, with my hon. Friends, supported a few years ago being thrown into the dustbin. I assume that he was consulted about it. We cannot be sure because from what we gather the Prime Minister does most of these things almost on her own. I am sure that the Minister will have an adequate explanation why the right hon. Gentleman has been dealt with in this severe fashion.

In order to get things straight with my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), who leads on these matters from the Opposition Front Bench, I should like to put it on record that I suspect that the NEC is not to blame for what I was about to call this aberration in the Government's Budget policy. However, that is not correct because it was predetermined. The NEC is not to blame for the decision not to apply the Rooker-Wise formula which would have meant about £2 billion if we take into account all the areas that are affected. It should be made clear that the national executive committee of the Labour Party is free from blame on this matter and that no member of the Parliamentary Labour Party will be tramping up and down the country explaining to audiences that the Left-wing-dominated NEC has caused the Government to drop this measure.

Unlike some other hon. Members on these Benches, I am not surprised that the proposal to keep in line with Rooker-Wise was dropped by the Tories. When one examines their taxation policy from the time they were elected just over two years ago, one sees that it has been a policy of handing out tax relief to, by and large, the wealthy wherever possible. There were many examples, especially in the first two Budgets, through which over £1,000 million was given to the better-off.

Recent examples show that only those who are getting four or five times the average wage benefit from the overall Tory tax policies. As has been mentioned in the House on two or three occasions, a newspaper article last week, not in Tribune or some Marxist periodical but in The Times, points out that people were conned two years ago when they were told that there would be tax cuts. Most of the electorate assumed that they would benefit as a result. Now we are seeing massive increases in taxation—about 20 per cent. for the average person. That is a terrible indictment of the Tory Government's attitude towards the electorate whom they kidded in a most dishonest way.

4.45 pm

Let us consider nurses, for example. About two years ago the Prime Minister stood on the door step of No. 10 Downing Street and talked about compassion. No doubt she had in mind the image of a nurse. Yet now not only are the Government hammering nurses with a possible 6 per cent. pay policy, but it is also nurses who will be hammered by the proposal in the Budget in regard to Rooker-Wise which ensured that fiscal drag was taken into account. I learnt that phrase from Roy Jenkins when he sat on these Benches. He used to regale us with stories about fiscal drag, the mirrored J-curve and all the other wonderful things. I wonder what he is doing now with the £90,000 that he has picked up out of the Common Market and the £10,000-odd that he is getting as a result of Morgan Grenfell selling off British Aerospace shares. He does not have to worry about fiscal drag. He is one of the people who have benefited from the Tories' taxation policies of the last two years, and no doubt he will benefit again through not being worse off as a result of this Budget.

It will be the nurses and people like that who will suffer. They will have a 6 per cent. pay policy and no free collective bargaining. They will suffer a loss through taxation of £5 or £6, or even £10, a week. It is different for people like Lord Vestey. The Government say they have tightened that loophole, but let us compare the two examples—the nurse with £40 take-home pay who will suffer as a result of the Budget, and people like Lord Vestey and others in the black economy. The ex-chairman of the Inland Revenue, Sir William Pile, talked about the black economy amounting to £8,000 million a year ago, yet here we are talking about taking away from the ordinary taxpayers £2¼ billion. That is what the Tory Government are up to in this proposal. That is why we on this side of the House, united on this occasion with all sorts of odds and sods, Liberals, sprats and everybody thrown in, are trying to get this reversed.

It is worth while noting at this stage that it is necessary to get that money into the economy in order to bring down unemployment. It is no use the Prime Minister and the rest of the Tory Front Bench talking about getting unemployment down, while refusing to put extra demand into the economy. Increasing demand does not mean increasing taxation, but rather decreasing the total taxation demand. Without increasing demand there is not a chance in hell of reducing the dole queue of 2½ million. It is no use assuming that we can wait for some magic cure, as suggested by Tory spokesmen from time to time. The old idea that somehow we are on course is nothing more than a cosmetic for the county council elections. The idea that the recession is bottoming out and that there is something better round the corner is nonsense. It cannot be achieved unless extra demand is put into the economy. That is why it is necessary to have the extra £2¼ billion.

When people ask Labour Members "What is your alternative strategy?", it is no use our just saying that we are against unemployment. We have to be able to express ideas and policies for reducing unemployment. It is no use our leaders wringing their hands and complaining. We have to be able to spell out to people how we would reduce unemployment. There are many ways of doing it, including a reduction in the working week and having longer holidays, but we must pump more money into the economy. That is the whole essence of our argument about economic strategy. It cannot be achieved by increasing taxation.

When Tory spokesmen suggest that a Labour Government would increase taxation, they are talking nonsense. If we were to do that the effect would be to put even more people out of work. We want to make it clear that putting £2¼ billion back into the economy is the very essence of our policy for reducing the dole queues. In fact, it will require a good deal more than that. This is only one element of it. We should not accept any lectures from Tory Members on this question.

The other day I was reading a financial article in The Daily Telegraph. I am not sure that the fellow who wrote the article is an avid reader of The Daily Telegraph, but he had been given a page in which to express his ideas. As we all know, The Daily Telegraph is one of the official organs of the Tory party, together with several other newspapers. The Daily Mail looks after the semier side and the The Sun looks after the so-called working-class side. The Daily Telegraph speaks to Conservative chairmen up and down the country.

The article referred to the well-known phrase that is used by Tory spokesmen, including the Prime Minister, about spending more than we are earning, and said that it is a complete lie; that it is the opposite of the truth. The article explained that in the personal sector we are spending £15,000 million less than we are earning, and it is nonsense to suggest otherwise. Yet that is what the Prime Minister does from the Dispatch Box, and she is supported by all the Tory pundits from the Tory BBC and the Tory ITV. It is nonsense to tell nurses and all the others who are fighting to stay above the poverty line—including most of the civil servants, but not all of them—that we are spending more than we are earning as a nation. The truth is that more money needs to be put into the economy to get it moving again. None of the promises that the Tory Government have made about reducing unemployment can come to fruition unless that is done.

The Government are hoping, naturally, as they have hoped throughout their whole two-year period of office, that somehow or other, by making firms leaner, by creating 7,000 bankruptcies, and so on, a new dynamic will suddenly emerge and there will be an upsurge from below which will result in a large number of jobs being produced at a much lower cost than hitherto. But it is not happening, and it cannot happen, because we do not live in a purely market-force economy.

The Tory theory about allowing things to run down so that a point will be reached at which they will start to build up again is correct in theory if there is a simple, ordinary, market-force economy, but most of our economy is managed. Some of us might not want that to be the case. Certainly some Tories do not like it. The Prime Minister actually believes that the economy is not managed. That is clear from all her outpourings. But the greater part of the economy is managed from year to year, and most of it can be forecast.

Let us assume that the public sector were to be run down, by, say, 20 per cent. in the course of the next 12 months. That could be planned by a Tory Government. It could not be done by market forces. The Government would have to take certain conscious decisions in order to run it down.

The First Deputy Chairman

Order. The hon Gentleman should keep subsection (1) of clause 23 clearly in mind and relate his arguments to it.

Mr. Skinner

The point that I am trying to make is quite simple. The Government suggest that they are worried about unemployment and want to reduce it. I am explaining that the amendment would put about £2¼ billion back into the economy and that that would help to reduce unemployment. I am also suggesting that the Tory Government are wrong in their assessment of the economy, as contained in the Budget. I am suggesting that they are wrong in believing that by allowing things to drift they will achieve their objective of reducing unemployment. That is all part of the argument in favour of the amendment, and one aspect cannot be divorced from another.

When Tory spokesmen argue that they want to reduce unemployment, I do not believe them. I believe that their strategy is to throw more and more people out of work, in order to have 60 or 70 young people or adults fighting for one job and having to run to the employment exchange the moment they hear of a job. That is the policy of the Tory Government. There is no question about it, but Tory spokesmen tell the people outside—this is true of their spokesmen in the county council election campaign—that the Government are really endeavouring to reduce the dole queues. That claim is nonsense.

We need to put more money into the economy in order to reduce unemployment. That policy alone will not reduce unemployment, but the one thing that is certain is that we cannot leave things to strict market forces. Indeed, the Secretary of State for Industry—tortured as he is—has on three occasions in recent months had to come to the Dispatch Box and make statements about managing the economy. We are told that he has been crying his eyes out in the Cabinet. He has told his Cabinet colleagues that he has to put more money into the economy or else the position will get worse. That is the opposite of what the Tory Government are seeking to do in the Budget.

The Financial Secretary to the Treasury has had a rough time over the last two or three months, having been upstaged by his right hon. and learned Friend the Chief Secretary to the Treasury. There is an important point to be made here in parliamentary terms. We seem never to see the Chief Secretary sitting on the Treasury Bench at the same time as the Financial Secretary. It is a strange state of affairs. When the Chancellor of the Exchequer was answering questions last Thursday, the Financial Secretary was not present.

The First Deputy Chairman

Order. That cannot be part of the debate on the amendment to clause 23.

Mr. Skinner

No, but it is surely fair to ask why the Chief Secretary is not sitting on the Treasury Bench today in order to listen to the arguments and to give support to his colleague the Financial Secretary when he answers the debate.

The First Deputy Chairman

Order. Any argument that is relevant is in order, but so far I am not persuaded that the hon. Gentleman is in order.

Mr. Skinner

My hon. Friend——

The Financial Secretary to the Treasury (Mr. Nigel Lawson)

May I assist the hon. Gentleman? My right hon. and learned Friend the Chief Secretary is at the moment giving evidence before a Select Committee.

Mr. Skinner

The point that I was trying to make is that it has happened on so many occasions that it cannot be a coincidence. On the last occasion that the Chancellor of the Exchequer was answering questions, the Financial Secretary was missing, but the Chief Secretary——

The First Deputy Chairman

Order. On the last occasion the debate could not have been on this amendment.

Mr. Skinner

The Select Committee was not sitting at the time, so I am not sure what was happening on that occasion. What is certain is that the amendment has been tabled by my hon. Friends in order to stop the Chief Secretary from carrying out his policy over the back of the Financial Secretary. That is another reason why the Chief Secretary should be in the Chamber to defend his policy. Why should the Fiancial Secretary have to do it? Perhaps he has to back the policy if he does not want to lose his job. His job is more important than anything else. However, the architect of this policy should be here.

I keep reading about the brilliant fellow who has been put in the Cabinet. I know that that is not true, and so do some Conservative Members. However, we are continually told that he is a brilliant lawyer, with a wonderfully incisive mind. The right hon. and learned Gentleman should be in the Chamber to tell us and his Tory colleagues the reason for introducing this policy.

5 pm

The First Deputy Chaiman

Order. I have spoken to the hon. Gentleman four times. I must ask him to come to the point.

Mr. Skinner

The point is simple. The Budget strategy is one of cutting back. In order to achieve that, the Government decided not to improve personal allowances in line with the Rooker-Wise-Lawson amendment of two or three years ago. The strategy is to get rid of that money. The Chief Secretary was given that job. Therefore he shoud be here, instead of the Financial Secretary. The Financial Secretary did not get promoted in the reshuffle. The Chief Secretary got promoted over his back. Why should the right hon. Gentleman——

The First Deputy Chairman

Order. The Chief Secretary is not here. I can do nothing to get him here. I am trying to ask the hon. Gentleman to return to the subject of the amendment.

Mr. Skinner

My remarks are in line with the amendment. The amendment involves the demand in the economy and the amount of taxation that is being imposed on most people. That does not matter much to Members of Parliament. They are well paid. I am thinking about all the pensioners who will face massive tax increases as a result of this proposal. My remarks should go out loud and clear during the county council elections. I am making a proper political point. I know that it will not be printed, but it is right to point out that in the week of the county council elections the Tories will prevent us from putting £2.25 billion back into the economy and into the pockets of nurses, dustmen, miners, old age pensioners and millions of others who are on or near the poverty line. I am thinking about voters in the marginal areas in Nottinghamshire—where we might succeed—the GLC area and particularly Derbyshire. Those electors should understand that that is what the Tory Government: will do.

I understand that there will be a Tory party political broadcast tonight. It will last for five minutes. One thing is certain, the Tories will not say that, "Dear electors, we should like to confess today. We should like to tell you that we have hustled all our troops through the Lobby in order to stop £2.25 billion going back to you, as it should have done in accordance with the law." I am asking not for something extra, but that the Government should keep personal allowances in line with the rate of inflation. What is wrong with that? The Tories will not say anything about that in the broadcast. They will give people a lot of flannel about the Labour Party, but they will not tell them that they have betrayed all those whom they told in the general election that they would——

The First Deputy Chairman

Order. Once again, may I ask the hon. Gentleman to deal with the amendment? It will not be involved in any broadcast that may occur subsequent to the debate.

Mr. Skinner

[Interruption.] I am being assisted by some of my hon. Friends on the Front Bench. That is not usual. They suggest that everything that I am saying is in order. I shall not name names. The Government have got rid of the Rooker-Wise amendment, by their central financial policy—the Budget. That amendment allowed personal allowances to increase in line with inflation, but it has been discarded. In the middle of county council election week, I have every right to tell electors—if those bods in the Press Gallery want to use it—that they are being conned. No doubt the speaker in the broadcast will weep crocodile tears about unemployment. No doubt the Tories will say that they will do everything right, that it is a long haul and that they will put their house in order if they are given five years.

This is a political argument, and not just a tinpot parliamentary one. It should go out loud and clear. It is an argument about the redistribution of wealth. It might not bother you, Mr. Godman Irvine, and it does not necessarily bother me. Nevertheless, it bothers all the impoverished groups in our society. I am appealing to them. It is true that there are no such groups in the Chamber. I have not come here to convince some of this lot. I do not expect this lot to change the way in which they vote. On a different issue I would not expect any Labour hon. Member to change the way in which he voted.

I am attacking the Tory Government's policy, on which you, Mr. Godman Irvine, and the rest of them went to the country in 1979. The public were kidded. That is what you did, Mr. Godman Irvine. You told them that the Tories would bring down taxation. Along with the Daily Mail and the other Tory papers—there was a front page about 12 lies—Conservative Members kidded the public. I am talking about one of those lies. At the time we challenged the Tory Party and all its members about taxation. We asked how they would finance the amount of money needed to pay decent pensions to 10 million old-age pensioners. We asked how they would finance the disability allowances that are paid to about 1 million disabled people. We asked how they would finance hospitals and the social services. In the 1979 general election those were the central arguments, yet only two years later the Tory Government have refused to increase personal allowances in line with inflation. I refuse to be shut up on this issue, because it is important.

In county council election week, the amendment seeks to show that on 5 May—prior to the Tories' broadcast—a sinister operation is taking place in the House of Commons. The Tories will not say anything about taking away £2.25 billion. That is what I am trying to say. I have every right to say it. You will listen, Mr. Godman Irvine, to a lot more twaddle before you have done. I do not suppose for a minute that other hon. Members will be pulled up and told that they are out of order—[HON. MEMBERS: "Withdraw".] It is essential to this issue——

The First Deputy Chairman

Order. The Chair is entirely impartial. The hon. Gentleman and I have worked together for some years, and he knows that.

Mr. Skinner

That is the theory——

The First Deputy Chairman

Order. The hon. Gentleman has said that to me personally.

Mr. Skinner

As far as I am concerned—[HON. MEMBERS: "Withdraw".] I shall not withdraw anything. Every prospective Tory candidate in the 1979 election went round the country boasting that a Tory Government would finance the social services and everything else. They said that there would not be any cuts and that they would keep personal allowances in line with inflation. The Financial Secretary bragged more than any other hon. Member, because together with several of my hon. Friends he was a member of the Committee on the Finance Bill and was partly responsible for the amendment. Why should I withdraw? I am talking about a policy that was supported by every Tory Member. No doubt some of them are talking about it in the county council elections. The truth should be told.

A couple of years ago the Prime Minister spoke from the steps of No. 10 about compassion. She is taking money from pensioners, nurses and these other groups. Why should I shut up and why should I withdraw?

The Tories have argued that this is all about the public sector borrowing requirement. They need to speak about that. How much did they get it wrong? The figure was about £5,000 million in one financial year. They got it wrong by about 60 per cent.

Mr. Jack Straw (Blackburn)

The figure was about 40 per cent.

Mr. Skinner

That was the size of the mistake in one year. Now they chide us for suggesting that we are wrong to ask for £2¼ billion to be put back into people's pockets. We are not putting it back in an abstract way. Our amendment suggests that the money should be returned to those to whom it belongs. It will affect everyone, but not to the same extent those in the higher income groups. We are concerned mostly about those who are worrying about how they will pay the rates in the next 12 months and how they will pay the water rates as a result of the cuts in the Government's subsidies. They would have a better chance of paying their rates and the rents which have been increased by the Government, if they were able to get their hands on the money that was taken from them in the Budget.

One of the most highly rated authorities involved in the GLC elections is the Royal borough of Kensington and Chelsea—Tory-controlled as it has always been. That council has the second highest rate in London. I do not want any lectures about that. The reason why the rates have increased in the inner cities and in Tory-controlled councils is that the Government have cut the rate support grant.

The lower paid could pay their rates if they had the money, which they would have if the Government were to accede to our amendment, but they will not. The £2¼ billion could be used to purchase some of the goods needed. The Government talk about reducing unemployment, but it cannot be done by whistling in the dark. It has to be planned. There is no way in which a multi-national company will decide to do something for Britain this year. It will not say, "We will improve our investment in certain parts of Britain". One thing is certain. The £2¼ billion will not do it on its own, but it will be a start if it increases the amount of money that can be spent. Most of the people who would benefit—though not all—from the £2¼ billion back in their pockets would spend it, because they are living on the breadline. By their spending it, some of that money would help to provide jobs for British workers. That is why it is essential—apart from the moral reason—to ensure that the Rooker-Wise proposals are kept in line.

We do not want lectures about the public sector borrowing. It increased last time by £5 billion. We have tabled the amendment in order to reduce the dole queues and play the game by these people so that the Tory Party—not that it matters to me—can be shown to have honoured its promises. Had it wanted to do so it would not have included this proposal in the Budget. The Opposition will vote in the Lobby in accordance with the policy that we put before the people in 1979. Although there were arguments in the Finance Committee when this was first introduced, by the time the manifesto was drawn up we had committed the next Labour Government to uprate the personal allowances in accordance with inflation. That is what we promised the electorate. The Tory Government have ratted on their promises, so tonight we shall be voting to honour our promise.

5.15 pm

Mr. K. J. Woolmer (Batley and Morley)

I shall join my colleagues in the Lobby to vote for the amendment, which is basically to ensure that people's income taxes do not increase simply because prices rise with increasing inflation.

I shall be voting with my right hon. and hon. Friends for a number of reasons, overwhelmingly because those on average or below average earnings have been badly hit by the Government despite the promises, to which my hon. Friend the Member for Bolsover (Mr. Skinner) referred, made before the election to cut taxes, especially income tax. Those on average, below average or a little above average earnings have been badly hit by the Government in three ways—first, by the abolition of the lower, reduced tax rate band in the 1980 Budget. Last year, at a stroke, the Government increased the marginal tax rate for the lower paid workers—the pence the taxpayer pays on the extra pound he earns—from 25p to 30p in the pound. Last year, too, Opposition Members drew to the attention of the public the fact that that was at odds with the Government's arguments before the last election to the effect that workers should be given an incentive to work. We had the picture of the lower paid worker being given an incentive to work—the good old Tory incentive that one must work harder because one will be paid less and if one wants to earn more one must work harder. That is a different scene and story from that before the election.

The second way the wage earner has been hit, again this year, is through the increase in the national insurance contributions, which have increased by a little over 1 per cent. of incomes. I am amazed when I hear Ministers protesting that national insurance contributions are not a tax or a deduction from a wage packet. Ministers know as well as anyone that for wage and salary earners national insurance contributions are a form of income tax. It is a stoppage out of the wage packet—yet another stoppage from wage packets in the past few weeks.

On top of the increase in marginal rates of tax and the increase in national insurance contributions, the failure to raise personal allowances is the third and final attack upon the average wage earner and those on lower pay. It is worth reminding the electorate that, as a result, 1¼ million low-paid workers will be drawn into the tax net by the Government who won the election on the fraudulent suggestion that they would cut direct taxes. We know what the truth is now. Our people pay more tax and not less.

I illustrate my argument by a few figures. If one compares average, below average and slightly above average earnings, some interesting figures emerge. For example, a married man, on two-thirds average earnings, with a couple of children, is about £2 a week better off, including child benefit. He is about 3½ per cent. better off as a result of the various changes since 1978–79. Someone on average earnings is about £3.40 better off, or about 4½ per cent. Someone on five times average earnings—earning over £600 a week—even after the Budget is £38 a week better off, or 16 per cent.

How can the Government justify tax policies that have resulted in a textile worker in my constituency being only £2 a week better off—indeed, as textile workers have had low wage increases, if any, recently, he is probably not even £2 a week better off—when someone earning £600 or £700 a week is £38 a week better off? That £38 is as much as many married women working in the textile industry take home each week.

I was appalled to hear the Chief Secretary to the Treasury say on Second Reading: Leaving personal allowances at the same level as last year is bound to increase the number of taxpayers. It will be unwelcome to taxpayers at all levels, especially those with small incomes. The Chief Secretary can say that again. He tried to justify the Government's action by saying: the largest cuts in real income will fall, perfectly reasonably, on those with very high incomes."—[Official Report, 13 April 1981; Vol. 3. c. 41.] That is a travesty of the total effect of the Government's policies. The Chief Secretary was trying to bamboozle people. Does the Financial Secretary to the Treasury wish to intervene to deny that the Government's policies have resulted in a 16 per cent. increase in real incomes to those earning five times the national average and a. measly 2 per cent. or 3 per cent. increase for those on two-thirds of average earnings? He cannot deny it.

This is not the time to discuss indirect taxation, but it is worth remembering that families have been clobbered by indirect tax as well as by the failure to raise personal allowances. That failure would not have been so bad if the Government had been making concerted efforts to hold down prices and indirect taxes, but not only are people suffering higher income tax, they are paying higher indirect taxes. For example, VAT was doubled and the taxes on beer and cigarettes have been increased. A person on average earnings pays nearly £20 a week or more to the tax man for the things he buys—an increase of nearly 17 per cent. in real terms.

As the representative of a constituency in West Yorkshire I know that the industrial workers there are suffering under the Government. They earn less than the national average. Earnings in the textile industry are 15 per cent. below those in manufacturing, and wages are even lower in the woollen industry, where the average male worker takes home £20 a week less than the national average. A worker in the clothing industry takes home £30 below the national average. Those are not fiddling sums, but are substantially below national average earnings and the workers concerned are being hit particularly hard by the Government, who are picking not on those earning £600 a week but on those earnings £50 to £70 a week and women earning £35 to £45 a week.

In West Yorkshire average earnings are about £15 a week below the national average and the industrial workers of Yorkshire are being hit by the Government's tax policies. They are also being hit hardest by price increases. Charges for gas and electricity have increased and council and private rents are going up. Private landlords know that they are on to a good thing because the general level of so-called fair rents is rising rapidly as council rents are increasing. Rent officer after rent officer is sanctioning private rent increases of hundreds of per cent. Private landlords in West Yorkshire cannot shove rents up far enough or fast enough. It is an outrage.

Mr. Straw

Does my hon. Friend agree that another reason why private landlords are on the rampage is that the waiting lists for council housing are growing and there is an increasing shortage of council housing because of the cuts in council house building and the sales of better council houses? Private tenants have nowhere else to go and have to put up with rent increases, even those above what rent officers allow.

Mr. Woolmer

I am grateful to my hon. Friend. He is correct. Those being hit by increased rents are the young, who have no choice, and the elderly, who may have lived in a house for 50 or 60 years and have known no other home.

Rents are being increased on properties that are over 100 years old and were paid for a long time ago. While canvassing for the local elections I have been asked by many private tenants why the Government do not pass an Act to allow them to buy their houses. The Government are apparently keen to give people the right to buy, so why do they not let private tenants buy the houses in which they live? Many of those tenants have paid for their houses many times over and they are being hit hard by the increases in gas and electricity prices, the rent rises, the doubling of VAT, the increased taxes on beer and cigarettes and the failure to uprate personal income tax allowances.

Pensioners are also being hit by the Government's tax policies. Women between 60 and 64 and those over 65 with small occupational pensions are being caught for income tax for the first time and they do not know what has hit them. They are receiving tax codes almost every other month. The codes are being scattered about like confetti and those pensioners are paying a marginal rate of tax of 40 per cent. or 50 per cent. It does not make sense.

I hope that Conservative Members will hang their heads in shame when they realise what is happening. I remember the claptrap that some Conservative candidates poured out during the election campaign about their concern for the elderly.

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

It may be unfair for my hon. Friend to castigate all Conservative Members. An article on the front page of Help the Aged's magazine "Yours" outlines the injustice done to women between 60 and 64. Listed among the hon. Members who have campaigned on behalf of those women is the hon. Member for Wellingborough (Mr. Fry). Will the hon. Gentleman be in the Lobby with the Opposition tonight?

Mr. Robin F. Cook (Edinburgh, Central)

Will he be in the Chamber today?

5.30 pm

Mr. Woolmer

I am grateful to my hon. Friend. Unfortunately, the hon. Member to whom he refers is not present in the Chamber. In fairness, the hon. Gentleman may not have been aware that reference was to be made to him. It shows, however, that if one makes promises to fight for something, one should be seen to be fighting for it. There is still considerable time left for debate. I am sure that the hon. Gentleman will be told by his hon. Friends that reference has been made to him. We hope to see him in the Chamber speaking on this matter and voting against the Government.

The failure to uprate benefits has meant a further sharp increase in the poverty trap. I recall, as do many hon. Members and members of the public, how the Conservative press, Conservative Members, and the Prime Minister shed enormous crocodile tears about the high rate of income tax and the number of those caught in the poverty trap. When the Government came to office, the poverty trap, in terms of today's prices, covered the income range from £44 a week to £74 a week, including family income supplement. The Government came into office pledged to take action. However, those now caught in the poverty trap cover the income range from £42 to £82 a week.

A family man with two children who has an increase in earnings from £42 to £82 a week will not finish up £40 better off but £1.23 worse off. That is a staggering situation. It is totally at odds with the Government's election pledge to increase incentives and to reduce the burdens on those who can least afford it.

Instead of improving, the position has worsened. Those affected are typically employed in the textile industries of West Yorkshire. The poverty trap has been made even deeper. The situation must be compared with the capital transfer tax concessions that hon. Members have yet to debate. The Government seek to give enormous benefits to those with the largest fortunes. I was listening to a BBC financial programme while driving around my constituency on Saturday morning. The programme defined small savers as those with less than £75,000 in savings. I would like to know how many industrial workers and their families have savings of £75,000. Yet these are described as small savings. Goodness knows what wealth is possessed by the big boys whom the Government seek to help.

At the same time, the Government hound people receiving social security payments with questions about sexual intercourse. There should be no mistake. People receiving small incomes have been hounded in the last few months. When one compares the enormous increase of £38 for a person earning £600 a week with the miserly increase for those on below average earnings, one sees the reality of the subsection that we seek to delete.

The truth is that there are huge tax cuts for the richest through income tax, the benefits that arise from the change in the balance of indirect taxes and the concessions on capital transfer tax. Those have to be compared with higher gas and electricity charges, increased rents, higher VAT and now the higher income tax payments. I hope that the Opposition can persuade sufficient Government Back Benchers to hang their heads in shame and to vote to restore the rightful personal allowances of taxpayers.

Mr. William Hamilton (Fife, Central)

Since the last election, the Government, and especially the Prime Minister, have emphasised that this is to be a period of honest and open Government. Yet the Budget can only be described as a massive deception of the electorate. I refer to the proposal that we are now debating. At a stroke and without undue publicity, the Government took, or stated their intention of taking, thousands of millions of pounds out of the pockets of people who, generally speaking, were among the poorest people of this country. At the same time, the Government created the impression that they were not increasing direct taxation. By sleight of hand, the Government did what they had stated they would not do. That is our complaint.

The indexing of personal allowances to protect them from inflation was first proposed by the present Financial Secretary to the Treasury. The amendment described by many people as the Wise-Rooker amendment was, in fact, the Lawson amendment. It was the right hon. Gentleman's idea originally at the time of the Labour Government that these personal allowances should be protected from inflation by indexing. My hon. Friends took the right hon. Gentleman at his word. That is how this matter became law.

The Government now seek to delete, at a stroke, that provision with consequent great hardship to those who can least bear such hardship. The right hon. Gentleman knows that very well. He cannot deny it. The figures have been produced not only by the Labour Party but by those disinterested and objective bodies that are part of the poverty lobby.

When the Budget proposals were produced there was a massive reaction on the Conservative Benches to the 20p increase in the price of a gallon of petrol. This was to be the start of the rebellion in the Tory Party. It is the issue that still reverberates throughout the shires. The Government have not yielded on the 20p petrol increase. In the period between the announcement of the Budget proposals and the debate in Committee last week, there was much press speculation about the number of Tory rebels on the issue. Hardly a mention was made of the personal allowances. Those allowances amount to thousands of millions of pounds while less than £100 million was involved in the amendment conceded last week reducing the duty on derv.

The Chancellor of the Exchequer argued that he could not afford to reduce the duty on petrol by 5p or 10p because substantial sums would be involved. Those sums are small change compared to what will be taken out of the pockets of the lower paid. My hon. Friend the Member for Batley and Morley (Mr. Woolmer) gave examples of textile workers, and in a moment I shall give an example from the Civil Service. I do so because the Government sought to paint a picture of civil servants in bowler hats and brollies, on £20,000 a year. The truth is almost the reverse. However, I shall come to that in a moment.

In the debate last week on the 20p increase on petrol there was immense competition among Tory Members. All the rural Tory Members wanted to say their piece about how wicked the 20p increase was, and yet almost all of them—with the exception of about a dozen—changed their minds when it came to the vote. In other words, their vote did not follow their voice. They made loud and rude noises about the Government's imposition of 20p per gallon, but then supported it in the Lobby. When they return to their constituencies and say "I spoke against it", their constituents should reply "We are not interested in how you spoke, but in how you voted". That, after all, is how we are judged in the House.

It is interesting to compare the enormous competition among hon. Members seeking to catch the Chairman's eye on that occasion with what has happened today. Not one Conservative Member has sought to speak in this debate on personal allowances, although Conservative Members must have among their constituents those agricultural workers whom they presumed to protect last week and who will be hit hard by the Government reneging on the indexing of personal allowances.

It is well known that most agricultural workers earn below average earnings. In fact, almost without exception, they earn below the average earnings of £120 a week, or thereabouts. As my hon. Friend the Member for Batley and Morley reminded us, those workers and their families are hit hard not only by this proposal, but by the indirect taxes on cigarettes, and even on the matches to light them. On every test, people on low incomes will be hard hit, particularly by this form of increased direct taxation.

The Chancellor said, in answer to a question earlier this week, that his Government were pledged not to increase direct taxation. He really believed what he was saying, but this is the most massive increase in direct taxation that there has been for a considerable time. Moreover, it is taxation on the low-paid. My hon. Friend mentioned widows between 60 and 64 years of age and the lower-paid workers on less than average earnings who will all be dragged into the income tax net, in which they were not caught before the Budget.

My hon. Friend the Member for Bolsover (Mr. Skinner) spoke about nurses. I too want to mention them, but first, I want to underline what he said. Many of the workers who will be paying income tax for the first time have what the Minister might call "real jobs" producing real wealth on which are based our National Health Service, social security, housing and all the things that add to the quality of life. They are producing the goods and the wealth on which the Prime Minister rightly lays such importance.

While our nurses do not produce goods, they produce one of the best services enjoyed in this country. Theirs is one of the most respected sections of the community, yet the Government are asking nurses, like the civil servants, to accept a 6 per cent. increase in their wages. Some of that will be deducted for lodging and allowances, if they are living in. Many nurses will be clobbered by the de-indexing of the personal allowances that we are now debating.

5.45 pm

Let not Government spokesmen use weasel words of gratitude to nurses when they know that their words conflict with their actions. The Government are taking money from the most respected and popular section of the community not only in direct taxes but in indirect taxes. It is nonsense for this Government to talk about incentives to work, because these workers are being given massive disincentives to increase their wages because of the poverty trap. If they earn an extra pound, they lose more than the pound in benefits in other directions.

We object to this kind of immorality and inequity. Even if the sums were trifling, it is an insult to the sense of fair play of ordinary people. One need only compare the fellow taking home less than £50 or £100 a week, and how he is treated in direct and indirect taxation, with the fellow who is earning £20,000 a year or more. He is laughing all the way to the bank, while the other fellow is laughing all the way to the dole queue. I find the situation quite indefensible.

In the same context, I quote an example from today's Glasgow Herald. That paper is what I suppose Scots would call a quality paper.

Mr. Cook

Well.

Mr. Hamilton

I thought that that remark would draw a comment from the hon. Member for Edinburgh, Central (Mr. Cook). I said that some people would describe the Glasgow Herald—it is all comparative, is it not?—as a quality, non-party paper, which means a Tory paper in Scotland.

The article is headed: The civil servants who live below the bread line". It describes an exact case, but I shall not mention the person's name or address, except to say that his christian name is Raymond and that he is aged 18. He is one of 232,366 civil servants, one third of the entire service, living below the poverty line". He says: I have to save hard for a new pair of shoes". That is no wonder, because he has a wife and a baby daughter and they live in one room of his father-in-law's flat. He takes home £45.29 a week.

The article says: Two thirds of the service"— that is, of the whole Civil Service— earn less than the national average wage, calculated as £124.50 a week or £6,474 for males over the age of 21". When I quote those figures in my constituency, I get a rude laugh. My constituents ask, what parts of the country have average earnings of £124 a week? Of course, the figures are distorted by the enormously high earnings of people working on oil rigs in north-east Scotland and elsewhere. In areas such as Fife and Yorkshire, the average is far less than that.

Mr. Robert Taylor (Croydon, North-West)

Is the hon. Gentleman suggesting that that young man should be on average earnings? Surely average earnings relate to those people who in many cases have been working for many years up to the age of retirement at 65. Is the hon. Gentleman saying that that 18-year-old youth, married with a child, should be on average earnings?

Mr. Hamilton

I am not saying that at all. That young man would not expect to be on average earnings. I assume that the hon. Gentleman will be voting against the amendment. The Conservative Government are saying that whether he likes it or not that young man shall accept a 6 per cent. increase in his wage this year and that he must do so in the national interest. The Government are imposing that because they take the view that all civil servants are on high incomes. In any case, "the Civil Service" is an emotive phrase which generates hostility among the populace. That is what the Government are acting on. They believe that the Civil Service is unpopular in the country and that therefore it is safe to clobber. By doing so, the Government are clobbering that young man who is struggling to survive with a young family on take-home pay of £45. In fact, he is struggling to the extent that he qualifies for £7 a week family income supplement.

That is all that I am saying. That young man is among the two-thirds of civil servants who earn less than average earnings. That was the figure given by the Government. According to the official figures, two out of every three civil servants are earning less than the average earnings—£124—and will therefore be hit hard by the proposal that we seek to delete from the Bill.

Mr. Robert Taylor

How many of that two-thirds are aged 18?

Mr. Hamilton

That seems to me to be singularly irrelevant. Two-thirds of all civil servants, whatever their age, will be clobbered hard by the Government's proposal. That is why we oppose it. It will hit hardest those who are worse off, because by definition, if someone receives less than average earnings, he is worst off than the rest. These very people are being singled out for clobbering by the Government.

I hope that the Financial Secretary will concede that he was wrong to propose that these allowances should be indexed in the first instance. If he does not, I hope that he will ask the forgiveness of the House. He has been corrupted by office. As a Minister, he is saying something different from what he said when in Opposition. As a result, the poor will suffer to the extent of a couple of thousand million pounds in tax increases which they have never had to endure before. The right hon. Gentleman has something to answer for. I hope that he will be frank with the Committee—although, knowing his record, I suspect that he will not.

Mr. Austin Mitchell (Grimsby)

I am grateful to you, Mr. Weatherill, for calling me amid the clamouring throng of Conservative Members who are anxious to absolve their consciences. I presume that the Conservative Benches are so empty because most Conservative Members are in the Library eating a diet of the words that they spoke on this very matter in 1977.

These amendments deal with what is perhaps the worst part of a bad Budget. Essentially, the clause that we are discussing represents a massive tax rise that has been introduced by the back door. It has been introduced in that way because we understand that that is the method of action that the Prime Minister forced on her minions at the Treasury by refusing to countenance in increase in tax rates. Her view seems to have been that Conservatives should not be seen to be increasing tax rates. Therefore, the Government must do what they have now proposed and increase taxes by the back door. So much for the manliness and virility of Treasury Ministers in standing up to the Prime Minister in Budget discussions.

That may not be true, but, like everything else about this Government, one learns about these things either through leaks or written answers. The leak indicates that this is the Prime Minister's approach to tax increases. The proposal puts her Ministers and many Conservative Back Benchers in the humiliating position of eating all the brave words that they spoke in 1977. I remember those words vividly, because as a young Back Bencher recently elected at a by-election I was persuaded by a smooth-talking Whip that it was an honour to serve as a Government Back Bencher on the Standing Committee dealing with the Finance Bill. I did not realise just how great an honour it was.

I sat through the long discussions on the Rooker-Wise amendments, for which, regrettably, I did not vote on that occasion. I have refreshed my memory today about the words spoken by Ministers and Conservative Back Benchers during those proceedings in Committee. Perhaps the best came from the right hon. Member for Guildford (Mr. Howell), who is now the Secretary of State for Energy. He said of the Rooker-Wise amendment: The effect is to require the Government each year to be explicit about the real effects of inflation upon taxation and to treat people more fairly than they have been treated in the past … to be more explicit". He went on to say that the amendment provides a good start in bringing Governments into better patterns of behaviour"— which the Conservative Government have now vitiated— and better habits in relation to taxation and the public discussion of tax policy than they have practised in the recent past. If those amendments were on the statute book, we would stand a better chance of better Government than we have now".—[Official Report, Standing Committee D, 14 June 1977; c. 497.] Yet we now have what the right hon. Gentleman must regard as a better Government behaving in this fashion and forcing those who supported the Rooker-Wise amendment to eat all their brave words. In fact, the Government have forced them into a position of total humiliation.

The Government's proposal also affects many other aspects of Conservative policy. Section 3 of the Tory Manifesto was rather laughably headed "A more prosperous country". The policies outlined there have given us the "more prosperous country" that we now enjoy as a result of their efforts. It stated: It is especially important to cut the absurdly high marginal rates of tax both at the bottom and top of the income scale. It must pay a man or woman significantly more to be in, rather than out of, work. It continued: Raising tax thresholds will let the low-paid out of the tax net altogether". That was the promise held out in the Conservative manifesto, but that promise has now been revoked by the decision of the Chancellor and Treasury Ministers not to raise tax allowances. It is that decision to which we are objecting, and it is that decision that we shall vote against.

The Chancellor, when introducing his second Budget, gave what I consider to be the best defence for raising tax allowances in line with inflation. He said: At first sight that would suggest increases in the personal allowances which fall some way short of the rise in prices during 1979, but this would have a number of undesirable effects. He added: It would lower the starting point of income tax in real terms compared with a year ago."— which he is now doing— It would increase the number of taxpayers."— which he is now doing— It would narrow the gap between the tax thresholds and the main social security benefits,"— which he is now doing— and it would impose particularly heavy burdens on those with the smallest incomes."— which he is now doing. He went on to say: All those effects would be most undesirable".—[Official Report, 26 March 1980; Vol. 980, c. 1474.] The right hon. and learned Gentleman is doing exactly that in this Budget by increasing taxation.

This is a long story of adjusting and trimming the figures. For example, the Chancellor might claim to have in hand the additional increase in the allowances provided for in his first Budget. That meant an 18 per cent. increase in allowances, which exceeded the then statutory requirement of about 9 per cent. However, that would still mean an increase of between 8 and 10 per cent. in allowances this year, rather than a statutory 15 per cent., if he were to be enabled to claim that personal allowances were not lower in real terms, but he has provided nothing.

The Labour Government's holding Budget in 1979 increased the allowances by less than was necessary. Out of the kindness of our hearts we gave the Chancellor some margin for the increase that he carried through in 1979. He then presented the increase in VAT as necessary to finance the increase in personal allowances. He said as much in his Budget speech.

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In 1980 the Rooker-Wise requirement was met by what amounted to sleight of hand, because one-third of the cost of indexing personal allowances was recovered by abolishing the reduced rate band. That limited the value of the combined changes in income tax to 11 per cent. rather than the 18 per cent. claimed by the Chancellor. As a result of the sleight of hand and the back-door method of taxation the less well off—the mass of the population whom the Labour Party represents—are now hit in three ways. They have to carry a doubled value added tax, there is no reduced rate band of income tax and at the same time their personal allowances are worse than when the Tory Party took office.

It is worth repeating what everyone is missing as a consequence of the Budget. A single person's allowance is £1,345, when it should be £1,585. A married person's allowance is £2,145, when it should be £2,475. Everybody is missing out because of the disastrous calculations upon which the Government's economic strategy was based. They failed to calculate the burden and the expense of the depression that they forced on Britain. They failed to calculate the cost of the massive increase in unemployment that they created. They failed to calculate the tax loss that unemployment would produce. They failed to calculate the loss in output because of the depression and the extra burdens imposed upon nationalised industries. All that meant a massive increase in expenditure, which they are now having to recoup from taxation.

The allowances are being fiddled because of the burden and the expense of the depression created by the Government. That makes a mockery of Conservative claims that Labour is the party of high taxation. The party of high taxation is the one that carries out its economic management through deflation, depression, unemployment and the strategies being adopted by the Government. Those strategies are far more expensive and far more of a tax burden than any strategy of expansion that the Labour Party would adopt if in power.

The strategies force the Government not only to increase taxation by a back-door method, but to become, as an article in The Times claimed last week, a Robin Hood in reverse. They are taking more from those who have least to give, to give to those who need it least. In 1979 the percentage of gross earnings, including child benefit, of a married man with two children on two-thirds of average earnings—the position of one-third of adult workers—being paid in tax and national insurance contributions was 18.7 per cent. As a result of this Budget and the failure to adjust the allowances, he is now paying 22.8 per cent.—and increase in his tax burden of 22 per cent. He is least able to bear it, but has been asked to do so by a Government who committed themselves to a reduction in taxation. The increase for a man on average earnings is less, but still substantial. The Government are redistributing income in the unfairest possible way.

The tax bills of the lowest earners are being increased substantially in order to reduce the tax bills of those with the highest incomes. By doing that the Government are widening the poverty trap tremendously. They are increasing it by about 40 per cent., and instead of 80,000 being affected, 110,000 are affected. Even worse, those who have been pushed into the poverty trap are being hit also by the disproportionate increase in VAT, which inevitably has a disproportionate impact on the lowest paid, as the work of the Low Pay Unit graphically demonstrates. The impact is more substantial on the low-paid than on the better-off. Also, the Low Pay Unit calculated that in November 1980 the tax free income of a typical family on average earnings was 78 per cent. of the supplementary benefit level. Next November it will be only 70 per cent.

I come next to amendment No. 56, which attempts to ameliorate the plight of retired women aged 60 to 64. Thanks to the Budget, that category of women will be paying tax for the first time. There are two operative factors: first, the upgrading of the increase of the single person's basic retirement pension to £29.60 last November, and, secondly, the freezing of personal allowances. That pushes them into the tax bracket. They are now receiving an income of £83 more than the £1,375 allowance. That comes within the concessionary tolerance and could be ignored. However, 200,000 of those women also receive a paltry amount—in many cases about 57p—of graduated pension. Anything more than 33p pushes them beyond the concessionary limit and into the tax net.

That ludicrous position has resulted from the Government's failure to increase allowances. Those women are least able to pay tax, and least need to pay tax. They could be exempted from tax altogether, but instead they are being scooped into the tax net by the Government because of their disastrous failure to increase allowances. That has been forced on them by the Prime Minister who, two years ago yesterday, quoted St. Francis and spoke about healing, curing and bringing society together. She is now imposing a fiddling tax burden on a pathetic section of society which is least able to afford it. That is typical of the Budget consequences—the pettifogging, tax-dredging, burden-increasing Budget to which the Labour Party object and against which we shall vote in the Lobby shortly.

The Budget does everything that the Government said they would not do. It breaks the promises held out, and it now compels Government Back Benchers and Ministers to eat their brave words of four years ago and the Prime Minister's brave words of two years ago. It turns the Government from the brave hope of encouraging initiative and enterprise by reducing taxes to imposing taxes on women aged 60 to 64 who receive pensions of 57p a week. It forces more people into the poverty trap. The Government are acting like Robin Hood in reverse. They are taxing those least able to bear the burden of taxation so that those who can bear the burden maintain the exemptions given to them two years ago.

Mr. Clive Soley (Hammersmith, North)

There could be no better example of a bad Finance Bill than the one before us. The clause that the Committee is discussing underlines the bankruptcy of Tory Party policy, Tory Party promises at the 1979 general election, Tory philosophy and Tory Party economic and financial policy since the general election.

We all remember being told in 1979 that the Conservative Party was the party of low taxation and that it would cut income tax with the idea of helping those who wanted to save more on the basis that those savings would go into investment. We know that the money did not go into investment. Also, we know that when the tax cuts came they were primarily for the rich. Again, the theory was that the money would go into investment. There is no evidence that the income tax cuts for the better-off were used for that purpose.

The low-paid were not encouraged to work harder. At the end of the day they were worse off because of direct and indirect taxes. The philosphy has failed, the promises have failed and the policies since the election have failed. We know that investment is determined not by tax cuts pure and simple but by whether it is profitable to invest, and whether it is profitable depends on many other financial factors which the Government have not solved and which I would argue they have gone some way towards making much worse.

We must ask ourselves "Who suffers?" Under the clause, the low-paid will suffer more than any other group. The part of Hammersmith that I represent is not a high-paid area. My hon. Friend the Member for Batley and Morley (Mr. Woolmer) has given clear and good examples of the way in which the better-off have benefited. He talked of small savers with £75,000. That would bring a smile to many people's faces if it were not so serious. It is surely something about which we cannot smile.

It is not that the people are desperately poor, although obviously there are some desperately poor people in places such as Hammersmith. A person in receipt of an average income in Hammersmith will suffer from the Government's policies. I ask the Committee to consider the position of a young boy or girl who has been brought up in his or her parent's council house. Let us suppose that they want to marry and get a house of their own. They may well be in receipt of a wage that will make them liable to the tax that we are discussing. If they try to buy, they will be faced with the prospect that in the Hammersmith and West London area it is not possible to buy even a single bedroom flat for much less than £21,000. That means that one needs an income of £10,000 and savings of about £5,000.

How does a person begin to save for a sum like that when the tax threshold is not changed to his advantage, when national insurance contributions are increased and when rates are being increased? The Conservative Party often talks about rates being increased in Labour areas. Hammersmith, in common with Kensington and Chelsea and Wandsworth, has been subject to massive rate increases. There was a 48 per cent. increase by the Conservative administration in Hammersmith and Fulham. In the face of increases on that scale, it is not possible for people to save effectively, and they are not able to benefit from the Government's policies.

It was said during the 1979 general election that Labour was the party of high taxation. Everything that has happened since then suggests the opposite. The industrial survey of the group economics department of Barclays Bank of March 1981 states: At home, final demand prospects are no more encouraging; wages are no longer keeping pace with price increases and consequently the volume of consumer's expenditure can only be sustained this year by a fall in the savings ratio. Worse still, aggregate investment actually seems likely to decline further this year despite lower interest rates. It predicts a further fall in private sector investment". 6.15 pm

That brings us back to the Conservative Party's promise to cut taxes and to ensure that the money so released would be put into investment to regenerate the economy. That was the underlying philosophy of the Government's economic strategy. Their aim was to regenerate Britain by liberating the small saver and the small business man. I do not know whether the small saver is the £75,000 man quoted by my hon. Friend the Member for Batley and Morley or someone living in Hammersmith, North and earning an average or below average income, but the Government will be unable to regenerate the economy with their present policy.

The Government, and particularly the Prime Minister, seem to have engendered the view that people must suffer if things are to get better. There is no reason to suffer unless things will really be much better. There is justice in suffering if the suffering is fairly apportioned. The same question has to be asked again—"Who is doing the suffering?" Most of those on higher incomes have not suffered very much. That would perhaps be acceptable if the Government's theory about those on higher incomes regenerating the economy had been proven to be true. As I have already indicated, that has not been proven. It is those on low incomes who seem to be suffering. They are being hit by increased fuel charges, increased national insurance rates, and rent and rate increases.

These are factors that are doing much damage to Britain's base. People are being driven into unemployment and into despair. That is because there is little to hope for in future. If we get that despair, we get the dangers to democracy that Conservative Members so often say are encouraged by the Left wing of the Labour Party. In such a situation it is not the Left wing that is a danger. The danger lies inevitably in the Right wing. The membership of Right-wing organisations grows at times of high unemployment and high inflation.

It is true that high inflation threatens the fabric of society, but so does high unemployment. If the group economics department of Barclays Bank is right in saying that there is nothing to indicate that home demand will increase or that demand from overseas will increase significantly, I suggest that the problem will become worse.

The Government must ask themselves how long the fabric of society will stand the present unemployment level. I put it to the Government that everything in the Bill, especially this clause, will do more to increase the burdens on low-income groups. That will undermine the Government's strategy and threaten the nation's social fabric.

I do not believe that anyone thinks that the low-paid can continue taking the sort of punishment that the Government are handing out to them. What does a man do if he is in receipt of a low income and is relying on tax reductions of the type that would have been made under the old Rooker-Wise amendment? What happens if that reduction is not forthcoming and at the same time gas and electricity tariffs increase? First, there is a massive increase in the number of disconnections. What happens when national insurance contributions increase or rates increase by nearly 50 per cent? What happens when rents increase and it is not possible to rent on the private market? These are questions that the Government must consider.

When we consider how well off the richer sections of society are, we must ask how that affluence can be justified on a moral basis and how long it will be before those in receipt of below average or average incomes question the very fabric of our society. They will say, and with some justice, that it is totally unfair and unreasonable to expect them to bear the present burden.

It was the Conservative Party that brought support to the Rooker-Wise amendment in the first instance and made it law. However, as soon as it became impolitic to support it, it suddenly abandoned ship and went back on its policy. If one believes that its intentions were good, which I am prepared to concede, it did so presumably so that the economy would be regenerated. However, there is no evidence of that happening.

If demand is to increase, it will have to come out of savings, as the Barclays Bank group states, but if one is on a low income either one does not have the savings or one is eating into the savings which were being put aside for something else. It is not always luxuries that are involved. The savings may have been made to buy a house if one is living with one's parents, and so on.

There is no justice and no economic sense in the clause. Above all, it underlines the bankruptcy of the Tory Party policy, philosophy and, economics because it picks on the low-paid to try to solve the problems of the nation while protecting the rich. That is a failure of philosophy, a failure of policy, and, above all, a failure of the Government to deliver on their election promise, which was to reduce income tax.

Mr. Derek Foster (Bishop Auckland)

One of the puzzles of the debate is why there are so few contributions from Conservative Members.

Mr. William Hamilton

None at all.

Mr. Foster

As my hon. Friend says, there have been none at all. I wonder why that is. There was a time when Conservative Members pretended to support the principle which we are debating. Without their support, it would not have become the law of the land. However, all those people with admirable consciences about the issue are either absent or silent.

It was rumoured that there was to be a revolt on Government Benches when this matter was mooted in the Budget debate. That revolt has so petered out that Conservative Members cannot be bothered to attend or to speak on that great principle. Perhaps they have a bad conscience because they would rather not have the measure included in the Finance Bill at all. Perhaps they have realised that the decent thing would have been to raise the standard rate of taxation. By failing to do that and by failing to index the allowances, they are raising taxation by the back door. That should be exposed in every newspaper in the land for the disgrace of this approach. However, fortunately, the newspapers too are quiet on the issue. They are strangely silent about the patent bankruptcy of the economic and political strategy of the Government.

Having won the election in either the most naive or the most dishonest way, in promising to reduce the burden of taxation, after two years the Government have succeeded in increasing the burden of taxation. They have also suceeded in increasing public expenditure as a percentage of the gross domestic product. The Conservative Party was to be the party which could teach the rest of the world how to eliminate waste in the public sector. It was going to achieve such reductions in public expenditure as had never been seen before and it was going to do so purely by eliminating waste. However, we have seen an increase in the burden of public expenditure.

Unemployment has cost us about £10.7 billion in loss of output. It has cost us a further £8 billion in the payment' of benefits and the loss of taxation revenue. I am beginning to wonder when the Government will stop shovelling the taxpayers' money into the pit of unemployment and start investing it creatively.

We challenge the Government on why they cannot go forward with investments in public sector projects, such as the electrification of the railways and investment in British Telecommunications, which are commercial by anyone's standards. By some quirk in Treasury reasoning, the Government wish to crowd out investment when it is believed that investment is reducing and that it will go on reducing, and when £3 billion went overseas in investment last year.

The debate poignantly highlights the financial and political bankruptcy of the Conservative Party, which, having won the election on the magnificent promise to reduce the burden of taxation, is now given the applause of the empty Benches of its own supporters, as they realise that the burden of taxation must be increased.

That increased burden of taxation is enforcing a further deflation of the economy. In my part of the world—the North of England—where unemployment was 13.6 per cent. at the last count in the whole region and where 54 people are chasing every job, the last thing we need or want is a further deflation of the economy. When will the Government respond in a decently human way to the problem of unemployment? It is not true that one has to solve the problem of inflation before the problem of unemployment can be tackled.

Of course, there is a trade-off between inflation and unemployment. In my part of the world, we would accept an increase of an extra one or two points in inflation for the sake of reducing unemployment, but instead, the Government respond in that massively deflationary and unjust way. That increase in taxation by the back door, as my hon. Friend the Member for Hammersmith, North (Mr. Soley) rightly said, is an increase in taxation at the expense of the low-paid.

Some of us in the Labour Party were propelled into the House to try to make a contribution to solving two problems. One is unemployment and the other is low pay. Many of our constituents suffer far too greatly and have suffered for too long from both those problems. However, the Government are increasing those problems. Unemployment has increased by 1 million since the Conservative Party came to power. On top of that burden, the Government are increasing the burden of taxation on the low-paid.

The Conservative Party said that it was committed to removing the low paid from the taxation threshold. It boasted about how that was to be done, how humanitarian it was and what a proof it was that the Tory Party cared about the low-paid. That party is now increasing the burden of taxation upon the low-paid, not only by this measure, but by doubling VAT as soon as it came to power, so as to give a tremendous boost to the problem of inflation, to which it said that it was completely committed and which it could cure.

The Government now boast that they have reduced the level of inflation, but they have not yet reduced it to the rate which they inherited. After all their efforts and having created an extra million unemployed, 15 per cent. of manufacturing industry's output disappeared last year. That has been done to bring down inflation. That objective is the main plank in the Government's strategy. We have to bear increased unemployment and reduced output to bring down inflation, but after two years inflation is still higher than the rate that the Government inherited.

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The Government give us more and more painful medicine, believing that one day they will cure the patient. I warn the Financial Secretary that the patient has nearly been cured for all time. He has nearly died from the medicine that they have forced down his gullet. The last thing that the country wants is the same medicine again.

The Government have not only increased the burden of taxation on the low paid. The party that came to power wishing to show us the brave new incentive world, which would galvanise us into entrepreneurial activity, has widened the poverty trap from 40,000 to 110,000.

Widows between the ages of 60 and 64 may be paying tax for the first time. They cannot understand what they have done to deserve the punishment and why they have been singled out to have their burden increased. Perhaps the Financial Secretary can explain.

As I have said, the debate has highlighted poignantly the financial and political bankruptcy of the Conservative Party. How can Conservatives, with their record over the past two years, go to the electorate, as many will tomorrow, and maintain the stance of believing in increasing incentives, reducing income tax and reducing public expenditure by eliminating waste? No wonder there are few Conservative Members here to defend their record. They are hanging their heads in shame in the bars and tea rooms, pretending that the debate is not happening. They should be here to defend their record. We shall call them to account later in the Lobby.

Mr. Allan Roberts (Bootle)

I support the amendment. It puts back the £2 billion to £2.4 billion taken out of the economy in the Budget by putting off raising personal allowances in line with inflation—and that sum is on top of £2½ billion taken out of the economy in increases in indirect taxation. As my hon. Friends have said, the honourable way to increase taxation would have been to increase the standard rate by 3p, which equates with what the Government are doing by not raising personal allowances.

The Government have tried to deceive the people into believing that they are not going back on the promise that they made at the election to reduce taxation. It is significant that they are increasing taxation in a way that hits people with lower incomes instead of people with higher incomes, whom they helped in their first Budget, which also shifted taxation significantly away from the rich towards the poor. The clause, unamended, is deflationary. The Government pretend that their Budget is not deflationary, but it is when they take £2.4 billion out of the economy by refusing to raise personal allowances. In addition, it hits the lower paid.

I represent Bootle, which suffers from social deprivation and poverty. Many of those lucky enough to have work earn only low wages. The area has a weak manufacturing base and many service industries and warehousing. Many people will be directly affected by the Government's refusal to raise personal allowances. In addition, my area in Merseyside suffers from high unemployment. In certain parts of my constituency, 25 per cent. of working males are unemployed. Because clause 23 will take money out of the economy, it will damp down demand and further increase unemployment. That is another reason why I support the amendment.

The Government justify their deflationary measures—their increases in taxation—by stating that they will reduce the public sector borrowing requirement. It is amusing, bemusing and worrying that the only people who agree with the Cabinet that the Government should not borrow and have to pay interest rates are members of the Militant Tendency of the Labour Party. Only the extreme left agrees with the Government's distaste for the PSBR. Members of the Cabinet are acting like latter-day Trotskyists in their opposition to Government borrowing.

The Prime Minister paints a simplistic picture. She challenges us to say how we would increase public expenditure. Will we print more, tax more or borrow more? We should borrow more. I do not agree with the Marxist Militant Tendency or the Government that it is intrinsically evil for the Government to borrow or to increase the PSBR. The right hon. Lady and her Treasury colleagues simplify the issue by comparing the country with an average family. She talks about a family having to balance its budget. If it spends more than its income, it is in difficulty. It is an over-simplification to say that if the books do not balance the country is in difficulty. A family with sufficient advantage to borrow does so.

Any family knows the benefits of borrowing money to purchase a house or, these days, even a car whose value increases rather than depreciates as inflation continues. So long as any family owes less money than the value of the assets for which the money was borrowed, it is in an advantageous situation.

I am simplifying a little, just as Ministers do, but the same is generally true for the whole country. So long as the public sector borrowing requirement does not get completely out of hand, so long as the capital investment in which the Government are involved and which will create assets for the country outstrips the public sector borrowing requirement, just as it is an advantage and not a disadvantage for the average family or business to borrow money, the same should be and is true of the Government.

To impose swingeing tax increases on the British people, as clause 23 does, which will cause further hardship, unemployment and deflation, merely for a doctrinaire reason, namely, to reduce the public sector borrowing requirement, is a strange activity for a Conservative Government committed to the capitalist idea of borrowing and interest. Moreover, the increases in the public sector borrowing requirement with which clause 23 seeks to cope and which were apparently unaccounted for previously by the Government are in any case a direct result of their own actions in increasing taxation and cutting public expenditure in past Budgets and mini-Budgets.

By having to defer the raising of personal allowances in line with inflation, the Government have to take money out of the eocnomy to reduce a PSBR which has increased beyond the limits that they expected because they have to pay far more in unemployment and social security benefits as a consequence of previous increases in taxation and cuts in public expenditure which have deflated the economy in the past and have created the unemployment which is pushing up the PSBR.

I believe that the same will happen as a result of this Budget. In the long term, rather than reducing the PSBR as the Government intend, the deflationary consequences of the clause on the workings of the economy will create more unemployment and cause more de-industrialisation, pushing unemployment still higher and thus pushing the PSBR beyond the £10½ billion that the Government now predict that it is likely to be in the future.

I have given three reasons why the amendment should be supported. First, the reduction of £2.4 billion that the Government propose to make by failing to increase personal allowances will hit low-paid people and will cause hardship. Secondly, it will create more unemployment. Thirdly, the Government proposals are the direct result of their doctrinaire obsession with reducing the public sector borrowing requirement, but although that is their intention, that will not be the result.

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The amendment would put back £2.4 billion into the economy. This is just one small instance of the Opposition's belief that the way to solve some of the nation's economic ills is not by deflation but by reflation. We need to reflate the economy and to create more demand at home for the goods which can be produced by our manufacturing industries. The way to do that is not to increase taxation in this way, but to reduce it and to reflate the economy. If that is not done, together with many other measures which need to be taken, the Government will not solve the country's economic problems. They will make them far worse.

The electors of Bootle sent me to this place in the hope that I and other Labour Members would advocate economic policies which would increase demand and create more employment rather than increasing unemployment.

Mr. Tim Eggar (Enfield, North)

What evidence do the electors of Bootle have for believing that reflation in the hon. Gentleman's terms would lead to increased output rather than to more inflation?

Mr. Roberts

The electors of Bootle believe that a country is worth the goods and services that it can produce. They believe that the 3 million unemployed, as the figure is likely soon to be, cannot be creating wealth, hut must be consuming it. If those people were employed, creating wealth and producing goods and services, the country would be better off. One way to put those people to work and to get them creating wealth is to put more money into the economy at this time and not to take money out. Taking money out dampens demand because nobody has the wherewithal to buy the goods that British industries produce. One way to increase demand is to increase personal allowances in line with inflation rather than to reduce them in real terms.

There are many other things which it would be out of order to discuss now but which the people of Bootle and of the country generally would like the Government to do to increase demand, to reflate the economy and to deal with the problems of unemployment. Certainly, the situation is exacerbated by a Government who, for doctrinaire reasons, are hell-bent on increasing taxation, although they were elected on a promise to reduce it.

I hope that at least some Conservative hon. Members will support the amendment. Certainly, to be consistent with what they said when they were in Opposition, they should join the Labour Members in the Lobby tonight. I hope that the Minister, when he replies, will deal with the question of the public sector borrowing requirement and explain why he believes intrinsically that that borrowing is wrong, although the Government's own documents published at the time of the Budget, their predictions, projections, and analyses of Government and public expenditure show that the amount of money to be spent by the Government in creating real wealth and investing in assets which will accrue to the wealth of the nation would far outstrip the borrowing.

Mr. Lawson

I have been present throughout the debate. Although one or two hon. Members have come lately into the Chamber, I think that it is appropriate for me now to reply briefly but, I hope, reasonably fully, to the various points that have been made. I shall not go through the individual contributions that were made. In some cases, I think that it might be kinder not to do so, but I shall do my best to attend to the various major points that have been made.

First, it was alleged that there was some kind of dishonesty—that was one of the words used—about the decision not to uprate personal allowances this year. Opposition Members spoke in particular of what they saw as a contrast between what we are doing now and what we did and said in Opposition in 1977, when the indexation of personal allowances first found its stormy way on to the statute book. I wholly repudiate that charge.

Mr. William Hamilton

The right hon. Gentleman would.

Mr. Lawson

Perhaps the hon. Gentleman would care to listen. He seldom listens. He is so puffed up by his own self-righteousness that he finds it difficult to listen to anyone else. Perhaps he will do me the courtesy of listening to me on this occasion. I could have spared him this. Had he been in the Chamber for the wind-up speeches on the Budget debate on 11 March, and had he been awake at the time, he would have heard a full reply on that point.

The position we have held consistently since 1977—it is on the record—is that if the Government wish to allow the real value of the allowances and thresholds on the higher rate bands to fall they should do so in an open manner and not by subterfuge. That is why we supported the so-called Rooker-Wise amendment of 1977—with which I am proud to have been associated—with the addition the order-making powers to which the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) objected. This was the only way the amendment could be made in order in the 1977 Finance Bill. Last year we replaced this with the procedure that the Government would have to lay an order, as we have done, stating the fully indexed figures for the allowances and thresholds. If the Government did no more than that, those fully indexed allowances and thresholds would automatically come into effect. If they wanted lesser figures for those thresholds and allowances to come into effect, the Government would have to write that into the Finance Bill, and that we have done.

The whole process is open and above board, as it was not before. That is what we objected to, and that is why we spoke about truth in taxation, as the right hon. Member for Ashton-under-Lyne correctly reminded the Committee.

The very subsection that we are debating now would not have appeared at all in the old style Finance Bills, which the right hon. Gentleman when he was Financial Secretary to the Treasury sought to defend. Under the old style Finance Bills the existing monetary figures for allowances and thresholds would have continued through automatically. No legislation would be needed to achieve that end and there would be nothing to that effect in the Finance Bill. The only time when something appeared in the Finance Bill was if the Government decided to raise the thresholds and allowances in monetary terms. To leave them where they were required nothing.

We have now required the Government of the day—as we have done today—to come to the House of Commons and seek approval. So far from being dishonest, this is thoroughly honest and open. The idea that the procedure should be automatic was repudiated by the right hon. Gentleman when he was in office, and I think he repudiates it now. No doubt he will correct me if I am wrong. He believes, as I do, that the Government of the day must have discretion to suggest that this should not be done, for whatever reason.

I have always believed that the procedure should not be automatic. That is why, when the hon. Member for Birmingham, Perry Barr (Mr. Rooker) and Mrs. Audrey Wise tried to make the procedure automatic, I tabled my amendment to their amendment to make sure that the Government of the day would always have the right to come to the House of Commons and have enforced a lesser figure than the indexed figure.

Mr. Ioan Evans (Aberdare)

The Financial Secretary referred to honesty in Government. Did not the Tory Party fight the election on the promise to reduce taxation? The Government have greatly increased both direct and indirect taxation. Departmental figures show that there has been a phenomenal increase in taxation under the present Government. How can the Financial Secretary talk about honesty in politics when the Tories fought the election on that promise?

Mr. Lawson

The hon. Gentleman knows that we inherited an economic situation of such gravity that, to keep public borrowing within bounds and to get the economy in a healthy condition, we have had, regrettably, to increase taxation. However the hon. Gentleman greatly exaggerates what has been done.

For the coming financial year, as the basis of the Budget proposals, the married man on average earnings will pay 21.8 per cent. of his earnings in income tax. When we came to office the figure was 21.6 per cent. That is the extent of the difference. It is not surprising that there has been this very small increase from 21.6 per cent. to 21.8 per cent. when the real average earnings of a married man have risen by 4 per cent. on a 1981–82 best estimate compared with 1978–79. So, even after tax, the average married man on average earnings is better off.

Mr. Horam

That is absolutely untrue. The man on average earnings is not better off; he is worse off than when the Government first came to office. I remind the Financial Secretary of the figures given in answer to a question asked by the hon. Member for Wolverhampton, North-East (Mrs. Short) in March, which showed that the total tax burden of indirect and direct taxation had increased under the Government from 36½ per cent. of GDP to 40 per cent. of GDP. That is an enormous burden on the average working person—not just the poor person. That is the charge that the Government have to face.

Mr. Lawson

I do not wish to bandy figures. The hon. Gentleman if referring to direct and indirect taxation together, total taxation as a percentage of GDP. I was talking about income tax as a proportion of a married man's average earnings. That is the basis on which most of the debate today has taken place.

Mr. Robert Sheldon

Will the right hon. Gentleman accept that, even in the limited area of direct taxation, the tax threshold for a married man with two children is the lowest it has ever been as a proportion of income, not by a small amount but by a large amount?

Mr. Lawson

I do not know what the right hon. Gentleman calls a small amount and a large amount. As a result of what we are obliged to do in this Budget, the Married Man's allowances will be 4 per cent. less in real terms than it was in 1978–79, the last year of the Government in which the right hon. Gentleman served. It is gross exaggeration to say that it has fallen by a large amount. It has not. It is a small amount.

A subject which was debated at greater length by Opposition Members than was any other aspect was the distribution of the tax burden. Two points were raised: the effect of these measures on the lower paid, and the position of the widow between 60 and 64 years of age. It is necessary to correct a misconception about the poverty trap which was frequently referred to by the hon. Member for Batley and Morley (Mr. Woolmer) and others.

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As my right hon. Friend the Secretary of State for Social Services has already explained in a written answer, the high marginal so-called tax rates—they are more than just tax rates—which are often quoted as evidence of the existence of the poverty trap are rather more theoretical than real. In practice many benefits run on for a while even if income rises. There is not an immediate cut-off. For instance, the family income supplement runs on for a whole year. That is one of the most important elements in the alleged poverty trap. The Independent Study Commission on the Family gives an apt summary of the position when it said: The idea that an increase in earnings can result in a sudden drop in disposable resources is a nonsense. It is true that this year's decision on income tax allowances has widened the gap between the tax thresholds and the main social security benefits. But that wider gap is just as much a result of the increases we made in the benefits as of the fact that we were regrettably unable to raise the allowances this year.

In deciding to raise the benefits, our overriding aim was to prevent those who depend on those benefits from being worse off. We are confident that the expansion of the poverty trap as such, which is much smaller than has been mentioned by some Labour Members, will be temporary. There is no deepening of the poverty trap, but it has widened, probably by about 10,000 families or a few more.

Mr. Robert Sheldon

The right hon. Gentleman talks about a temporary situation. Can he elaborate on that?

Mr. Lawson

I cannot anticipate my right hon. and learned Friend's next Budget.

Quite apart from the question of the poverty trap, there is a mixture of fact and error in what Labour Members have been saying. If hon. Members look at the Government's record in office over the past two years, it will be seen that those who pay the higher rates of tax have received the greatest benefit. The reason is that we inherited high rates of marginal tax which were almost the highest in the civilised world, which were ludicrous and which we were committed to bring down. They were admitted to be absurd by many Members then on the Government Benches, including, for example, Lord Lever, one of the more perceptive Members on financial matters. [Interruption.] I believe he is not a Social Oemocrat but remains a somewhat sceptical member of the Labour Party. He said that these rates of tax were nonsense. Therefore, it was right for us to bring them down, as we have done.

Allowances, thresholds and higher rate bands together have to be seen as a whole because they comprise the whole structure of the system of income tax. The commitment to index them, to the extent that there is a commitment, runs right across that range. This year we have indexed none of them and changed none of them. The effect is that the greatest burden, in percentage terms as well as in absolute terms, falls on those in the highest income bracket. [Interruption.] The hon. Member for Edinburgh, Central (Mr. Cook) says that that is not so. I can assure him that, whereas a married man on £3,500 a year has a 3.1 per cent. reduction in income, it rises gradually to a 4.4 per cent. reduction in after-tax income for a married man on £40,000 a year. For someone with £20,000 a year, the figure is 3.4 per cent. It is no good Opposition Members jeering simply because the figures disprove the contention they were seeking to make. Those are the facts.

As for single women, particularly widows aged 60 to 64 years, all of us know that for years widows of all ages have felt that they have a grievance about the tax system. Under Governments of both parties they have consistently been treated as single women while they feel, for various reasons which we all know because of representations from widows in our constituencies, that they should be treated better than other single women. That is a wider issue which we cannot go into now. You, Mr. Weatherill, would rightly say that I was out of order if I were to go into that. We attempted to do something about it in a modest way with the widow's bereavement allowance in last year's Finance Bill. That is really at the root of the complaints that are being made now.

In this measure we have treated women aged 60 to 64 years very fairly through the assessing tolerance which, as I think the Committee knows, means that if the income is £100 or less above the tax-threshold tax will not he levied on it although there is a technical liability to tax. That is a long-standing practice. That means that no widow who has no income other than the widow's pension will be liable to pay income tax. It is true that some widows with a little more will have to pay tax, but that goes right across the board. There is no reason to make a distinction in the case of widows and to say that if a widow has that much more it is monstrous that she should pay tax, but that if she has the same amount more from another source it is all right that she should pay tax. That is not a logical position to adopt. At some stage the widow, like everybody else, has to come into the tax net.

From the many representations that I have received, I think that the main grievance of widows is about the way the tax system treats them as a whole and has nothing to do with this Budget.

Mr. Cook

Nobody is suggesting that widows should be treated differently according to the source of their income. Will the Financial Secretary acknowledge that hitherto the graduated pension has been regarded, as it clearly is, as a part of the State pension and that, as a result of the failure to uprate the age allowance and the other personal allowances, for the first time widows aged 60 to 64 years who are receiving the graduated pension will be liable to income tax under this Budget brought in by a Government who pledged themselves to reducing the income tax burden on pensioners?

Mr. Lawson

I do not agree with the hon. Gentleman. The graduated pension has not been seen as a part of the basic State pension. It has been seen as an alternative to the occupational pension of many pensioners. [HON. MEMBERS: "No."] What is the logic of distinguishing between the Boyd-Carpenter scheme and the new State scheme? What is the justice in distinguishing these two? They are of exactly the same status, and they are alternatives to an occupational pension.

I turn now to a fallacy which the hon. Member for Gateshead, west (Mr. Horam) perpetrated. It is a prevalent fallacy in Budget debates over the years. He suggested that at a stroke of a pen we were affecting the living standards of millions of people. I have always believed that that is manifest nonsense. The living standards of the people depend on the wealth of the country, what the country produces, what the people earn in real terms and the productivity of the country's industry, commerce, business and agriculture. It is absurd to suggest that if we wanted to we could have almost any rate of economic growth we liked simply by writing in the appropriate figure for income tax allowances. That is the logical consequence of the proposition which the hon. Gentleman was putting forward, and it is nonsense, but it takes us to the heart of the Government's decision—the question of the Budget judgment.

No one has really suggested that we should raise the taxation in some other way. Some have said that we would have done better instead to increase the basic rate of income tax, and that we should have increased it by 2½p or so. But that would have increased the marginal rate of tax for 24 million taxpayers out of a total of 26 million taxpayers. In other words, for the vast majority of the people it would have meant an increase in the marginal rate of tax. That surely would not be sensible, even the very poorest taxpayers would have been affected.

Therefore, looking at the incentive consequences, we felt clearly that the lesser evil would not be to index the allowances rather than to raise the basic rate of tax, which is the marginal rate of tax for the vast majority of the people in this country.

Mr. Woolmer

The Minister is not suggesting that there would be any different amount of taxation raised if it were raised by a 3p increase in the standard rate, instead of in this particular way, but the way that he has chosen takes more tax from lower-paid people. Why does he feel that the best way of levying the additional taxation is by levying it on the lower-paid?

Mr. Lawson

This is not levied on the lower-paid. What we have done affects everybody throughout the tax scale. The question, therefore, was: which would have the less damaging effect on incentives? We chose to do it in this way.

As to the Budget judgment, the argument that is put to us is that we should not have raised the money at all but borrowed a further £2¼ billion. I suppose that it is really a lot more than that, for with the vote on the petrol tax last week the Opposition were saying that we should add £½ billion to the borrowing requirement, so the figure is now £2¾ billion and is getting up towards the £3 billion mark.

As the Bill progresses through the House of Commons, we shall see how much the Opposition wish to add to the total borrowing requirement. They have been less than clear so far as to the figure to which they would like to see the borrowing requirement increased. They have been very coy about it. The right hon. Member for Stepney and Poplar (Mr. Shore) has been particularly coy about revealing it. Perhaps we shall be able laboriously to tot it up and find out the answer as we go through the Bill amendment by amendment.

Mr. Robert Sheldon

The right hon. Gentleman's memory is rather short. He seems not to recall what happened in the past, when he was on the Opposition Benches, and amendments were moved frequently to reduce taxation. Oppositions do not win all their amendments. One cannot, therefore, simply add up the losses to the Revenue that each amendment would entail.

Mr. Lawson

That is a very interesting comment. If the Opposition had won the Division on the petrol tax, would they have refrained from moving the amendment that we are now considering? The right hon. Gentleman is suddenly silent. I shall be pleased to give way to him, but he is glued to the Bench, so what he was telling me a moment ago was nonsense. The effect would have been cumulative, because the Oppositon would have pushed both amendments. He knows that well enough, and he should not try to mislead the House.

7.15 pm

It was the judgment of the Chancellor of the Exchequer and of the Government that a borrowing requirement of £10½ billion was the most that we could afford, given the need to reinforce our success in the battle against inflation by a continual reduction in the rate of monetary growth, and given the desire to do that consistently with a gradual reduction in interest rates. We felt that that was the way to benefit industry and business most. It was nonsense for the hon. Member for Colne Valley (Mr. Wainwright), on behalf of the Liberal Party, to suggest that it would clobber industry.

For the Government to borrow more—the alternative that we have been offered—would be far more damaging to British industry, because of the interest rate consequences, than any increase in the personal income tax. It was our deliberate decision that, given the need to raise taxation, we would raise it from the personal sector rather than from business and industry. We chose not to take the easy way out, and then we are accused of having clobbered industry. I utterly reject the hon. Gentleman's proposition.

Mr. Richard Wainwright

The Financial Secretary knows from earlier debates on the Budget and on the Finance Bill that the Liberals do not for a moment accept his analogy as to the borrowing that would be necessary or the rates that would have to be paid to secure the money. Why does he go on repeating the illusion that we share the strange assumptions of himself and his Treasury colleagues?

Mr. Lawson

The hon. Gentleman is committed to living in cloud-cuckoo-land. He can do that because, as he knows well, his party will never be in office.

Clause 23 is an essential element in the Chancellor's Budget judgment. It is not something that he or we took any pleasure in deciding. It was an unpopular decison, but it was a right decision, and I ask the Committee to reject the amendment.

Mr. Cook

Several of my right hon. Friends have referred tonight to how little we have heard from the Government Benches. If there was one hon. Member on the Government Benches from whom a period of silence throughout the debate might have been more dignified, it was the Financial Secretary, who played such a sterling part in getting on to the statute book the Rooker-Wise amendment, which is dishonoured by the clause that we are debating tonight.

This is, indeed, a major issue in the Budget and in the Finance Bill. It is right and natural that a number of hon. Members taking part in the debate should have referred to the Rooker-Wise amendment and the Rooker-Wise debates of 1977. But the House should have it clearly in its mind that, if we want to find an occasion when personal allowances were not uprated at all, we have to go back well beyond the debates of 1977. Indeed, we do not find a Finance Bill in which there was no uprating of personal allowances until we come to 1968, at a time when inflation was running at 2½ per cent.

Between 1968 and the present day there is no precedent for any Chancellor introducing a Budget which did not provide for an uprating of some personal allowances by some amount. That is the extent to which the Government have retreated from the campaign that they waged only two years ago, in which the Conservative Party persuaded the British people that, if returned, a Conservative Government would cut income tax at all levels. That is what was promised in the manifesto.

It is therefore natural that some of my hon. Friends should have used the debate to raise major points about the Government's policy. It was natural and proper that my hon. Friend the Member for Bolsover (Mr. Skinner) should have made a characteristically trenchant attack on the Government's economic policy, and that my hon. Friend the Member for Hammersmith, North (Mr. Soley) should have chosen to illustrate the dangers to our political and social fabric of the political philosophy being followed by the Government, who are putting the highest burden of taxation on the lowest paid.

It was also right that my hon. Friend the Member for Bishop Auckland (Mr. Foster) should have drawn the attention of the House to the way in which, over the last two years, the tax burden of the nation has increased under a Conservative Government. Indeed, on the figures which the Government themselves released in a parliamentary answer in March this year, in the two years in which they have been in office the tax burden, measured as a percentage of the national income, has increased by 10 per cent. In the light of that figure—which comes from their own mouths—one can describe the pledges, commitments and promises made during the last election about easy tax reductions only as the chicanery of the huckster.

My hon. Friend the Member for Fife, Central (Mr. Hamilton) rightly pointed to the contrast between last week's debate on the 20p increase in petrol and tonight's debate on this major issue, which will result in an increase in tax for every income tax payer. In addition, it will result in a notable and difficult increase for the low-paid. He reminded the House that when we debated the 20p increase in the price of petrol there were many speeches from Conservative Members. Indeed, when the Chancellor of the Exchequer had concluded his speech, Conservative Members on the Government Back Benches insisted on making their voices heard on behalf of their constituents.

Strangely, there was no commitment in the Conservative manifesto not to put up the tax on petrol. But there was a commitment in the Manifesto on personal allowances. The manifesto stated: Raising tax thresholds will let the low paid out of the tax net altogether. I can understand why that was worded in that way. The Conservative Party did not commit itself to doing anything, but it said that raising tax thresholds would have that effect.

It would be interesting to have a rerun of the 1979 general election. Perhaps a computer could simulate the election. We should then be able to see what the result of that election would have been if the Conservative manifesto had stated—as turned out to be the case—that lowering tax thresholds would bring into the tax net the even lower paid. After two years of Conservative Government that has happened.

It is possible to contrast not merely our debate this evening with that of last week, but tonight's debate with the debate on the Rooker-Wise amendment, which took place four years ago. That is a celebrated debate. No fewer than three members of the Government took part in that debate in support of the Rooker-Wise amendment. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who now serves in the Foreign Office, spoke after Mrs. Wise and said: there was practically nothing in her speech which was not a sentiment with which I entirely agree". The electors of Coventry may have misconstrued that support; that may partly account for the fact that my former hon. Friend was unable to join us after the 1979 election.

The hon. Member for Norfolk, South (Mr. MacGregor), also spoke. He is now in charge of the Government's policy on small businesses. As big businesses get smaller under this Government, there are an increasing number of small businesses. The hon. Member for Norfolk, South made a lengthy speech in support of the Rooker-Wise amendments, in the course of which he let fall the following candid observation: There is a public relations aspect to these amendments". I could not have expressed the then Opposition's support for the Rooker-Wise amendments more succinctly or clearly.

The third Minister who supported the amendments in that debate was the Financial Secretary. In the same debate he said: I do not believe that the fall in the real value of these allowances would have occurred if the present Government had been obliged to state quite clearly that they proposed to cut personal allowances. I do not believe that it would have occurred."—[Official Report, Standing Committee D, 14 June 1977; c. 450–60.] Four years ago the Financial Secretary said that he did not believe that a Government would fail to upgrade personal allowances if they were obliged to state that they were cutting them. It is extraordinary that he should be part of a Treasury team that has done exactly that.

It is usually a distressing and painful sight to see beliefs shattered and to see faith exposed and unfulfilled. The most remarkable aspect of the Financial Secretary's performance at the Dispatch Box today is that it seems that not a hair of his head has turned in anxiety or trouble at the discovery that his belief was wholly unfounded. He has discovered that a Government who came to power on a pledge to cut tax are prepared not to increase personal allowances. They are prepared to come to the House and to state explicitly—as they do in this clause—that they are cutting personal allowances and thereby increasing the tax burden.

The remarkable feature of this debate is that the case for uprating personal allowances is common ground between the Government and the Opposition. My hon. Friend the Member for Grimsby (Mr. Mitchell) in a cogent and well-briefed speech—if I may say so—quoted a statement by the Chancellor of the Exchequer in last year's Budget speech. The right hon. and learned Gentleman gave the reasons why he felt obliged to carry through the uprating in line with the Rooker-Wise amendment. I shall not weary the House with the quotation, but I shall restate the four grounds.

First, it was said that if the right hon. and learned Gentleman did not carry through the uprating it would have the effect of lowering the threshold at which taxpayers start paying income tax. That will be the precise result of this Bill. The Bill will lower the threshold at which an income holder starts paying income tax from 45 per cent. of average income to 38 per cent. of average income. On a very modest expectation about increases in income, the Bill will by the end of the financial year lower the threshold to 35 per cent. That is a full 10 per cent. drop. In other words, members of the public will become liable to income tax although they earn barely one-third of average earnings.

The second reason was that if the Chancellor of the Exchequer did not carry through the upratings, the number of people paying income tax would increase. That will be the precise effect of this Bill. In evidence to the Select Committee, the Treasury admitted that, as a result of the failure to uprate personal allowances, 700,000 taxpayers would not be taken out of tax despite their expectations. In the year to the next Finance Bill another 500,000 taxpayers will be added to the tax net. That is a total increase of 1¼ million taxpayers.

The third reason was that if the Chancellor of the Exchequer failed to carry through the uprating, it would narrow the gap between those in work and those out of work. Again, that will be one of the effects of this Bill. Previously, Conservative Members have made speeches on the "why work?" syndrome. We have not had the pleasure of the company of the hon. Member for Norfolk, North (Mr. Howell), who has spoken on this point in most debates on the Finance Bill. I can understand why the Whips Office might have found him an engagement miles away from the House. I can understand why it would be anxious to avoid him attending the debate. The Bill makes the "why work?" syndrome—if one is concerned about that—worse. It might be more helpful if the Government were to address their minds to the question not of "why work?", but of "what work?". If the Treasury team adopted that new priority we should welcome it. There can be no escape from the logical conclusion that the Bill makes the poverty trap worse.

The Secretary of State for Social Services gave us a speech on this subject during the Budget debate. He clarified the Government's thinking. He pointed out that the failure to uprate personal allowances would not deepen the poverty trap but widen it. Apparently, the poverty trap would be deepened only if the marginal rate of taxation were increased. Of course, in the last Finance Bill the Government increased the marginal rate of taxation for the new income tax payer, because they abolished the reduced rate band. They increased the marginal rate of tax by 5p for the new income tax payer at the bottom of the threshold.

To use the metaphor of the Secretary of State for Social Services, there we have, succinctly, the Government's record on the poverty trap. Last year, they deepened the poverty trap; this year they have widened it. Each year the Government dig a bigger and bigger pit. At the next election, when Britain's income tax payers have an opportunity cast a vote on the Government's record, they will sink into it.

The fourth reason that the Chancellor of the Exchequer adduced in support of the uprating last year was that if he failed to uprate the personal allowances the heaviest burden would fall on the poorest section of the population. I find it interesting that last year the Chancellor should have stated candidly that it was necessary to carry through the full uprating to avoid the heaviest burden falling on the poorest sections of the community. We are faced with weasel words from the Treasury Bench proving that that is not the Government's concern.

7.30 pm

The Financial Secretary attempted to show that the burden does not fall, in percentage terms, most heavily on the poorest. I refer him to two independent sources—first, the work of the Institute of Fiscal Studies, which is not known to be a partisan organisation. The Financial Secretary asked us to address ourselves to the overall effect of the Budget. Taking the overall effect of the Budget and comparing it with the revalorisation of both personal allowances and indirect taxation, the institute came to the conclusion that for the household with double the average income the increase in taxation was equivalent to a 2 per cent. cut in weekly income. It also came to the conclusion that for the household with half the average income the increases in taxation were equivalent to a 6 per cent. cut in take home pay. There is a clear contrast provided by the figures. Those with more than the average income suffer a cut of 2 per cent. and those below it suffer a cut of 6 per cent.

The Financial Secretary invited us to look at the record as a whole. I am happy to do that and I refer him to another independent body—the Low Pay Unit—that produced a report this month in which the right hon. Gentleman's record as a whole is considered. One of the figures adduced in contemplating that record is that over the past two years in which he has been responsible for tax affairs, a family with earnings of two-thirds the national average has suffered a cut in take-home pay, as a result of increases in taxation, of £1.47. As the Financial Secretary generously admitted at one point, the further up the income scale one goes, the more beneficial is the overall record of the Government. Indeed, the family with five times the average income has not suffered a cut, but has benefited from the overall record of the Government by £60.65 per week. I cannot hope to produce a clearer contrast between the Government's treatment of the low paid and the high paid.

Mr. Lawson

Rubbish.

Mr. Cook

The Financial Secretary will have plenty of opportunities, in addressing meetings in Zurich and eleswhere, to rebut those figures with precise calculations. But the House will not accept a rebuttal of a closely argued pamphlet with plenty of statistical evidence based on surveys of family income supplement and surveys carried out by the DHSS. The House will not accept a rebuttal of those closely argued calculations by a statement from a sedentary position to the effect that the pamphlet is rubbish.

Mr. Lawson

The family expenditure surveys—as many Labour Members who have been in office in the Departments concerned will know—are not believed to be reliable for those whose income is above one-and-a-half times the national average. Therefore, the figures for those with five times average earnings, which the hon. Gentleman quoted, are purely speculative and no credence should be placed on them.

Mr. Cook

In the past two minutes we have moved rapidly from the claim that the figures are rubbish to the claim that they are speculative. I am willing to give way again to the Financial Secretary if he wishes to quote fresh figures for those on five times average earnings. If those figures are speculative, what is the clear figure held by the Treasury? What is the Treasury's view on the matter? Is the figure £60.65? If that is speculative, is it speculative because it is too low or because it is too high? Let us hear the correct figure.

As this is an open-ended debate, I should be happy to give way. If the Financial Secretary is unwilling to respond to my generous, pressing invitations, the Committee will be well advised to accept that at least we have a figure, speculative or otherwise. I am not necessarily saying that the figure is speculative, but that it is a figure drawn from the family income supplement surveys and from the DHSS family expenditure surveys. Plenty of comments on methodology are made by the Low Pay Unit to which the right hon. Gentleman may wish to refer. In the fullness of time, if he wishes to give the Committee a less speculative and more correct figure, we should be interested to hear it and return to it on Report.

Dr. Jeremy Bray (Motherwell and Wishaw)

My hon. Friend will understand that the Financial Secretary's tax difficulty in dealing with people with five times the national average income arises from the fact that such people have a discretion whether they spend out of income or wealth. Therefore, my hon. Friend will understand why the Financial Secretary has stopped all statistical analysis of the distribution of wealth under the proposals of Sir Derek Rayner. He does not want to know.

Mr. Cook

I agree with my hon. Friend about the effects of Sir Derek Rayner's review of the Government's statistical services. I repeat a prediction that I have made in the House—that I yet expect to see the tax and prices index go as an economy measure as it continues to condemn the Government's policies.

My hon. Friend has anticipated my next point. Of course, those with five times average income have flexibility in deciding whether they spend or save and whether they pay through direct or indirect taxation. However, the geat bulk of the population saves only a small proportion of income and spends most of it. It therefore has little choice about whether it pays indirect taxation through VAT.

My hon. Friend the Member for Batley and Morley (Mr. Woolmer) correctly and appropriately referred to the increase in VAT. The first thing that the Government did was to double VAT, despite a clear election pledge that our claim that they would double VAT was a lie. It is worth while reminding the Committee of what was said at that time when the Chancellor of the Exchequer announced that he would fulfil——

Mr. D. N. Campbell-Savours (Workington)

The Financial Secretary to the Treasury still says that it is a lie.

Mr. Cook

I suggest that the Financial Secretary reads the Budget debate for 1979 in which he will find that the Government increased VAT from 8 per cent. to 15 per cent. I will not split words with the right hon. Gentleman about whether 8 per cent. to 15 per cent. is a doubling. I will settle for "virtually" doubling. I remind the Committee of what the Chancellor said.

Mr. Lawson

I must correct the hon. Gentleman's arithmetic. First, there was a 12½ per cent. VAT rate in operation, about which the hon. Gentleman may have forgotten. Secondly, the average VAT rate when we came into office across the board was 5 per cent., with the rates at zero, 8 per cent. and 12½ per cent. The average VAT rate has now increased to 8 per cent. and if the hon. Gentleman thinks that 5 per cent. to 8 per cent. is doubling that would explain why his earlier figures were so suspect and speculative.

Mr. Cook

The front page of that edition of the Daily Mail has been scanned closely by myself and by many of my hon. Friends. It ranks high among our bedtime reading. I cannot remember, when I have re-read that fascinating historic document, that, when it came to branding as a lie Labour's claim that the Tories would double VAT, there was a footnote in small print which said that that was a lie with respect to the 12½ per cent. but was patently correct with respect to the 8 per cent. It simply said that it was a lie.

When the Chancellor of the Exchequer carried through that increase in 1979—my hon. Friend the Member for Grimsby (Mr. Mitchell) has generously allowed me to quote this to the Committee—he said: the increase I make must be sufficient to provide for substantial and worthwhile reductions in income tax."—[Official Report, 12 June 1979; Vol. 968, c. 250.] I am sorry to remind the House that we are still paying that higher rate of VAT at 15 per cent., with an average rate of 8 per cent. rather than 5 per cent., and we do not have those "substantial and worthwhile" cuts in income tax. Indeed, the income earner in Great Britain begins to pay income tax at a lower income than in 1979 and at a higher marginal rate than in 1979.

If there were any decency, integrity and honesty among Treasury Ministers they would admit that we can no longer have "substantial and worthwhile" cuts in income tax, but we could return to the 8 per cent. VAT that they inherited from the previous Government.

The story does not stop there. The Financial Secretary invited us to look at the record as a whole and I am happy to do so. As well as the increase in VAT, the reduced rate band was abolished last year. We were told that its abolition was necessary to implement the terms of the Rooker-Wise amendment. I refer the House to the percipient words of the hon. Member for Truro (Mr. Penhaligon)—perhaps we can rebuild pacts. He said: The real question must be: What will they do next year; what will they succeed in abolishing next year to raise the £1,000 million that … they have fiddled from the low-paid? They have paid for the Rooker-Wise amendment by abolishing the lower rate band. What will they do next year?"—[Official Report, 2 June 1980; Vol. 985, c. 1179.] The committee now knows. The Government have not tried to implement any part of Rooker-Wise. Unable to find any new device, either by increasing VAT or by abolishing the reduced rate band, to squeeze more money out of the lowest-paid, they have not attempted to uprate personal allowances by one penny.

I end by returning to one group of the low-paid who will be most affected by the Government's failure. Single women aged between 60 and 64 do not qualify for the age allowance until they reach 65 and are entitled only to the single person's allowance. As a result of the failure to uprate the single person's allowance, 200,000 women in that category are liable to enter the income tax bracket for the first time.

I had an exchange with the Financial Secretary on that point during his speech. I put it to him that the graduated pension is part of the State pension. He responded by cavilling that it was not part of the basic pension. I accept that, but it is undeniably part of the State pension and the Government should be embarrassed by the fact that, for the first time, a State pensioner receiving no income other than the State pension will be liable to income tax.

The figures are interesting. The average graduated pension received by women in that category is over 50p. However, if they receive only 33p a week in graduated pension that will carry them over the tolerance level and they will become liable to income tax on the full amount of their liability. If they receive a graduated pension of 33p a week they will be liable to income tax of 57p a week. In other words, as a result of getting 33p, they will be 24p worse off. That is the effect of the marginal rate of taxation to which they have been exposed.

7.45 pm

We are dealing with a group whose sole income is the State pension for a single person plus the munificent figure of 33p. They are exposed by this scandalous clause to the rigours of income taxation. It may be worth reminding the House what the Prime Minister said just before the 1979 election. Her words did not figure on the front page of the issue of the Daily Mail to which I referred, but they are interesting. She said: Those pensioners who have another little pension of their own will benefit from our income tax reductions. One cannot have a little pension, of any significance, of less than 33p—one cannot get littler than 33p. However, instead of being relieved of income tax, the women receiving that pension will be liable to tax for the first time. The whole Committee would admit, if it were candid, that that is a scandal.

Certainly the Prime Minister has shown some decent humility on the subject. My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) wrote to her on 26 March and received a reply on 30 April in which she said: As you will appreciate, the proposals which you make in your third paragraph to deal with this problem raise wider issues about the structure of personal income tax reliefs. I have therefore asked the Chancellor and his colleagues to consider your proposals and to reply to your letter. I have checked with my hon. Friend the Member for Perry Barr and he assures me that he has, as yet, received no further reply.

I can understand that the Treasury team may feel that, since the problem was the creation of the Prime Minister—because she refused to contemplate an increase in the standard rate, and they therefore felt obliged to abolish the uprating of personal allowances—it is unfair of her to pass the problem to them for a solution, but I point out, for the Financial Secretary's own benefit and with good-will to his future political career, that the Prime Minister regards the plight of women between 60 and 64 with that graduated pension as a problem. It is indeed a problem.

It is a major disgrace and an insult to the House that, given such a problem and such a scandalous imposition of a tax burden on a low-paid group, we should have heard the Financial Secretary reply to the debate without a single positive, constructive suggestion about how that problem should be dealt with.

Clearly, those widows will be cheated by the failure to uprate the personal allowances and will be cheated by the imposition of a tax on their graduated pension. It is cheating that is entirely of a piece with the failure of the Government to implement an amendment for which many Conservative Members fought when in Opposition.

I believe that when the public discover during the autumn that they are paying more income tax as a result of the Government's actions, there will be contempt and anger among that public. The House should demonstrate its own contempt and anger by voting against clause 23.

Question put, That the amendment be made:—

The Committee divided: Ayes 253, Noes 297.

Division No. 168]	[7.48pm
AYES
Abse, Leo	Cunningham, G. (Islington S)
Adams, Allen	Cunningham, Dr J. (W'h'n)
Anderson, Donald	Dalyell, Tam
Archer, Rt Hon Peter	Davidson, Arthur
Ashley, Rt Hon Jack	Davies, Rt Hon Denzil (L'lli)
Ashton, Joe	Davies, Ifor (Gower)
Atkinson, N.(H'gey.)	Davis, Clinton (Hackney C)
Barnett, Guy (Greenwich)	Davis, T. (B'ham, Stechf'd)
Barnett, Rt Hon Joel (H'wd)	Deakins, Eric
Beith, A. J.	Dean, Joseph (Leeds West)
Benn, Rt Hon A. Wedgwood	Dempsey, James
Bennett, Andrew(St'kp't N)	Dewar, Donald
Bidwell, Sydney	Dixon, Donald
Booth, Rt Hon Albert	Dobson, Frank
Boothroyd, Miss Betty	Dormand, Jack
Bottomley, Rt Hon A.(M'b'ro)	Douglas-Mann, Bruce
Bradley, Tom	Dubs, Alfred
Bray, Dr Jeremy	Duffy, A. E. P.
Brocklebank-Fowler, C.	Dunn, James A.
Brown, Hugh D. (Provan)	Dunwoody, Hon Mrs G.
Brown, R. C. (N'castle W)	Eadie, Alex
Brown, Ron (E'burgh, Leith)	Eastham, Ken
Brown, Ronald W. (H'ckn'y S)	Edwards, R. (W'hampt'n S E)
Buchan, Norman	Ellis, Tom (Wrexham)
Callaghan, Jim (Midd't'n & P)	English, Michael
Campbell, Ian	Ennals, Rt Hon David
Campbell-Savours, Dale	Evans, Ioan (Aberdare)
Canavan, Dennis	Evans, John (Newton)
Carmichael, Neil	Ewing, Harry
Carter-Jones, Lewis	Faulds, Andrew
Cartwright, John	Field, Frank
Clark, Dr David (S Shields)	Fitch, Alan
Cocks, Rt Hon M. (B'stol S)	Flannery, Martin
Cohen, Stanley	Fletcher, Raymond (Ilkeston)
Coleman, Donald	Fletcher, Ted (Darlington)
Concannon, Rt Hon J. D.	Foot, Rt Hon Michael
Conlan, Bernard	Ford, Ben
Cook, Robin F.	Forrester, John
Cowans, Harry	Foster, Derek
Cox, T. (W'dsw'th, Toot'g)	Foulkes, George
Craigen, J. M.	Fraser, J. (Lamb'th, N'w'd)
Crawshaw, Richard	Freud, Clement
Crowther, J. S.	Garrett, John (Norwich S)
Cryer, Bob	Garrett, W. E. (Wallsend)
Cunliffe, Lawrence	George, Bruce

Gilbert, Rt Hon Dr John	Morris, Rt Hon J. (Aberavon)
Ginsburg, David	Morton, George
Golding, John	Moyle, Rt Hon Roland
Gourlay, Harry	Mulley, Rt Hon Frederick
Graham, Ted	Newens, Stanley
Grant, George (Morpeth)	Oakes, Rt Hon Gordon
Grant, John (Islington C)	Ogden, Eric
Grimond, Rt Hon J.	O'Halloran, Michael
Hamilton, James (Bothwell)	O'Neill, Martin
Hamilton, W. W. (C'tral Fife)	Owen, Rt Hon Dr David
Hardy, Peter	Palmer, Arthur
Harrison, Rt Hon Walter	Parker, John
Hart, Rt Hon Dame Judith	Parry, Robert
Hattersley, Rt Hon Roy	Pavitt, Laurie
Haynes, Frank	Pendry, Tom
Healey, Rt Hon Denis	Penhaligon, David
Heffer, Eric S.	Powell, Raymond (Ogmore)
Hogg, N. (E Dunb't'nshire)	Prescott, John
Holland, S. (L'b'th, Vauxh'll)	Price, C. (Lewisham W)
Home Robertson, John	Race, Reg
Homewood, William	Radice, Giles
Hooley, Frank	Rees, Rt Hon M (Leeds S)
Horam, John	Richardson, Jo
Howells, Geraint	Roberts, Albert (Normanton)
Huckfield, Les	Roberts, Allan (Bootle)
Hudson Davies, Gwilym E.	Roberts, Ernest (Hackney N)
Hughes, Robert (Aberdeen N)	Roberts, Gwilym (Cannock)
Hughes, Roy (Newport)	Robertson, George
Janner, Hon Greville	Robinson, G. (Coventry NW)
Jay, Rt Hon Douglas	Rodgers, Rt Hon William
John, Brynmor	Rooker, J. W.
Johnson, Walter (Derby S)	Roper, John
Johnston, Russell (Inverness)	Ross, Ernest (Dundee West)
Jones, Rt Hon Alec (Rh'dda)	Rowlands, Ted
Jones, Barry (East Flint)	Ryman, John
Jones, Dan (Burnley)	Sever, John
Kerr, Russell	Sheerman, Barry
Kilroy-Silk, Robert	Sheldon, Rt Hon R.
Kinnock, Neil	Shore, Rt Hon Peter
Lambie, David	Short, Mrs Renée
Lamborn, Harry	Silkin, Rt Hon J. (Deptford)
Lamond, James	Silkin, Rt Hon S. C. (Dulwich)
Leadbitter, Ted	Silverman, Julius
Lestor, Miss Joan	Skinner, Dennis
Lewis, Arthur (N'ham NW)	Smith, Rt Hon J. (N Lanark)
Lewis, Ron (Carlisle)	Snape, Peter
Litherland, Robert	Soley, Clive
Lofthouse, Geoffrey	Spearing, Nigel
Lyon, Alexander (York)	Spriggs, Leslie
Lyons, Edward (Bradf'd W)	Stallard, A. W.
Mabon, Rt Hon Dr J. Dickson	Stewart, Rt Hon D. (W Isles)
McDonald, Dr Oonagh	Stoddart, David
McElhone, Frank	Stott, Roger
McGuire, Michael (Ince)	Strang, Gavin
McKay, Allen (Penistone)	Straw, Jack
McKelvey, William	Summerskill, Hon Dr Shirley
MacKenzie, Rt Hon Gregor	Thomas, Dafydd (Merioneth)
Maclennan, Robert	Thomas, Jeffrey (Abertillery)
McMahon, Andrew	Thomas, Mike (Newcastle E)
McNally, Thomas	Thomas, Dr R.(Carmarthen)
McNamara, Kevin	Thome, Stan (Preston South)
McTaggart, Robert	Tilley, John
McWilllam, John	Tinn, James
Magee, Bryan	Torney, Tom
Marshall, D(G'gow S'ton)	Urwin, Rt Hon Tom
Marshall, Dr Edmund (Goole)	Varley, Rt Hon Eric G.
Marshall, Jim (Leicester S)	Wainwrlght, R.(Colne V)
Martin, M(G'gow S'burn)	Walker, Rt Hon H.(D'caster)
Mason, Rt Hon Roy	Weetch, Ken
Maxton, John	Welsh, Michael
Maynard, Miss Joan	White, Frank R.
Meacher, Michael	White, J. (G'gow Pollok)
Mellish, Rt Hon Robert	Wigley, Dafydd
Mikardo, Ian	Willey, Rt Hon Frederick
Millan, Rt Hon Bruce	Williams, Rt Hon A.(S'sea W)
Miller, Dr M. S. (E Kilbride)	Wilson, Gordon (Dundee E)
Mitchell, Austin (Grimsby)	Wilson, Rt Hon Sir H.(H'ton)
Mitchell, R. C. (Soton Itchen)	Wilson, William (C'try SE)
Morris, Rt Hon A. (W'shawe)	Winnick, David
Morris, Rt Hon C. (O'shaw)	Woolmer, Kenneth

Wrigglesworth, Ian	Tellers for the Ayes:
Wright, Sheila	Mr. Hugh McCartney and
Young, David (Bolton E)	Mr. Ron Leighton.

NOES
Adley, Robert	Durant, Tony
Aitken, Jonathan	Eden, Rt Hon Sir John
Alexander, Richard	Edwards, Rt Hon N. (P'broke)
Amery, Rt Hon Julian	Eggar, Tim
Ancram, Michael	Elliott, Sir William
Arnold, Tom	Eyre, Reginald
Aspinwall, Jack	Fairbairn, Nicholas
Atkins, Robert(Preston N)	Fairgrieve, Russell
Atkinson, David (B'm'th,E)	Faith, Mrs Sheila
Baker, Kenneth(St.M'bone)	Farr, John
Baker, Nicholas (N Dorset)	Fell, Anthony
Banks, Robert	Fenner, Mrs Peggy
Beaumont-Dark, Anthony	Fisher, Sir Nigel
Bell, Sir Ronald	Fletcher, A. (Ed'nb'gh N)
Bendall, Vivian	Fletcher-Cooke, Sir Charles
Bennett, Sir Frederic (T'bay)	Fookes, Miss Janet
Benyon, Thomas (A'don)	Forman, Nigel
Benyon, W. (Buckingham)	Fowler, Rt Hon Norman
Berry, Hon Anthony	Fox, Marcus
Best, Keith	Fraser, Peter (South Angus)
Bevan, David Gilroy	Gardiner, George (Reigate)
Biffen, Rt Hon John	Garel-Jones, Tristan
Biggs-Davison, John	Glyn, Dr Alan
Blackburn, John	Goodhart, Philip
Blaker, Peter	Goodhew, Victor
Body, Richard	Gorst, John
Bonsor, Sir Nicholas	Gow, Ian
Boscawen, Hon Robert	Gower, Sir Raymond
Bottomley, Peter (W'wich W)	Grant, Anthony (Harrow C)
Bowden, Andrew	Gray, Hamish
Boyson, Dr Rhodes	Greenway, Harry
Braine, Sir Bernard	Griffiths, Peter Portsm'th N)
Bright, Graham	Grist, Ian
Brinton, Tim	Grylls, Michael
Brittan, Leon	Gummer, John Selwyn
Brooke, Hon Peter	Hamilton, Hon A.
Brotherton, Michael	Hamilton, Michael (Salisbury)
Brown, Michael(Brigg & Sc'n)	Hampson, Dr Keith
Browne, John (Winchester)	Hannam, John
Bruce-Gardyne, John	Haselhurst, Alan
Bryan, Sir Paul	Havers, Rt Hon Sir Michael
Buchanan-Smith, Alick	Hawkins, Paul
Buck, Antony	Hawksley, Warren
Budgen, Nick	Hayhoe, Barney
Bulmer, Esmond	Heddle, John
Burden, Sir Frederick	Henderson, Barry
Butcher, John	Hicks, Robert
Butler, Hon Adam	Higgins, Rt Hon Terence L.
Cadbury, Jocelyn	Hill, James
Carlisle, John (Luton West)	Hogg, Hon Douglas (Gr'th'm)
Carlisle, Kenneth (Lincoln)	Holland, Philip (Carlton)
Carlisle, Rt Hon M. (R'c'n)	Hooson, Tom
Chalker, Mrs. Lynda	Hordern, Peter
Chapman, Sydney	Howell, Rt Hon D. (G'ldf'd)
Churchill, W. S.	Hunt, David (Wirral)
Clark, Hon A. (Plym'th, S'n)	Hunt, John (Ravensbourne)
Clark, Sir W. (Croydon S)	Hurd, Hon Douglas
Clarke, Kenneth (Rushcliffe)	Irving, Charles (Cheltenham)
Clegg, Sir Walter	Jenkin, Rt Hon Patrick
Cockeram, Eric	Jessel, Toby
Cope, John	Jopling, Rt Hon Michael
Cormack, Patrick	Kaberry, Sir Donald
Corrie, John	Kershaw, Anthony
Costain, Sir Albert	Kimball, Marcus
Cranborne, Viscount	King, Rt Hon Tom
Critchley, Julian	Knight, Mrs Jill
Crouch, David	Knox, David
Dean, Paul (North Somerset)	Lamont, Norman
Dickens, Geoffrey	Lang, Ian
Dorrell, Stephen	Langford-Holt, Sir John
Douglas-Hamilton, Lord J.	Latham, Michael
Dover, Denshore	Lawrence, Ivan
du Cann, Rt Hon Edward	Lawson, Rt Hon Nigel
Dunn, Robert (Dartford)	Lee, John

Le Marchant, Spencer	Rhys Williams, Sir Brandon
Lennox-Boyd, Hon Mark	Ridsdale, Sir Julian
Lewis, Kenneth (Rutland)	Rifkind, Malcolm
Lloyd, Ian (Havant & W'loo)	Rippon, Rt Hon Geoffrey
Lloyd, Peter (Fareham)	Roberts, M. (Cardiff NW)
Loveridge, John	Roberts, Wyn (Conway)
Luce, Richard	Rossi, Hugh
Lyell, Nicholas	Rost, Peter
McCrindle, Robert	Sainsbury, Hon Timothy
Macfarlane, Neil	St. John-Stevas, Rt Hon N.
MacGregor, John	Scott, Nicholas
MacKay, John (Argyll)	Shaw, Giles (Pudsey)
Macmillan, Rt Hon M.	Shaw, Michael (Scarborough)
McNair-Wilson, M. (N'bury)	Shelton, William (Streatham)
McNair-Wilson, P. (New F'st)	Shepherd, Colin (Hereford)
McQuarrie, Albert	Shepherd, Richard
Madel, David	Shersby, Michael
Major, John	Silvester, Fred
Marland, Paul	Sims, Roger
Marlow, Tony	Skeet, T. H. H.
Marshall, Michael (Arundel)	Smith, Dudley
Marten, Neil (Banbury)	Speed, Keith
Mates, Michael	Speller, Tony
Mather, Carol	Spence, John
Maude, Rt Hon Sir Angus	Spicer, Jim (West Dorset)
Mawby, Ray	Spicer, Michael (S Worcs)
Mawhinney, Dr Brian	Sproat, Iain
Maxwell-Hyslop, Robin	Squire, Robin
Mayhew, Patrick	Stainton, Keith
Mellor, David	Stanbrook, Ivor
Meyer, Sir Anthony	Stanley, John
Miller, Hal (B'grove)	Steen, Anthony
Mills, Iain (Meriden)	Stevens, Martin
Mills, Peter (West Devon)	Stewart, Ian (Hitchin)
Miscampbell, Norman	Stewart, A.(E Renfrewshire)
Mitchell, David (Basingstoke)	Stokes, John
Moate, Roger	Stradling Thomas, J.
Monro, Hector	Tapsell, Peter
Montgomery, Fergus	Taylor, Robert (Croydon NW)
Moore, John	Taylor, Teddy (S'end E)
Morgan, Geraint	Temple-Morris, Peter
Morris, M. (N'hampton S)	Thomas, Rt Hon Peter
Morrison, Hon C. (Devizes)	Thorne, Neil (Ilford South)
Morrison, Hon P. (Chester)	Thornton, Malcolm
Murphy, Christopher	Townend, John (Bridlington)
Myles, David	Townsend, Cyril D, (B'heath)
Neale, Gerrard	Trippier, David
Needham, Richard	van Straubenzee, W. R.
Nelson, Anthony	Vaughan, Dr Gerard
Neubert, Michael	Viggers, Peter
Newton, Tony	Waddington, David
Nott, Rt Hon John	Wakeham, John
Onslow, Cranley	Waldegrave, Hon William
Oppenheim, Rt Hon Mrs S.	Walker, Rt Hon P.(W'cester)
Osborn, John	Walker, B. (Perth)
Page, Rt Hon Sir G. (Crosby)	Walker-Smith, Rt Hon Sir D.
Page, Richard (SW Herts)	Waller, Gary
Parris, Matthew	Walters, Dennis
Patten, Christopher (Bath)	Ward, John
Patten, John (Oxford)	Warren, Kenneth
Pawsey, James	Watson, John
Percival, Sir Ian	Wells, Bowen
Peyton, Rt Hon John	Wheeler, John
Pink, R. Bonner	Whitelaw, Rt Hon William
Pollock, Alexander	Whitney, Raymond
Porter, Barry	Wickenden, Keith
Prentice, Rt Hon Reg	Wiggin, Jerry
Price, Sir David (Eastleigh)	Wilkinson, John
Prior, Rt Hon James	Williams, D.(Montgomery)
Proctor, K. Harvey	Wolfson, Mark
Pym, Rt Hon Francis	Young, Sir George (Acton)
Raison, Timothy	Younger, Rt Hon George
Rathbone, Tim
Rees, Peter (Dover and Deal)	Tellers for the Noes:
Rees-Davies, W. R.	Mr. Alastair Goodlad and
Renton, Tim	Mr. Donald Thompson.
Rhodes James, Robert

Question accordingly negatived.

Amendment proposed: No. 17, in page 13, line 9, after `1981–82', insert 'except for age allowance'.—[Mr. Robert Sheldon.]

Question put, That the amendment be made:—

The Committee divided: Ayes 251, Noes 294.

Division No. 169]	[8.01 pm
AYES
Abse, Leo	Evans, John (Newton)
Adams, Allen	Ewing, Harry
Anderson, Donald	Faulds, Andrew
Archer, Rt Hon Peter	Field, Frank
Ashley, Rt Hon Jack	Fitch, Alan
Ashton, Joe	Flannery, Martin
Atkinson, N.(H'gey,)	Fletcher, Raymond (Ilkeston)
Barnett, Guy (Greenwich)	Fletcher, Ted (Darlington)
Barnett, Rt Hon Joel (H'wd)	Foot, Rt Hon Michael
Beith, A. J.	Ford, Ben
Benn, Rt Hon A. Wedgwood	Forrester, John
Bennett, Andrew(St'kp't N)	Foster, Derek
Bidwell, Sydney	Foulkes, George
Booth, Rt Hon Albert	Fraser, J. (Lamb'th, N'w'd)
Boothroyd, Miss Betty	Freud, Clement
Bottomley, Rt Hon A.(M'b'ro)	Garrett, John (Norwich S)
Bradley, Tom	Garrett, W. E. (Wallsend)
Bray, Dr Jeremy	George, Bruce
Brocklebank-Fowler, C.	Gilbert, Rt Hon Dr John
Brown, Hugh D. (Provan)	Ginsburg, David
Brown, R. C. (N'castle W)	Golding, John
Brown, Ron (E'burgh, Leith)	Gourlay, Harry
Brown, Ronald W. (H'ckn'y S)	Graham, Ted
Buchan, Norman	Grant, George (Morpeth)
Callaghan, Jim (Midd't'n & P)	Grant, John (Islington C)
Campbell, Ian	Grimond, Rt Hon J.
Campbell-Savours, Dale	Hamilton, James (Bothwell)
Canavan, Dennis	Hamilton, W. W. (C'tral Fife)
Carmichael, Neil	Hardy, Peter
Carter-Jones, Lewis	Harrison, Rt Hon Walter
Cartwright, John	Hart, Rt Hon Dame Judith
Clark, Dr David (S Shields)	Hattersley, Rt Hon Roy
Cocks, Rt Hon M. (B'stol S)	Haynes, Frank
Cohen, Stanley	Healey, Rt Hon Denis
Coleman, Donald	Heffer, Eric S.
Concannon, Rt Hon J. D.	Hogg, N. (E Dunb't'nshire)
Conlan, Bernard	Holland, S. (L'b'th, Vauxh'll)
Cook, Robin F.	Home Robertson, John
Cowans, Harry	Homewood, William
Cox, T. (W'dsw'th, Toot'g)	Hooley, Frank
Craigen, J. M.	Horam, John
Crawshaw, Richard	Howells, Geraint
Crowther, J. S.	Huckfield, Les
Cryer, Bob	Hudson Davies, Gwilym E.
Cunliffe, Lawrence	Hughes, Robert (Aberdeen N)
Cunningham, G. (Islington S)	Hughes, Roy (Newport)
Cunningham, Dr J. (W'h'n)	Janner, Hon Greville
Dalyell, Tam	Jay, Rt Hon Douglas
Davidson, Arthur	John, Brynmor
Davies, Rt Hon Denzil (L'lli)	Johnson, Walter (Derby S)
Davies, Ifor (Gower)	Johnston, Russell (Inverness)
Davis, Clinton (Hackney C)	Jones, Rt Hon Alec (Rh'dda)
Davis, T. (B'ham, Stechf'd)	Jones, Barry (East Flint)
Deakins, Eric	Jones, Dan (Burnley)
Dean, Joseph (Leeds West)	Kerr, Russell
Dempsey, James	Kilroy-Silk, Robert
Dewar, Donald	Kinnock, Neil
Dixon, Donald	Lambie, David
Dormand, Jack	Lamborn, Harry
Douglas-Mann, Bruce	Lamond, James
Dubs, Alfred	Leadbitter, Ted
Duffy, A. E. P.	Lestor, Miss Joan
Dunn, James A.	Lewis, Arthur (N'ham NW)
Dunwoody, Hon Mrs G.	Lewis, Ron (Carlisle)
Eadie, Alex	Litherland, Robert
Eastham, Ken	Lofthouse, Geoffrey
Edwards, R. (W'hampt'n S E)	Lyons, Edward (Bradf'd W)
Ellis, Tom (Wrexham)	Mabon, Rt Hon Dr J. Dickson
English, Michael	McDonald, Dr Oonagh
Ennals, Rt Hon David	McElhone, Frank
Evans, Ioan (Aberdare)	McGuire, Michael (Ince)

McKay, Allen (Penistone)	Roper, John
McKelvey, William	Ross, Ernest (Dundee West)
MacKenzie, Rt Hon Gregor	Rowlands, Ted
Maclennan, Robert	Ryman, John
McMahon, Andrew	Sever, John
McNally, Thomas	Sheerman, Barry
McNamara, Kevin	Sheldon, Rt Hon R.
McTaggart, Robert	Shore, Rt Hon Peter
McWilliam, John	Short, Mrs Renée
Magee, Bryan	Silkin, Rt Hon J. (Deptford)
Marshall, D(G'gow S'ton)	Silkin, Rt Hon S. C. (Dulwich)
Marshall, Dr Edmund (Goole)	Silverman, Julius
Marshall, Jim (Leicester S)	Skinner, Dennis
Martin, M(G'gow S'burn)	Smith, Rt Hon J. (N Lanark)
Mason, Rt Hon Roy	Snape, Peter
Maxton, John	Soley, Clive
Maynard, Miss Joan	Spearing, Nigel
Meacher, Michael	Spriggs, Leslie
Mellish, Rt Hon Robert	Stallard, A. W.
Mikardo, Ian	Stewart, Rt Hon D. (W Isles)
Millan, Rt Hon Bruce	Stoddart, David
Miller, Dr M. S. (E Kilbride)	Stott, Roger
Mitchell, Austin (Grimsby)	Strang, Gavin
Mitchell, R. C. (Soton Itchen)	Straw, Jack
Morris, Rt Hon A. (W'shawe)	Summerskill, Hon Dr Shirley
Morris, Rt Hon C. (O'shaw)	Thomas, Dafydd (Merioneth)
Morris, Rt Hon J. (Aberavon)	Thomas, Jeffrey (Abertillery)
Morton, George	Thomas, Mike (Newcastle E)
Moyle, Rt Hon Roland	Thomas, Dr R.(Carmarthen)
Mulley, Rt Hon Frederick	Thorne, Stan (Preston South)
Newens, Stanley	Tilley, John
Oakes, Rt Hon Gordon	Tinn, James
Ogden, Eric	Torney, Tom
O'Halloran, Michael	Urwin, Rt Hon Tom
O'Neill, Martin	Varley, Rt Hon Eric G.
Owen, Rt Hon Dr David	Wainwright, R.(Colne V)
Palmer, Arthur	Walker, Rt Hon H.(D'caster)
Parker, John	Weetch, Ken
Parry, Robert	Welsh, Michael
Pavitt, Laurie	White, Frank R.
Pendry, Tom	White, J. (G'gow Pollok)
Penhaligon, David	Wigley, Dafydd
Powell, Raymond (Ogmore)	Willey, Rt Hon Frederick
Prescott, John	Williams, Rt Hon A.(S'sea W)
Price, C. (Lewisham W)	Wilson, Gordon (Dundee E)
Race, Reg	Wilson, Rt Hon Sir H.(H'ton)
Radice, Giles	Wilson, William (C'try SE)
Rees, Rt Hon M (Leeds S)	Winnick, David
Richardson, Jo	Woolmer, Kenneth
Roberts, Albert (Normanton)	Wrigglesworth, Ian
Roberts, Allan (Bootle)	Wright, Sheila
Roberts, Ernest (Hackney N)	Young, David (Bolton E)
Roberts, Gwilym (Cannock)
Robertson, George	Tellers for the Ayes:
Robinson, G. (Coventry NW)	Mr. Ron Leighton and
Rodgers, Rt Hon William	Mr. Hugh McCartney.
Rooker. J. W.

NOES
Adley, Robert	Biggs-Davison, John
Alexander, Richard	Blackburn, John
Amery, Rt Hon Julian	Blaker, Peter
Ancram, Michael	Body, Richard
Arnold, Tom	Bonsor, Sir Nicholas
Aspinwall, Jack	Boscawen, Hon Robert
Atkins, Robert(Preston N)	Bottomley, Peter (W'wich W)
Atkinson, David (B'm'th.E)	Bowden, Andrew
Baker, Kenneth(St.M'bone)	Boyson, Dr Rhodes
Baker, Nicholas (N Dorset)	Braine, Sir Bernard
Banks, Robert	Bright, Graham
Beaumont-Dark, Anthony	Brinton, Tim
Bell, Sir Ronald	Brittan, Leon
Bendall, Vivian	Brotherton, Michael
Bennett, Sir Frederic (T'bay)	Brown, Michael(Brigg & Sc'n)
Benyon, Thomas (A'don)	Browne, John (Winchester)
Benyon, W. (Buckingham)	Bruce-Gardyne, John
Berry, Hon Anthony	Bryan, Sir Paul
Best, Keith	Buchanan-Smith, Alick
Bevan, David Gilroy	Buck, Antony
Biffen, Rt Hon John	Budgen, Nick

Bulmer, Esmond	Hordern, Peter
Burden, Sir Frederick	Howell, Rt Hon D. (G'ldf'd)
Butcher, John	Hunt, David (Wirral)
Butler, Hon Adam	Hunt, John (Ravensbourne)
Cadbury, Jocelyn	Hurd, Hon Douglas
Carlisle, John (Luton West)	Irving, Charles (Cheltenham)
Carlisle, Kenneth (Lincoln)	Jenkin, Rt Hon Patrick
Carlisle, Rt Hon M. (R'c'n)	Jessel, Toby
Chalker, Mrs. Lynda	Jopling, Rt Hon Michael
Chapman, Sydney	Kaberry, Sir Donald
Churchill, W. S.	Kershaw, Anthony
Clark, Hon A. (Plym'th, S'n)	Kimball, Marcus
Clark, Sir W. (Croydon S)	King, Rt Hon Tom
Clarke, Kenneth (Rushcliffe)	Knight, Mrs Jill
Clegg, Sir Walter	Knox, David
Cockeram, Eric	Lamont, Norman
Cope, John	Lang, Ian
Cormack, Patrick	Langford-Holt, Sir John
Corrie, John	Latham, Michael
Costain, Sir Albert	Lawrence, Ivan
Cranborne, Viscount	Lawson, Rt Hon Nigel
Critchley, Julian	Lee, John
Crouch, David	Le Marchant, Spencer
Dean, Paul (North Somerset)	Lennox-Boyd, Hon Mark
Dickens, Geoffrey	Lester, Jim (Beeston)
Dorrell, Stephen	Lewis, Kenneth (Rutland)
Dover, Denshore	Lloyd, Ian (Havant & W'loo)
du Cann, Rt Hon Edward	Lloyd, Peter (Fareham)
Dunn, Robert (Dartford)	Loveridge, John
Durant, Tony	Luce, Richard
Eden, Rt Hon Sir John	Lyell, Nicholas
Edwards, Rt Hon N. (P'broke)	McCrindle, Robert
Eggar, Tim	Macfarlane, Neil
Elliott, Sir William	MacGregor, John
Fairbairn, Nicholas	MacKay, John (Argyll)
Fairgrieve, Russell	Macmillan, Rt Hon M.
Farr, John	McNair-Wilson, M. (N'bury)
Fell, Anthony	McNair-Wilson, P. (New F'st)
Fenner, Mrs Peggy	McQuarrie, Albert
Fisher, Sir Nigel	Madel, David
Fletcher, A. (Ed'nb'gh N)	Major, John
Fletcher-Cooke, Sir Charles	Marland, Paul
Fookes, Miss Janet	Marlow, Tony
Forman, Nigel	Marshall, Michael (Arundel)
Fowler, Rt Hon Norman	Marten, Neil (Banbury)
Fox, Marcus	Mates, Michael
Fraser, Peter (South Angus)	Mather, Carol
Gardiner, George (Reigate)	Maude, Rt Hon Sir Angus
Garel-Jones, Tristan	Mawby, Ray
Glyn, Dr Alan	Mawhinney, Dr Brian
Goodhart, Philip	Maxwell-Hyslop, Robin
Goodhew, Victor	Mayhew, Patrick
Goodlad, Alastair	Mellor, David
Gorst, John	Meyer, Sir Anthony
Gow, Ian	Miller, Hal (B'grove)
Gower, Sir Raymond	Mills, Iain (Meriden)
Grant, Anthony (Harrow C)	Mills, Peter (West Devon)
Gray, Hamish	Miscampbell, Norman
Green way, Harry	Mitchell, David (Basingstoke)
Griffiths, Peter Portsm'th N)	Moate, Roger
Grist, Ian	Monro, Hector
Grylls, Michael	Montgomery, Fergus
Gummer, John Selwyn	Moore, John
Hamilton, Hon A.	Morgan, Geraint
Hamilton, Michael (Salisbury)	Morris, M. (N'hampton S)
Hampson, Dr Keith	Morrison, Hon C. (Devizes)
Hannam, John	Morrison, Hon P. (Chester)
Haselhurst, Alan	Murphy, Christopher
Havers, Rt Hon Sir Michael	Myles, David
Hawkins, Paul	Neale, Gerrard
Hawksley, Warren	Needham, Richard
Hayhoe, Barney	Nelson, Anthony
Heddle, John	Neubert, Michael
Henderson, Barry	Newton, Tony
Hicks, Robert	Nott, Rt Hon John
Higgins, Rt Hon Terence L.	Onslow, Cranley
Hill, James	Oppenheim, Rt Hon Mrs S.
Hogg, Hon Douglas (Gr'th'm)	Osborn, John
Holland, Philip (Carlton)	Page, Rt Hon Sir G. (Crosby)
Hooson, Tom	Page, Richard (SW Herts)

Parris, Matthew	Stainton, Keith
Patten, Christopher (Bath)	Stanbrook, Ivor
Patten, John (Oxford)	Stanley, John
Pawsey, James	Steen, Anthony
Percival, Sir Ian	Stevens, Martin
Peyton, Rt Hon John	Stewart, Ian (Hitchin)
Pink, R. Bonner	Stewart, A.(E Renfrewshire)
Pollock, Alexander	Stokes, John
Porter, Barry	Stradling Thomas, J.
Prentice, Rt Hon Reg	Tapsell, Peter
Price, Sir David (Eastleigh)	Taylor, Robert (Croydon NW)
Prior, Rt Hon James	Taylor, Teddy (S'end E)
Proctor, K. Harvey	Temple-Morris, Peter
Pym, Rt Hon Francis	Thomas, Rt Hon Peter
Raison, Timothy	Thompson, Donald
Rathbone, Tim	Thorne, Nell (Ilford South)
Rees, Peter (Dover and Deal)	Thornton, Malcolm
Rees-Davies, W. R.	Townend, John (Bridlington)
Renton, Tim	Townsend, Cyril D, (B'heath)
Rhodes James, Robert	Trippier, David
Rhys Williams, Sir Brandon	van Straubenzee, W. R.
Ridsdale, Sir Julian	Vaughan, Dr Gerard
Rifkind, Malcolm	Viggers, Peter
Rippon, Rt Hon Geoffrey	Waddington, David
Roberts, M. (Cardiff NW)	Wakeham, John
Roberts, Wyn (Conway)	Waldegrave, Hon William
Rossi, Hugh	Walker, Rt Hon P.(W'cester)
Rost, Peter	Walker, B. (Perth)
Sainsbury, Hon Timothy	Walker-Smith, Rt Hon Sir D.
St. John-Stevas, Rt Hon N.	Walters, Dennis
Scott, Nicholas	Ward, John
Shaw, Giles (Pudsey)	Warren, Kenneth
Shaw, Michael (Scarborough)	Watson, John
Shelton, William (Streatham)	Wells, Bowen
Shepherd, Colin (Hereford)	Wheeler, John
Shepherd, Richard	Whitelaw, Rt Hon William
Shersby, Michael	Whitney, Raymond
Silvester, Fred	Wickenden, Keith
Sims, Roger	Wiggin, Jerry
Skeet, T. H. H.	Wilkinson, John
Smith, Dudley	Williams, D.(Montgomery)
Speed, Keith	Wolfson, Mark
Speller, Tony	Young, Sir George (Acton)
Spence, John	Younger, Rt Hon George
Spicer, Jim (West Dorset)
Spicer, Michael (S Worcs)	Tellers for the Noes:
Sproat, Iain	Lord James Douglas-Hamilton
Squire, Robin	and Mr. Peter Brooke

Amendment proposed: No. 56, in page 13, line 9, at end add 'except for women aged 60–64 years the personal relief shall be £1,425'.—[Mr. Robert Sheldon.]

Question put, That the amendment be made:

The Committee divided: Ayes 253, Noes 298.

Division No. 170]	[8.15 pm
AYES
Abse, Leo	Brown, Ron (E'burgh, Leith)
Adams, Allen	Brown, Ronald W. (H'ckn'y S)
Anderson, Donald	Buchan, Norman
Archer, Rt Hon Peter	Callaghan, Jim (Midd't'n & P)
Ashley, Rt Hon Jack	Campbell, Ian
Ashton, Joe	Campbell-Savours, Dale
Atkinson, N.(H'gey,)	Canavan, Dennis
Barnett, Guy (Greenwich)	Carmichael, Neil
Barnett, Rt Hon Joel (H'wd)	Carter-Jones, Lewis
Beith, A. J.	Cartwright, John
Benn, Rt Hon A. Wedgwood	Clark, Dr David (S Shields)
Bennett, Andrew(St'kp't N)	Cocks, Rt Hon M. (B'stol S)
Bidwell, Sydney	Cohen, Stanley
Booth, Rt Hon Albert	Coleman, Donald
Boothroyd, Miss Betty	Concannon, Rt Hon J. D.
Bottomley, Rt Hon A.(M'b'ro)	Conlan, Bernard
Bradley, Tom	Cook, Robin F.
Bray, Dr Jeremy	Cowans, Harry
Brocklebank-Fowler, C.	Cox, T. (W'dsw'th, Toot'g)
Brown, Hugh D. (Provan)	Craigen, J. M.
Brown, R. C. (N'castle W)	Crawshaw, Richard

Crowther, J. S.	Jones, Rt Hon Alec (Rh'dda)
Cryer, Bob	Jones, Barry (East Flint)
Cunliffe, Lawrence	Jones, Dan (Burnley)
Cunningham, G. (Islington S)	Kerr, Russell
Cunningham, Dr J. (W'h'n)	Kilroy-Silk, Robert
Dalyell, Tarn	Kinnock, Neil
Davidson, Arthur	Lambie, David
Davies, Rt Hon Denzil (L'lli)	Lamborn, Harry
Davies, Ifor (Gower)	Lamond, James
Davis, Clinton (Hackney C)	Leadbitter, Ted
Davis, T. (B'ham, Stechf'd)	Leighton, Ronald
Deakins, Eric	Lestor, Miss Joan
Dean, Joseph (Leeds West)	Lewis, Arthur (N'ham NW)
Dempsey, James	Lewis, Ron (Carlisle)
Dewar, Donald	Litherland, Robert
Dixon, Donald	Lofthouse, Geoffrey
Dobson, Frank	Lyon, Alexander (York)
Dormand, Jack	Lyons, Edward (Bradf'd W)
Douglas-Mann, Bruce	Mabon, Rt Hon Dr J. Dickson
Dubs, Alfred	McCartney, Hugh
Duffy, A. E. P.	McDonald, Dr Oonagh
Dunn, James A.	McElhone, Frank
Dunwoody, Hon Mrs G.	McGuire, Michael (Ince)
Eadie, Alex	McKay, Allen (Penistone)
Eastham, Ken	McKelvey, William
Edwards, R. (W'hampt'n S E)	MacKenzie, Rt Hon Gregor
Ellis, Tom (Wrexham)	Maclennan, Robert
English, Michael	McMahon, Andrew
Ennals, Rt Hon David	McNally, Thomas
Evans, loan (Aberdare)	McNamara, Kevin
Evans, John (Newton)	McTaggart, Robert
Ewing, Harry	McWilliam, John
Faulds, Andrew	Magee, Bryan
Field, Frank	Marshall, D(G'gow S'ton)
Fitch, Alan	Marshall, Dr Edmund (Goole)
Flannery, Martin	Marshall, Jim (Leicester S)
Fletcher, Raymond (Ilkeston)	Martin, M(G'gow S'burn)
Fletcher, Ted (Darlington)	Mason, Rt Hon Roy
Foot, Rt Hon Michael	Maxton, John
Ford, Ben	Maynard, Miss Joan
Forrester, John	Meacher, Michael
Foster, Derek	Mellish, Rt Hon Robert
Foulkes, George	Mikardo, Ian
Fraser, J. (Lamb'th, N'w'd)	Millan, Rt Hon Bruce
Freud, Clement	Miller, Dr M. S. (E Kilbride)
Garrett, John (Norwich S)	Mitchell, Austin (Grimsby)
Garrett, W. E. (Wallsend)	Mitchell, R. C. (Soton Itchen)
George, Bruce	Morris, Rt Hon A. (W'shawe)
Gilbert, Rt Hon Dr John	Morris, Rt Hon C. (O'shaw)
Ginsburg, David	Morris, Rt Hon J. (Aberavon)
Golding, John	Morton, George
Gourlay, Harry	Moyle, Rt Hon Roland
Graham, Ted	Mulley, Rt Hon Frederick
Grant, George (Morpeth)	Newens, Stanley
Grant, John (Islington C)	Oakes, Rt Hon Gordon
Grimond, Rt Hon J.	Ogden, Eric
Hamilton, W. W. (C'tral Fife)	O'Halloran, Michael
Hardy, Peter	O'Neill, Martin
Harrison, Rt Hon Walter	Owen, Rt Hon Dr David
Hart, Rt Hon Dame Judith	Palmer, Arthur
Hattersley, Rt Hon Roy	Parker, John
Haynes, Frank	Parry, Robert
Healey, Rt Hon Denis	Pavitt, Laurie
Heffer, Eric S.	Pendry, Tom
Hogg, N. (E Dunb't'nshire)	Penhaligon, David
Holland, S. (L'b'th, Vauxh'll)	Powell, Raymond (Ogmore)
Home Robertson, John	Prescott, John
Homewood, William	Price, C. (Lewisham W)
Hooley, Frank	Race, Reg
Horam, John	Radice, Giles
Howells, Geraint	Rees, Rt Hon M (Leeds S)
Huckfield, Les	Richardson, Jo
Hudson Davies, Gwilym E.	Roberts, Albert (Normanton)
Hughes, Robert (Aberdeen N)	Roberts, Allan (Bootle)
Hughes, Roy (Newport)	Roberts, Ernest (Hackney N)
Janner, Hon Greville	Roberts, Gwilym (Cannock)
Jay, Rt Hon Douglas	Robertson, George
John, Brynmor	Robinson, G. (Coventry NW)
Johnson, Walter (Derby S)	Rodgers, Rt Hon William
Johnston, Russell (Inverness)	Rooker, J. W.

Roper, John	Thomas, Dr R. (Carmarthen)
Ross, Ernest (Dundee West)	Thorne, Stan (Preston South)
Rowlands, Ted	Tilley, John
Ryman, John	Torney, Tom
Sever, John	Urwin, Rt Hon Tom
Sheerman, Barry	Varley, Rt Hon Eric G.
Sheldon, Rt Hon R.	Wainwright, H.(Colne V)
Shore, Rt Hon Peter	Walker, Rt Hon H.(D'caster)
Short, Mrs Renée	Weetch, Ken
Silkin, Rt Hon J. (Deptford)	Welsh, Michael
Silkin, Rt Hon S. C. (Dulwich)	White, Frank R.
Silverman, Julius	White, J. (G'gow Pollok)
Skinner, Dennis	Wigley, Dafydd
Smith, Rt Hon J. (N Lanark)	Willey, Rt Hon Frederick
Snape, Peter	Williams, Rt Hon A,(S'sea W)
Soley, Clive	Wilson, Gordon (Dundee E)
Spearing, Nigel	Wilson, Rt Hon Sir H.(H'ton)
Spriggs, Leslie	Wilson, William (C'try SE)
Stallard, A. W.	Winnick, David
Stewart, Rt Hon D. (W Isles)	Woolmer, Kenneth
Stoddart, David	Wrigglesworth, Ian
Stott, Roger	Wright, Sheila
Strang, Gavin	Young, David (Bolton E)
Straw, Jack
Summerskill, Hon Dr Shirley	Tellers for the Ayes:
Thomas, Dafydd (Merioneth)	Mr. James Hamilton and Mr. James Tinn.
Thomas, Jeffrey (Abertillery)
Thomas, Mike (Newcastle E)

NOES
Adley, Robert	Chalker, Mrs. Lynda
Alexander, Richard	Chapman, Sydney
Amery, Rt Hon Julian	Churchill, W. S.
Ancram, Michael	Clark, Hon A. (Plym'th, S'n)
Arnold, Tom	Clark, Sir W. (Croydon S)
Aspinwall, Jack	Clarke, Kenneth (Rushcliffe)
Atkins, Robert(Preston N)	Clegg, Sir Walter
Atkinson, David (B'm'th,E)	Cockeram, Eric
Baker, Kennetb(St.M'bone)	Cope, John
Baker, Nicholas (N Dorset)	Cormack, Patrick
Banks, Robert	Corrie, John
Beaumont-Dark, Anthony	Costain, Sir Albert
Bell, Sir Ronald	Cranborne, Viscount
Bendall, Vivian	Critchley, Julian
Bennett, Sir Frederic (T'bay)	Crouch, David
Benyon, Thomas (A'don)	Dean, Paul (North Somerset)
Benyon, W. (Buckingham)	Dickens, Geoffrey
Berry, Hon Anthony	Dorrell, Stephen
Best, Keith	Dover, Denshore
Bevan, David Gilroy	du Cann, Rt Hon Edward
Biffen, Rt Hon John	Dunn, Robert (Dartford)
Biggs-Davison, John	Durant, Tony
Blackburn, John	Dykes, Hugh
Blaker, Peter	Eden, Rt Hon Sir John
Body, Richard	Edwards, Rt Hon N. (P'broke)
Bonsor, Sir Nicholas	Eggar, Tim
Bottomley, Peter (W'wich W)	Elliott, Sir William
Bowden, Andrew	Eyre, Reginald
Boyson, Dr Rhodes	Fairbairn, Nicholas
Braine, Sir Bernard	Fairgrieve, Russell
Bright, Graham	Faith, Mrs Sheila
Brinton, Tim	Farr, John
Brittan, Leon	Fell, Anthony
Brooke, Hon Peter	Fenner, Mrs Peggy
Brotherton, Michael	Fisher, Sir Nigel
Brown, Michael(Brigg & Sc'n)	Fletcher, A. (Ed'nb'gh N)
Browne, John (Winchester)	Fletcher-Cooke, Sir Charles
Bruce-Gardyne, John	Fookes, Miss Janet
Bryan, Sir Paul	Forman, Nigel
Buchanan-Smith, Alick	Fowler, Rt Hon Norman
Buck, Antony	Fox, Marcus
Budgen, Nick	Fraser, Peter (South Angus)
Bulmer, Esmond	Gardiner, George (Reigate)
Burden, Sir Frederick	Garel-Jones, Tristan
Butcher, John	Glyn, Dr Alan
Butler, Hon Adam	Goodhart, Philip
Cadbury, Jocelyn	Goodhew, Victor
Carlisle, John (Luton West)	Goodlad, Alastair
Carlisle, Kenneth (Lincoln)	Gorst, John
Carlisle, Rt Hon M. (R'c'n)	Gow, Ian

Gower, Sir Raymond	Mills, Iain (Meriden)
Grant, Anthony (Harrow C)	Mills, Peter (West Devon)
Gray, Hamish	Miscampbell, Norman
Greenway, Harry	Mitchell, David (Basingstoke)
Griffiths, Peter Portsm'th N)	Moate, Roger
Grist, Ian	Monro, Hector
Grylls, Michael	Montgomery, Fergus
Gummer, John Selwyn	Moore, John
Hamilton, Hon A.	Morgan, Geraint
Hamilton, Michael (Salisbury)	Morris, M. (N'hampton S)
Hampson, Dr Keith	Morrison, Hon C. (Devizes)
Hannam,John	Morrison, Hon P. (Chester)
Haselhurst, Alan	Murphy, Christopher
Havers, Rt Hon Sir Michael	Myles, David
Hawkins, Paul	Neale, Gerrard
Hawksley, Warren	Needham, Richard
Hayhoe, Barney	Nelson, Anthony
Heddle, John	Neubert, Michael
Henderson, Barry	Newton, Tony
Hicks, Robert	Nott, Rt Hon John
Higgins, Rt Hon Terence L.	Onslow, Cranley
Hill, James	Oppenheim, Rt Hon Mrs S.
Hogg, Hon Douglas (Gr'th'm)	Osborn, John
Holland, Philip (Carlton)	Page, Rt Hon Sir G. (Crosby)
Hooson, Tom	Page, Richard (SW Herts)
Hordern, Peter	Parris, Matthew
Howe, Rt Hon Sir Geoffrey	Patten, Christopher (Bath)
Hunt, David (Wirral)	Patten, John (Oxford)
Hunt, John (Ravensbourne)	Pawsey, James
Hurd, Hon Douglas	Percival, Sir Ian
Irving, Charles (Cheltenham)	Peyton, Rt Hon John
Jenkin, Rt Hon Patrick	Pink, R. Bonner
Jessel, Toby	Pollock, Alexander
Jopling, Rt Hon Michael	Porter, Barry
Kaberry, Sir Donald	Prentice, Rt Hon Reg
Kershaw, Anthony	Price, Sir David (Eastleigh)
Kimball, Marcus	Prior, Rt Hon James
King, Rt Hon Tom	Proctor, K. Harvey
Knight, Mrs Jill	Pym, Rt Hon Francis
Knox, David	Raison, Timothy
Lamont, Norman	Rathbone, Tim
Lang, Ian	Rees, Peter (Dover and Deal)
Langford-Holt, Sir John	Rees-Davies, W. R.
Latham, Michael	Renton, Tim
Lawrence, Ivan	Rhodes James, Robert
Lawson, Rt Hon Nigel	Rhys Williams, Sir Brandon
Lee, John	Ridsdale, Sir Julian
Le Marchant, Spencer	Rifkind, Malcolm
Lennox-Boyd, Hon Mark	Rippon, Rt Hon Geoffrey
Lester, Jim (Beeston)	Roberts, M. (Cardiff NW)
Lewis, Kenneth (Rutland)	Roberts, Wyn (Conway)
Lloyd, Ian (Havant & W'loo)	Rossi, Hugh
Lloyd, Peter (Fareham)	Rost, Peter
Loveridge, John	Sainsbury, Hon Timothy
Luce, Richard	St. John-Stevas, Rt Hon N.
Lyell, Nicholas	Scott, Nicholas
McCrindle, Robert	Shaw, Giles (Pudsey)
Macfarlane, Neil	Shaw, Michael (Scarborough)
MacGregor, John	Shelton, William (Streatham)
MacKay, John (Argyll)	Shepherd, Colin (Hereford)
Macmillan, Rt Hon M.	Shepherd, Richard
McNair-Wilson, M. (N'bury)	Shersby, Michael
McNair-Wilson, P. (New Fst)	Silvester, Fred
McQuarrie, Albert	Sims, Roger
Madel, David	Skeet, T. H. H.
Major, John	Smith, Dudley
Marland, Paul	Speed, Keith
Marlow, Tony	Speller, Tony
Marshall, Michael (Arundel)	Spence, John
Marten, Neil (Banbury)	Spicer, Jim (West Dorset)
Mates, Michael	Spicer, Michael (S Worcs)
Mather, Carol	Sproat, Iain
Maude, Rt Hon Sir Angus	Squire, Robin
Mawby, Ray	Stainton, Keith
Mawhinney, Dr Brian	Stanbrook, Ivor
Maxwell-Hyslop, Robin	Stanley, John
Mayhew, Patrick	Steen, Anthony
Mellor, David	Stevens, Martin
Meyer, Sir Anthony	Stewart, Ian (Hitchin)
Miller, Hal (B'grove)	Stewart, A.(E Renfrewshire)

Stokes, John	Walker-Smith, Rt Hon Sir D.
Stradling Thomas, J.	Waller, Gary
Tapsell, Peter	Walters, Dennis
Taylor, Robert (Croydon NW)	Ward, John
Taylor, Teddy (S'end E)	Warren, Kenneth
Temple-Morris, Peter	Watson, John
Thomas, Rt Hon Peter	Wells, Bowen
Thompson, Donald	Wheeler, John
Thorne, Neil (Ilford South)	Whitelaw, Rt Hon William
Thornton, Malcolm	Whitney, Raymond
Townend, John (Bridlington)	Wickenden, Keith
Townsend, Cyril D, (B'heath)	Wiggin, Jerry
Trippier, David	Wilkinson, John
van Straubenzee, W. R.	Williams, D.(Montgomery)
Vaughan, Dr Gerard	Wolfson, Mark
Viggers, Peter	Young, Sir George (Acton)
Waddington, David	Younger, Rt Hon George
Wakeham, John
Waldegrave, Hon William	Tellers for the Noes:
Walker, Rt Hon P.(W'cester)	Lord James Douglas-Hamilton
Walker, B. (Perth)	and Mr. Robert Boscawen.

Question accordingly negatived.

Question proposed, That Bill.

Mr. Robert Sheldon

Even in this wretched clause we can see a faint glow in the provision to increase the blind allowance. It is set out in the precise terms of an amendment moved by my hon. Friend the Member for Edinburgh, Central (Mr. Cook) during Committee stage of the Finance Bill last year.

It is a useful provision, but we must remember that it will cost the Revenue only about £1 million as opposed to the £2.2 billion forgone because of the Government's failure to index personal allowances. Nevertheless, we are grateful for even small mercies, and I express that gratitude today.

Question put and agreed to.

Clause 23 ordered to stand part of the Bill.