PAY AS YOU EARN REPAYMENTS

HC Deb 11 May 1981 vol 4 cc542-87

Mr. Robert Sheldon

I beg to move amendment No. 25, in page 18, line 35, leave out paragraph (a).

The Chairman (Mr. Bernard Weatherill)

With this it will be convenient to take the following amendments:

No. 26, in page 18, line 35, leave out 'unemployment benefit or'.

No. 27, in page 18, line 35, leave out from benefit' to 'in' in line 38.

No. 28, in page 18, line 38, after '1977', insert 'which is taxable by virtue of section 27 above'.

Mr. Sheldon

Subsection (a) makes provision for tax benefits to be withheld from the unemployed and from people on strike. The unemployment benefit office will be able to set off tax liability against the refund of the tax. Any refund due will be paid only on return to work. The Government see that as an incentive to encourage the unemployed to find work quickly. They have incentives for all sorts of things, none of which seem to work, because they fail to understand what motivates the British people. They will be disappointed yet again if they believe that this measure will get people back to work. The striker will not receive any benefit. and he will only get the tax refund when he returns to work.

We heard earlier that the Civil Service will be increased by 3,500, yet the Government set great, if not excessive, store by reducing the Civil Service. The Inland Revenue is the major Department involved in this measure. On I April 1979 it had 84,000 civil servants. The number dropped to 79,000 on 1 January 1980, and on 1 January' 1981 the figure was 76,200. Even with their enormous impetus to reduce bureaucracy, the Government appear able to contemplate with equanimity an additional 3,500 civil servants.

We must also bear in mind the enormous increase in the number of unemployed. In April 1979 the figure was 1,340,000. It had increased to 1,470,000 by January 1980, and is now about 2½ million.

The Government have made the reduction of the Civil Service into almost a political philosophy in a way unprecedented in this century. Civil servants are aware that the Government do not like them and perhaps even dislike them. The Government preach the virtues of good management, so it does not make sense to have that relationship with those with whom they come into daily contact. The Government have offset their dislike for the Civil Service and their desire to reduce it against their dislike for the unemployed and those on strike, and they are prepared to accept the enormous increase in the Civil Service.

Not only are many of the measures in the Bill unfair, but they come at a most inopportune time. People are under great pressure. Fear of unemployment is spreading. In addition, it tends to affect certain parts of the country more than others. In the 1960s unemployment was only 200,000. In the 1970s it was about ½ million, rising to about 1 million in the latter half of that period. It is now about 2½ million and approaching 3 million. People are not out of work because they are workshy. It is inopportune to suggest that this legislation will encourage people to work. The Government's economic policy is failing, so they are naturally blaming others, and the ideal candidates are strikers and the unemployed. The Government's monetary policies have reduced our manufacturing output and prosperity. In January 1980, industrial output was 111.6 per cent. By January 1981 it had declined to 98.3 per cent. Srikes have had only a trivial effect on that staggering drop.

Mr. Anthony Fell (Yarmouth)

I must have misunderstood the right hon. Gentleman. I thought that he gave the highest figure of unemployment during the Labour Government as 1 million.

Mr. Sheldon

The hon. Gentleman misunderstood me. I was giving rough figures for the latter part of the 1970s. I said that unemployment was 1 million. In 1979 it was 1,300,000. I shall be happy to be more precise if the hon. Gentleman wishes.

The Financial Secretary mentioned the Departments in which the additional civil servants would be employed—the Department of Health and Social Security, and the Department of Employment, but mainly the Inland Revenue.

The provision for taxing benefits reminds one of the time, when public expenditure cuts reached the end of the line in the 1930s. Governments first cut capital projects until hardly any are left. They then turn to transfer payments. Taxing unemployment benefits is an easy option. It will not end there. The search for scapegoats went on in the 1930s. Transfer payments were taxed and unemployment benefit was cut. We shall see the same again. The Chief Secretary will apply the same pressure to transfer payments from the DHSS as his forerunners did 50 years ago.

Mr. Ioan Evans (Aberdare)

In their first Budget, the Government introduced massive concessions for the wealthy. The taxation of unemployment benefit is the other side of the coin. Is not that scandalous?

Mr. Sheldon

I am grateful to my hon. Friend for that observation. I shall be dealing with the wholly unjustifiable way in which taxation is being biased, which will cause a great outcry once it is fully understood.

Mrs. Elaine Kellett-Bowman (Lancaster)

The right hon. Gentleman, like myself, was a member of the Select Committee which dealt with tax credits. That Committee very largely agreed that all income should be taxed, irrespective of source. There was no division between the parties on that. Does not he therefore agree that it was a pity that the Labour Government did not introduce this, as it would have been totally fair all round?

Mr. Sheldon

It is a great pity that the hon. Lady was not present earlier, as that was dealt with on clause 27. Had she been here, she would know that every hon. Member who spoke agreed on that. There was no division whatever. I shall not go into the details, as I am sure that I should incur your displeasure, Mr. Weatherill. That was disposed of as a matter which did not divide the Committee. What we are arguing about is the means.

In the incentives which, according to the Government, are being provided for jobs, we are seeing something not all that different from what happened in the 1930s, when there was also great talk about scroungers. Anyone who went through the 1979 election will recall strongly the antipathy felt by a large part of the electorate towards scroungers on social welfare and unemployment pay. The same happened in 1930. People were looking for scapegoats. The unemployed were held to be capable of employment if only they would seek it. Eventually, the war came along, unemployment dropped dramatically from millions to about 100,000 and there were no further arguments about scroungers. We are now having to relearn that lesson, which should not need to be relearned. The people of this country are still anxious to work. Anyone who doubts that has only to talk to people in the employment offices and the jobcentres.

In an earlier debate, the hon. Member for Gateshead, West (Mr. Horam) put forward an argument that is relevant to this debate. He asked whether this was a serious way of widening the tax base or whether it was just at the lower end. I do not believe that it has anything to do with that. One does not employ 3,500 civil servants just to widen the tax base. There must be a greater reason than that. If one compares the amount of money that will be gained with the cost of the civil servants, the cost of collection is one that the Inland Revenue would normally boggle at and not consider to be a reasonable proportion to spend on collecting that amount of revenue—unless there were wider considerations in mind.

As we well know, the considerations are those of getting people working again and making sure that they do not idle away their time. We are all aware of the fear of unemployment, but those of us from the North and from the other regions know perhaps rather more strongly, how it is felt in our constituencies. With the recent local elections, we were perhaps rather more prominent in our constituencies than at other times. One has only to witness the strength of feeling on the subject to appreciate how deeply these matters concern the working people of this country.

I was told last week when we debated a number of tax measures which would normally concern my constituents and others as matters of particular importance that they were held not to have the same degree of importance as on previous occasions. I was told again and again that the major issue that affects all the people of my constituency is the fear of unemployment. It frightens every one of them. As factory after factory closes—and for every closure, there are half a dozen rumours—people in my constituency become more and more frightened at the rising level of unemployment.

8.15 pm

At the time of greatest fear, what do the Government do? They say that those whose fears are realised will be denied their own tax refunds, so that when the blow finally strikes, their own money will be sequestered and they will not be allowed to have it until they get back to work, if and when work becomes available. Only then will they have the chance to make up the deficit which the Government will make sure that they must accept.

It is not only that which concerns me. Another worry, to which I must return although I mentioned it earlier, is the increasingly widespread feeling that the tax system that we regarded as an open and fair system, which we could admire, run by civil servants whom we sometimes mocked but whom we fundamentally respected for their integrity and independence, will now involve privileged taxpayers due to the distortion of the system in which the clause plays its part.

Taxpayers on schedule D, for example, will pay tax many months later. They will be able to claim a wide range of expenses that those on schedule E cannot even consider. They or their accountants will be able to conduct a dialogue with the tax inspector. A whole range of avoidance devices, some less acceptable than others, will be available and any accountant will use at least some of them. Let us compare that position with the situation of those on schedule E, whom we are considering here. The schedule E taxpayer hands over the money before receiving it. He can claim no expenses. The computation of his tax is reduced to a piece of simple arithmetic, and even that is to be withheld from him when he is unemployed. If clause 28 is accepted—and we shall strongly oppose it—the schedule E taxpayer who does not understand or who makes a mistake will find that the mistake cannot be rectified in any way.

As my hon. Friend the Member for Edinburgh, Central (Mr. Cook) pointed out, all this would almost create a class system in this country even if one did not exist already. The Government are distorting our tax system and debasing the traditional standards of the Civil Service to ensure that their crude and even cruel method of taxation of benefits is produced at a cost of 3,500 civil servants. That is no way to change the tax system and we shall continue to oppose it.

Mr. Richard Wainwright

At the expense of a great deal of ingenuity on the part of the Inland Revenue and an enormous burden upon employers, this country, almost alone in the world, maintains a system of pay-as-you-earn income tax so exquisitely devised, although so very difficult to operate, that from one pay day to another the average taxpayer is, as it were, up to date proportionately in his tax position. It is a remarkable system. Many people query whether it is any longer justifiable, but it has been one of the conspicuous features of British administration hitherto and it still stands.

The Government now take it upon themselves to take power to produce regulations partially to abort that system. For the first time, so far as I am aware, the principle embodied in the taxes Acts that when the tax tables show that a refund is due it must be paid on the next pay day is to be aborted in respect of unemployment benefits. The meanness is that this will all be done through the employer. The Government will use employers to withhold refunds which, during all the years that PAYE has existed, have otherwise been made promptly to the employee.

If the Chief Secretary can assure me that the regulations will somehow remove that distasteful burden from the employer, I shall be prepared to think again about this matter. However, the Bill contains no saving clause to show that the employer will be protected. It is invidious in the extreme to ask employers to shoulder the burden of operating such a distasteful mechanism.

There is no saving clause to ensure that the regulations will operate only where there is good prima facie evidence that the amount of PAYE refund due is at least roughly equivalent to the tax that will eventually become due on the benefits which the unemployed person has received. If there were a saving clause to ensure that as closely as possible the regulations would provide that the refund would be withheld only in so far as it roughly balanced the estimated tax due on the unemployment benefit up to the end of a certain period, I would again be prepared to have second thoughts. But the Bill contains no such saving clause.

It will be apparent to all hon. Members that the PAYE refund due to a taxpayer who becomes unemployed may, for all kinds of reasons, be much larger than any liability on his unemployment benefit. For example, as is well known, the PAYE system takes account in one year of failures to assess tax in previous years, be it under-assessment or over-assessment. That can be brought forward into the current tax year and can be the subject of refunds.

Such refunds can be extremely large. If a major error in a previous year is discovered, an employee can receive a large refund, far larger than his liability on unemployment benefit. However, there is nothing in the clause to ensure that the regulations will take care of what will otherwise be a gross inequity.

There is also the question of error. We have already been told of the statement by the Chairman of the Inland Revenue that one in 10 PAYE codes are in error. That is a frequent source of substantial PAYE refunds. I cannot for the life of me see any possible justification for withholding a refund arising from a major error simply because the Government cannot think of any method within the PAYE system of taxing unemployment benefit.

It would be a major departure of principle to withhold refunds which in equity belong to the taxpayer simply because the Government cannot apply their own laws to their own disbursements. We should not give the Government power to issue these regulations in the absence of saving clauses in the Bill which state the parameters of these regulations. The Government would be wise to pause and consider whether it will not help to destroy public confidence in the PAYE system by insisting that employers must withhold what may be large sums from their employees for reasons that have absolutely nothing to do with the liability to tax on unemployment benefit.

Mr. John Maxton (Glasgow, Cathcart)

When Labour Members complain about the Conservative Party making a distinction between the so-called scroungers on social security benefit and those who evade taxation, I have often heard Conservative Members say "Ah well, it is different". The difference seems to be that when someone receives unemployment, social security or sickness benefit he is receiving money from the State, whereas when someone pays tax it is his money and essentially he is trying to keep more of it.

But there is now a total inconsistency in that argument. Now, when someone who is unemployed or on strike is entitled to a return on his own money, he will not receive it until such time as he returns to work. In other words, he will no longer get what he is morally entitled to. As is typical of the Government, the only consistency is that they are hitting the poorest and making sure that their wealthy, fatted calf friends are all right. That has been the consistent theme running through the Government's economic policy, particularly their fiscal policy.

We must look at these clauses in the context of total legislation in terms of social security, unemployment and other welfare benefits. They cannot be considered in isolation. We must look at them in the context of the person who becomes unemployed, and we must also remember that the unemployment benefit increase last year suffered a 5 per cent. abatement.

I am glad to see my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) on the Opposition Front Bench, because this is very much an area with which he is concerned. We must bear in mind the fact that the DHSS has introduced new regulations to ensure that those on social security are subject to a regime. Certainly, people in my constituency have been subjected to threats about the possibility of defrauding the DHSS. If there is the slightest suspicion, they are told "You really ought to come off benefit", which ensures that payments are kept to a minimum.

8.30 pm

Of the unemployed, 99 per cent. find themselves in that position through no fault of their own, and they are desperate to find work. The hard drive against the unemployed is morally indefensible. In addition, it is based on an out-of-date myth that, somehow or other, jobs are available. It is based on the myth that people strike willy-nilly and that if pressure is applied they will not do so. It is thought that people will somehow find jobs when there are no jobs to be found.

The Government will not give the unemployed their money. Next year they will cut out earnings-related unemployment benefit. Such actions contradict something that the Prime Minister said recently, namely, that if the unemployed cannot find jobs in South Wales they should move to find them. If tax rebates are not given back immediately, and if earnings-related benefits are not given, the unemployed will find it even more difficult to look for work elsewhere. If the Government take such action they will in effect be telling people to look for jobs in their own areas. The unemployed will find it more difficult to move elsewhere if they do not have the capital to survive a period of initial unemployment.

Mr. Campbell-Savours

That is important.

Mr. Maxton

Of course it is an important point; I made it. In the changing world in which we live, modern technology will pose an increasing problem. The Government have not faced the fact that some unemployment is due to technological change. Unemployment can be dealt with only if the unemployed have money—through tax rebates, earnings-related benefits and redundancy payments—when they first lose their jobs. Such money would give them opportunities not only in the areas in which they live but throughout the country. The unemployed would then be able to move easily and retrain in a new skill.

When we win the next election the economy will start to move again. However, people will still have to move from one job to another. They will have to be trained and retrained between one employment and another. If that is to be done satisfactorily, people will need more money in the initial months of unemployment.

To leave the repayment of tax until a person goes back to work—which may be a long time—is indefensible. I had thought that one of the Government's aims was to create a mobile work force. They told us that that was why they wanted to introduce the sale of council houses. This legislation will make it more difficult for people to look for work elsewhere. Most of my constituents find it desperately difficult to find a job anywhere. This legislation will make it even more difficult for them.

Mr. Austin Mitchell

It is clear from their approach to economics and to the Bill that the Government are a body of men and women who are mad on incentives. Perhaps I should have paused between "mad" and "on incentives". They are keen on incentives, but make distinctions among the incentives that they apply. For the working class, the trade unionists and the less well off, the incentive is the whip. For them, the main incentive is a rise in unemployment. That is their incentive to stay at work and not to ask for wage increases. For the well-off, there is another incentive. The Government think that they belong to a different section of society, which needs the carrot of tax cuts and direct benefits. It is also clear that that incentive forms part of their argument in favour of the clause. The clause is an incentive to stay at work. If a person does not stay at work, his tax repayments will be delayed, regardless of whether he is out of work through his own fault. The clause represents an incentive to stay at work. I am convinced that the Government will abandon this incentive craze only when the sole incentive for Governments looms on the horizon—the threat of an election. Some Back Benchers have already seen that threat; perhaps that is why, shamefaced, they are not here. That incentive will soon be felt among the ranks of the Tory Party.

There will be a massive and gathering protest against what is being done. There are aspects now of an economic version of Jonestown. The prophet having led the chosen people into this disastrous mess, those people are beginning to realise that the prophet is asking for ritual suicide. That realisation will spread. Tory Back Benchers, at the end of this economic folly, will wonder why, in their unemployment, which will result from the election defeat of the Tory Government, they are not getting the massive tax rebates to which most of them would be entitled through not having not only their parliamentary but their outside salaries to help them through the unemployment that the Prime Minister will force upon them.

The incentive argument, when applied to the unemployed, is an insult to a section of society which should be helped and protected. There is no other explanation for the continued rise in unemployment than deliberate Government policy. It cannot be frictional or transitional unemployment. It cannot be unemployment generated by new technology, because we do not have the investment to produce the new technology. It cannot be unemployment generated by productivity. It is not even generated by the world recession. Why should the impact of the world recession be harder, deeper and steeper in our economy, which should be insulated by oil revenues? The only explanation is that it has been deliberately engineered to bring wage settlements down and the unions to heel.

The Government are now adding insult to this injury. [Interruption.] I do not know whether the hon. Member for Yarmouth (Mr. Fell) wishes to intervene to discuss the causes of unemployment. There is no other logical explanation for the rapid rise in unemployment—more than one million in two years—than deliberate Government policy. For the unemployed to be treated in this way is to add insult to injury. When this tax rebate is most necessary—they have a right to it; it is their money—it is being withheld from them. It is dangled before them like a carrot until the end of the tax year or their unemployment, whichever comes first. I repeat, when they need this money—their money—to help them plan their finances for the undoubtedly difficult period ahead, it is being withheld from them by the Government.

Mr. Maxton

Does my hon. Friend accept that this may cost the Government more money? Many honest, hard-working people, when declared redundant, are anxious to stay off social security because they dislike the idea of receiving social security. Many use the tax benefits to keep off unemployment and social security benefits for even longer.

Mr. Mitchell

My hon. Friend is right. Such people will obviously qualify for social security. That need will be forced on them by the Government, despite the Government's allegations of their being scroungers and layabouts. This tax rebate, which is their right and which will help to cushion them against the consequences of unemployment, is being snatched away from them by the Government for no easily understood reason. What kind of Government can do this to the unemployed, whose numbers are increasing rapidly and will continue to increase remorselessly throughout this year and next year because there is no alternative to increasing unemployment?

The Government set out a vision of improving society in some way, but they are throwing into reverse all the gains of the post-war period. All the better understanding of social structures, all the improvements that have been made in the post-war period, have been thrown into reverse because of sheer malevolence against the unemployed—and strikers. The Prime Minister is recreating the society, with the benefits that we have built up, so hard won since the war, and rebuilding it in her own image—divisive, vindictive, embittered. At the end of it all, it is tarted up with incentives, peroxided with the kind of incentives to the well-off that have been the main motive force behind the Government's economic policy over the last two years.

Thanks to measures such as this, Britain is becoming steadily a nastier, more unpleasant, more divisive and more hate-filled place, as a direct consequence of the present Government's policy. As despair and unemployment grow, that situation will get far worse, because the Government must now look around for someone to blame for their own failures—for the failure of these incentives to produce the promised economic results, for the failures of monetarist economic policy to produce the growth, and for the failure of night to follow day in the way in which the Chief Secretary promised it would. We are in a victim-of-the-month society where the Prime Minister and the Government look round for fresh victims to blame for their own failures.

That might suit the temperaments and prejudices of the Conservative Party. However, from the point of view of the unemployed, who are being treated to shabby measures such as this, it is nothing but vindictiveness. The unemployed, rising in number, are now to be not only belaboured with accusations but robbed of the pittance of tax repayments which is their right.

Unemployment is an enormous personal tragedy to anyone hit by it. It deprives people of almost the nexus of their existence, because a job is so important. The contacts, workmates and friends that come with a job are very important. It is not only the money but the whole social structure of a job. It is the whole structure of a being that is provided by a job. People are deprived of their mainspring by unemployment. As they see it, they are deprived of the esteem of their fellow men and certainly of contact with workmates, and they are humiliated by unemployment. Now, this patriotic, glorious Goverment are to add to that the additional humiliation of withholding these tax payments.

Professor Patrick Minford has talked of an economic policy of rational expectations. The only rational expectation that one can have of the consequences of the present Government's economic policy is a continuous rise in unemployment. Just when that is happening and is certain to continue, is that the moment for treating the unemployed in this shabby fashion? This is just when. the Government should be declaring their sympathy—not using those glycerine tears of sympathy for the unemployed that the Prime Minister and so many other Ministers have thought necessary to put in their eyes. They should be increasing the long-term benefits and helping the unemployed by doing something for them. What are the Government now doing in their shabby way? They are taking back from the unemployed a tax repayment which should be theirs and is theirs as of right.

As the hon. Member for Colne Valley (Mr. Wainwright) said, this is not only breaching a basic principle of the tax system—prompt and immediate repayment. It is breaching the principle that the money is, after all, theirs. Just when the Government should be speeding up these tax repayments, they are withholding them. They are doing all this to appease a clamour in their ranks which they themselves have helped to generate—a clamour against the unemployed and against strikers and a clamour for victims.

That is why the House should reject this measure. In a sense, that is why it is sad to see someone quite extraordinarily able, in the form of the Chief Secretary, facing the humiliating job of defending this tawdry little measure. However, as he replies, it will be useful to the House if he comments on some specific points.

Mr. Bob Cryer (Keighley)

My hon. Friend has been very generous to the Chief Secretary, but, does he accept that if the Chief Secretary does not like doing the job, he does not have to do it? If the Chief Secretary finds crushing the unemployed so distasteful, he could retrieve some tangled shreds of what is left of his honour, resign and stand up for the unemployed.

8.45 pm

Mr. Mitchell

My hon. Friend is correct. Those identified with the policy have a choice. If they do not take the obvious choice, clearly they approve wholeheartedly of the policy and all its consequences. It is sad to see the Chief Secretary rushing in to embrace the consequences of the folly, admittedly of others, but which he had the chance to distance himself from on taking over his office.

I understand that tax rebates will be withheld until the end of unemployment or the end of the tax year. Does it have to be that long, in the sense that someone becoming unemployed at this time of the year—if the unemployment is prolonged—may have a long wait for tax repayment? Is it not possible to devise an interim repayment system after a shorter time for those extreme cases who would be hit hard by prolonged unemployment? Why is a distinction made in the clause between the unemployed, who receive a tax rebate at the end of a tax year or a period of unemployment, and those involved in trade disputes, from whom a tax rebate is withheld until the end of the dispute even if the tax year ends before that? Why is there that distinction and why such a long period?

What is the main reason for this particularly nasty measure? Why should tax rebates be withheld during unemployment? Is it because it will be administratively too difficult to pay rebates during unemployment, once benefit is treated as taxable income? Or is it an attempt to reduce the living standards of the unemployed? Those are the alternatives. It is up to the Government to avow what they are doing -with this unpleasant measure.

Mr. John Horam

I find the Government's attitude in this subsection hard to understand. The amendment refers only to the unemployed. We are not talking about the separate issue of those engaged in industrial dispute. As the hon. Member for Grimsby (Mr. Mitchell) said, we are concerned about the involuntarily unemployed and the problems that they face.

A number of Opposition Members have said that people are morally entitled to the tax repayments that they should receive in normal circumstances when they become unemployed. Since the war, as the hon. Member for Colne Valley (Mr. Wainwright) said, we have had a cumulative tax system. The logic of that system is that every week one is roughly in balance with one's tax payments and therefore entitled to repayment should one become unemployed.

Mr. Fell

That is correct.

Mr. Horam

I am glad to hear the hon. Gentleman agree. That should appeal to the Government just as much as to any Opposition Member. It is something to which the Government should attach importance. As they would say, the money belongs to the people and not to the Government. It is money that has been overpaid in taxation and that the unemployed are entitled to have repaid.

As the hon. Member for Glasgow, Cathcart (Mr. Maxton) said, the Government have been encouraging people to consider mobility and have been endeavouring to justify their housing policy. They have talked about the need to move to find other jobs. People need every penny they can get if they are to take that big and courageous step of going to another part of the country to find work.

It is not always easy to obtain the repayment quickly in normal circumstances. If a person ceases to be employed, his employer no longer handles his tax matters, and he must deal with them himself. He must take his P45 to the Inland Revenue and claim back the tax. It does not return automatically as it would if, for example, he were on strike and still nominally employed by the same employer, who was still handling his tax matters. Therefore, even in present circumstances it is by no means easy to get back reasonably quickly the money to which one is morally entitled. It usually takes at least a month before one has the money, which one may badly need earlier.

The hon. Member for Grimsby (Mr. Mitchell) speculated about the possible reasons. I fear that the real reason is the second, dreary one that he suggested—simple administrative convenience. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) extracted from the Government earlier the information that they are committed to engaging another 3,500 civil servants to handle the changes in taxation of short-term benefits. If they continued to handle tax repayments in the traditional way they might need even more. They are having to consider this change in the system to confine the number to 3,500.

If the Government dealt with the matter in two operations, making the repayments separate from the taxing of short-term benefits, I imagine that that would require more civil servants than the Government's proposals imply. I suspect that that is why they are trying to take it all in one go, subtracting one item from the other and giving the taxpayer a net sum. In netting his potential liability to tax on his short-term benefits from any tax repayments due to him, they are cutting administrative corners and taking less administrative time.

It will be interesting to hear what the Chief Secretary says, but I suspect that the real reason is to save Civil Service time in dealing with the consequences of the Government's actions. That is the dreary reason why people are having to be loaded with this additional difficulty at a particularly trying time.

Mr. Stan Thorne (Preston, South)

When I look at this part of the Bill I am reminded of the section of the Social Security (No. 2) Act 1980, which results in the withholding of unemployment benefit from, for example, workers dismissed by an employer for belonging to a trade union, a dismissal that results in a picket. Although he has a notice of dismissal from an employer and has a P45, a person on a picket is not eligible for unemployment benefit under that Act. We have before us a similar shabby measure.

This is another stroke by the Government that will inevitably mean hardship for the unemployed. The Chief Secretary may give figures to try to contradict what I am about to say, but I believe that very few unemployed people entitled to unemployment benefit receive more in benefit than they received as earnings. If there are such people, that is a remarkable condemnation of the level of wages paid in some of the industries concerned.

Even if there are those in that position, we are talking about the money of a wage earner which has been taken from him in the expectation that his earnings relate to a position on the PAYE tax code documents and that at the end of the year the amount deducted will relate to the code number that he has had during that period. If he is unemployed for two or three weeks, inevitably his level of earnings, plus whatever benefits he may have received will fall during that period and therefore he will be entitled to some repayment. That must be the case, otherwise the provision would not appear in the Bill.

One can only assume that the purpose is to save money, and it is precisely that which is immoral on the part of the Government, bearing in mind that it does not become their money until the end of the financial year, when it has been determined that the deduction from the individual employee is due to the Inland Revenue.

I suppose we should not be surprised at the nature of this mean approach by the Government to the unemployed. It is interesting to reflect on the contents of the manifesto put before the electorate by the Conservative Party in 1979. We have seen a plethora of measures taken by this Government that were not spelt out in that manifesto, and this is one of them. It would have been difficult to produce a manifesto that catalogued the hardships that the Government intended to inflict on the people, if elected, and obviously for good political reasons it was not the Conservative party's intention to keep the people very well informed about its intentions. We have had a series of measures that were never put before the British electorate.

That, of course, explains why, on the doorsteps during the past fortnight, we continually heard one name spoken with more hatred than I should care to hear applied to my own name. I refer, of course, to the present Prime Minister. It is clear that the bulk of the electorate—certainly in the North and NorthWest—ascribe their present hardships and difficulties directly to the activities, the hard line, the intransigence, the near demagogy that we hear from the Prime Minister in this House week by week.

It is for those reasons that, not with a great deal of optimism, I hope that we can defeat this measure. If we do not, I am convinced that it is only a matter of time before the electorate throw out of the House the architects of measures of this description who sit on the Treasury Bench.

Mr. Cryer

I can recall, a few days ago, being with a group of Labour Members and having a small debate with the Secretary of State for Employment. The right hon. Gentleman suggested then that debates on unemployment should take place in the House. The same day, I asked the Leader of the House to arrange a general debate on unemployment. The right hon. Gentleman said that the Government had no plans for one. That being so, inevitably we have to focus our attention on the detailed attacks that the Government are making on the unemployed and their resistance to any measure designed to remedy the position of unemployment.

9 pm

I must, of course, limit my remarks to the amendment. I want to raise one or two issues. Repayments will be regulated by statutory instrument. I do not want to anticipate amendment No. 32, which recommends that regulation be by affirmative resolution. I object to the Committee handing over an untrammelled power to make regulations for tax purposes to the relevant Minister. It is a device to hand over power to the Civil Service. We have insufficient control of statutory instruments to allow Parliament to exercise adequate scrutiny. In this instance, where provision—not a very clear provision—is envisaged by the Government to repay at some stage money which is already due to unemployed people, there is no reason why the procedure cannot be contained in the Finance Bill and be debated with the rest of the Bill, clause by clause.

It is scandalous to withhold money from the taxpayer and from people whom even the Government must know are in difficulties. Do they realise that when a person is unemployed he is in financial difficulties? Do they know that it is a shattering experience? We tell them, but it may be difficult for them to grasp. Conservative Members live cossetted lives. They earn £20,000 to £30,000, if they are members of the Cabinet, although those in marginal constituencies have little prospect of continuing in their present role after the next election. Some of them, like the Chief Secretary, will move swiftly into the courts to earn lucrative fees which are the scandal of our legal system. They can earn £400 or £500 a day. So perhaps they do not understand that when a person is unemployed they actually need money because they have no other source of income. When one is unemployed, one's wages disappear and one is reduced to living on unemployment benefit.

Unfortunately,I have come across too many people who have been made unemployed. Sometimes they believe the rubbish that is contained in Conservative newspapers such as the Daily Mail and The Sun, saying that life on the dole is very sunny. Perhaps hon. Members will recall the report in The Sun, when Larry Lamb was busy bribing his way by laying out the inside pages of The Sun in the service of the Conservative Central Office, when he was building up to the accolade of "Sir Larry". It was discovered that there were reciprocal relations between ourselves and Spain for the payment of unemployment money. The Sun's headline was "Olé Dolé". The impression that The Sun gave was of unemployed people sunning themselves on the Spanish coast and going round the corner to collect their unemployment pay.

When the vast majority of people become unemployed their incomes go down with a bump. There is a vast gap between some newspaper campaigns, and what actually happens. Life is not comfortable on the dole, particularly for a family man. A number of difficulties are caused.

The kernel of the argument is that a person rendered unemployed needs money. He needs more than unemployment pay because it is a time of intense difficulty. Yet the Government propose to withhold tax rebates from the unemployed for an unspecified time. We shall be interested to hear the Minister's observations, although I do not understand why the information could not be in the Bill.

More and more people face the problem of unemployment. Already about 2½ million people are unemployed. That will rise to 3 million. The opposition to the Government's policies was demonstrated vehemently last Thursday in one of the most splendid county council wins that the Labour Party has experienced post-war. The writing is on the wall for the Conservatives.

The Prime Minister, when questioned about unemployment on radio or in the House puts on her Saatchi and Saatchi voice. That is a soft, slightly husky tone to show that her concern is there all the time. When the Prime Minister talks about scroungers her voice assumes the slight shrillness that we have come to know. She assumes the hectoring manner which is really hers and which shows that she does not care that much about unemployment. If she cared about the unemployed she would not attack their benefits and she would not introduce such a provision in a Finance Bill. It is no good the Prime Minister using Saatchi and Saatchi words and the soft intonations with which we were regaled after the election. She spent a lot of time learning the techniques. She was trained like a Pavlovian dog to react correctly and to respond for the media.

The Prime Minister is being judged by her actions. The decision that produced this legislation is that of a hard-faced, hard-hearted Cabinet. The Government are attacking people who are in the most difficult position that can be experienced today. The unemployed are bereft. They have been pushed out. Their contacts are diminished and they are no longer needed, whether they are labourers or skilled people. Skills which might have been built up over the years through training, learning and experience are rejected.

Most people know about the reality or the threat of job loss. I was speaking to a constituent about one of his lads who has an apprenticeship with an engineering firm and considers himself to be lucky. My constituent said that when there was talk of redundancy he thought that his lad had had it. Instead, older workers were sacked. An inspector with 27 years' service is out on his neck. That means 27 years of experience and skill is thrown to the winds. That is happening all over West Yorkshire in the textile and engineering industries.

From the bottom of their heart the Government are now saying "It is not enough that you are unemployed, that you are thrown on the scrap heap, that hope is diminished. You will not receive the bit of money that might soften the blow by an infinitesimal amount." The prospects are still gloomy in an economy that is still under-used and under-active. It is a gloomy prospect trying to obtain a job, which the Government are not relieving with a tiny bit of silver in the shape of an immediate tax rebate. It is not even the Government's money. However, we know that the Government are not too choosey when it comes to breaking pledges about people's money.

The earnings-related scheme, which is not financed by the Treasury but is self-financing, will end in 1982. If the directors of an insurance company had broken off such a scheme, the Chief Secretary would prosecute them in the courts. Yet the Government are breaking off the earnings-related scheme. Within the terms of legislation which is far too generous in handing over powers" they are deciding when and how tax which has already been paid, and is the property of the taxpayer, should be repaid. That is not good enough.

I hope that the message gets out of this oak-pannelled place. One comforting aspect of last Thursday's election is that, although we sometimes seem to speak in small groups in the House, and refer wistfully to the message getting outside, the Government's treatment of the economy which is producing so much unemployment is being massively criticised. It is equally clear that the Government's treatment of the unemployed will be massively criticised. This wretched clause in a wretched Finance Bill is an example of the way that the Government are kicking the unemployed when they are down. We shall vote against it. We may not win, but it is another nail in the Government's coffin.

Mr. Campbell-Savours

When the BBC programme "Today in Parliament" is broadcast tonight, many thousands of listeners will wonder where their Conservative Members of Parliament were. I hope that those who broadcast the programme tonight and tomorrow morning will say that there was a long series of Labour speakers about the amendment relating to unemployment.

Conservative Members intervened during the debate, but instead of rising to their feet they sought to make sedentary observations. In the European Parliament the hon. Member for Lancaster (Mrs. Kellett-Bowman) represents my constitency and four other constituencies in the county of Cumbria. I understand that it is not for me to comment on the hon. Lady's relationship with her constituency. That is for her to do. I am sure that she is an assiduous Member. However, it is noticeable tonight that she has not commented on matters of vital concern.

Mrs. Kellett-Bowman

The hon. Gentleman is aware that when I intervene in the House on matters that concern his constituency he objects most strenuously. I therefore confine my effort on behalf of Cumbria to the European Parliament, and raise in this House only matters that concern my consistituency. That is the proper way to proceed. That view is held on both sides of the House. My hon. Friend the Member for Yarmouth (Mr. Fell) raised a point about unemployment, and he was on his feet when he did so. He gave correct figures, which the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) had not given. The hon. Gentleman must admit that my duty in the House is to Lancaster and in the European Parliament to Cumbria.

9.15 pm

Mr. Campbell-Savours

The hon. Lady represents Lancaster. She says that she speaks for Lancaster but she has not sought to rise in the debate. The people of Cumbria can rightfully ask whether the case for the unemployed in the county is being put in the European Parliament. We believe that it is not.

Mrs. Kellett-Bowman

rose—

Mr. Campbell-Savours

I turn directly to the amendment—

The Second Deputy Chairman (Mr. Ernest Armstrong)

I hope that the hon. Gentleman will return to the amendment.

Mr. Campbell-Savours

I shall do that, Mr. Armstrong. The amendment illustrates perhaps more than any of the others on the Order Paper the Conservative Party's strong prejudice against the unemployed. I understand that the objective of the amendment is to ensure that the tax that is taken prior to unemployment will be paid during unemployment and not at the end of unemployment, or at the end of the subsequent financial year.

The effect of the clause is to draw money from the unemployed that is rightfully theirs, and for the Government to use that money without paying interest on it. I am sure that Conservative Members will be aware that if a taxpayer owes money to the Revenue and if it goes beyond a certain threshold and a certain period, the taxpayer is required to pay interest upon that money to the Inland Revenue.

Mr. Arthur Lewis (Newham, North-West)

My hon. Friend is right in general, but does he agree that if the taxpayer happens to be a member of the Vestey family and is supported by Lord Thorneycroft, the chairman of the Tory Party, it will be ensured that he pays no tax? Money will be filtered into other countries and patriotism will be displayed by the payment of no tax.

Mr. Campbell-Savours

My hon. Friend makes an important intervention. However, the Government have informed us that later in Committee there will be a statement on matters concerning the Vestey empire, if that is what it be. I am told that there are clauses in the Bill that will tighten the loopholes that that body was able to use.

If the Government require that taxpayers pay interest, I want to know why the Government should not be required to pay interest when they borrow money from my constituents and from the constituents of others. The money that they are keeping is the property of our constituents. Surely it is right that it should be subject to interest payments.

It could be said that our taxpayers have sought not to claim money from the Government but have invested in the Government. It could be said that they have purchased a form of gilt stock. They are purchasing shares in the activities of the Government. The right hon. and learned Gentleman should tell us why taxpayers should not receive some return on the investment that they are making, which they are being required to make by the Government's refusal to pay rebates.

I know that many who go into business treat the tax rebate that they receive at the end of their employment as part of the cash that is necessary to establish their business. When steel workers in my constituency are asked what they intend to do in conditions in which no alternative work is being created, many of them suggest that they want to go into business. They believe that one of the assets that will help them to do so is the tax rebate that is rightfully theirs. The Government are saying that all people who choose to set up a small business will be denied access to that money, either until they register as businesses—and even then there is a delay—or until the beginning of the following financial year.

If the right hon. and learned Gentleman believes that that is incorrect, I can tell him that I was one of those people. His Treasury Ministers will be able to prove that if they dig back far enough. I remember how important my one tax rebate was when I was going into business. I ask the right hon. and learned Gentleman to consider that. If he consults the self-employed bodies outside the House and asks them about the problems that confront people when they are going into business and scratching around for funds, he will find that many self-employed people treated that first tax rebate in the same way as soldiers coming home after the war treated their gratuities. Those rebates are sources of vital cash at a difficult time. Therefore, I ask the right hon. and learned Gentleman to make particular reference to the point that I am making.

This money—it should not be underestimated—which is rightly the property of our unemployed constituents, is of vital importance to them. They can ill afford to lend it to the Government. In conditions of unemployment, people always have cash flow problems. Their problems are far greater when their expenses are greater.

One of the interesting aspects of the current round of unemployment is that it is affecting not only lower-paid groups but large numbers of people who earn reasonable wages and salaries. Those people have a particular use for this tax rebate. The right hon. and learned Gentleman has told them that that money is no longer theirs. He has said that the Government are borrowing it and that they shall do with it what they want. He is saying that those people cannot have it back until the financial year ends or until his Government decide that they will create conditions in which those people will be put back to work. For many people, that may be a long time.

Mr. Arthur Lewis

I had not intended to take part in the debate until I heard my hon. Friend the Member for Workington (Mr. Campbell-Savours) speak. I then thought how unfair the measure was and I wondered how any Government, whatever their political complexion, could bring forward such a measure.

We have a system whereby some—usually the poorer sections of the population or those on more limited means of earning capacity—pay their tax on a PAYE basis. Because of that, they cannot fiddle and work in the same way as the others who are often able to get away with that. Those who are not on PAYE dodge or fiddle legally. As I read in the press almost every day of the week, some well-known entertainer or someone in business who owes the Inland Revenue £20,000, £30,000 or £100,000 has either left the country or has gone bankrupt and will now dodge paying his tax.

The man who is on PAYE, who cannot dodge paying tax whether he wants to or not, is estimated in a year to receive so much money and to be entitled to so many allowances. Therefore, after that is worked out, he will be liable to so much tax. He does not pay that tax willingly, but as he cannot get out of it, he acquiesces. He cannot do much else about it, so he pays.

If, towards the end of the calendar year, through no fault of his own, the man is dismissed, he has to live on only a half or one-third of his normal income. Perhaps he has put off paying certain bills, and he hopes to use the refund from the tax that he has overpaid to pay them—but the Government do not allow that. Rather dishonestly they will now decide when he gets that money back. They will keep it immorally. The tax was calculated for the man working throughout the year, so it should be refunded. If a person found that he had paid in anticipation and been overcharged in a shop, the shop would not be able to say when he would have his refund. It would not be able to say, for example, that he would be paid back only when he was in work.

I can understand the Government wanting to tighten the system to eliminate abuses, to save money and to obtain more for the Inland Revenue, but most of us older ones well remember the saying that there is one law for the rich and another for the poor. It is true today. There is a law on social security for the rich and another for the poor.

A poor man like Lord Thorneycroft gets about £100,000 a year in directors' fees, and, in addition, he gets £44 a day tax free—which for him is equivalent to £120 a day—merely by going to the House of Lords and saying "Hello. I am here." He can then go to the races or wherever he likes. The unemployed man, deprived of his tax rebate, will be paying for the £44 a day that all Members of the House of Lords get.

Sir William Clark (Croydon, South)

What about Lord Lever?

Mr. Lewis

I could go through the whole lot. Some are millionaires. For some it is worth £150 a day. The unemployed man is paying that, because that money comes out of taxes. He is not getting the interest on the money that he should have. Instead, the money is going towards paying wealthy peers of the realm £44 a day. It is not only the unemployed. The person may be sick or disabled. He may have only one leg, or none at all. If he buys something, he has to pay VAT, which goes to the Treasury. That money goes to pay the £44 per day to Lord Thorneycroft, Lord Rothermere, Lord Matthews of the Sun, Lord Kagan and all the other noble peers. Moreover, they all have three or four other jobs—sinecures as chairmen of national boards and so forth—all paid for by this unemployed taxpayer who is not allowed to get his money back when he has been overtaxed.

9.30 pm

If ever there was dishonesty in Government, this is it. It is the most dishonest Government and the most dishonest approach that I have seen in more than 50 years in public life and certainly in nearly 37 years in the House. I have never seen any one in any Government do a thing like this. I mean that seriously. It is a crying shame. I am glad that the hon. Member for Yarmouth (Mr. Fell) has been here throughout the debate, although I am also glad to see the newcomers who have just arrived. He himself has said that it is unfair and unreasonable.

We may argue about whether social security is right or wrong and whether there is abuse. We may argue about whether the Government are doing the right thing economically and whether monetarism is right or wrong. But no one could maintain that it is right that a person who through no fault of his own is unemployed and who has overpaid tax not only cannot get his money back but is not even told when he will be able to get it back. There should be provision in the Bill to deal with this.

If I underpay my tax, I get a notice. If I do not pay within 21 days, action will be taken against me and cumulative interest will be added. We should provide that if within three weeks or a month of claiming it the unemployed person does not receive his overpaid tax he will receive cumulative interest on the same basis. These people may be constituents of Conservative Members. Thay have paid their tax. They are not scroungers. Scroungers exist, but these are honest, decent people who through no fault of their own are unemployed, and they want to draw a little money. They may have a little money saved, but why should they draw on that when they have overpaid tax which they should be able to claim back?

Under the Labour Government, I believe, there was a well known actress, Miss Diana Dors. [HON. MEMBERS: "Oh!"] Yes, indeed. She owed £64,000 in tax. How she was allowed to accumulate that kind of debt, I do not know. She went on and on refusing to pay it. Eventually the debt was washed out. The case of a chap called Michael Stern comes up next week. That is a bankruptcy case involving £240 million. He has three Rolls-Royces, a big house and all the rest. So some of them get away with it and not a word is said. I mentioned the Vestey family, who also got away with it. We should therefore protect the interests of hard-working, decent men and women who claim the right of every one of Her Majesty's loyal citizens to claim back overpaid tax and to have it when they want it and not when the Government say that they should have it.

Mr. Ioan Evans

I agree with my hon. Friend the Member for Newham, North-West (Mr. Lewis). Of all the things done by the Government, this measure is a new low in British politics. Unemployment currently stands at 2½ million. It is said that it will reach 3 million by Christmas. Some economic experts and trade union leaders calculate that it could even reach 4 million. Yet the Government are seeking to prevent the repayment of rebates to those unemployed people.

Last Thursday was an event in British politics. Local elections give hon. Members the opportunity to meet constituents. We learn about the difficult and chronic cases in our surgeries. People tell us how they are having difficulty in obtaining mobility allowances, or how other help has been withdrawn because of Government policies. Local elections give hon. Members a chance to go on the doorstep and meet people.

There is now 17 per cent. male unemployment in my area. More than 3,000 people are unemployed in the valley. Unemployment is not a new problem to the area. However, there is a quantitative change from what has existed in the past. More than 1 million more people have joined the unemployment queues in the last 12 months, and as a result many people now find themselves unemployed for the first time in their lives.

Because of the Government's economic policies, skilled people who have enjoyed employment since before the war now suddenly find themselves unemployed. Some of them get earnings-related supplement, which is designed to tide them over during a difficult period. Many firms of international standing have suddenly ceased to exist. It is no use talking about an economic upturn, because those companies will no longer be there when it comes. Yet those people who have paid their bills and sustained themselves will be prevented from obtaining a rebate on tax that they have already paid.

It is interesting that such a proposal should come from this Government, who said that they would reduce taxation. No wonder there were massive Labour successes last Thursday. The people do not have short memories. They remember that the Tories promised to reduce taxation.

I recently asked a question about direct and indirect taxation in 1981–82. In view of the Tories' pledge, one would have thought that the figures would show a reduction. However, I discovered that in 1978–79 direct taxation amounted to £28 billion and indirect taxation to £30½ billion-a total of £58½ billion. It is estimated that in 1981–82 direct taxation will total £46 billion and indirect taxation £54 billion.

Therefore, this Government, who were elected to reduce taxation, have increased it from £58½ billion in 1978–79 to an estimated £100 billion in 1981–82. I appreciate that inflation has increased and that allowances must be made for that, but there is no doubt that this Government have increased both direct and indirect taxation. In their third Finance Bill, why should the Government contemplate withholding the tax rebates that people are entitled to merely because they are unemployed? If a person is entitled to a tax rebate and is employed, he will receive it. However, the Government intend to pick on the unemployed. In the first Tory Budget the Government increased VAT from 8 per cent. to 15 per cent. The difference between income tax and VAT is that the unemployed do not expect to pay tax. An unemployed person should not have to pay direct tax, because that is based on income. However, VAT is a tax on spending. Therefore, the disabled, the sick, pensioners and the unemployed have seen indirect taxation doubled. That is what the Government did in their first Budget. But it was not enough.

The Labour Party is committed to an irreversible shift of wealth to the masses. In that same Budget the top rate of income tax was reduced from 83 per cent. to 60 per cent. It has been calculated that that reduction of 23 per cent. is worth about £600 per week back in tax. The Government may argue that they need to raise money. If that is so, why do they not reverse what they did in their first Budget? It is diabolical that a Government who gave massive tax concessions to the wealthy should tell the unemployed, whose numbers have increased tremendously as a result of the Government's policies, that they will not receive tax rebates.

The Budget also increased the tax on petrol, cigarettes, and so on. I hope that the Chief Secretary will reconsider the situation. References have been made to the Prime Minister. She is like Marie Antoinette. The unemployed call for bread and she replies "Take off their tax rebates." She is completely out of touch with reality. There have been elections in France. Whatever one might say about the ex-President of France, he did not increase unemployment as the Government have done. Even the French Assembly would not have been offered these stupid, monetarist taxation methods. Therefore, I hope that the Government will reconsider their position.

It must be borne in mind that there are limits in a democracy. The Government have gone beyond those limits, because they have given massive tax concessions to the wealthy. Many people are unemployed for the first time in their lives. They are trying to budget but find that they face increasing expenses. There has been an increase in water rates and local authority rates, and the unemployed face a mass of bills. The Government are primarily responsible, so I hope that they will reconsider their position and accept the amendment.

The Chief Secretary to the Treasury (Mr. Leon Brittan)

Perhaps I should make it clear that, despite the blandishments put forward with customary verve by the hon. Member for Aberdare (Mr. Evans), I shall advise the Committee not to accept the amendment which stands in the name of the official Opposition.

The debate has been wide-ranging. In such debates it is not unusual for hon. Members to be tempted to range over the whole of the Government's economic and taxation policies. They are often tempted to go beyond the scope of the amendment. I do not complain of that, but I hope that I shall be forgiven if I do not go down some of the alleyways into which hon. Gentlemen have strayed.

9.45 pm

Before coming to the detail of the amendment, I observe that in the course of some of these wide-ranging observations some strong language was used. In particular, the hon. Member for Grimsby (Mr. Mitchell) used phrases such as "sheer malevolence—[HON. MEMBERS: "Hear, hear."]—"vindictive"—[HON. MEMBERS: "Hear, hear."]—and "embittered"—[HON. MEMBERS: "Hear, hear."] It is a tribute either to his eloquence or to their loyalty that even the repetition of what he said can draw the cheers of his hon. Friends.

The hon. Member for Grimsby and I have known each other for some time. It is a sign of the maturity of a democracy for it to be possible for hon. Members on opposite sides of the Committee to disagree passionately about the consequences of what the Government are doing and the desirability of doing what the Government are seeking to do, but at the same time not to feel that those who take different views can be inspired only by motives of malevolence, vindictiveness and bitterness. I hope that I shall not reach a time when I am so convinced that I am right that I shall have to conclude that any one who says or does something different can only be vindictive, embittered and malevolent.

Those are general observations. They may have arisen because the debate has not only ranged well beyond the scope of the Bill, but because it has not fully related to the previous debate with which my right hon. Friend dealt. It is clear from what has been said with sincerity by many Opposition Members that the purpose and explanation of the clause have not become apparent to the Committee. Therefore, I welcome the opportunity to clarify it. In particular, I welcome the opportunity to deal with some of the specific points and queries which were raised by, among others, the hon. Members for Gateshead West (Mr. Horam) and Colne Valley (Mr. Wainwright.)

The fundamental question whether unemployment benefit should be taxed was discussed and decided in the previous debate. It is in the context of that Division and decision that this clause has to be considered. In the debate on whether unemployment benefit should be taxed it was pointed out—it could not be disputed—that there was a wide degree of agreement across the Floor of the Committee that in principle it was desirable that unemployment and, indeed, other short-term benefits should be taxed. In putting forward that proposition we were not regarded as being disciples of Genghis Khan. Therefore, it is strange that on the succeeding clause, which does no more than settle—in a way which obviously will not be free from controversy, but is rational—how to implement that principle, these more extravagant allegations should fall from the lips of Opposition Members.

My hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman), in an intervention, made a highly relevant point to the consideration of these matters. There was agreement across the Floor of the Committee that unemployment benefit should be taxed. I accept that some have said—I do not propose to go over the ground again in arguing why I disagree with the view—that, even if in principle it is right that unemployment benefit should be taxed, this is not the moment or the way to do it. Those are tenable views, although I do not share them. The clause provides a way of taxing unemployment benefit. The amendment seeks to remove that method.

Mr. Cook

If it is the purpose of subsection (a) to facilitate the taxation of unemployment benefit, or, presumably, the taxation of supplementary benefit in lieu of unemployment benefit, why cannot the Minister at least accept amendment No. 28, which would limit the cases of supplementary benefit claimants caught under this subsection to those claimants who are liable to tax under clause 29? Is it not the case that under subsection (a) as drafted, anyone who claims supplementary benefit for any reason, whether or not unemployed, will lose entitlement to any refund?

Mr. Brittan

That is a very strange way for the hon. Gentleman to speak to his amendment No. 28. He did riot come to it, nor did his right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), until an intervention after a lengthy debate—[HON. MEMBERS: "Answer."] I am very happy to deal with the point, but I shall deal with it in order. There has been a long debate, to which I have listened carefully. I propose to answer the points that have been made before coming to the last-minute matter on amendment No. 28, with which I shall happily deal.

I was about to explain that the proposal to withhold tax refunds from benefit claimants is a basic element of the method chosen by the Government for bringing into tax benefit that is paid to the unemployed. There were alternative ways of doing it, but I shall explain why this was the preferred one. I shall also explain why, granted that the decision has been taken, it is a way of dealing with the matter which is more beneficial to the unemployed.

I deal first with some of the specific subsidiary points that were made. It was suggested that the unemployed person is entitled on a weekly basis to a refund on his tax at present and that, therefore, the change that is made is in some sense subversive. I think that it was the hon. Member for Colne Valley who first said that of the basic structure of the PAYE system. I do not think that that is right. The point that I am making is in a sense a small one, but it illustrates the fact that we do not have an ancient and sacrosanct structure which we are now tinkering with and interfering with unacceptably, but, rather, that the structure is complex, with regulations which have come at different times and which cannot be regarded as untouchable. The point that I was about to make in illustration, but no more than that—I know that the hon. Member for Edinburgh, Central (Mr. Cook) will not think that I am trying to pick him up on a technicality—is that where a refund is due, it will be paid by the tax office after the first four weeks of unemployment, and thereafter at four-weekly intervals, until the entitlement is exhausted. I say that to illustrate the fact that it is a structure of some complication and ought not to be regarded as sacrosanct.

We have decided not to follow the alternative method of taxing unemployment, which would be to do so in the way that would be described as the current method of operation—in other words, not to operate a version of PAYE on the benefits as they are paid. The reason why that decision was taken is that if that were done, tax would, in a proportion of cases, have to be deducted directly from the benefit, because the allowances given in the PAYE code were reduced, for example, to take account of other income or underpayments of tax from an earlier year.

I am not suggesting that that would happen in the majority of cases, but it would in some. It would not make sense for a person to be paid supplementary benefit or unemployment benefit and to have tax deducted from that benefit. For that reason, the Government decided that the right way to deal with it is to freeze claimants' tax accounts during unemployment. In that way, tax will not be deducted and refunds will not be paid. Liability would be assessed at the end of the period of claim or the end of the tax year, if sooner.

That gives me an opportunity to deal with another point raised by the hon. Member for Colne Valley—the role of the employer. The employer will not be involved because the unemployment benefit office will be responsible for repayment. Statements to the effect that this is robbery or that money that the employee is entitled to is being withheld are irrelevant. Those statements relate to unemployment benefit which is not taxed, but when unemployment benefit is taxed, prima facie one would expect tax to be paid currently. Some hon. Members may query whether now is the time to introduce that, but the measure has considerable support. Therefore, the question of refunds can be seen in a different perspective. It is reasonable to assume that we shall not require the tax to be paid on a regular weekly basis and similarly we shall withhold the refunds.

While the claimant is receiving taxable income which is currently not being brought into tax, it is anomalous to pay refunds of tax. If refunds were made, he would be receiving back tax paid earlier and, at the same time, building up a liability to tax which he would have to satisfy at the end of his claim or at the end of the tax year. That would be disadvantageous to the taxpayer, because at the end of the tax year, or when he resumed his employment, he would be facing an enormous tax liability. That would be a disincentive to return to work. Once the decision to tax unemployment benefit is taken it will be disadvantageous to make the tax bill payable when a person returns to work. For that reason this method is preferable.

Mr. Horam

The flaw in the right hon. and learned Member's argument is that he is assuming equality in the amount due to the taxpayer by way of tax repayment of money overpaid when in employment and the amount of money that he will pay in tax benefit. Surely the amount of tax paid on benefit will be much smaller than the tax repayment due. The core of the right hon. and learned Member's argument is a false parity.

Mr. Brittan

I was coming to that point next. I intend to analyse what will happen in practice.

In most cases the unemployed person's personal tax allowances will exceed his taxable benefit, but in these cases he will normally have only a small net refund of tax on return to work or at the end of the tax year. On the figures, it will be only a small amount. In the majority of cases there will be the broad balance that the hon. Member for Colne Valley regarded as necessary if this method was to be fair.

Mr. Cook

rose—

10 pm

Mr. Brittan

I should proceed.

In the minority of cases where an actual liability to tax arises as a result of unemployment, there is the question of what will happen to the tax that is payable. Before explaining what happens, let me make it clear that if there were any difficulties in such a case they would be infinitely worse if the tax refunds had been paid earlier, when the person concerned was out of work—once we accept the principle that unemployment benefit should be taxed.

Mr. Cook

rose—

Mr. Brittan

I am not giving way.

Mr. Cook

This is intolerable.

Mr. Brittan

The hon. Gentleman can say that to his heart's content. I have listened to a long debate—

Mr. Cook

rose—

The Second Deputy Chairman

Order. It is clear that the Minister is not giving way.

Mr. Brittan

I shall explain what I propose to do, and I shall not take lectures from the hon. Member for Edinburgh, Central as to what is and is not intolerable. These are complex matters. Many things have been said, and I propose to explain what is involved. I shall then give way, in my own time.

Mr. Cook

The right hon. and learned Gentleman does not know the answers. He is terrified to leave his brief.

Mr. Brittan

The hon. Gentleman can get as heated as he wishes. I assure the hon. Gentleman I shall give way when I wish to do so.

I was explaining a particular point raised by some hon. Members who are concerned with the serious issues involved. I was dealing with the question of what happens in the minority of cases in which an actual liability to tax arises as a result of unemploymemt.

Naturally, there would be some concern if the taxpayer had to pay a lump sum, but that will not happen. The tax will be collected not in a lump sum on the person's return to work but by a subsequent adjustment to his PAYE code, which will lead to an adjustment over a period of time. This is a method of providing for taxation of unemployment benefit that enables the object to be achieved with the minimum of hardship for the unemployed person. I am not saying that it is the only way, but I explained when dealing with the current method why this was preferable.

I was about to deal with amendment No. 28. The right hon. Member for Ashton-under-Lyne did not refer to it in opening, but the hon. Member for Edinburgh, Central corrected him by raising it in an intervention. If the hon. Gentleman wishes to deal with another matter by way of intervention, I am content to give way now.

Mr. Cook

I am much obliged to the right hon. and learned Gentleman for giving way. However, if he is not to give way to Opposition Members when we have genuine questions to put, that bodes ill for the Committee upstairs, as his right hon. Friend the Financial Secretary will tell him.

The right hon. and learned Gentleman said a few minutes ago that it would be anomalous to make a refund where liability to tax was being clocked up by payment of benefit, because it would constitute a disincentive to return to work at the end of the period of unemployment. He has spoken of the person who is unemployed at the start of the tax year, for whom, therefore, there is no tax refund to be withheld, but who may be, as the right hon. and learned Gentleman admits, acquiring a tax liability during the period of unemployment. Why is there not the same disincentive to work when that person can return to employment? Surely the Chief Secretary does not suggest that simply because it is done by adjustment to the PAYE code, which is taken over a period of weeks rather than as a lump sum, he is not thereby increasing substantially the marginal rate of tax that that person pays on returning to work.

Mr. Brittan

To an extent, of course, it is a disincentive, but it is very much less of a disincentive than it would be to do it in the way made necessary by the amendment. It is as simple as that.

I tell the hon. Member for Edinburgh, Central that I have no wish for debates to be more intemperate than the hon. Gentleman feels that he must make them. However, it is one thing to be asked to give way. It is quite another for the hon. Gentleman to demand that I give way instantly. I think that I am entitled to develop my argument and to give way—as I can assure the hon. Gentleman that I will—at what I regard as a convenient moment.

I move to amendment No. 28. As I understand it, the purpose is to restrict slightly the scope of paragraph (a). As it stands, paragraph (a), with the initial four lines of clause 29, gives power for regulations to be made providing for tax refunds to be withheld from claimants of unemployment benefit or supplementary allowance for their period of claim. The purpose of the amendment is to restrict the provision to withhold refunds so that it applies only in the case of benefit claimants whose benefit is taxable.

I am happy to tell the Committee that the Government are prepared in principle to accept the amendment. However, there is some doubt whether its wording is appropriate to the purpose. Therefore, I hope that the Committee will be content if I say that the Government will examine the drafting and seek to bring forward on Report an appropriate form of words to meet the point. It may be convenient, if the Opposition are content on that basis, for the amendment to be withdrawn; otherwise, I shall have to invite my right hon. and hon. Friends to vote against it.

The remainder of the amendments in this grouping are fundamentally subversive to the purpose of the clause and therefore cannot be accepted.

Mr. Cook

The Chief Secretary began his remarks by referring to my hon. Friend the Member for Grimsby (Mr. Mitchell), who made a notable speech in our preceding debate. The right hon. and learned Gentleman took my hon. Friend to task for speaking in such a passionate and, according to him, intemperate manner. He said that he hoped that he would never be so embittered as to be convinced that he was right, in the way that my hon. Friend spoke.

I am sure that all Opposition Members will agree that my hon. Friend was right to speak as he did. We have to make the point that it is not surprising that there should be bitterness—given the rate at which this Government have increased unemployment—and that that bitterness should come to a head in a debate that follows a cumulative attack by the Government on the standard of living of those whom they themselves have thrown out of work.

All that my hon. Friend the Member for Grimsby did was to articulate the bitterness that is felt already by those who have lost their jobs and the anger that will be felt by those same people as they continue to find their standard of living eroded by the Government's policy both on their benefits and on their taxation. It would be a neglect of the duty of hon. Members if that anger and bitterness were not articulated in a debate on this subject.

Having said that, I am glad that the Chief Secretary has found his way to accept the principle of amendment No. 28. However, it is a strange state of affairs that the Opposition have to tidy up the provisions of a Bill that has come from the Treasury draftsmen.

The Chief Secretary has acknowledged that as it stands the subsection would bite on many people who would not have taxable incomes under clause 27.

I am glad that the Government have accepted the principle of amendment No. 28, but I must draw the Chief Secretary's attention to the debate on the next subsection, when we shall debate the same principle. The following subsection bites even deeper. I hope that the right hon. And learned Gentleman will be able to accept the similar amendment that is based on a parallel principle in our next debate.

However, as the Chief Secretary said, the remaining amendments, particularly amendment No. 25, are subversive of the whole subsection. I am happy to confirm that they are, indeed, subversive of the principle contained in the subsection and we are happy to stand by that subversion, even with the modest improvement that the Chief Secretary announced. We stand by the amendment because we find the principle of the subsection obnoxious.

As the Chief Secretary admitted, we have a cumulative system of taxation in which the tax liability is based on the assumption that the income will be maintained over the year. It necessarily follows that if, in the course of the year, the taxpayer loses the source of income and employment, he has paid too much tax while in employment. Having paid too much tax over the previous months, he is entitled to get that tax back.

We find the subsection obnoxious because it provides a means by which the Treasury can cheat—albeit legally—the taxpayer of his right to get the money back. The taxpayer has paid too much tax in the past, and the Treasury will take power to pocket it and retain it at its pleasure, because it is more convenient to approach the taxation of benefit on that basis.

That is undesirable, for two reasons. First, it is arbitrary. The amount of refunds will vary, and the amount of liability for tax to be deducted from those refunds, even accepting taxation on unemployed benefit, will vary. Let us consider the case of a skilled man who has worked for nine months in the financial year and who, over that time, has paid a substantial amount of income tax. If that skilled man becomes unemployed he will be entitled to a substantial refund. At the end of the financial year he will be entitled to a refund because, as the Chief Secretary acknowledged, he is likely to be liable only for a small amount of tax on the unemployment benefit that he receives.

The Financial Secretary admitted that 90 per cent. of those whose refunds were withheld would have refunds in excess of any tax liability that would arise on the unemployment benefit. So 90 per cent. of taxpayers will have withheld from them a sum in tax refund greater than anything for which they will be liable as a result of taxation of unemployment benefit. There is no possible justification for making all of them wait until the end of the financial year before they get any money back, although it may be egregiously in excess of their tax liability.

Mr. Campbell-Savours

Did my hon. Friend hear the Chief Secretary say earlier that when the taxpayer owed the Revenue at the end of the financial year and at the beginning of the period of employment, the money would be paid through in his coding for the following year? Does that mean that conversely, when the taxpayer is owed money by the Revenue, instead of a block payment being made the sum due may be paid over the period of the following year, in the form of a coding?

Mr. Cook

That is more for the Chief Secretary than for me, but I understand that he said that where the unemployed person is unemployed at the outset of the financial year, and therefore has no tax refund due to him, the tax liability that will accrue will be deducted, when he returns to work, by an increase in his PAYE code. As the Chief Secretary condeded, that means that the person will pay a higher rate of marginal taxation when he returns to work. A higher rate of tax will be deducted from his pay than is deducted from the pay of his fellow workers. When he returns to work, when he could look forward to recouping his income, he will pay a higher rate of tax than will people who were employed when he was not. That is the first reason why the approach is undesirable. It withholds from taxpayers money that they have paid in tax and that they are entitled to get back.

10.15 pm

Mr. Brittan

I wish to deal with the question asked by the hon. Member for Workington (Mr. Campbell-Savours). I thought that I made it clear that a refund that is due will be paid in a lump sum at the moment in question.

Mr. Cook

The second reason why we regard the approach as undesirable is that a refund due to the taxpayer, much of which will remain due irrespective of tax liability, will be paid at the end of the period of unemployment. That is daft. The taxpayer needs his money back when he is unemployed and not when he is back at work.

The Chief Secretary has achieved the remarkable feat of withholding money from the taxpayer when he needs it most and returning it when his need is less pressing. That is being done to facilitate the convenience of the Treasury to tax unemployment benefit. That is daft.

We should remember that Government Members campaigned at the last election on the basis that people were paying too much tax. They said that they would relieve the public of that tax burden. They also argued that the country groaned under too much bureaucracy and that therefore individual freedom and creativity were being suppressed. They promised to liberate that freedom and creativity by curbing bureaucracy. Yet the Government are introducing a measure that creates a fresh burden of taxation administered on the basis of that same bureaucracy. The Government say that to suit their convenience they will not pay tax refunds that are due to the taxpayer.

I find that proposition harsh and lacking in logic. It is intolerable that the Government are prepared to say to an unemployed person that it is convenient for them to hold on to his money until he returns to work when it is so inconvenient for that person to lend it to the Government when he is unemployed. If that is the only way to achieve taxation of short-term benefits without employing even more than 3,500 civil servants, the whole system should be scrapped. The Committee would take a positive step towards scrapping that system by voting for the amendment.

Question put, That the amendment be made: —

The Committee divided: Ayes 223, Noes 277.

Division No. 176]	[10.18 pm
AYES
Abse, Leo	Ashton, Joe
Adams, Allen	Atkinson, N.(H'gey,)
Allaun, Frank	Bagier, Gordon A.T.
Alton, David	Barnett, Guy (Greenwich)
Anderson, Donald	Barnett, Rt Hon Joel (H'wd)
Archer, Rt Hon Peter	Benn, Rt Hon A. Wedgwood
Ashley, Rt Hon Jack	Bennett, Andrew(St'kp't N)

Bidwell, Sydney	Holland, S. (L'b'th, Vauxh'll)
Booth, Rt Hon Albert	Homewood, William
Boothroyd, Miss Betty	Hooley, Frank
Bray, Dr Jeremy	Horam, John
Brocklebank-Fowler, C.	Howell, Rt Hon D.
Brown, R. C. (N'castle W)	Howells, Geraint
Brown, Ron (E'burgh, Leith)	Hudson Davies, Gwilym E.
Buchan, Norman	Hughes, Mark (Durham)
Callaghan, Rt Hon J.	Hughes, Robert (Aberdeen N)
Callaghan, Jim (Midd't'n & P)	Hughes, Roy (Newport)
Campbell, Ian	Janner, Hon Greville
Campbell-Savours, Dale	Jay, Rt Hon Douglas
Canavan, Dennis	John, Brynmor
Cant, R. B.	Johnson, James (Hull West)
Carmichael, Neil	Johnston, Russell (Inverness)
Carter-Jones, Lewis	Jones, Rt Hon Alec (Rh'dda)
Clark, Dr David (S Shields)	Jones, Barry (East Flint)
Cocks, Rt Hon M. (B'stol S)	Jones, Dan (Burnley)
Concannon, Rt Hon J. D.	Kaufman, Rt Hon Gerald
Cook, Robin F.	Kerr, Russell
Cowans, Harry	Kilroy-Silk, Robert
Craigen, J. M.	Kinnock, Neil
Crowther, J. S.	Lambie, David
Cryer, Bob	Lamborn, Harry
Cunliffe, Lawrence	Leadbitter, Ted
Cunningham, G. (Islington S)	Leighton, Ronald
Cunningham, Dr J. (W'h'n)	Lestor, Miss Joan
Dalyell, Tam	Lewis, Arthur (N'ham NW)
Davidson, Arthur	Litherland, Robert
Davies, Ifor (Gower)	Lyon, Alexander (York)
Davis, Clinton (Hackney C)	Lyons, Edward (Bradf'd W)
Davis, T. (B'ham, Stechf'd)	Mabon, Rt Hon Dr J. Dickson
Deakins, Eric	McCartney, Hugh
Dean, Joseph (Leeds West)	McElhone, Frank
Dempsey, James	McKelvey, William
Dewar, Donald	MacKenzie, Rt Hon Gregor
Dixon, Donald	McMahon, Andrew
Dobson, Frank	McNally, Thomas
Dormand, Jack	McNamara, Kevin
Douglas-Mann, Bruce	McWilliam, John
Dubs, Alfred	Magee, Bryan
Duffy, A. E. P.	Marks, Kenneth
Dunn, James A.	Marshall, D(G'gow S'ton)
Dunnett, Jack	Marshall, Dr Edmund (Goole)
Dunwoody, Hon Mrs G.	Marshall, Jim (Leicester S)
Eadie, Alex	Martin, M(G'gow S'burn)
Eastham, Ken	Mason, Rt Hon Roy
Ellis, R. (NE D'bysh're)	Maxton, John
English, Michael	Maynard, Miss Joan
Ennals, Rt Hon David	Mellish, Rt Hon Robert
Evans, Ioan (Aberdare)	Mikardo, Ian
Evans, John (Newton)	Millan, Rt Hon Bruce
Ewing, Harry	Mitchell, Austin (Grimsby)
Faulds, Andrew	Mitchell, R. C. (Soton Itchen)
Field, Frank	Morris, Rt Hon A. (W'shawe)
Fitch, Alan	Morris, Rt Hon C. (O'shaw)
Flannery, Martin	Morris, Rt Hon J. (Aberavon)
Fletcher, Ted (Darlington)	Morton, George
Foot, Rt Hon Michael	Newens, Stanley
Ford, Ben	Oakes, Rt Hon Gordon
Forrester, John	Ogden, Eric
Foster, Derek	O'Halloran, Michael
Fraser, J. (Lamb'th, N'w'd)	O'Neill, Martin
Freeson, Rt Hon Reginald	Orme, Rt Hon Stanley
Garrett, John (Norwich S)	Palmer, Arthur
George, Bruce	Parry, Robert
Gilbert, Rt Hon Dr John	Prescott, John
Ginsburg, David	Price, C. (Lewisham W)
Graham, Ted	Race, Reg
Grant, George (Morpeth)	Radice, Giles
Grimond, Rt Hon J.	Rees, Rt Hon M (Leeds S)
Hamilton, James (Bothwell)	Richardson, Jo
Hamilton, W. W. (C'tral Fife)	Roberts, Albert (Normanton)
Harrison, Rt Hon Walter	Roberts, Allan (Bootle)
Hart, Rt Hon Dame Judith	Roberts, Ernest (Hackney N)
Hattersley, Rt Hon Roy	Roberts, Gwilym (Cannock)
Haynes, Frank	Robertson, George
Healey, Rt Hon Denis	Robinson, G. (Coventry NW)
Heffer, Eric S.	Rooker, J. W.
Hogg, N. (E Dunb't'nshire)	Ross, Ernest (Dundee West)

Ross, Stephen (Isle of Wight)	Tinn, James
Rowlands, Ted	Torney, Tom
Ryman, John	Wainwright, E.(Dearne V)
Sever, John	Wainwright, R.(Colne V)
Sheerman, Barry	Walker, Rt Hon H.(D'caster)
Sheldon, Rt Hon R.	Watkins, David
Shore, Rt Hon Peter	Weetch, Ken
Short, Mrs Renée	Wellbeloved, James
Silkin, Rt Hon J. (Deptford)	Welsh, Michael
Silkin, Rt Hon S. C. (Dulwich)	White, Frank R.
Skinner, Dennis	White, J. (G'gow Pollok)
Smith, Rt Hon J. (N Lanark)	Whitlock, William
Snape, Peter	Wigley, Dafydd
Soley, Clive	Willey, Rt Hon Frederick
Spearing, Nigel	Williams, Rt Hon A.(S'sea W)
Spriggs, Leslie	Wilson, Rt Hon Sir H.(H'ton)
Stallard, A. W.	Wilson, William (C'try SE)
Stewart, Rt Hon D. (W Isles)	Winnick, David
Stoddart, David	Woodall, Alec
Stott, Roger	Woolmer, Kenneth
Straw, Jack	Wright, Sheila
Summerskill, Hon Dr Shirley	Young, David (Bolton E)
Thomas, Dafydd (Merioneth)
Thomas, Jeffrey (Abertillery)	Tellers for the Ayes:
Thomas, Dr R.(Carmarthen)	Mr. Donald Coleman and Mr. Allen McKay.
Thorne, Stan (Preston South)
Tilley, John

NOES
Adley, Robert	Cockeram, Eric
Aitken, Jonathan	Colvin, Michael
Alexander, Richard	Cope, John
Alison, Michael	Corrie, John
Amery, Rt Hon Julian	Cranborne, Viscount
Ancram, Michael	Critchley, Julian
Aspinwall, Jack	Crouch, David
Atkins, Robert(Preston N)	Dean, Paul (North Somerset)
Baker, Kenneth(St.M'bone)	Dickens, Geoffrey
Baker, Nicholas (N Dorset)	Dorrell, Stephen
Banks, Robert	Dover, Denshore
Bell, Sir Ronald	du Cann, Rt Hon Edward
Bendall, Vivian	Dunn, Robert (Dartford)
Benyon, Thomas (A'don)	Dykes, Hugh
Benyon, W. (Buckingham)	Eden, Rt Hon Sir John
Berry, Hon Anthony	Edwards, Rt Hon N. (P'broke)
Best, Keith	Eggar, Tim
Bevan, David Gilroy	Elliott, Sir William
Biggs-Davison, John	Emery, Peter
Blackburn, John	Eyre, Reginald
Blaker, Peter	Fairgrieve, Russell
Body, Richard	Faith, Mrs Sheila
Bonsor, Sir Nicholas	Fell, Anthony
Boscawen, Hon Robert	Fenner, Mrs Peggy
Boyson, Dr Rhodes	Fisher, Sir Nigel
Braine, Sir Bernard	Fletcher, A. (Ed'nb'gh N)
Bright, Graham	Fletcher-Cooke, Sir Charles
Brinton, Tim	Fookes, Miss Janet
Brittan, Leon	Forman, Nigel
Brooke, Hon Peter	Fowler, Rt Hon Norman
Brotherton, Michael	Fox, Marcus
Brown, Michael(Brigg & Sc'n)	Fraser, Rt Hon Sir Hugh
Browne, John (Winchester)	Fraser, Peter (South Angus)
Bruce-Gardyne, John	Fry, Peter
Bryan, Sir Paul	Gardiner, George (Reigate)
Buchanan-Smith, Alick	Gardner, Edward (S Fylde)
Buck, Antony	Garel-Jones, Tristan
Budgen, Nick	Gilmour, Rt Hon Sir Ian
Bulmer, Esmond	Glyn, Dr Alan
Burden, Sir Frederick	Goodlad, Alastair
Butcher, John	Gow, Ian
Cadbury, Jocelyn	Gower, Sir Raymond
Carlisle, John (Luton West)	Gray, Hamish
Carlisle, Kenneth (Lincoln)	Greenway, Harry
Carlisle, Rt Hon M. (R'c'n)	Griffiths, E.(B'y St. Edm'ds)
Chalker, Mrs. Lynda	Griffiths, Peter Portsm'th N)
Churchill, W. S.	Grist, Ian
Clark, Hon A. (Plym'th, S'n)	Grylls, Michael
Clark, Sir W. (Croydon S)	Hamilton, Hon A.
Clarke, Kenneth (Rushcliffe)	Hamilton, Michael (Salisbury)
Clegg, Sir Walter	Hampson, Dr Keith

Hannam, John	McNair-Wilson, P. (New F'st)
Haselhurst, Alan	McQuarrie, Albert
Hastings, Stephen	Madel, David
Hawksley, Warren	Major, John
Hayhoe, Barney	Marland, Paul
Heddle, John	Marlow, Tony
Henderson, Barry	Marshall, Michael (Arundel)
Heseltine, Rt Hon Michael	Maude, Rt Hon Sir Angus
Hicks, Robert	Mawby, Ray
Higgins, Rt Hon Terence L	Mawhinney, Dr Brian
Holland, Philip (Carlton)	Maxwell-Hyslop, Robin
Hooson, Tom	Mayhew, Patrick
Hordern, Peter	Mellor, David
Howell, Rt Hon D. (G'ldf'd)	Meyer, Sir Anthony
Hunt, David (Wirral)	Miller, Hal (B'grove)
Hunt, John (Ravensbourne)	Mills, lain (Meriden)
Hurd, Hon Douglas	Mills, Peter (West Devon)
Jenkin, Rt Hon Patrick	Miscampbell, Norman
Johnson Smith, Geoffrey	Moate, Roger
Jopling, Rt Hon Michael	Molyneaux, James
Kaberry, Sir Donald	Monro, Hector
Kellett-Bowman, Mrs Elaine	Montgomery, Fergus
Kimball, Marcus	Moore, John
King, Rt Hon Tom	Morris, M. (N'hampton S)
Kitson, Sir Timothy	Morrison, Hon C. (Devizes)
Knox, David	Morrison, Hon P. (Chester)
Lamont, Norman	Mudd, David
Lang, Ian	Murphy, Christopher
Langford-Holt, Sir John	Myles, David
Latham, Michael	Neale, Gerrard
Lawrence, Ivan	Needham, Richard
Lawson, Rt Hon Nigel	Nelson, Anthony
Lee, John	Neubert, Michael
Le Marchant, Spencer	Newton, Tony
Lennox-Boyd, Hon Mark	Normanton, Tom
Lloyd, Ian (Havant & W'loo)	Onslow, Cranley
Lloyd, Peter (Fareham)	Page, Rt Hon Sir G. (Crosby)
Loveridge, John	Page, Richard (SW Herts)
Luce, Richard	Parkinson, Cecil
Lyell, Nicholas	Parris, Matthew
McCrindle, Robert	Patten, Christopher (Bath)
Macfarlane, Neil	Patten, John (Oxford)
MacGregor, John	Pattie, Geoffrey
MacKay, John (Argyll)	Pawsey, James
Macmillan, Rt Hon M.	Peyton, Rt Hon John
McNair-Wilson, M. (N'bury)	Pink, R. Bonner

Question accordingly negatived

10.30 pm

Mr. Cook

I beg to move amendment No. 30, in page 18, line 40, leave out paragraph (b).

The Second Deputy Chairman

With this it will be convenient to take amendment No. 31, in page 18, line 40, leave out from 'is' to end of line 4 on page 19 and insert 'in receipt of supplementary allowance reduced by application of section 8 of the said Act of 1979 (trade disputes) and paragraph 10 of Schedule 2 to the Supplementary Benefit (Requirements) Regulations 1980 applies to him.'.

Mr. Cook

The hour is growing late. I appreciate that it would be the wish of the Committee to make progress as speedily as possible, consisitent with doing justice to the clauses which have been put before us by the Treasury. Therefore, I do not propose to rehearse in this debate the general arguments on why the striker should be singled out for special treatment among those who claim supplementary benefit in the way in which we dealt with them in clause 27.

I stand by anendment No. 30. The Opposition may wish to divide on it, but the arguments on it are on an issue of principle which we substantially debated when we debated the parallel amendment to clause 27. I therefore turn to amendment No. 31. I am encouraged to do so by the response of the Chief Secretary to our previous debate, when he accepted the principle of our amendment No. 28 to limit the withholding of refunds to claimants who came within the scope of the tax provisions of clause 27.

As the Chief Secretary will have apprehended, amendment No. 31 would do for the striker what amendment No. 28 was intended to do for the unemployed person. In other words, amendment No. 31 would limit the scope of the subsection to strikers who have made a claim for supplementary benefit which is taxable under clause 27. I go further and say—I hope with some confidence—that at least amendment No. 31 is not defective, because it lifts bodily the wording of clause 27 and inserts it as our amendment. If we are defective, it follows that the Bill is defective in the first place.

The Chief Secretary admitted in his reply to the previous debate that the subsection to which he was speaking went wider in its application than to households who would find that they had a taxable benefit under clause 27. Not only does the subsection also so wider in its application than strike families whose benefits would be taxable under clause 27, but the vast majority of households who would find that their refund was withheld under the subsection would have no benefit which was taxable under clause 27.

I can demonstrate that from figures produced by the Government. In answer to a parliamentary question, a former Minister at the Department of Health and Social Security gave the percentage of strikers in receipt of supplementary benefit. It varied from 3.3 per cent. in 1975 to 1.1 per cent. in 1979. In a previous debate, we explored the myth that the generosity of supplementary benefit enabled strikers to subsist. Only a tiny fraction of strikers claim benefit, and many in that tiny fraction claim only derisory amounts. In no year between 1975 and 1979 did more than 5 per cent. of those on strike claim supplementary benefit. Nineteen out of 20 did not claim benefit, which demonstrates more clearly than the rhetoric of the previous debate that it is fanciful to suggest that the generosity of supplementary benefit encourages people to strike. It has nothing to do with supplementary benefit, which is not available to the majority of strikers.

More than 95 per cent. of strikers do not claim supplementary benefit. As worded, the subsection would also cover that 95 per cent. It bites on both categories. For those 95 per cent. there is no benefit which is liable to tax. A striker with no dependants cannot claim supplementary benefit. In long strikes, single people subsist on their tax refunds. The subsection will deny those people their own money on which they have hitherto relied.

I am anxious to find out what possible reason the Government will give for the arrangement. What is their justification for singling out strikers, even those who are not claiming benefit? In a previous debate the Financial Secretary said that strikers were carrying out a voluntary activity. Will we be told that the reason is that strikes damage the economy? We were also told that strikers were taking action consistent with improving their income. All those arguments are risible, but are preferable to the breathtaking argument that it is administratively convenient to treat all strikers the same, which is further insulting to those who will have their own money withheld from them, even though the State will not give them any benefit. It would be an outrage. I hope that the Chief Secretary will spare us that.

I hope that, as in the previous debate, the right hon. Gentleman will accept, at least in principle, that the scope of the subsection should be limited to households that are covered by clause 27. Anything else could be explained only on the basis of the arguments used by my hon. Friends in previous debates—namely, that the measure is put forward in a vindictive spirit, to penalise the striker. The Chief Secretary took exception to those terms. I assure him that none would be happier than we to withdraw those phrases if he could establish that there is a rational ground for withholding refunds to those not claiming benefit. If he cannot do that he will confirm the accusation that there is no rational explanation for such a proposal and that it can rest only on a vindictive attitude towards the striker and his family.

Mr. Ennals

Like my hon. Friend the Member for Edinburgh, Central (Mr. Cook) I look forward with great interest to hearing the Minister's justification for this measure. We have already passed a mean and miserable measure penalising the unemployed. The Government now seek to pass a measure which will be even more damaging to those involved in industrial relations. As I understand it, under the previous clause, tax rebates will be withheld until the end of the year or the end of the period of unemployment. But for those involved in trade disputes, rebates will be withheld until the end of the dispute, even if the tax year ends before that.

Why are those involved in trade disputes to be treated differently from the unemployed in this respect? I can only regard it as a vendetta against those involved in industrial disputes, whatever the rights or wrongs of the dispute may be. What can be the Government's justification for doing this in the first place, and for taking it further in this provision than in the previous clause? What is the Government's view of the legality of industrial disputes? If those involved in industrial disputes are to be placed in a separate category from the unemployed, whom we have already treated meanly, that issue must arise. Is there something illegal about industrial action? If so, why do not the Government declare it to be illegal? Is there something worthy of victimisation about those involved in industrial action, whatever may have been the cause of that action? Are industrial disputes automatically wrong, even if the employer is in breach of a solemn agreement reached with his employees? Why should we assume that those involved in an industrial dispute should automatically be penalised by the tax laws that the Government wish to introduce?

My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) referred earlier to the Government's attitude to the Civil Service. I shall not take that any further. I merely point out that those who will suffer most if the clause is passed will not be those on high pay. Those who will be hit will be those on the lowest pay, who most need the rebate. People on high rates of pay will be able to manage without the rebate to which they are entitled. It is those living from week to week or month to month who will need the rebate.

The question must be asked. Whose money are we talking about? We are talking about money that belongs to the citizens of this country. Any Government who decide to withhold, for however long, tax rebates due to citizens are taking away the rights of their own citizens. The Government claim to believe that we are too heavily taxed, yet they are simply picking on those at the lowest end of the scale. This paragraph is almost as iniquitous as the previous paragraph dealing with tax rebates to the unemployed.

10.45 pm

I see the proposal as a vendetta against those involved in an industrial dispute. What action do the Government propose to take against employers who may be responsible for an industrial dispute? None at all. What about those involved in an industrial dispute who have had no part in the decision? They and their families will still be penalised. What possible justification is there not only for withholding tax rebates during unemployment, but during trade disputes?

I am also worried about the position of single people involved in a trade dispute who are not entitled to supplementary benefit and who may have no other source of income. What justification is there for denying them the right to a tax rebate until they have returned to work or until the dispute is over?

The Government are denying to the citizens funds which are the citizens' funds. If there has been an over-payment of tax, it is the Government's responsibility to ensure that that money is returned to the citizen at the earliest possible moment. Their motives for not doing so can only be that they wish to penalise the unemployed and bring excessive political pressures upon those who rightly and properly take part in industrial disputes.

Mr. Winnick

Although the hour is late, the principle is important. It is so important to Labour Members that we are entitled to make these remarks, however briefly.

This is a vindictive measure. It will undoubtedly strengthen the view of Conservative Members that they are getting their way—at least, the view of those Conservative Members who are militant in their anti-trade union feelings. Only recently we learnt that there had been increasing pressure on the Secretary of State for Employment to introduce more penal measures against the trade unions and strikers.

Under the clause, the tax refund will be withheld until the person goes back to work. As my right hon. Friend the Member for Norwich, North (Mr. Ennals) said, that is even worse than the person who is unemployed. At least in his case, the refund will be paid either when he goes back to work or at the end of the tax year. But if a person goes on strike the tax refund will be withheld until he returns to work. That is why we stronly object to this proposal. The money that belongs to the citizen will not be returned to him, even though he has not committed a crime. Even under this Government strikes are not illegal. [HON. MEMBERS: "Yet."] The citizen has exercised his democratic rights, yet will be penalised in every conceivable way. The Budget and the Finance Bill are being used as a means of punishing the striker.

In effect, the Government are saying "We cannot take away your right-to strike, but we inend to do everything to hurt you by fiscal means." Labour Members believe that the clause is an open, anti-trade union measure. Earlier today the Financial Secretay was quite blunt. When pressed he said that strikes caused real damage. To do him justice, the Financial Secretary was only echoing the view of many of his right hon. and hon. Friends. They do not like strikes. They object to the withdrawal of labour. They consider that wrong. On the other hand, we believe that in the large majority of cases people do not strike lightly or because of wicked agitators. They do so because they passionately believe that there is no other way of resolving their difficulties.

I speak as an active lay member of a white-collar union. Like several white-collar unions, my union experiences difficulties over recognition. Unbelievable as it may seem in the 1980s the union experiences difficulties similar o those seen at Grunwick. In that case, people were refused the elementary right to belong to a trade union at their place of work. [Interruption.] We know the reactions of Conservative Members who have no sympathy for workers who are struggling for the basic right of recognition for their trade union.

If workers decide that there is no alternative—as in the Grunwick dispute—but to take industrial action, they will not be entitled, of course, to supplementary benefit. A striker's family is entitled to some benefit. Although supplementary benefit is the bare minimum on which to exist, £12 is being deducted because of the measures that the Government took last year. Clearly, both the striker and his family will find themselves in dire financial difficulties. The striker might have hoped for a tax refund, but the clause will deny him that.

The chairman of ACAS has not been associated with the trade union side of industry. When he gave his report, he said that employers were wrong to exploit the present difficulties over unemployment and to break agreements. No doubt the breaking of a number of agreements will lead to strike action. We know that the Government intend to penalise those who exercise their rights. Many of us in the trade union and Labour movement are sickened because the Tory Government and Tory Members go on and on about Poland. They say that they sympathise with the workers there and appreciate what is being done. Labour Members understand and appreciate the struggle of Polish workers in the past 12 months to obtain basic democratic rights. We also, however, support the right of working people in Britain to defend their living standards and, if necessary, to take strike action. They have a right to do that in Britain. We are not hypocrites. We do not support strikes only when they occur in Eastern Europe.

The trade union movement has a pretty long memory. We have not forgotten the Industrial Relations Act 1971 of the previous Conservative Government. The trade union movement will not forget the Employment Act 1980 or the squalid little penal measures that are aimed at undermining the citizen's right to take strike action. When a Labour Government are re-elected, we must ensure that the shabby, squalid measures that are aimed against the trade union movement are removed from the statute book as quickly as possible.

Mr. Maxton

It will be interesting to hear the Chief Secretary's reply to this debate. Under clause 29(a) those who claim unemployment benefit cannot claim a rebate. Clause 29(b) covers those who cannot receive unemployment benefit. They will not be able to receive a rebate, either. On Clause 29(a) the Chief Secretary argued that the measure was for administrative convenience and would ensure that no one would suddenly find himself with a massive tax bill at the beginning of a financial year or on returning to work. He cannot put forward that argument now. In this instance, a person is not entitled to unemployment benefit. He will not be paid unemployment benefit, so he will not pay tax. There is no way in which an adjustment can be made at the end of the period during which he is on strike. It would mean that he would be paying tax instead of receiving a rebate. The clause should not be in the Finance Bill. It should be presented not by a Treasury Minister, but by the Department of Employment, because this is not about tax revenue and rebates; it is about trade union legislation.

As my hon. Friend the Member for Walsall, North (Mr. Winnick) said, this is a way of hitting the striker. This is vindictiveness by the Government. They believe that strikes are wrong. As my hon. Friend said, strikes in Poland are all right, but the Government and their supporters do not believe they should take place in any circumstances in this country. Indeed, they will do everything possible to ensure that they do not take place, to the extent of stopping a person getting money to which he is entitled.

The Chief Secretary cannot put forward the argument that he set out the last time round; he can argue this matter only on anti-trade union legislation grounds. He is trying to stop people going on strike. In an attempt to do that, he will stop them getting money to which they are entitled. I am not an expert on fiscal matters and I hope that the Chief Secretary will explain some of these points. The first part of the clause makes it clear who will not get rebates—namely, those who are disqualified at the time from receiving unemployment benefit by virtue of section 19 of the Social Security Act 1975 or section 19 of the Social Security (Northern Ireland) Act 1975". But will the Chief Secretary explain what is meant by or would be so disqualified if he otherwise satisfied the conditions for entitlement"? If people are disqualified on the first ground, on what other ground will they be disqualified as well?

Who will be covered? Will those who have taken strike action be covered? will those who form part of a trade union which has called them out on strike be covered? If an employer locks out the whole work force—not just those who are in dispute—will those not in dispute be disqualified from receiving a rebate? Some workers may be locked out by their employer as a result of a dispute between him and others of his work force.

Will the right hon. and learned Gentleman tell me what is meant by and such regulations may make different provision with respect to persons falling within paragraph (b) above from that made with respect to other persons"? What will the regulation say? I find this part unclear. I am not sure what is meant by it. It seems to give the Government the opportunity to introduce harsher measures against those who may be in dispute with their employers than is implied in this harsh clause.

The Minister must give us some clear answers. I accept that the hour is late, but answers are required. We consider this to be part not of the Government's fiscal strategy and economic policy but of their vindictive campaign against the trade union movement.

11 pm

Mr. Brittan

The two amendments are not acceptable to the Government. The first amendment seeks to remove from the clause the power to provide regulations for tax refunds to be withheld from strikers until the end of the strike. The second, more narrowly phrased, amendment does not go as far but seeks to confine the right to withdraw tax refunds from those who claim benefit. I ask the Committee to reject them.

The reason why refunds are to be deferred until the end of a strike is that that will align the treatment of strikers with that of the unemployed. Hon. Members have mentioned those who do not claim benefit. It is correct: that the rights of strikers should be broadly comparable with those of the unemployed.

Mr. Ennals

rose—

Mr. Brittan

I shall answer the right hon. Gentleman, but I am sure that he wishes to hear what I have to say first.

The majority of the unemployed claim that benefit and tax refunds will be withheld. In theory, it would be possible to withhold tax refunds only from strikers who are benefit claimants. However difficult it may be to accept, in practice that would be difficult to do if the group concerned were a minority. I do not accept that it is such a small minority as was suggested by the hon. Member for Edinburgh, Central (Mr. Cook), because his figures included short strikes. The more extended strikes are relevant because in a short strike a person probably would not be away from work long enough to qualify for a refund.

Mr. Ennals

The Minister did not answer my question. Perhaps I am a little stupid in not understanding. If the industrial dispute goes on after the tax year, does the striker receive his refund at the end of the tax year or does he have to wait until the end of the industrial dispute?

Mr. Brittan

As so often, one is reluctant to give way because one was about to speak about that subject. I shall answer that question. However, I should first say that if refunds are withheld only from strikers who claim benefit, the majority of strikers who do not claim benefit would be more favourably treated than the unemployed. I readily accept that that is the majority, although not the overwhelming majority as has been suggested. The relevant figure is about two-thirds. That is not a defensible proposition, and in the circumstances it is reasonable to withhold the refunds from strikers at large.

The right hon. Member for Norwich, North (Mr. Ennals) asked when the refund is to be made. We considered whether the same conditions should apply to strikers as to the unemployed—that a refund should be payable at the end of the tax year. We came to the conclusion that that is the right way to do it. We have decided that the right course in a trade dispute is for tax refunds to be withheld until the person has returned to work.

Essentially, there are two reasons. First, unemployment is likely to be a much longer experience for many people than going on strike. There are long strikes. We can all mention them, and we all have views about their rights and wrongs. But there is no doubt that in today's conditions unemployment usually lasts longer. Moreover, if tax refunds to strikers were made in the middle of a strike merely because the tax year had ended, that would be arbitrary action that could not be justified. It would be at random, and it would provide an unwarranted incentive for some disputes to continue.

Mr. Cryer

What will be the position of a single person, in receipt of no benefits, who is locked out in an industrial dispute, or as a consequence of an industrial dispute, because the production process has come to an end, but who is not on strike? Is he affected in exactly the same way as anyone who is directly on strike?

Mr. Brittan

The matter is governed by section 19 of the Social Security Act 1975, which provides A person who has lost employment … by reason of a stoppage of work … due to a trade dispute at his place of employment will be covered by this provision. But that statute also provides that that does not apply to those who are not participating in … or directly interested in the trade dispute". Exactly the same provision is being used for the purposes of the fiscal legislation.

Mr. Cook

One or two of my hon. Friends, particularly my hon. Friend the Member for Walsall, North (Mr. Winnick), asked why the striker should be treated differently in respect of how long he must wait for his refund compared with the unemployed person. As my hon. Friend pointed out, the striker apparently is to be kept waiting until the end of the strike, whereas the unemployed person will receive his refund at the end of the period of unemployment or at the end of the tax year if it intervenes.

Having listened to the Chief Secretary elaborate the view that there should be broad comparability between the treatment of the unemployed person and that of the striker, I should have expected him to accept my hon. Friend's contention that the striker should be on the same footing if the end of the tax year intervened. I entirely accept the Chief Secretary's point that the dates of the tax year are arbitrary, but we are familiar with the many occasions on which the end of the tax year and the start of a new one have that arbitrary effect.

We provide in the statute that at the end of the tax year the taxpayer is entitled to an adjustment, and, as part of that adjustment, if a rebate is due he is entitled to receive it. The clause sets aside the Inland Revenue's obligation to make that payment to one group of people who have been singled out for special treatment. We cannot repeat too often how, throughout these clauses, those who are party to industrial disputes are singled out. They are treated on a different basis from the unemployed, a basis that is special to strikers. It is not surprising that some Opposition hon. Members have formed the view that that special treatment does not reflect any underlying principle, which would surely argue the same treatment for other groups, but is pure, petty vindictiveness towards those involved in a strike.

The clause does not say that the refund will be withheld until the end of the strike. We are advised that that will be its effect, because press notices have been issued. The press has been advised, even if it has not been included in the statute, that the regulations that will be laid under the clause will have that effect.

We have still to see those regulations, and we shall have an opportunity to debate that matter when we consider a later amendment. But we shall want to express the view that Parliament should see those regulations before we complete the Report stage so that we at least are privy to the consultation which is to take place about those regulations.

I see from the press notice that the consultation on the regulations will take place with "interested parties". I hope that a random sample of the unemployed and those on strike will be included among the interested parties, because some of the responses which the Chief Secretary may have to his consultation will be very interesting when they discover what is to be done to them.

The right hon. and learned Gentleman picked me up on my reference to the percentage of strikers who have claimed supplementary benefit. The Committee will remember my pointing out that in 1979 a marvellous total of 1.1 per cent. of all strikers received supplementary benefit; in other words, 98.9 per cent. of all strikers did not. The Chief Secretary said that I exaggerated, and that he would come down to a figure of 33 per cent., although we are not quite sure, who claimed and obtained supplementary benefit, leaving 66 per cent. who did not. The basis on which he did that was by concentrating on longer strikes.

As the Chief Secretary generously admitted, this is a matter of some speculation. For a start, it depends upon the definition of "longer strike" that is chosen. But let us waive any cavilling about how we define a long-term striker, and let us waive any speculation about whether the figure of one-third is too high or too low. Let us simply accept the figure. It leaves us with the conclusion that under the clause tax refunds will be withheld from 100 per cent. of those on strike, although on the right hon. and learned Gentleman's admission only 33 per cent. of them are receiving income which is taxable under the provisions of clause 27.

That is scandalous. It is shameful. It is imposing a new burden, a new loss of right on the other 66 per cent. who are not receiving taxable income. Under the clause they will have removed from them their right to have the tax refund in respect of the preceding month to which they have been entitled hitherto.

There are numbers of people who cannot claim supplementary benefit when on strike, even if they wish to do so. There are single people, who will be deprived of the sole source of income to which they have been entitled hitherto. The Chief Secretary said that the reason why they had to be deprived of that right and the reason why the 66 per cent. who were not claiming benefit would have their refunds withheld was to put them on the same footing as the unemployed.

With respect, that is not the case. Under paragraph (a), only the unemployed person who has claimed unemployment benefit or a payment of supplementary allowance. will be affected. In other words, there may be unemployed people who may not make a claim for unemployment benefit or supplementary allowance, and in those circumstances para (a) does not bite and they are entitled to their refunds. The Inland Revenue has no power under para (a) to withhold their refunds. But that will not be the case with a striker. The 66 per cent. who will not, or who cannot find their way through the regulations to claim their supplementary benefit will have their tax refunds withheld. The option is not extended to them in the way that it is to the unemployed.

If the Chief Secretary is anxious to put both classes on the same footing, in logic he is bound to accept amendment No. 31, which limits the scope of clause 29 to those who come within the scope of clause 27. But the Chief Secretary says that he will not do that and, to be honest, I do not expect him to. As my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) said, the reality is that what we are discussing has nothing to do with tax policy. This proposal is not made out of any high consideration of fiscal policy, nor is it made out of any consideration of the necessity to raise revenue for the Government.

The measure is brought before us as part of a sustained programme by the Government to try to shift the bargaining strength from workers to management and to try to weaken the power of labour so as to strike a bargain with management. That is its purpose. It is part of the Government's policy to run up a large reserve army of unemployed people to undercut the bargaining strength of those who have managed to remain in work, even under this Government.

11.15 pm

We find the principle of such an approach repugnant. We find the tactics short-term and short-sighted. The Chief Secretary complained of the mood of bitterness ain this debate—a mood which reflects the bitterness outside the Committee. Nothing is more likely to encourage that bitterness than this type of tactic, which can only backfire on those who invented it. The Committee has a duty to try to protect the wives and children of strikers who will be denied refunds under the provision. Perhaps we should try, too, to protect the Chief Secretary from their anger by voting for amendment No. 30.

Question put, That the amendment be made: —

The Committee Divided: Ayes 216, Noes 275.

Division No. 176]	[10.18 pm
AYES
Abse, Leo	Ashton, Joe
Adams, Allen	Atkinson, N.(H'gey,)
Allaun, Frank	Bagier, Gordon A.T.
Alton, David	Barnett, Guy (Greenwich)
Anderson, Donald	Barnett, Rt Hon Joel (H'wd)
Archer, Rt Hon Peter	Benn, Rt Hon A. Wedgwood
Ashley, Rt Hon Jack	Bennett, Andrew(St'kp't N)

Bidwell, Sydney	Holland, S. (L'b'th, Vauxh'll)
Booth, Rt Hon Albert	Homewood, William
Boothroyd, Miss Betty	Hooley, Frank
Bray, Dr Jeremy	Horam, John
Brocklebank-Fowler, C.	Howell, Rt Hon D.
Brown, R. C. (N'castle W)	Howells, Geraint
Brown, Ron (E'burgh, Leith)	Hudson Davies, Gwilym E.
Buchan, Norman	Hughes, Mark (Durham)
Callaghan, Rt Hon J.	Hughes, Robert (Aberdeen N)
Callaghan, Jim (Midd't'n & P)	Hughes, Roy (Newport)
Campbell, Ian	Janner, Hon Greville
Campbell-Savours, Dale	Jay, Rt Hon Douglas
Canavan, Dennis	John, Brynmor
Cant, R. B.	Johnson, James (Hull West)
Carmichael, Neil	Johnston, Russell (Inverness)
Carter-Jones, Lewis	Jones, Rt Hon Alec (Rh'dda)
Clark, Dr David (S Shields)	Jones, Barry (East Flint)
Cocks, Rt Hon M. (B'stol S)	Jones, Dan (Burnley)
Concannon, Rt Hon J. D.	Kaufman, Rt Hon Gerald
Cook, Robin F.	Kerr, Russell
Cowans, Harry	Kilroy-Silk, Robert
Craigen, J. M.	Kinnock, Neil
Crowther, J. S.	Lambie, David
Cryer, Bob	Lamborn, Harry
Cunliffe, Lawrence	Leadbitter, Ted
Cunningham, G. (Islington S)	Leighton, Ronald
Cunningham, Dr J. (W'h'n)	Lestor, Miss Joan
Dalyell, Tam	Lewis, Arthur (N'ham NW)
Davidson, Arthur	Litherland, Robert
Davies, Ifor (Gower)	Lyon, Alexander (York)
Davis, Clinton (Hackney C)	Lyons, Edward (Bradf'd W)
Davis, T. (B'ham, Stechf'd)	Mabon, Rt Hon Dr J. Dickson
Deakins, Eric	McCartney, Hugh
Dean, Joseph (Leeds West)	McElhone, Frank
Dempsey, James	McKelvey, William
Dewar, Donald	MacKenzie, Rt Hon Gregor
Dixon, Donald	McMahon, Andrew
Dobson, Frank	McNally, Thomas
Dormand, Jack	McNamara, Kevin
Douglas-Mann, Bruce	McWilliam, John
Dubs, Alfred	Magee, Bryan
Duffy, A. E. P.	Marks, Kenneth
Dunn, James A.	Marshall, D(G'gow S'ton)
Dunnett, Jack	Marshall, Dr Edmund (Goole)
Dunwoody, Hon Mrs G.	Marshall, Jim (Leicester S)
Eadie, Alex	Martin, M(G'gow S'burn)
Eastham, Ken	Mason, Rt Hon Roy
Ellis, R. (NE D'bysh're)	Maxton, John
English, Michael	Maynard, Miss Joan
Ennals, Rt Hon David	Mellish, Rt Hon Robert
Evans, Ioan (Aberdare)	Mikardo, Ian
Evans, John (Newton)	Millan, Rt Hon Bruce
Ewing, Harry	Mitchell, Austin (Grimsby)
Faulds, Andrew	Mitchell, R. C. (Soton Itchen)
Field, Frank	Morris, Rt Hon A. (W'shawe)
Fitch, Alan	Morris, Rt Hon C. (O'shaw)
Flannery, Martin	Morris, Rt Hon J. (Aberavon)
Fletcher, Ted (Darlington)	Morton, George
Foot, Rt Hon Michael	Newens, Stanley
Ford, Ben	Oakes, Rt Hon Gordon
Forrester, John	Ogden, Eric
Foster, Derek	O'Halloran, Michael
Fraser, J. (Lamb'th, N'w'd)	O'Neill, Martin
Freeson, Rt Hon Reginald	Orme, Rt Hon Stanley
Garrett, John (Norwich S)	Palmer, Arthur
George, Bruce	Parry, Robert
Gilbert, Rt Hon Dr John	Prescott, John
Ginsburg, David	Price, C. (Lewisham W)
Graham, Ted	Race, Reg
Grant, George (Morpeth)	Radice, Giles
Grimond, Rt Hon J.	Rees, Rt Hon M (Leeds S)
Hamilton, James (Bothwell)	Richardson, Jo
Hamilton, W. W. (C'tral Fife)	Roberts, Albert (Normanton)
Harrison, Rt Hon Walter	Roberts, Allan (Bootle)
Hart, Rt Hon Dame Judith	Roberts, Ernest (Hackney N)
Hattersley, Rt Hon Roy	Roberts, Gwilym (Cannock)
Haynes, Frank	Robertson, George
Healey, Rt Hon Denis	Robinson, G. (Coventry NW)
Heffer, Eric S.	Rooker, J. W.
Hogg, N. (E Dunb't'nshire)	Ross, Ernest (Dundee West)

Ross, Stephen (Isle of Wight)	Tinn, James
Rowlands, Ted	Torney, Tom
Ryman, John	Wainwright, E.(Dearne V)
Sever, John	Wainwright, R.(Colne V)
Sheerman, Barry	Walker, Rt Hon H.(D'caster)
Sheldon, Rt Hon R.	Watkins, David
Shore, Rt Hon Peter	Weetch, Ken
Short, Mrs Renée	Wellbeloved, James
Silkin, Rt Hon J. (Deptford)	Welsh, Michael
Silkin, Rt Hon S. C. (Dulwich)	White, Frank R.
Skinner, Dennis	White, J. (G'gow Pollok)
Smith, Rt Hon J. (N Lanark)	Whitlock, William
Snape, Peter	Wigley, Dafydd
Soley, Clive	Willey, Rt Hon Frederick
Spearing, Nigel	Williams, Rt Hon A.(S'sea W)
Spriggs, Leslie	Wilson, Rt Hon Sir H.(H'ton)
Stallard, A. W.	Wilson, William (C'try SE)
Stewart, Rt Hon D. (W Isles)	Winnick, David
Stoddart, David	Woodall, Alec
Stott, Roger	Woolmer, Kenneth
Straw, Jack	Wright, Sheila
Summerskill, Hon Dr Shirley	Young, David (Bolton E)
Thomas, Dafydd (Merioneth)
Thomas, Jeffrey (Abertillery)	Tellers for the Ayes:
Thomas, Dr R.(Carmarthen)	Mr. Donald Coleman and Mr. Allen McKay.
Thorne, Stan (Preston South)
Tilley, John
NOES
Adley, Robert	Cockeram, Eric
Aitken, Jonathan	Colvin, Michael
Alexander, Richard	Cope, John
Alison, Michael	Corrie, John
Amery, Rt Hon Julian	Cranborne, Viscount
Ancram, Michael	Critchley, Julian
Aspinwall, Jack	Crouch, David
Atkins, Robert(Preston N)	Dean, Paul (North Somerset)
Baker, Kenneth(St.M'bone)	Dickens, Geoffrey
Baker, Nicholas (N Dorset)	Dorrell, Stephen
Banks, Robert	Dover, Denshore
Bell, Sir Ronald	du Cann, Rt Hon Edward
Bendall, Vivian	Dunn, Robert (Dartford)
Benyon, Thomas (A'don)	Dykes, Hugh
Benyon, W. (Buckingham)	Eden, Rt Hon Sir John
Berry, Hon Anthony	Edwards, Rt Hon N. (P'broke)
Best, Keith	Eggar, Tim
Bevan, David Gilroy	Elliott, Sir William
Biggs-Davison, John	Emery, Peter
Blackburn, John	Eyre, Reginald
Blaker, Peter	Fairgrieve, Russell
Body, Richard	Faith, Mrs Sheila
Bonsor, Sir Nicholas	Fell, Anthony
Boscawen, Hon Robert	Fenner, Mrs Peggy
Boyson, Dr Rhodes	Fisher, Sir Nigel
Braine, Sir Bernard	Fletcher, A. (Ed'nb'gh N)
Bright, Graham	Fletcher-Cooke, Sir Charles
Brinton, Tim	Fookes, Miss Janet
Brittan, Leon	Forman, Nigel
Brooke, Hon Peter	Fowler, Rt Hon Norman
Brotherton, Michael	Fox, Marcus
Brown, Michael(Brigg & Sc'n)	Fraser, Rt Hon Sir Hugh
Browne, John (Winchester)	Fraser, Peter (South Angus)
Bruce-Gardyne, John	Fry, Peter
Bryan, Sir Paul	Gardiner, George (Reigate)
Buchanan-Smith, Alick	Gardner, Edward (S Fylde)
Buck, Antony	Garel-Jones, Tristan
Budgen, Nick	Gilmour, Rt Hon Sir Ian
Bulmer, Esmond	Glyn, Dr Alan
Burden, Sir Frederick	Goodlad, Alastair
Butcher, John	Gow, Ian
Cadbury, Jocelyn	Gower, Sir Raymond
Carlisle, John (Luton West)	Gray, Hamish
Carlisle, Kenneth (Lincoln)	Greenway, Harry
Carlisle, Rt Hon M. (R'c'n)	Griffiths, E.(B'y St. Edm'ds)
Chalker, Mrs. Lynda	Griffiths, Peter Portsm'th N)
Churchill, W. S.	Grist, Ian
Clark, Hon A. (Plym'th, S'n)	Grylls, Michael
Clark, Sir W. (Croydon S)	Hamilton, Hon A.
Clarke, Kenneth (Rushcliffe)	Hamilton, Michael (Salisbury)
Clegg, Sir Walter	Hampson, Dr Keith

Hannam, John	McNair-Wilson, P. (New F'st)
Haselhurst, Alan	McQuarrie, Albert
Hastings, Stephen	Madel, David
Hawksley, Warren	Major, John
Hayhoe, Barney	Marland, Paul
Heddle, John	Marlow, Tony
Henderson, Barry	Marshall, Michael (Arundel)
Heseltine, Rt Hon Michael	Maude, Rt Hon Sir Angus
Hicks, Robert	Mawby, Ray
Higgins, Rt Hon Terence L	Mawhinney, Dr Brian
Holland, Philip (Carlton)	Maxwell-Hyslop, Robin
Hooson, Tom	Mayhew, Patrick
Hordern, Peter	Mellor, David
Howell, Rt Hon D. (G'ldf'd)	Meyer, Sir Anthony
Hunt, David (Wirral)	Miller, Hal (B'grove)
Hunt, John (Ravensbourne)	Mills, lain (Meriden)
Hurd, Hon Douglas	Mills, Peter (West Devon)
Jenkin, Rt Hon Patrick	Miscampbell, Norman
Johnson Smith, Geoffrey	Moate, Roger
Jopling, Rt Hon Michael	Molyneaux, James
Kaberry, Sir Donald	Monro, Hector
Kellett-Bowman, Mrs Elaine	Montgomery, Fergus
Kimball, Marcus	Moore, John
King, Rt Hon Tom	Morris, M. (N'hampton S)
Kitson, Sir Timothy	Morrison, Hon C. (Devizes)
Knox, David	Morrison, Hon P. (Chester)
Lamont, Norman	Mudd, David
Lang, Ian	Murphy, Christopher
Langford-Holt, Sir John	Myles, David
Latham, Michael	Neale, Gerrard
Lawrence, Ivan	Needham, Richard
Lawson, Rt Hon Nigel	Nelson, Anthony
Lee, John	Neubert, Michael
Le Marchant, Spencer	Newton, Tony
Lennox-Boyd, Hon Mark	Normanton, Tom
Lloyd, Ian (Havant & W'loo)	Onslow, Cranley
Lloyd, Peter (Fareham)	Page, Rt Hon Sir G. (Crosby)
Loveridge, John	Page, Richard (SW Herts)
Luce, Richard	Parkinson, Cecil
Lyell, Nicholas	Parris, Matthew
McCrindle, Robert	Patten, Christopher (Bath)
Macfarlane, Neil	Patten, John (Oxford)
MacGregor, John	Pattie, Geoffrey
MacKay, John (Argyll)	Pawsey, James
Macmillan, Rt Hon M.	Peyton, Rt Hon John
McNair-Wilson, M. (N'bury)	Pink, R. Bonner
Porter, Barry	Stokes, John
Powell, Rt Hon J.E. (S Down)	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	Tebbit, Norman
Pym, Rt Hon Francis	Temple-Morris, Peter
Raison, Timothy	Thomas, Rt Hon Peter
Rathbone, Tim	Thompson, Donald
Rees-Davies, W. R.	Thorne, Neil (Ilord South)
Renton, Tim	Thornton, Malcolm
Rhodes James, Robert	Townend, John (Bridlington)
Rhys Williams, Sir Brandon	Trippier, David
Ridley, Hon Nicholas	Trotter, Neville
Ridsdale, Sir Julian	van Straubenzee, W. R.
Rifkind, Malcolm	Vaughan, Dr Gerard
Rippon, Rt Hon Geoffrey	Viggers, Peter
Roberts, M. (Cardiff NW)	Waddington, David
Roberts, Wyn (Conway)	Wakeham, John
Rossi, Hugh	Waldegrave, Hon William
Rost, Peter	Walker, B. (Perth)
Royle, Sir Anthony	Walker-Smith, Rt Hon Sir D.
Sainsbury, Hon Timothy	Wall, Patrick
Scott, Nicholas	Waller, Gary
Shaw, Michael (Scarborough)	Walters, Dennis
Shelton, William (Streatham)	Ward, John
Shepherd, Colin (Hereford)	Warren, Kenneth
Shepherd, Richard	Watson, John
Shersby, Michael	Wells, John (Maidstone)
Silvester, Fred	Wells, Bowen
Sims, Roger	Wheeler, John
Skeet, T. H. H.	Whitelaw, Rt Hon William
Speed, Keith	Whitney, Raymond
Speller, Tony	Wickenden, Keith
Spicer, Jim (West Dorset)	Williams, D.(Montgomery)
Spicer, Michael (S Worcs)	Winterton, Nicholas
Sproat, Iain	Wolfson, Mark
Squire, Robin	Young, Sir George (Acton)
Stanbrook, Ivor	Younger, Rt Hon George
Stanley, John
Steen, Anthony	Tellers for the Noes:
Stevens, Martin	Mr. Carol Mather and Lord James Douglas-
Stewart, Ian (Hitchin)
Stewart, A.(E Renfrewshire)	Hamilton.

Division No. 177]	[11.16 pm
AYES
Abse, Leo	Bennett, Andrew (St'kp't N)
Adams, Allen	Bidwell, Sydney
Allaun, Frank	Booth, Rt Hon Albert
Alton, David	Boothroyd, Miss Betty
Anderson, Donald	Bray, Dr Jeremy
Archer, Rt Hon Peter	Brown, R. C. (N'castle W)
Ashley, Rt Hon Jack	Brown, Ron (E'burgh, Leith)
Ashton, Joe	Buchan, Norman
Atkinson, N.(H'gey,)	Callaghan, Rt Hon J.
Bagier, Gordon A.T.	Callaghan, Jim (Midd't'n & P)
Barnett, Guy (Greenwich)	Campbell, Ian
Barnett, Rt Hon Joel (H'wd)	Campbell-Savours, Dale
Benn, Rt Hon A. Wedgwood	Canavan, Dennis

Cant, R. B.	Johnston, Russell (Inverness)
Carmichael, Neil	Jones, Rt Hon Alec (Rh'dda)
Carter-Jones, Lewis	Jones, Barry (East Flint)
Clark, Dr David (S Shields)	Jones, Dan (Burnley)
Cocks, Rt Hon M. (B'stol S)	Kaufman, Rt Hon Gerald
Coleman, Donald	Kerr, Russell
Concannon, Rt Hon J. D.	Kilroy-Silk, Robert
Conlan, Bernard	Kinnock, Neil
Cook, Robin F.	Lambie, David
Cowans, Harry	Leadbitter, Ted
Craigen, J. M.	Leighton, Ronald
Crowther, J. S.	Lestor, Miss Joan
Cryer, Bob	Lewis, Arthur (N'ham NW)
Cunliffe, Lawrence	Litherland, Robert
Cunningham, G. (Islington S)	Lyon, Alexander (York)
Cunningham, Dr J. (W'h'n)	McCartney, Hugh
Dalyell, Tam	McElhone, Frank
Davidson, Arthur	McKay, Allen (Penistone)
Davies, Rt Hon Denzil (L'lli)	McKelvey, William
Davies, Ifor (Gower)	MacKenzie, Rt Hon Gregor
Davis, Clinton (Hackney C)	McNally, Thomas
Davis, T. (B'ham, Stechf'd)	McNamara, Kevin
Deakins, Eric	McWilliam, John
Dempsey, James	Magee, Bryan
Dewar, Donald	Marks, Kenneth
Dixon, Donald	Marshall, D(G'gow S'ton)
Dobson, Frank	Marshall, Dr Edmund (Goole)
Dormand, Jack	Marshall, Jim (Leicester S)
Douglas-Mann, Bruce	Martin, M(G'gow S'burn)
Dubs, Alfred	Mason, Rt Hon Roy
Duffy, A. E. P.	Maxton, John
Dunn, James A.	Maynard, Miss Joan
Dunnett, Jack	Meacher, Michael
Dunwoody, Hon Mrs G.	Mikardo, Ian
Eadie, Alex	Millan, Rt Hon Bruce
Eastham, Ken	Mitchell, Austin (Grimsby)
Ellis, R. (NE D'bysh're)	Mitchell, R. C. (Soton Itchen)
English, Michael	Morris, Rt Hon A. (W'shawe)
Ennals, Rt Hon David	Morris, Rt Hon C. (O'shaw)
Evans, Ioan (Aberdare)	Morris, Rt Hon J. (Aberavon)
Evans, John (Newton)	Morton, George
Ewing, Harry	Newens, Stanley
Faulds, Andrew	Oakes, Rt Hon Gordon
Field, Frank	Ogden, Eric
Fitch, Alan	O'Halloran, Michael
Flannery, Martin	O'Neill, Martin
Fletcher, Ted (Darlington)	Orme, Rt Hon Stanley
Foot, Rt Hon Michael	Palmer, Arthur
Ford, Ben	Parry, Robert
Forrester, John	Prescott, John
Foster, Derek	Price, C. (Lewisham W)
Fraser, J. (Lamb'th, N'w'd)	Race, Reg
Freeson, Rt Hon Reginald	Radice, Giles
Freud, Clement	Rees, Rt Hon M (Leeds S)
Garrett, John (Norwich S)	Richardson, Jo
George, Bruce	Roberts, Albert (Normanton)
Gilbert, Rt Hon Dr John	Roberts, Allan (Bootle)
Ginsburg, David	Roberts, Ernest (Hackney N)
Graham, Ted	Roberts, Gwilym (Cannock)
Grant, George (Morpeth)	Robertson, George
Hamilton, James (Bothwell)	Robinson, G. (Coventry NW)
Hamilton, W. W. (C'tral Fife)	Rooker, J. W.
Harrison, Rt Hon Walter	Ross, Stephen (Isle of Wight)
Hart, Rt Hon Dame Judith	Rowlands, Ted
Healey, Rt Hon Denis	Ryman, John
Heffer, Eric S.	Sever, John
Hogg, N. (E Dunb't'nshire)	Sheerman, Barry
Holland, S. (L'b'th, Vauxh'll)	Sheldon, Rt Hon R.
Homewood, William	Shore, Rt Hon Peter
Hooley, Frank	Short, Mrs Renée
Howell, Rt Hon D.	Silkin, Rt Hon J. (Deptford)
Howells, Geraint	Skinner, Dennis
Hudson Davies, Gwilym E.	Smith, Rt Hon J. (N Lanark)
Hughes, Mark (Durham)	Snape, Peter
Hughes, Robert (Aberdeen N)	Soley, Clive
Hughes, Roy (Newport)	Spearing, Nigel
Janner, Hon Greville	Spriggs, Leslie
Jay, Rt Hon Douglas	Stallard, A. W.
John, Brynmor	Steel, Rt Hon David
Johnson, James (Hull West)	Stewart, Rt Hon D. (W Isles)

Stoddart, David	Welsh, Michael
Stott, Roger	White, Frank R.
Straw, Jack	White, J. (G'gow Pollok)
Summerskill, Hon Dr Shirley	Whitlock, William
Thomas, Dafydd (Merioneth)	Wigley, Dafydd
Thomas, Jeffrey (Abertillery)	Williams, Rt Hon A.(S'sea W)
Thomas, Dr R.(Carmarthen)	Wilson, Rt Hon Sir H.(H'ton)
Thorne, Stan (Preston South)	Wilson, William (C'try SE)
Tilley, John	Winnick, David
Tinn, James	Woodall, Alec
Torney, Tom	Woolmer, Kenneth
Wainwright, E.(Dearne V)	Wright, Sheila
Wainwright, R.(Colne V)	Young, David (Bolton E)
Walker, Rt Hon H.(D'caster)
Watkins, David	Tellers for the Ayes:
Weetch, Ken	Mr. Joseph Dean and Mr. Frank Haynes.
Wellbeloved, James

NOES
Adley, Robert	Dunn, Robert (Dartford)
Aitken, Jonathan	Dykes, Hugh
Alexander, Richard	Eden, Rt Hon Sir John
Alison, Michael	Edwards, Rt Hon N. (P'broke)
Amery, Rt Hon Julian	Eggar, Tim
Ancram, Michael	Elliott, Sir William
Aspinwall, Jack	Emery, Peter
Atkins, Robert(Preston N)	Eyre, Reginald
Baker, Kenneth (St.M'bone)	Fairgrieve, Russell
Baker, Nicholas (N Dorset)	Faith, Mrs Sheila
Banks, Robert	Fell, Anthony
Bendall, Vivian	Fenner, Mrs Peggy
Benyon, Thomas (A'don)	Fisher, Sir Nigel
Benyon, W. (Buckingham)	Fletcher, A. (Ed'nb'gh N)
Berry, Hon Anthony	Fletcher-Cooke, Sir Charles
Best, Keith	Fookes, Miss Janet
Bevan, David Gilroy	Forman, Nigel
Biggs-Davison, John	Fowler, Rt Hon Norman
Blackburn, John	Fox, Marcus
Blaker, Peter	Fraser, Peter (South Angus)
Body, Richard	Gardiner, George (Reigate)
Bonsor, Sir Nicholas	Gardner, Edward (S Fylde)
Boscawen, Hon Robert	Garel-Jones, Tristan
Boyson, Dr Rhodes	Gilmour, Rt Hon Sir Ian
Braine, Sir Bernard	Glyn, Dr Alan
Bright, Graham	Goodlad, Alastair
Brinton, Tim	Gow, Ian
Brittan, Leon	Gower, Sir Raymond
Brotherton, Michael	Gray, Hamish
Brown, Michael(Brigg & Sc'n)	Greenway, Harry
Browne, John (Winchester)	Griffiths, E.(B'y St. Edm'ds)
Bruce-Gardyne, John	Griffiths, Peter Portsm'th N)
Bryan, Sir Paul	Grist, Ian
Buchanan-Smith, Alick	Grylls, Michael
Buck, Antony	Hamilton, Hon A.
Budgen, Nick	Hamilton, Michael (Salisbury)
Bulmer, Esmond	Hampson, Dr Keith
Burden, Sir Frederick	Hannam, John
Butcher, John	Haselhurst, Alan
Cadbury, Jocelyn	Hastings, Stephen
Carlisle, John (Luton West)	Hawksley, Warren
Carlisle, Kenneth (Lincoln)	Hayhoe, Barney
Carlisle, Rt Hon M. (R'c'n )	Heddle, John
Chalker, Mrs. Lynda	Henderson, Barry
Channon, Rt. Hon. Paul	Heseltine, Rt Hon Michael
Churchill, W. S.	Hicks, Robert
Clark, Hon A. (Plym'th, S'n)	Higgins, Rt Hon Terence L.
Clark, Sir W. (Croydon S)	Holland, Philip (Carlton)
Clarke, Kenneth (Rushcliffe)	Hooson, Tom
Clegg, Sir Walter	Hordern, Peter
Cockeram, Eric	Howell, Rt Hon D. (G'ldf'd)
Colvin, Michael	Hunt, David (Wirral)
Cope, John	Hunt, John (Ravensbourne)
Corrie, John	Hurd, Hon Douglas
Cranborne, Viscount	Jenkin, Rt Hon Patrick
Crouch, David	Johnson Smith, Geoffrey
Dean, Paul (North Somerset)	Jopling, Rt Hon Michael
Dickens, Geoffrey	Kaberry, Sir Donald
Dorrell, Stephen	Kellett-Bowman, Mrs Elaine
Dover, Denshore	Kimball, Marcus
du Cann, Rt Hon Edward	King, Rt Hon Tom

Kitson, Sir Timothy	Rees-Davies, W. R.
Knox, David	Renton, Tim
Lamont, Norman	Rhodes James, Robert
Lang, Ian	Rhys Williams, Sir Brandon
Langford-Holt, Sir John	Ridley, Hon Nicholas
Latham, Michael	Ridsdale, Sir Julian
Lawrence, Ivan	Rifkind, Malcolm
Lawson, Rt Hon Nigel	Rippon, Rt Hon Geoffrey
Lee, John	Roberts, M. (Cardiff NW)
Le Marchant, Spencer	Roberts, Wyn (Conway)
Lennox-Boyd, Hon Mark	Rossi, Hugh
Lloyd, Ian (Havant & W'loo)	Rost, Peter
Lloyd, Peter (Fareham)	Royle, Sir Anthony
Loveridge, John	Sainsbury, Hon Timothy
Luce, Richard	Scott, Nicholas
Lyell, Nicholas	Shaw, Giles (Pudsey)
McCrindle, Robert	Shaw, Michael (Scarborough)
Macfarlane, Neil	Shelton, William (Streatham)
MacGregor, John	Shepherd, Colin (Hereford)
MacKay, John (Argyll)	Shepherd, Richard
Macmillan, Rt Hon M.	Shersby, Michael
McNair-Wilson, M. (N'bury)	Silvester, Fred
McNair-Wilson, P. (New F'st)	Sims, Roger
McQuarrie, Albert	Skeet, T. H. H.
Madel, David	Speed, Keith
Major, John	Speller, Tony
Marks, Kenneth	Spicer, Jim (West Dorset)
Marland, Paul	Spicer, Michael (S Worcs)
Marlow, Tony	Sproat, Iain
Marshall, Michael (Arundel)	Squire, Robin
Mather, Carol	Stanbrook, Ivor
Maude, Rt Hon Sir Angus	Stanley, John
Mawby, Ray	Steen, Anthony
Mawhinney, Dr Brian	Stevens, Martin
Maxwell-Hyslop, Robin	Stewart, Ian (Hitchin)
Mayhew, Patrick	Stewart, A.(E Renfrewshire)
Mellor, David	Stokes, John
Meyer, Sir Anthony	Stradling Thomas, J.
Miller, Hal (B'grove)	Tapsell, Peter
Mills, Iain (Meriden)	Taylor, Robert (Croydon NW)
Mills, Peter (West Devon)	Taylor, Teddy (S'end E)
Miscampbell, Norman	Tebbit, Norman
Moate, Roger	Temple-Morris, Peter
Molyneaux, James	Thomas, Rt Hon Peter
Monro, Hector	Thompson, Donald
Montgomery, Fergus	Thorne, Neil (Ilford South)
Moore, John	Thornton, Malcolm
Morris, M. (N'hampton S)	Townend, John (Bridlington)
Morrison, Hon C. (Devizes)	Trippier, David
Morrison, Hon P. (Chester)	Trotter, Neville
Mudd, David	van Straubenzee, W. R.
Murphy, Christopher	Vaughan, Dr Gerard
Myles, David	Viggers, Peter
Neale, Gerrard	Waddington, David
Needham, Richard	Wakeham,John
Nelson, Anthony	Waldegrave, Hon William
Neubert, Michael	Walker, B. (Perth)
Newton, Tony	Walker-Smith, Rt Hon Sir D.
Normanton, Tom	Wall, Patrick
Onslow, Cranley	Waller, Gary
Page, Rt Hon Sir G. (Crosby)	Walters, Dennis
Page, Richard (SW Herts)	Ward, John
Parkinson, Cecil	Warren, Kenneth
Parris, Matthew	Watson, John
Patten, Christopher (Bath)	Wells, John (Maidstone)
Patten, John (Oxford)	Wells, Bowen
Pattie, Geoffrey	Wheeler, John
Pawsey, James	Whitelaw, Rt Hon William
Peyton, Rt Hon John	Whitney, Raymond
Pink, R. Bonner	Wickenden, Keith
Porter, Barry	Williams, D.(Montgomery)
Powell, Rt Hon J.E. (S Down)	Winterton, Nicholas
Price, Sir David (Eastleigh)	Wolfson, Mark
Prior, Rt Hon James	Young, Sir George (Acton)
Proctor, K. Harvey	Younger, Rt Hon George
Pym, Rt Hon Francis
Raison, Timothy	Tellers for the Noes:
Rathbone, Tim	Lord James Douglas-Hamilton and Mr. Peter Brooke.
Rees, Peter (Dover and Deal)

Question accordingly negatived

Mr. Robert Sheldon

I beg to move amendment No. 32, in page 19, line 5, after 'regulations', insert 'which, without prejudice to the generality of section 204 of the Income and Corporation Taxes Act 1970, shall be subject to an affirmative resolution of the House of Commons'. Under the clause, regulations can be introduced dealing with the details of how refunds to strikers will not be made. The regulations will deal with the withholding of taxpayers' money, as we have discussed in previous debates. The unemployed will lose a certain amount of income but will gain something from the benefit side of the equation. The strikers will gain nothing. That is a penal use of taxation. Strikers will lose their refunds when they need their money most. Their commitments do not usually stop when their income stops. Their income will not increase again until they return to work and can pay for the continuing commitments.

Those matters have been the subject of discussion during the day. We are now debating whether the regulations should be made in an affirmative or negative manner. They should be the subject of a schedule so that they can be properly discussed and examined. We shall require to have a much closer understanding of the regulations. If they are not in final form, we shall need to share in some of the thinking that will lie behind them. That will be necessary before we accept this part of the legislation in Standing Committee. There will be plenty of time for debate at that stage.

11.30 pm

Mr. Cryer

The amendment adds the requirement that the regulations under the clause shall be made by affirmative resolution rather than by the negative procedure, which I assume is that involved in the legislation mentioned in section 204 of the Taxes Act.

My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) has mentioned the onerous nature of the proposed legislation—namely, that the unemployed will not have their tax rebates returned to them as at present. Strikers are placed in a much worse position than others. Contrary to the claims of many of the daily newspapers which play a subservient role to Conservative Central Office, they receive no benefit. Therefore, there will be some who will be dependent entirely on tax rebates for any form of sustenance. Single persons will have no other income. They have no dependants and there will be no income to share. They will be devoid of income.

The governing of payment is to be laid down in regulation. It would be far more desirable if the method of payment were laid down in a schedule to the Bill. Parliament's function is to pass primary legislation. The clause contains such important and unusual provisions, including an element of punitive legislation against strikers, that the matter should not be left to regulations.

Where the House of Commons agrees to regulations —as we know, the Government have a majority and they can get the clause through the House—it should insist that they are subject to the affirmative procedure and not the negative procedure. I hope that the Minister will assure us that the Government will undertake that procedure.

Workpeople have the strength to equal the power of the employer only through combination. Workpeople do not want to go on strike, because that is an action that involves sacrifices. However, they are sometimes faced with no alternative if they are to obtain negotiating rights or a proper understanding of reasonable wage or working conditions claims. Therefore, it is important that this attack on strikers is dealt with by Parliament. It should not be managed by the antique backstairs method of delegated legislation that is undertaken by the House of Commons.

Far too much of our legislation is subject to the negative procedure. We all know that if a prayer is set down against a statutory instrument it is rarely, if ever, debated unless it is supported by the Front Bench. Only one and a half hours is available in any case, and, whichever procedure is used, instruments cannot be changed. That is most unsatisfactory: one must have the instrument or nothing.

Therefore, the proposal for the affirmative procedure is a democratic improvement. Whether one agrees with clause 29 or not, even some Conservative Members might just conceivably have a vague aspiration towards sustaining the democratic processes. In that case, they might have considered the general desirability of using the affirmative rather than the negative procedure wherever possible.

To us, the powers in clause 29 are particularly onerous. They are an attack on the unemployed and on strikers. We know that that is what the Government are about, that they do not much care about the unemployed, that they do not mind burdening them and that they are only too delighted to attack strikers. But the amendment is not about he merits of the clause—[Interruption.] I understand that the hon. Member has difficulty in stretching his mind this far, but if he could devote lengthy study to reading the clause he would see that it affects both categories.

Apart from the merits of these powers, the amendment seeks simply to give the House a better opportunity of debating the method of implementing it. That is a reasonable aspiration for both the Opposition and for Conservative Members who want to improve our debating procedures and make this place more accountable. We are asking the Government to ensure that democratic procedures are adhered to, and I hope that the Minister will respond.

Mr. Brittan

It is always a matter for judgment whether regulations under an Act of Parliament should be subject to the affirmative or the negative resolution procedure. Without wishing to sound cynical or cavilling, I would say that it is natural that the Opposition, who challenge the basis of this legislation, should be more prone to favour the affirmative procedure. However, in this case, there is good reason for the negative procedure.

Clause 29 clarifies and supplements the powers to make regulations under section 204 of the Taxes Act, so that regulations can be made providing for tax refunds to be withheld from benefit claimants during unemployment and from strikers. Section 204 is the enabling legislation which provides for regulations to be made for the operation of the PAYE system. When it was enacted, Parliament decided that the powers exercisable under it should be subject to the negative resolution procedure. Therefore, I find it difficult to see why, in relation to broadly similar regulations extending them under clause 29, a different procedure should be adopted. It is for that reason that I cannot commend the amendment to the Committee.

Amendment negatived.

Question put and agreed to.

Clause 29 ordered to stand part of the Bill.

To report Progress and ask leave to sit again tomorrow.—[Mr. Brittan.]

Committee report Progress; to sit again tomorrow.