§ Mr. Robert Sheldon:: (Ashton-under-Lyne)
I beg to move amendment No. 1, in page 13, line 25, leave out '£2,445' and insert '£2,755'.
§ The Chairman
With this it will be convenient to take the following amendments: No. 2, in page 13, line 25, leave out '£2,445' and insert '£2,510'.
§ No. 3, in page 13, line 28, leave out '£1,565' and insert '£1,775'.
§ No. 4, in page 13, line 28, leave out '£1,565' and insert '£1,609'.
§ Mr. Sheldon
I wonder whether we might, for the convenience of the Committee, take also the following amendment:
§ No. 6, in page 13, line 30, leave out '£3,295' and insert '£3,387'.
§ No. 7, in page 13, line 31, leave out '£2,070' and insert£2,340'
§ No. 8, in page 13, line 31, leave out '£2,070' and insert£2,129'
§ No. 9, in page 13, line 33, leave out £6,700' and insert '£7,600'.
§ No. 10, in page 13, line 33, leave out '£6,700' and insert '£6,903'.
§ Mr. Richard Wainwright (Colne Valley)
Although amendments Nos. 5 to 10 are of the same genus and deal with the taxation of the aged, before agreeing to the proposal, as we would like to do, we should like to be assured that if this change is made it will not prevent separate votes on amendments Nos. 2 and 6.
§ The Chief Secretary to The Treasury (Mr. Leon Brittan)
I take it, Mr. Weatherill, that it is proposed to include also amendment No. 5, in page 13, line 30, leave out '£3,295' and insert '£3,735'. I think that by mistake it was not included.
§ The Chairman
That would be in the second grouping. As I understand it, it would be for the convenience of the Committee if we took amendments Nos. 1 to 10 together in one debate. That appears to be so.
§ Mr. Sheldon
The Government have a few simple economic views, which are reflected in their tax policies which we start to discuss in some detail this afternoon. They believe in the market economy. I should not trust those who preach that economy to go into Sainsbury's with a shopping list, let alone venture into Petticoat Lane. Their belief in these matters has been clearly stated, and continues to be.
The Government's second broad policy of which we must take note, because it, too, is reflected in the taxation policies that we are discussing, is that they have in mind the need to look after the rich, on the principle that it is the rich who provide the jobs and the wealth of the country. The policy is a simple one: let the rich make even more money and they will spend their time creating new industries, investing in the economy and improving the efficiency of the enterprises for which they are responsible.
Even though the rich have been encouraged magnificently by the Government, I see no sign of industrial investment expanding in the way that was hoped. Rather, I see a decline, and side by side with that decline in the investment that it had been hoped would increase I see tax havens flourishing as they have never flourished before.
The two economic views that I have set out hold at least part of the key to the tax policies of which clause 22 is a good example. For the Conservative Government, the taxation of the rich is an economic problem and the taxation of the ordinary person is a budgetary one. They need to reduce the money that is taken from the rich to improve the economy, but they need to increase the money that is taken from ordinary people to pay for the running of the economy.
§ Mr. Tony Marlow (Northampton, North)
Does the right hon. Gentleman agree that if it were not for the likes of Mr. Ken Livingstone across the river the taxation and the budgetary problems of the poor would be rather less than they are at the moment?
§ Mr. Sheldon
I find that an incredible assessment. If the hon. Gentleman has the courtesy to stay and listen to these debates he will hear us dealing with the taxation of those people who are least well off and what has happened to them during the lifetime of this Government. He will see from the figures, which will be discussed at some length during the debate, just how ordinary people and, even worse, those with smaller than average incomes, have suffered under this Government. That is one of the marked features of this Conservative Administration which the hon. Gentleman will do well to study. If he has not studied it so far, I hope that he will take note of what is said during these debates.
The Government have divided the people into two parts—the rich, who are made richer to encourage them, and for whom taxation represents a diminishing burden, and the ordinary people, for whom taxation is increased to pay for running the economy. The Government have changed the traditional basis of taxation, which is the raising of tax from the those best able to bear it. The principle so far has been that those with the broadest backs should rightly bear the greatest burdens. That principle has been eroded by the Government in their various Budgets. That is a serious departure, made for reasons that we find unconvincing.
441 The first major element came in last year's Budget, though there were signs before. That important change was the failure to uprate the personal allowances in line with the Rooker-Wise amendment, introduced under the last Labour Government. The amendment was the first element of indexation in our tax system, if we exempt the indexation of pensions carried out by a Conservative Government way back in 1972.
We are not talking about the failure to increase allowances; we are talking about the system of indexing year by year in line with the increases in the cost of living. Following on from that simple element of indexation, which applied to the taxation of ordinary people, there have been further legislative attempts by the Government to index other areas of our tax system. Whereas we indexed the allowances in so far as they applied to ordinary people, the Conservatives have indexed capital transfer tax, capital gains tax, higher rate bands, capital gains tax exemption limits and the CTT bands, and there will be more to come.
The Government have deliberately zeroed in on the rich in order to give them, at times of both economic difficulty and lesser economic difficulty, increased limits in a way that we find incomprehensible and unjustified.
§ The Financial Secretary to the Treasury (Mr. Nicholas Ridley)
Will the right hon. Gentleman tell us which way he voted in the Division when the Rooker-Wise amendment was carried in Committee?
§ Mr. Sheldon
Will the hon. Gentleman recall what happened on Report, when the Labour Government accepted the amendment? We listened to the arguments and accepted on Report the amendment put forward by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker). Since then I have not ceased to pay tribute to my hon. Friend for his wise education of the Treasury. I wish that that education had continued into the present Government. Their types of indexation are different from ours. The benefits that they provide in Finance Bill after Finance Bill go directly to those with higher incomes.
All of this started with the statement by the present Chancellor of the Exchequer in the debate on 25 July 1977, when he said:That is why truth in taxation is important.The great claim was that indexation would not be a means to help the wealthy but would be for truth and for telling people what taxation really meant.By failing to keep personal allowances in line with the dreadful ravages inflicted by inflation, the Government have extended the range of disincentives and deepened the poverty trap. Social benefits have risen with full indexation while personal tax thresholds have not. Therefore more people are moving into the band where their earnings in work hardly exceed their earnings out of work … the real thief is inflation. It is the promoter of this increased burden of taxation and we are angry because, due to the Treasury's failure to change the tax system in line with inflation, the Treasury itself becomes the main body to profit from the inflation that it has failed to check. The House should feel quite entitled to impose the indexation obligation on the Government."—[Official Report, 25 July 1977; Vol. 936, c. 70.]Those were ringing words, but the right hon. and learned Gentleman last year failed to increase the personal allowances in, line with inflation. He had said that he would index them to ensure that in particular those at the lower levels of incomes would not suffer from inflation. 442 The Government had in mind that they would reduce taxation, because they believed in that. The right hon. Member for Blaby (Mr. Lawson), who is a conviction politician, persuaded a gullible Chancellor to introduce a tax and price index. He talked about the need to show people how they were better off under the present Government. He said that to show that they were a tax-cutting Government they needed an index that did not simply illustrate the way in which retail prices had moved upwards but took account of the way in which taxes would diminish year by year. Side by side with inflation coming down, the levels of taxation would come down even quicker, so there would be two benefits for ordinary people—inflation declining and taxation declining.
The right hon. Gentleman wanted to introduce an index that made that clear for all to see. Everyone could then go into the negotiating room to discuss increased pay realising how much better off in both those areas he was year by year. The Chancellor said in his speech to a conference organised by the Financial Times on 23 July 1979:There has been a good deal of talk about whether or not the tax changes make most households better off. I hope that the new tax and price index of real take-home pay which the Government hopes shortly to introduce will help to settle this kind of dispute. For the retail price index, by itself, is not a sufficient guide".In the period from the introduction of the tax and price index in 1979 to February 1982 the retail price index rose by 35.6 per cent. That is the measure of the decline of the value of money in the economy run by the Conservative Government. At the same time, the tax and price index rose by 42.7 per cent. The position worsens each year. Between March 1981 and February this year the retail price index rose by 9.4 per cent. and the tax and price index rose by 12½ per cent.
The tax and price index is recording that prices are going up and up. Additionally, we are now being given the useful but not surprising information that taxes are also going up and up. That is the valuable contribution made by the right hon. Member for Blaby. The right hon. Gentleman, who is adept at all these matters, thought up the index. He designed the petard. He constructed it lovingly of selected iron plate, placed the gunpowder inside, and prepared to use it against the enemy. When he arranged the initiating ceremony the whole petard blew up, hoisting the right hon. Gentleman with it.
But the right hon. Gentleman's ingenuity did not end there. Once he realised that the tax and price index had failed, the base dates were kept separate, so a direct comparison is a tedious operation. Many of us can recognise the hand of the right hon. Member for Blaby in constructing what is a rather difficult exercise for those who wish to make a fairly obvious simple comparison. I am grateful, and I must express my gratitude, to the Library staff for arranging this examination.
As I mentioned before, the Rooker-Wise amendment was overridden for the very first time by this Government. The principle of truth in taxation—which we understood the Conservative Government were always interested in—gave away to the more important principle that tax reliefs should be available for the better off. This was the principle that finally won in the conflict. It was not a conflict about which we had all that much doubt.
If we make a further examination to see what happened in the case of the worse off, we see that the level of income at which a typical family started to pay tax fell from 44.7 per cent. of average earnings to an estimated 38 per cent. 443 in November last year. The proportion of a low-paid family's earnings taken in income tax and national insurance contributions increased from 21.9 per cent. to 23.6 per cent. There were further problems for those in the poverty bracket.
This Government did not just fail to index last year; they failed to raise the allowances at all. So the thief of inflation which made the Chancellor angry when it took place in the lifetime of the last Government—those were his own words; it is a rare attribute of the Chancellor to be angry, he rarely gets angry—was discovered not to be a thief at all last year. The Chancellor of the Exchequer was no thief; he was a removal man and he arrived with a whole pantechnicon and left nothing. There was nothing left to compensate for the increases in inflation then. I understand that the bailiffs—a growing profession under this Government—are supposed to leave a bed and a chair for the occupants. But this Government last year left bare boards. That was all that remained of truth in taxation on that occasion.
Also, for the first time the Government did not increase the age allowance. Extra consideration has always been given to the age allowance. Many people in work, however difficult their circumstances, always have the prospect of future opportunities to make good the ravages of any year. The problem of the older members of our society is that they see their savings decline, and if benefits or tax allowances to old people are delayed many of them cannot postpone their needs in the same way that young people can. For older people the future is obviously more limited.
Last November a typical family started to pay tax at an estimated 38 per cent. of average earnings as against the 44.7 per cent. at the beginning of this Administration.
Looking now at the effect of the 1982 Budget on individual incomes, we are indebted to the Library and to the Institute of Fiscal Studies for an excellent background paper which documents many of these matters. [Interruption.] The hon. Member for Marlow would be well instructed to read this paper carefully. He will find many of the answers in it. I know he prefers to make speeches without notes, but from time to time it is an advantage to have a document which sets out the facts for him to look at. I am going to be tedious and quote one or two facts but perhaps we should hear the comments of the hon. Gentleman first.
§ Mr. Marlow
I am grateful to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) for giving way. He is a very courteous Member of the House. I can see what he is driving at. His amendments are there for us to see: that these allowances should be increased significantly. The right hon. Gentleman is an honest man and would not want to mislead the House. Will he tell the House exactly how much these increases will cost, bearing in mind the massive increases in public expenditure which he and his colleagues are calling for, and tell the House precisely where he intends to get the money?
§ Mr. Sheldon
That has been made quite clear in previous economic debates. I am happy to have repeated economic debates so as to explain how this Government have such a narrow view of the public sector borrowing requirement that they think that they can tie it down to the nearest £100 million, although the task force going to the 444 South Atlantic will be without cash limits. Who knows, it may be hundreds or even thousands of millions of pounds over which the Government will have no control. They will find, when they come to look at their PSBR, that they will have no control of the kind that they had assumed with such certainty. They will have to consider their policy again right from the beginning as we would wish to see.
As I said, we are indebted to the Library and to the Institute of Fiscal Studies. Their paper makes use of the family expenditure survey and works out the effect fully and accurately in the case of seven different types of households. It looks at households on half average earnings and goes through seven family households up to five times average earnings. It looks at the effects of their expenditure and the taxes on that expenditure. It comes to a certain number of conclusions, which are set out in this background paper, No. 100. I advise the hon. Member for Northampton, North (Mr. Marlow), when he comes to the House to make speeches or interventions on this matter, to absorb at least one small part of this paper in order to inform himself and others of his hon. Friends on these matters.
If we consider the impact of the taxation on those on half average earnings, we see that they have suffered a reduction of 45p a week. They will pay an extra 45p a week in income tax. Those on average earnings will suffer to the extent of £1.01 a week, those on one and a half times average earnings will suffer to the extent of £1.75 a week, those on twice average earnings will be £1.50 a week worse off. Those on three times average earnings will suffer to the extent of 25p per week. Those on four times average earnings will be 39p a week worse off. But those on five times average earnings—surprise!—will gain. They are the only ones who will do so. The Library has produced a study showing who gains and who loses, and the only ones to gain will be those on five times average earnings.
§ Mr. Brittan
I am sure that it must be inadvertence on the part of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), because I cannot believe that, with his customary courtesy, he would have wished not to answer the point made by my hon. Friend the Member for Northampton, North (Mr. Marlow). Perhaps he was confused by thinking that my hon. Friend was the Member for Marlow, which of course is his name.
The cost of the amendment to which the right hon. Gentleman is speaking, over and above what the Government are doing, would be £2 billion in a full year. How does he think that that ought to be financed?
§ Mr. Sheldon
I am not sure whether the Minister heard our previous debates on these matters when my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) made it clear that there was to be an increase in the PSBR. Did he not hear that? It was mentioned again and again. I should not have thought that I need to come to the House, which has heard the figure mentioned again and again, and say how we would finance it. We shall increase the borrowing. That should come as no surprise to the right hon. Gentleman. He has attacked us for increasing the borrowing. He is entitled to attack us, but he is not entitled to deny that we have told him how we shall deal with these matters.
It does not fall to the Chief Secretary to make those points. After all, it was he who said that the ordinary 445 person would be much better off as a result of the Budget. We have had long debates to prove that the ordinary person will do badly out of the Budget and that income tax will be increased. I remember that the matter caused great concern to Treasury Ministers, who were unaware whether people would benefit or lose as a result of the Budget. It has now been proved conclusively that they will lose, in contradistinction to the point made by the Chief Secretary to the Treasury, who was under the misapprehension that the Budget, on which he must have spent a considerable time, would benefit them. We had to show that they would lose, as has now become accepted in our discussions.
§ Mr. Tim Eggar (Enfield, North)
I know that the right hon. Member for Aston-under-Lyne (Mr. Sheldon) is a keen reader of The Guardian. I wonder whether he read the assessment of the economic policies of his right hon. Friend the Member for Stepney and Poplar (Mr. Shore) in that newspaper on Tuesday? As we all wish to debate these matters seriously, will the right hon. Gentleman persuade his right hon. Friend to publish the figures not only for the first year of his simulation on the Treasury model but for subsequent years, because that might give us some interesting information?
§ The Second Deputy Chairman (Mr. Ernest Armstrong)
Order. I hope that the right hon. Gentleman realises that if he goes down that road we shall be straying far from the amendment.
§ Mr. Sheldon
I was sorely tempted to reply to Mr. Huhne, who was putting what he believed to be the Labour Party's budget. If the hon. Member for Enfield, North (Mr. Eggar) is an avid reader of The Guardian, he will have read my right hon. Friend's statement, but perhaps he has not got round to it yet. It is an interesting and excellent statement, which will answer the points about which he seems to be concerned. That is as far as I can take the matter and I hope that it answers the point.
This year's Budget was said to recognise the wrong that was being done to the ordinary person and to compensate him in some small way for the failure to increase the personal allowances last year. But even in such a Budget the rich once again become better off. That refers only to this clause. What about those that we shall be discussing later on capital taxes in general?
One series of our amendments embodies the principle that both last year and this year the Rooker-Wise upratings of personal allowances should have been implemented. We have increased both the personal and age allowances by the amounts that the Government failed to uprate last year and should have uprated this year. As a result personal allowances will increase for single and married people, as will age allowances. We shall divide the Committee in such a way as to make it clear that we wish to see those allowances increased in line with inflation and in line with the wishes of the entire Committee, as they were expressed last year.
The amendments are not magnanimous. They are no more than what is expected as a consequence of inflation. What is more disturbing is that a Government who are anxious to help the better off have failed to increase personal allowances. They have revealed their true intentions to the elderly and others. They have done so on many occasions, but this is a further example, which we wish to divert by a vote this evening.
§ Mr. Kenneth Carlisle (Lincoln)
Like the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), we, too, consider that tax thresholds are an essential part of our financial structure. One of the best acts of the Budget was to raise those thresholds across the board by about 14 per cent., which is substantially more than the rate of inflation. It took about 500,000 taxpayers out of the tax bracket. It was a most welcome act and is a move in the right direction, because we must all recognise that tax thresholds are much too low. The cost of raising the thresholds was about £2 billion, so it took a substantial slice of the money that my right hon. and learned Friend the Chancellor had available.
The Government must go much further along that road in future. We must recognise—I believe that the Government do—that low tax thresholds cause substantial hardship and are a great disincentive to everyone in work. My experience, which is restricted to my constituency, is that many families that pay tax should not do so. I have become aware of that through letters, constituency surgeries and talking to people. I am sure that many hon. Members have heard about pensioners, widows and single-parent families who pay tax but who genuinely should not, and the hardship caused by that tax demand. Hon. Members on both sides of the House recognise that for many years we have lived with the nonsense of a growing number of people who receive benefits but who pay tax. No hon. Member could concede that that is sensible.
§ Mr. D. N. Campbell-Savours (Workington)
If the hon. Member for Lincoln (Mr. Carlisle) feels so strongly about the matter, will he support us when we table our amendments on capital gains tax and capital transfer tax, because the Government are giving large sums of money to the better off? The hon. Gentleman obviously wishes to protect the low paid.
§ Mr. Carlisle
The hon. Member for Workington (Mr. Campbell-Savours) is going up the wrong path. I have yet to develop the theme of incentives. Perhaps the answer to his question will come later in my speech.
It is fair to recognise that every party has condemned the idea of people paying tax while receiving benefits. The problem has become worse in the past year. I respect the work of my hon. Friend the Member for Norfolk, North (Mr. Howell), who has argued comprehensibly and powerully about the fault of the "why work" syndrome, the disincentive that it causes and the poverty trap that it creates in society. I am sorry that he is not here today, as his would be a more powerful voice than mine in this matter.
I welcome the move in the Budget to take 500,000 taxpayers out of the tax bracket. That has been of considerable help to many pensioners and widows in my constituency, and they have recognised the fact. However, I hope that next year my right hon. and learned Friend the Chancellor and his team will consider taking tax thresholds much further than they have this year.
I distinctly remember that in the May 1979 general election I campaigned hard on a programme of less tax and better incentives. I know from my meetings outside factories and elsewhere that the issue of incentives struck a deep chord among all working people. I am conscious that the pledge that I gave then has not been fulfilled. I recognise that was a pledge for a full Parliament. We still 447 have time to succeed. However, I beg the Treasury to take note that the varying of taxes and the increasing of incentives struck a chord in the hearts of many average earners at that time.
The Government have done enough for the better paid. There are sufficient incentives for the creation and building up of small businesses. The Government have done a great deal to help the small business man. I am glad that the Minister of State, Treasury, my hon. Friend the Member for Maldon (Mr. Wakeham), has had a role to play in that respect.
It is easy to ask the Government to raise tax thresholds, as the Opposition have done. It is easy for the Opposition to pledge to raise tax thresholds. Amendment No. 1 seeks to raise tax thresholds.
This year, I have supported the Budget strategy. I have told my constituents and others that it is a good Budget. We must recognise that only by controlling borrowing, which means restricting our tax handouts or our expenditure, can we hope to bring down interest rates and inflation. That is central to our escape from recession. It must be remembered that high inflation affects the pensioner and the widow perhaps more than anyone.
The Budget strategy this year is reasonable, given the money that is available. During a severe recession the Government have sought to cover their costs much more from personal taxation. We all know of the extra sums that have had to be spent to sustain industries, such as British Leyland and the British Steel Corporation, and to expand employment schemes for the young unemployed. The money has had to come from somewhere. Therefore, there has not been sufficient scope to raise tax thresholds as much as we might have done.
As my right hon. and learned Friend the Chancellor said recently, there are signs that we are emerging from this claustrophobic recession. As we do, the curse of low tax thresholds must be tackled, for that is one of the major pledges that remain to be fulfilled over the last two years of the Government's term of office.
I welcome the fact that a start has been made in this Budget to raise tax thresholds by more than the rate of inflation. More needs to be done now. I should like my right hon. and learned Friend the Chief Secretary to give his word that the Government regard this matter with great gravity and considerable commitment and that, if the money is available over the next year, priority will be given to raising tax thresholds and creating many more incentives for men and women on average incomes.
§ Mr. John Horam (Gateshead, West)
This debate is about tax thresholds, both generally and in relation to the age allowance. Tax thresholds are most important because they have a major and decisive influence on the take-home pay of the lowest paid. It is they, apart from the unemployed, of course, who have the toughest time in a recession.
I would regard as a major priority of a Social Democratic and Liberal alliance Government the raising of tax thresholds in line with inflation and, whenever the occasion permits, raising them faster than the rate of inflation so that we can see some real uplift in the point at which people begin to pay tax. This is certainly a more important issue than the level of the standard rate of income tax. It has always disappointed me that Conservative Governments appear to pay so much more 448 attention to the standard rate of tax than to the level at which people begin to pay tax. That is far more important to the average and low-paid person's standard of living.
The problem of tax threshold was not always so severe. In the 1950s it was about level with average male earnings. It has steadily increased under successive Governments over the past few years and has now reached the point where people begin to pay tax at well below half average earnings.
After all that the Conservative Party said in its manifesto, it is a major crime that the Government have allowed the general slide to worsen. It is estimated that the tax threshold is now £250 lower in real terms than when the Government took office nearly three years ago. That is a measure of the extent to which the Government have gone against the commitment that they and their supporters made at the general election.
§ Mr. Carlisle
I am grateful to the hon. Gentleman for giving way. I know how busy the Social Democrats are. The Government's pledge at the election was for a full term of office. We are only halfway through that teen. Perhaps the hon. Gentleman will be generous enough to recognise that there is still time for us to fulfil that pledge.
§ Mr. Horam
There is very little time left. We have had almost three years of Conservative Government. There is little time left, whether it be six months, 18 months or the full two years. Would the hon. Gentleman like to lay a bet with me on what the tax threshold will be at the end of the Government's term of office compared with what it was when they took office? I bet that the £250 real depreciation in the value of tax thresholds will not be made good in the time available.
The Conservative manifesto said that a Conservative Government would take the lowest paid out of tax altogether. Despite the 500,000 to whom the hon. Gentleman referred, 26.3 million are paying tax this year compared with 26.4 million when the Government came to office. That is a significant difference, especially as unemployment is much higher now than when the Government took office.
The damage was done last year. The Government recognised that by raising the threshold by 14 per cent. this year-2 per cent. above the going rate of inflation. However, there is a limit to what can be done to make up for the sins of last year. One reason why we shall not be supporting the Labour Party's amendment on general tax thresholds is that it would cost too much. That cost—£2 billion was the Chief Secretary's assessment—shows how irresponsible and opportunistic the Opposition are to call for a doubling of the tax threshold this year.
The Government's position is untenable at a general level, and it is even worse when it comes to the elderly. The Finance Act 1981 meant that some women between 60 and 65 years of age were taxed on their pensions when they received no other income. That was mollified by the Inland Revenue's concession, but it still required only £56 of graduated pension supplement to bring them into income tax. That is indefensible. Therefore, because of the smaller sums involved and the real hardship caused to the 449 elderly by the Government's failure last year to do anything about tax thresholds, the Social Democratic Party will support amendments to make the Government more generous than they are now.
§ Mr. David Winnick (Walsall, North)
Clause 22 is of great importance. It is particularly important to the many families who live on limited incomes. Therefore, in some respects, it is one of the most important clauses of the Finance Bill that is likely to emerge for debate.
The hon. Member for Lincoln (Mr. Carlisle) referred to those in his constituency who are clearly paying more in tax than they should be. A number of such cases have been brought to my attention during surgeries and in letters. One elderly widow told me that she had a very small income, that she received only the widow's pension, but that she was having to pay income tax. I wrote to the Inland Revenue in my district and it confirmed that my constituent had an obligation to pay income tax. In the course of the reply I was told:It is true that the single personal allowance of £1,375 per annum is insufficient to cover an annual widow's pension.My constituent has an income slightly above that level.
I wrote to the Minister of State, Treasury, who is not on the Treasury Bench today. I put all the facts before him. I explained how my constituent, with an income of less than £2,000 a year, was being drawn into income tax liability as a result of personal allowances not being increased in the previous financial year. He tried to justify that position in his reply. I forwarded the letter to my constituent, as I was bound to do, and, understandably, it did not provide her with much satisfaction.
A parliamentary reply of 14 December 1981 stated that about 80,000 more widows of 65 and over were liable to pay tax in 1981–82 than in 1980–81. I imagine that the majority of the 80,000 are living on limited incomes. However, they have been drawn into tax liability. These women have the utmost difficultly in managing from day to day, and it is extremely difficult to justify the argument that they should be paying income tax in the first place.
The hon. Member for Lincoln was frank when he said that what he promised his constituents during the 1979 election campaign had not come about. Probably the most important promise that the Conservative Party made during that election campaign was that a Conservative Government would reduce tax. During the general election campaign the average person would have said that the main emphasis of the Tory campaign was to reduce income tax. Indeed, without the Conservative Party's promises on income tax reductions, it is likely that a Conservative Government would not have been elected.
We tried to explain at the hustings that, even if a Conservative Government were able to reduce income tax as the Conservative Party intended, the majority would not be helped—certainly not those on average or below average incomes. We explained that public expenditure would be reduced, which would certainly hit those on low incomes, and that indirect taxation would increase accordingly. However, we lost that argument, and it is no use pretending otherwise.
It is important to consider whether those on small incomes have suffered or benefited as a result of the Government's action on taxation. In 1978–79 a married 450 couple with two children in receipt of 50 per cent. of average income paid 6.6 per cent. of their income in tax. In 1981–82, income tax had increased the proportion to 11.8 per cent. If we move up the scale to 75 per cent. of average income, the income tax liability in 1978–79 was 14.7 per cent. That was the last financial year in which the Labour Government were in office. In 1981–82, the income tax liability became 17.4 per cent. If national insurance contributions are included, a married couple with two children in receipt of 75 per cent. of average income paid 20.8 per cent. of their earnings in income tax and national insurance contributions compared with 24.5 per cent. in 1981–82. That family is not able to say that it has benefited from the promises that the Conservative Party made during the 1979 general election.
§ Mr. Winnick
My hon. Friend has asked an interesting and relevant question. Before I respond to it, I suggest that it is appropriate to consider who has not benefited from the Conservative Party's promises. Much has been made about those on average incomes. We have heard a great deal about how the Government want to help them by providing incentives, for example. In 1978–79, a married person with two children in receipt of average income paid tax and national insurance contributions amounting to 25.2 per cent. of his income. In the past financial year that same person paid tax and insurance contributions amounting to 27.6 per cent. of his earnings. That person has not benefited from the Government's policies. The figures that I have quoted do not include increases in rents, fuel charges and indirect taxation. These are all the things that make life difficult and hard for those on limited incomes.
§ Mr. Kenneth Carlisle
Does the hon. Gentleman agree that inflation hits especially hard the weakest in society? If so, does he accept that if Britain increased its borrowings dramatically and lived beyond its means it is likely that the rate of inflation would be increased, whereas the reduction of inflation is likely to be one of the Government's great successes?
§ Mr. Winnick
My constituents, and no doubt the hon. Gentleman's constituents, are waiting for the inflation rate to be reduced to the level that obtained when the Labour Government left office. That day has yet to come. We would be silly to dismiss the argument that more borrowing would lead to increased interest rates and a higher inflation rate. One hopes that that would not be the result, but that leads to a much wider argument about dealing with the misery of mass unemployment, which I am unable to advance while speaking to the amendment.
My hon. Friend the Member for Workington (Mr. Campbell-Savours) asked "Who has benefited?". My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) explained who has benefited. It would not help my constituents, who are mainly on limited incomes and paying larger tax bills, if everyone suffered. That would be no consolation to them. However, it is even more irritating that the richest in the community—those who need the least help of all—have benefited from the tax changes and other measures introduced by the Conservative Government since May 1979. For example, a man on five times average income—about £38,500—has seen his tax bill reduced from 49½ per cent. in May 1979 to about 44.9 per cent. That has been a hefty reduction. 451 If we move further up the income scale—incidentally, I am talking about incomes that my constituents do not have and are never likely to have—and take someone with 10 times average income, which is over £77,000 a year—
§ Mr. Winnick
I understood that a Government Whip was not permitted to intervene in debates. The hon. Member for Watford (Mr. Garel-Jones) can always drop his book and join us. I am not a great believer in ritual. He can go to his former place and join the debate. I do not believe that it is his role to make a running commentary on hon. Members' speeches, but if he wants to continue to do so from his former place I shall not report him to the Chief Whip or the Prime Minister.
§ Mr. William Hamilton (Fife, Central)
The hon. Member for Watford (Mr. Garel-Jones) was found a place in the Whips Office to shut him up.
§ Mr. Winnick
That is not a matter on which I shall comment.
The tax liability of someone earning over £77,000 has dropped from 65 per cent. during the last financial year of the Labour Government to 51 per cent. in 1981–82. There is quite a difference between the way in which those on substantial incomes have benefited and what has happened to those on half or three-quarters of average earnings and those to whom I referred earlier who are on even less than half average income.
We hear a great deal from the Government Benches about matters such as rent control and the difficulties of widows, but what of the widows who have been penalised over the past few years in the way that I have described?
I fully support the changes in taxation and personal allowances urged on the Government by the Opposition Front Bench. It has never been my view that there is a good case for reducing the general tax level. First and foremost, our need is to protect those in greatest need. Perhaps it has been unpopular, but I have never played the demagogue like Conservative Members at elections and promised all kinds of tax concessions.
Reducing the standard rate of taxation does not help the average person; it helps only the richest and most prosperous in the community. I urge the Government to change the tax system. People on the smallest and most limited incomes should not pay tax. It has been pointed out in previous debates that in some cases they are the people who receive State benefits because of their limited incomes and at the same time pay tax. There is no sense in that. It discredits the tax system. Conservative Members may not be worried, but it causes us on these Benches anxiety.
I believe that taxation is a fair way for raising revenue, and it is the worst kind of trickery to pretend to the electorate that one can reduce taxation for most people. Most of the measures in which I believe, which I defend and, rightly or wrongly, want to see carried out, will come to some extent as a result of taxation. I want to make it clear that my argument, like that of my right hon. and hon. Friends, is not a general argument for reducing taxation as such. I want to help those in greatest need.
Many of my constituents have been humiliated and means-tested when applying for assistance. If they have more than £2,000, for example—I note that this ceiling is 452 to be raised a little—they cannot draw one penny of supplementary benefit. In many cases their life savings and redundancy money are taken into consideration. The Labour Government did not have that ceiling of £2,000.
My constituents are means-tested before they can receive supplementary benefit, but prior to the Government's economic policies many would have been earning their own living, and proud to do so. The last thing they wanted was to be on the dole. When I compare the difficulties of those people with what has happened to the richest in our community, I am justified in saying that the Tory Party has again established itself as the party that cares about one tiny section of the community—the richest in Britain.
There has been hardly any change in the concentration of personal wealth. One per cent. of the population continues to own about 24 per cent. of all private wealth. Five per cent. of the population owns nearly half of the personal wealth of this country. Bearing that in mind, one recognises the scope for fundamental change that we shall expect from a Labour Chancellor.
§ Mr. Richard Wainwright
The hon. Member for Walsall, North (Mr. Winnick) gave a particularly convincing demonstration of the peculiarly great hardships for widows and other women pensioners caused by those disgracefully low thresholds. He gave one or two telling individual examples. I hope that his feelings will later lead him to support amendment No. 11.
I support amendments Nos. 2, 4, 6, 8 and 10, relating to the various income tax thresholds. Earlier, hon. Members correctly claimed that there was grave disapproval on both sides of the Committee of the appallingly low level of tax thresholds. I hope that there will be a convincing demonstration of those all-party feelings in the Lobby tonight.
However, it is by no means only in this House, important though that is, that these thresholds are conspicuously deplored. For example, the Royal Commission on the taxation of profits and incomes as long ago as 1954 felt it necessary to utter this solemn statement by way of warning:There should be no income tax levied upon any income which is insufficient to provide its owner with what he requires for subsistence.What a long, steep descent from civilised standards we have had since then, particularly when one associates with the income tax thresholds that other tax on incomes—national insurance. That has made increasing inroads into incomes of the poor that are well below subsistence levels since the Royal Commission reported.
It is not only within these shores that low thresholds are regarded as uncivilised. Our partners in the Common Market, with the exception of Italy, do not tolerate tax thresholds anywhere near as low as we have in this country and proposed in the Bill. In West Germany, in 1981, the threshold for income tax was £3,010 sterling equivalent, and that related to a starting rate for income tax of only 18 per cent. In France the threshold was even more civilised—£5,400—with a starting rate for tax of only 7.2 per cent. In Belgium the threshold is £3,300, with a starting rate of 21.7 per cent. We are in a uniquely deplorable state of levying income tax on the poor.
I emphasise that one of the major factors in creating the present state of hardship—the failure to index tax thresholds last year—is, in the opinion of Liberal Members, far too deep and grave a damage to be put right 453 in one Finance Bill. We cannot support the Labour segment of the Opposition in its proposal that the failure to apply the Rooker-Wise amendment last year can be fully put right this year and that we can go sailing onwards with super-indexation, virtually regardless of cost.
The cost of repairing last year's damage, approximately £2 billion, would be an impossible burden to assume in one fiscal year. That proposal comes oddly from a Labour Opposition who would finance it by adding a further £2 billion to public sector borrowing without any defence against inflation in the form of an incomes policy. Therefore, I do not support those amendments.
The Liberal amendments embody an additional 3 per cent. on the previous threshold to acknowledge part of the failure to index in the previous year, making in all a 17 per cent. increase this year. In other words, we believe that last year's damage will have to be recovered by instalments. The approximate cost of £330 million for this fiscal year is a burden that should be accepted, and would be accepted by a Government who had put their defences against inflation into place and operated an incomes policy.
It is well known that these low thresholds hit two important sections of our population particularly hard—the poorest families with a breadwinner and, at the other end of the scale, elderly people, especially women between the ages of 60 and 65, who receive a pension but who have not reached the age of 65 which would entitle them to age relief for income tax.
In the first case, the numbers caught in this poverty trap are considerable. It is important to say that, because from time to time some hon. Members have suggested, although their statements have never survived challenge, that the poverty trap is more a statistical theory than a human fact. However, the Low Pay Unit, which only yesterday gave impressive evidence to one of our Select Committees, has given a statistically backed estimate that at least 150,000 families are caught in the poverty trap and have an income less than their supplementary benefit entitlement. It is estimated that the total number of people involved is 390,000. We are talking not about a few freak situations or about a tiny minority which should be relieved in some other way, but about a substantial body of taxpayers.
We must then consider how people can climb out of that poverty trap, which has largely been created by these thresholds. I address my remarks for a moment to people of the Samuel Smiles school, for whom I have no profound disrespect, who might say "If only the breadwinner in these families made more of an effort and bullied his foreman to get some overtime or did a second job, he might bring his family out of this trap".
The trouble with the poverty trap is that marginal tax rates are so high that someone earning £45 a week with a wife and two children, would be no better off if he managed to jack his earnings up to £85 a week gross. It is a further blot on our income tax system that the marginal tax rate, not the margin created by social security and other benefits, for people in that position is more than 60 per cent., which is higher than the highest marginal rate payable on earned income by any other taxpayer.
454 It is peculiarly perverse that we should impose on people trapped this way a marginal rate that is higher than the rate we deem to be right for people with substanital earned incomes.
As to the average tax threshold on all income taxpayers, I am informed that as a percentage of average male earnings we are now down to a tax threshold of only 30.33 per cent. In other words, people earning less than a third of average male earnings come into the income tax net. That cannot be right and must be remedied as rapidly as possible by as large an instalment of increased thresholds as the economy can bear.
Our judgment of that increase is embodied in these amendments. I hope that the Committee will support them, because they are intended to be a responsible answer to the challenge of taxing poverty based on what the economy can afford this year.
§ Mr. Campbell-Savours
The debate has been marked by the dire absence of Conservative Members. Indeed, the only Conservative Back Bencher who has spoken is the hon. Member for Lincoln (Mr. Carlisle), who criticised the Government and their strategy. He expressed reservations about the inadequacy of the Government's response to the problems of the lower paid, yet on a number of occasions he has intervened in defence of the Government.
Outside the Chamber, a colleague told me "The fact that the hon. Member for Lincoln is perhaps to the Left of Dick Taverne may indicate the reason for his reservations". Of course, Mr. Taverne, as a member of the Social Democratic Party, represents the new Conservative strain in monetary matters, in the sense that the SDP represents the old views, recipes and remedies which we all know will not work, particularly to resolve the crisis confronting the British economy.
The Government's taxation policy is a disaster. It must join the other areas of Government that have proved to be equally disastrous. For example, there is the Government's inability effectively to deal with law and order. They have failed to constrain the disorder in the way that they promised the electorate three years ago. They have failed sufficiently to maintain a defence policy that protects our friends overseas. That has led to the crisis confronting the Government. Indeed, they have failed to deal with unemployment and to defend the poster seen by millions of people during the election, which suggested that Labour's employment policy was not working when clearly it was.
I remind hon. Members of the statement by the Government in the 1979 Conservative Party manifesto, because it makes interesting reading now. It said:To become more prosperous, Britain must become more productive and the British people must be given more incentive … We shall cut income tax at all levels to reward hard work".In the light of the comments made by hon. Members today, including the hon. Member for Lincoln, it is clear that the Government have not fulfilled that expectation and promise.
The manifesto promisedto reward hard work, responsibility and success;"—there is little of that—tackle the poverty trap; encourage saving and the wider ownership of property; simplify taxes—like VAT;"—that meant doubling it from 8 to 15 per cent.—and reduce tax bureaucracy".
§ Mr. Campbell-Savours
Yes, indeed. When the Daily Mirror printed the suggestion that they would do so they promised not to increase VAT, yet they did precisely that.
This absurd document goes on:it is especially important to cut the absurdly high marginal rates of tax both at the bottom and top of the income scale. It must pay a man or woman significantly more to be in, rather than out of, work. Raising tax thresholds will let the low-paid out of the tax net altogether.".I recall the Workington by-election. It was an experience that I shall never forget. I remember the door knocking that took place. We were told that the Labour Government's taxation policy would lead to defeat, which is what happened. If one assesses the effect of the weight of taxation on the British people, including my constituents in Workington, it is interesting to note that they are paying more today than they did then. Perhaps today the people will wish to consider their commitment to the Conservative Party. They will do so at the next general election.
The people were misled during the general election campaign in 1979. The miserly tax concessions that have been made in the Budget have all been overtaken, cast aside and rendered negligible by the effects of the national insurance increases that were introduced before the Budget, and have therefore damaged the interests of the lower paid, again with the result that the poverty trap has deepened. A family with two children is now required to start paying tax on income that is £23 a week below the official poverty line. In my language that means that tax is now being paid on poverty scale incomes. I cannot believe that the Government can use any language or rhetoric at the Dispatch Box to justify the effect of that on many of our constituents.
Every hon. Member, particularly Opposition Members, will have constituents who have complained in recent months about the burden of taxation that has developed under the Government. That has been accompanied by the substantial rise in council rents over the past few years. They have had to pay substantially increased amounts for many of the services that under the Labour Government were provided free. That is the measure of the effectiveness of the Government.
I shall now refer to the response by many people outside the House following the statement made by the Chancellor of the Exchequer on taxation policy at the time of the Budget. Much of the euphoria was false and misplaced. Many people believed that they were getting something which they were not getting. It is only when the analysts in the media and my hon. Friends have sat down to evaluate the effects of the Budget measures that it has become increasingly clear that the Government cannot fund the social wage that many of our electorate have come to presume is their right and entitlement. When I refer to the social wage, I refer again to all the public services that for decades successive Governments, including—
§ The Second Deputy Chairman
Order. The hon. Gentleman is going wide of the amendments. He must relate what he is saying to the amendments.
§ Mr. Campbell-Savours
Perhaps you feel that I am speaking wide of the amendments, Mr. Armstrong. However, I am trying to suggest that, with the increase in taxation that is taking place under the Government and 456 with their refusal to accept our amendments, they further damage the interests of our constituents who are already suffering from the increases to which I have been referring. Therefore, I believe that there is a direct link between the amendments and the points that I am seeking to make.
The credit that was paid to the Government on their decision to reintroduce a form of indexation of tax thresholds was grossly misplaced. A married couple pay tax on an income that is £4.74 a week lower in real terms than it was two years ago. In 1980 the tax allowance for a married couple was £2,145. If that had been indexed, as it should have been last year, the tax threshold for a married couple in 1981–82 should have been £2,475. This year it should have been £2,775. As it is only £2,445, there must be a shortfall of £330 in the tax threshold which, in our view, is the entitlement of our constituents. I wonder how many fewer people would be paying tax if the Government had decided last year to maintain the indexation policy of the Labour Government.
I am sure that I shall be corrected if I misrepresent his remarks, but in his Budget Statement the Chancellor of the Exchequer said that 1.2 million people would not pay tax next year. That was widely reported in the country as a reduction in the total number of people who would be paying tax. That is not correct. It is a gross misrepresentation of the facts. As I understand it, the number of people who will be paying tax this year is broadly similar to the number of people who were paying tax last year. The 1.2 million people to whom the Chancellor of the Exchequer referred in his Budget Statement are the people who would be paying tax next year in the event that the Government did not raise the tax threshold in line with inflation, or perhaps higher than the level of inflation.
However, that is not the way in which the Government have sought to present the facts on taxation policy, because they know the truth. They are using every procedural and public relations device to deceive the British people into believing that there has been a general benefit in taxation arising from the implementation of the Chancellor of the Exchequer's policies. That is not so.
When we consider the innumerable comments that were made before the general election about the need to reduce the numbers who are paying tax, an interesting statistic surfaces. In 1978–79, if one includes tax-paying wives, the number of people paying tax was 26.4 million. In 1979–80 that number had dropped to 26.2 million. In 1980–81 it had dropped to 25.8 million. Last year it increased to 26.3 million.
Therefore, the reduction in the numbers of people paying tax has been marginal. Although we do not have the figure for next year, it will probably be but 100,000 people fewer. That has all been during a period when 1¾ million people have become unemployed. If the Government were effectively to have reduced the number of people paying tax, at the least we would have presumed is that the statistics would have revealed 2 million fewer people paying tax. That has not been so. The real effect of the Government's policy overall has been to increase as a total percentage of the work force the number of people paying tax.
We are told that the lowest threshold—in other words, the earliest point for paying tax—in the whole European 457 Community is in the United Kingdom, apart from Italy. Even in Italy the bottom tax band is at a substantially lower rate than in the United Kingdom.
I shall consider tax thresholds falling as a percentage of average earnings. In April 1979, the figure was 34.42 per cent.—that was during the final year of the Labour Government's period of office. By April 1980 that tax threshold had fallen again to 33.13 per cent. By April 1981 it had fallen to 29.3 per cent. In their projections, as in all the projections they make, the Government are seeking to claim that the threshold will now marginally rise by 1 per cent. We know in advance that that will not be so. The burden of taxation is falling increasingly on the lower paid, and the burden of taxation falls on those people who can ill afford it.
I want to quote the words of the Prime Minister in 1977, to make my point, certainly in connection with what I said about the European Community:We pay the highest rate of tax at the lowest level of income of any country in the EEC".She went on to say:That is the measure of Socialism—the effect on the poorer people of this country."—[Official Report, 29 March 1977; Vol. 929, c. 293.]She was criticising the Labour Government for what she believed was their high tax policy at that time, blaming it on what she called "the measure of Socialism". I wonder what she calls it today. Is it the measure of Conservatism? Is it the measure of failure? What is it? The right hon. Lady always seems to pass by when questions of taxation are raised, and selectively produces statistics which in no way reflect the reality of this Government's attitude to taxation. So much for the right hon. Lady's leaky and flimsy attitude to the poor and the lower paid.
However, in our society there is a group of people who have benefited. We in the House know who those people are, because over the past years in Committee considering the Finance Bill we have repeatedly raised the matter of the better off in society. The media have not reflected our frustrations. What we have said has not been reported in the press. The truth should be told. The better off in society are gaining handsomely again under this Budget from the concessions on capital gains tax and capital transfer tax.
My hon. Friend the Member for Walsall, North (Mr. Winnick) said that the man who earns five times the average income, £38,610 per annum, benefits under this Budget, in that his tax loading is reduced from what it was in 1979, from 49.7 per cent. of his total income to 44.9 per cent. this year under this Government. There has been a 5 per cent. measurable benefit to the better off, directly arising out of the taxation policies pursued by this Government.
It is interesting that when my hon. Friend the Member for Walsall, North said that Conservative Members whispered to themselves "How many are they? How few are they?", as if that negated the indecency of pursuing such a policy. It does not matter how many they are. In the view of the lower paid, it is unjust that the better off in society can gain in the way that they have under successive Finance Bills. It is about time that the Chief Secretary informed his constituents in the Northern region why he and the Treasury support a policy that favours the 458 better off, when in that region tens of thousands of people—indeed, hundreds of thousands of people—are now suffering as a result of this Government's policy.
The reflation proposed by the Social Democratic contingent in the House is quite insufficient to deal with the problems of our society. That is why I support the alternative economic strategy which has been proposed by the Labour Party and which is the only solution to the crisis that confronts our country. Labour Members realise that the economy needs a major reflation if 3 million people are to be put back to work in the way that my right hon. Friend the Leader of the Opposition said at that famous press conference two months ago. We have a major task before us, and the Opposition are ready to take on the responsibilities of carrying out the policies that are necessary if we are to protect the people whom we represent.
Finally, I want to mention an article that was printed in The Guardian the other day on a matter that was mentioned in a number of other newspapers. Curiously enough, it is a subject which repeatedly crops up prior to the Finance Bill going into Committee each year. It is the black economy. I am told that the article is based on research that was carried out by two eminent economists, Mr. Edgar Feige and Mr. Robert McGee. They maintain that the black economy is now responsible for the loss to the Inland Revenue of possibly as much as £11 billion per year. The relevance of the black economy to this debate is that, if we were to secure only a small portion of that money, it could be offset against the unfair weight of taxation on the lower paid. That £11 billion compares with the £4 billion that was identified by Sir Lawrence Airey, the chairman of the Inland Revenue, when he gave evidence to a Commons Select Committee last year, as representing between 6 and 8 per cent. of the total economy. If it is £11 billion, it is £1½ billion more than this Government's projections for the public sector borrowing requirement. It is madness for this Government to ignore the possibility that the black economy is now of this scale and nature.
I shall quote what Mr. Feige and Mr. McGee said, according to the journal of the Institute of Economic Affairs:A large and growing unobserved sector has significant implications for our understanding of the macro-economic situation of the British economy"—as I understand that statement, it means that the Chief Secretary should now, in the light of the magnitude of that sum, take that potential revenue to the Exchequer into account in the macro-decisions that are taken by this Government and in their determination of the PSBR and other Government financial factors—and for guiding government stabilisation policy.The article goes on:Feige and McGee insist that efforts to predict tax revenues, to estimate revenue losses and to determine optimal tax policy can no longer ignore the important consequences of the unobserved sector".I recall the Finance Bill debates two years ago, when my hon. Friend the Member for Midlothian (Mr. Eadie), at great length, moved an amendment on the black economy and the lack of response by the Government. I recall that at each stage of the Finance Bill over the past two years the Government have failed to respond as the Opposition demand. We say that if the scale of loss to the Exchequer is now possibly £11 billion, and if it is the sum 459 that was identified by the chairman of the Inland Revenue last year, there is a duty on the Government to treat this as a matter of urgency and to act in the national interest.
I understand that Treasury Ministers speak for the Civil Service. It is quite insufficient for them to come to the Dispatch Box and repeatedly try to impress the House with the number of civil servants that they have managed to displace. They have been put on the queue of unemployed when there is a demand for more civil servants capable of dealing with the problems of the black economy.
On this occasion, Opposition Members on the Finance Bill Committee cannot afford to miss the opportunity of pressing our cause on the black economy relentlessly and at every stage, perhaps on every amendment, as we did last year on capital gains and capital transfer tax concessions.
I hope that the Chief Secretary will refer to the black economy and to the article in the document to which I have referred. He should also give a clear undertaking that this time the Government will not ignore the problem but will take real action to restore the money that is lost to the Exchequer so that it can be used to offset the enormous weight of tax that falls on those whom Labour Members represent—the lower paid, the unemployed and those who need more money to live as a result of the Government's economic strategy.
§ 6 pm
§ Mr. William Hamilton
I shall not take too much time as I understand that there is an arrangement for a Division at about 7 o'clock. I shall refer to some facts that I hope will induce the Chief Secretary, if he is listening, to reply. I shall refer specifically to some remarks that he made on the Budget. He made the absurd claim that almost everyone will be better off in tax terms as a result of the Budget proposals. I hope that he has heard sufficient in the debate so far to convince him that he was misleading the House. It is obvious that millions of people, especially those on below average earnings, and a large number of those on above average earnings, will be worse off as a direct consequence of the Budget.
I shall quote from a document that was produced by the House of Commons Library research division. It is background paper No. 100 entitled "The impact of the 1982 Budget on individual incomes and real income movements since 1979". I hope that the Chief Secretary has a copy, as he will need to correct it if his assertion is right. Both he and this document cannot be right. I would bank on the Library's figures if I had to choose between them and the Chief Secretary's.
The Institute for Fiscal Studies carried out the work for the Library research division. The document is divided into three sections. The first deals with income, expenditure and the effect of the Budget on various income groups. The second deals with how the tax system has changed between 1978 and 1982. The third deals with the effect of tax and other changes on the seven family groups in section I. I shall not weary the House with the detailed figures in the document, but I shall refer to the final page.
Figure 6 is a block diagram of the effect of the Budget on families on half average earnings, average earnings, one-and-a-half, two, three, four and five times average earnings—in other words, a broad sweep of incomes from the very poor to the extremely rich. The block diagram makes it abundantly clear that the most massive penalties have been imposed on those earning minutely or substantially below average earnings.
460 The only group that has gained from the Budget in real terms, taking account of inflation and the rest, is the people on five times average earnings. That evidence has not been produced by the Labour Party or anyone with a political axe to grind. It is produced by some of the most objective and able people at the service of the House. The information that the Library provides for hon. Members is impeccable.
The block diagram shows clearly that those on half average earnings have lost about 50p a week as a direct result of the Budget taxation proposals. Those on average earnings have lost about £1 a week, those on one-and-ahalf times average earnings more than £1.50, those on twice average earnings about the same, those on three times average earnings about 30p a week and those on four times average earnings about 40p to 50p a week. Only those on five times average earnings have a net gain in real terms.
The final sentence in the document deals with all other groups—all those receiving less than five times average earnings—who are losing. It says:All other groups make losses, which are more important at below average and average incomes than at higher levels, both because they are greater in nominal terms and because they reflect a higher proportion of those families' incomes.Those are the words of an objective document. I refer specifically to those who have lost most heavily as a direct consequence of the Budget because I represent a large number of them, both as a Member of Parliament and as a Member sponsored by the Confederation of Health Service Employees. That trade union represents some of the lowest paid workers in the country. It also represents some of the most worthy citizens.
I received this morning a letter from a gentleman in Gwent who will add up his pennies after the Budget and will almost certainly find that he is substantially worse off as a result of it. He writes:I am employed by the N.H.S. as a storesman in St. Cadoc's Hospital Gwent and I strongly urge you to support the NHS staffs' united campaign for a 12% pay increase for 1982. N.H.S. staffs, working as a team, are for the most part low paid, highly skilled and extremely dedicated to the N.H.S. and its patients. Many staff including nurses, ancillaries, clerical staff, technicans and junior doctors earn little more then £60 per week.'That employee writes:My wages are £50 per week, after stoppages. I have worked for the N.H.S. for 10 years.Our 12 per cent. claim is a reasonable demand".That claim is far too modest. The Chief Secretary probably spends £50 per night on dinners. Yet that employee who has worked for 10 years in one of the most noble professions in this country takes home only £50 per week, and the Government say that he must be satisfied with a 4 per cent. pay increase and not a penny more.
What will that employee get out of the Budget? The effect of our amendments is highly marginal and far too modest, but we cannot deal with these people through income tax proposals. We must deal with them in other ways, through a more just economic system and a fairer distribution of the country's wealth.
A survey was undertaken by my sponsoring union at the Royal Surrey county hospital in Guildford, with the cooperation of the hospital management. Those people will be watching and listening carefully to our debates to see whether we have any concern for their problems. I cite just one or two of the many cases to show the amount of tax that those people pay and why it is essential that something be done in the Bill to protect them. The survey states: 461The most senior nurse on duty—a nursing officer responsible for four wards of around 30 beds each—takes home between £460 and £500 a month, depending on her shift pattern. Last month she earned the equivalent of £115 a week.That is less than the average earnings on which, according to the Library document, even after the Government's proposals on allowances and so on, employees will be substantially worse off as a result of the Budget. The survey further states that that lady, who receives the princely sum of £115 per week net,has two qualifications—the State Registered Nurse and the State Certificate of Midwifery. On duty she is responsible for over thirty nursing staff. At evenings and weekends she is responsible for nursing services in the entire hospital of 400 beds … Last week she worked through her half day off to help make ends meet.I cite just one other case from the many examples given. The survey states:Robin Jago is the senior operating department assistant in theatre. He is responsible for the in-service training of ODA staff, the day to day staffing of the theatre as well as clinical commitments. He has 16 staff in his team. … He takes home £75 a week for a 40 hour week, £95 last week when he worked for 55 hours. His gross was £125.11."—that means that he pays £50 per week in tax and national insurance.For on-call duty he receives a 5p an hour allowance.Those are the people whom we are exploiting in our hospital service. It behoves the House to call attention to their problem on every possible occasion. They have not been protected. On the contrary, they have been further penalised by the Budget. Moreover, the Government are now telling them that they shall have a pay increase of no more than 4 per cent. this year although the inflation rate is at least 10 per cent. and probably higher. We are asking those people to work hard for starvation wages while attempting to cut their standard of living by a swingeing amount in the forthcoming year.
It is no wonder that nurses, who do not usually threaten strike action, are now driven to it. I hope that the Government are proud of what they have done to those people. I hope that the Chief Secretary will now make as graceful an apology as he can for having misled the House in such an outrageous way by claiming that all individuals will benefit as a direct consequence of the Budget proposals.
§ Mr. David Penhaligon (Truro)
The levels at which tax begins to be paid in this country are extraordinary. Our amendments propose at least minor modifications to the present limits
The incident which brought the situation home to me most powerfully in the past year was the discovery, after considerable correspondence with the Chancellor, the local tax office and various other people, of the situation facing a 62-year-old widow in my constituency. Her sole income was State benefit, plus—unfortunately, as it turned out—a pension of just £10 per year from her husband's former employer. That £10 per year caused my constituent to lose the exemption given by the Government on the amount of tax payable by widows according to the basic tax thresholds. As a result, the £10 per year pension that her husband had earned for her during his working life cost her £40 or £50 in tax.
As a Member of Parliament, I often try to explain to constituents the difficulties that face Governments. It is 462 not my job to defend the Government, but it is good for all of us to play our part in explaining that the country is perhaps not quite so easy to run as people sometimes imagine. Nevertheless, I could not think of one coherent or even half-coherent reason why that 62-year-old constituent, whose income consisted entirely of her widow's pension and a miserable £10 per year from her husband's former employer, should pay some £50 in tax. I even wrote to the Chancellor, suggesting that he should compose a letter explaining the position to my constituent, but of course he could not do so.
The situation is incredible. It was considerably worsened by the Government last year, but the problem has been growing for a considerable number of years. I hope that tax thresholds will be considerably increased by any future Government in which I may be fortunate enough to play a part.
§ Mr. Robin F. Cook (Edinburgh, Central)
Is the hon. Gentleman thinking of joining the Labour Party?
§ Mr. Penhaligon
I stand as good a chance as the hon. Gentleman of being a member of the next Government.
After the Budget, the first £1 of income that will attract tax will be the forty-eighth for a married person and the thirty-first for a single person—income below that being tax free. On that £1, the effective rate of tax taken by the Government—my constituents rightly regard income tax and national insurance contributions as much the same thing—will be 38.75p.
I would be prepared—I am speaking personally—to vote for an increase in the standard rate of tax if that was the only way by which we could do something about this obscenity. There is no justification for it. Nearly 40p in the pound is taken by the Government on a married person's forty-eighth pound and on a single person's thirty-first pound. The Government campaigned throughout the country—less successfully in my constituency, as it turned out, than in others—about reducing tax. It is therefore extraordinary that the Government have made the situation worse. The Budget has made it marginally even worse than last year if that was possible. I ask the Minister to explain the widespread claim that this year's tax threshold changes will take about 500,000 people out of income tax. That is the figure thrown around on the Opposition Benches, and I recollect that it has been mentioned by a Government Member. I should like the right hon. and learned Gentleman to explain it.
I have been an hon. Member since October 1974. I suppose that, in that time, not least because of the record of the former Chancellor of the Exchequer, I must have heard at least 10 or 15 Budgets. I should have liked, if I had had some research assistance, to set someone the task of adding together all the people that Chancellors claim to have put outside the tax threshold. I think that there would be very few left paying tax. It is misleading for the Government to claim that the tax changes this year mean that, by the end of the year, when one assumes that most people's incomes are adjusted for a little less than, about, or a bit more than, inflation, 500,000 fewer people will pay income tax. This would mean, in my constituency, that 1,000 people, according to the Chancellor, will not pay tax who paid it last year. Hon. Members know this to be nonsense. Why do the Government insist on going around the country saying it?
The modest proposal of the Liberal Party, supported by our alliance colleagues, is for a 3 per cent. increase in the 463 thresholds—£44 a year for a single person and £65 a year for a married couple. We recognise that there are considerable economic difficulties. We wish to express dissatisfaction at the current allowances and to indicate a determination to do something about them should we be given the opportunity. I believe that the Government could accept the amendment put down by my colleagues and myself. The total cost is £380 million in a year. When one considers that enough money has been found to launch two thirds of the British Navy to the other side of the world, it is inconceivable that such a modest proposal would seriously affect the country's economy.
I wish to deal with a matter that the Government have been foolish, psychologically speaking, to pursue. Even in terms of aggregate sums, the amount is not much. A great deal has been made about the amount of tax reduction received by those who earn five times the national average wage. Incredibly few people earn five times the national average wage. I recollect once asking the Chancellor of the Exchequer to state what percentage of the PAYE population earns more than a Member of Parliament. I was surprised to learn that the reply was 1½ per cent. I must admit that I felt far more satisfied with my job at that moment than I did before.
Not many people have these colossal earnings. The global sum involved in the tax reductions is not large. Psychologically, however, at a time of economic recession and a time when people are unemployed or living on very small incomes, the tax reductions on these high incomes are insanity of the first order. The Government deserve much of the abuse that has been thrown at them.
I represent a constituency a long way from the House. The average wage in my constituency is more than 20 per cent. below the national average. A working man will be lucky to find a job, especially at the moment, with what is known in my area as a top line of £80 or £85 a week. The hon. Member for Fife, Central (Mr. Hamilton) outlined the pay of many of those employed in the Health Service. There is nothing in his remarks with which I would not concur. In my area, however, those who work in the Health Service, by local standards, are not badly paid. The jobs are enormously sought after.
These are the sort of wages on which people are forced to bring up families. I cannot believe that the modest proposal put forward from this Bench would cause the Government any serious financial difficulty. To accept the proposal would show the Government's willingness to rectify some of their sins since they took office. I express a clear determination that we shall do something about this problem when we are given the opportunity. I believe that we shall be given the opportunity before long.
§ Mr. George Cunningham (Islington, South and Finsbury)
I rise only to ask the Minister to explain what the Government have done with regard to the ratio between the single person's allowance and the married man's allowance. Many hon. Members feel that, over a prolonged period, the ratio should be altered in the direction of bringing the two reliefs closer together. By a fractional amount, the figures this year have gone in the opposite direction. I imagine that this is only due to rounding. It is, however, particularly serious because this is the first year in two years that the reliefs have been altered. Two years ago, the figures were set at levels which meant that the married man's allowance was 56 per cent., I think, more than the single person's allowance. This 464 year, following no change last year, the married man's allowance will stand, I believe, at about 56.23 per cent. more than the single person's allowance.
The difference is no doubt entirely attributable to rounding. I would, however, beg the Minister to see that when this is done the move is made in the other direction. This change can only be done gradually. It is therefore important that, when a change is made, it should bring the two figures closer together rather than the opposite. I should like the Minister to explain the rationale, if there is one, in the Government's mind for the ratio that they have chosen and especially their decision to round in the wrong direction rather than in the right direction.
§ Mr. Brittan
I should like to deal first with the specific point raised by the hon. Member for Islington, South and Finsbury (Mr. Cunningham). The hon. Gentleman is right in his guess. There is not, in any sense, a conscious policy decision to move in a particular direction in the balance between allowances. It is simply a question of a convenient figure for the purposes of rounding. The difference, as the hon. Gentleman will appreciate, is so small that the question of the direction of the move was not the dominant consideration in deciding where to put it. If one was making a policy decision, even a decision to move gradually, one would move a little further than has occurred simply as a result of the rounding operation. I shall take account of the direction that the hon. Gentleman commends when these matters are considered in future years. I can obviously make no statement about that now.
This debate is in the best traditions of debates on this Budget in that everybody wants to talk about the Government's economic policy over the past three years or to say that the Budget was doing the right thing and should have done more of it. It is significant that the criticism is not so much of what the Budget has done, but rather of what has happened in previous years or to the effect that the Government have not done more along the same lines. It is in that context that I consider some of the points that have been made. I would remind hon. Members—certainly those who are filling up the Chamber now—that the debate has been purportedly on allowances but it has ranged more widely. I make no complaint about that.
Clause 22 gives effect to the decision, announced in my right hon. and learned Friend's Budget Statement, to increase personal allowances across the board by about 14 per cent. The Opposition, in their various manifestations, are inviting an increase of 29 per cent. or 17 per cent., as the case may be. The 14 per cent. increase that is implemented in the unamended Finance Bill is 2 per cent. more than inflation in 1981 and 5 per cent. more than the 9 per cent. forecast for the increase in the 1982 retail price index. The burden of income tax will be lower in 1982–83 than it was in 1981–82 for people at all income levels. That statement, which I made in the Budget debate, is unchallengeable.
In spite of the characteristically intemperate language of the hon. Member for Fife, Central (Mr. Hamilton), having scrutinised everything that I have said, I have found nothing that calls for correction. The full impact of the Budget as a whole, as opposed to the income tax provision, is a different matter. I shall say a word about that in a moment.
465 To return to the allowances, the increase in the married man's allowance which is implemented by the Budget proposals is £300. That is £40 more than the statutory indexation requirement. A married man paying tax at the basic rate will get an income tax reduction of £1.73 a week. The increase in the single allowance is £190, which is £20 more than the statutory requirements, giving a reduced tax payment at the basic rate of £1.10 a week. The cost to the Exchequer of the increases in personal allowances will be £2,050 million in a full year and £1,665 million in 1982–83. That is over £200 million more than the cost of bare indexation. Several hon. Members, including the hon. Member for Workington (Mr. Campbell-Savours), referred to the impact of those proposals, and specifically the ones that we are debating, in the narrower sense of the word, on the total number of taxpayers. The hon. Member for Truro (Mr. Penhaligon) also touched on that point.
The hon. Member for Workington accused the Chancellor of misrepresentation in saying in his Budget speech that there would be 1.2 million fewer taxpayers in 1982–83 than in 1981–82. There was no misrepresentation. That accusation is wholly false. What the Chancellor said is true. The number of taxpayers will be 1.2 million less than it would have been if the thresholds had remained at their 1981–82 levels.
About 500,000 people will drop out of tax this year as a result of the increases that we are debating and other factors—as, I think, my hon. Friend the Member for Lincoln (Mr. Carlisle) said. The other 700,000 of the 1.2 million who would have been paying tax if allowances had remained at their 1981–82 levels are people who would otherwise have been brought into tax. There is no mystery about it.
§ Mr. Robin F. Cook
I am grateful to the Chief Secretary for his clarification of the figures. I presume that the figure of 500,000 less is as at March 1982. Will the Chief Secretary tell the House how that figure would compare with the figures for March 1981?
§ Mr. Brittan
I cannot do that without notice. If the hon. Gentleman would like to have that information he has only to put down a question and he will get it. The Chancellor made an accurate statement about the number of people paying tax at the time of the Budget who would cease paying tax as a result of the Budget. That does not seem to me to be unreasonable.
As I have said, the burden of income tax will be lower than last year at all levels of income. The question arose in various forms as to the total burden of the Budget. National insurance contributions were changed not in the Budget but elsewhere in legislation. None the less, it may be convenient to take them together with the income tax changes.
The position is as set out by the Chancellor of the Exchequer in an answer to a question on 11 March, elaborating what had been said earlier in the Budget debate. On the assumption that earnings increased by 7.5 per cent. in 1982–83—which is a particular assumption but by no means the one that will prove to be right—the proportion of income going in income tax and national insurance contributions combined will indeed be higher for most people.
466 It is significant that that is not the case not only for those with the highest incomes but also for those with the lowest. The proportion of earnings going in income tax and national insurance contributions will be lower than last year in the case of a married man earning between £2,300 and £3,800 a year and for a single person or a working wife with earnings between £1,500 and £2,200. In addition, families with children will benefit from the increase in child benefit from November.
Low-paid families will also benefit from the substantial improvement in family income supplement. Moreover, those over pensionable age who are taxpayers will benefit from the income tax changes. They will not be affected by the national insurance contribution increase and will benefit from the full uprating of the retirement pension in November.
§ Mr. Richard Wainwright
Is the Chief Secretary aware that the Treasury table from which he has just made some selective quotations about people on low incomes shows in cold print that for single people with incomes of £3,000 a year right up to £15,000 a year in 1981–82 the proportion taken under the Bill in 1982–83 to those adjusted incomes is in each case higher than in the previous year?
§ Mr. Brittan
That is not a result of the Bill. I am sure that the hon. Gentleman did not mean to say that. As the hon. Gentleman will appreciate, the Bill is concerned with income tax and not with national insurance contributions. It is of considerable significance because the statement relating to income tax on which I was challenged was correct and I am now giving the picture for income tax and national insurance contributions which are not covered by the Bill.
What the hon. Gentleman says is in no sense inconsistent with the point that I was making, which is that, although it is true that the proportion going in income tax and national insurance contributions combined would be higher for most people, that was not the case not only for those on the highest incomes but also for those on the lowest. That is exactly the mirror image that one would expect, as the previous year the indexation provision was not implemented.
§ Mr. Brittan
I shall give way in a moment.
Reference has been made to the background paper produced by the House of Commons Library research division and based on work done by the Institute for Fiscal Studies. That document also purports to discuss the real effect of the Budget. I remind the House that we are discussing the allowances and not the Budget as a whole. Nevertheless, reference was made to it, although the hon. Member concerned has chosen this moment to leave the Chamber without hearing the answer.
The paper takes account of indirect tax changes as well as of national insurance contributions. The assertions that it makes are based on a number of speculative assessments about the effect of indirect tax changes on such things as the consumption of spirits. It takes no account of the increase in child benefit due in November. It is extraordinary to take account of national insurance contribution changes—although I do not make any complaint about that—but to fail to take account of child benefit.
467 Page 5 of the paper also assumes that families on half average earnings are entitled to family income supplement and to rent and rate rebates, but do not claim them. That is an heroic assumption. Without wishing to criticise the paper, it makes several speculative assumptions. The facts that I have given about the combined effect of national insurance contributions and income tax in relation to percentages are correct.
The gravamen of the debate is the suggestion by the Labour Party that allowances should be increased by 29 per cent. and the Liberal Party's more modest suggestion that they should be increased by 17 per cent. I shall refer first to the principle of the indexation provisions. They have been rightly described as the "truth in taxation" provisions. I am firmly of the view that no Government—whether Conservative, Labour or of unknown hue—
§ Mr. Brittan
The hon. Gentleman refers to a rainbow Government with pride. [Interruption.] The hon. Member for Blackburn (Mr. Straw) obviously does not regard that as such an attractive appellation. However, the very possibility of mentioning such a thing shows how speculative and almost flippant the debate has become.
Whatever their political complexion, no Government could or should guarantee that tax rates will be indexed year in and year out in accordance with the increase in inflation. It would be constitutionally impossible for a Government to guarantee to do that, because Parliament is sovereign and would have to consider the matter. Therefore, the purpose of these so-called indexation provisions is truth in taxation. Wherever possible the Government will implement the indexation provision and will index the tax allowance or whatever. However, above all, the Government and the legislation will not permit inflation to affect the burden of taxation without anyone knowing and without any action being required by Parliament.
The provisions require Parliament to face up to matters and require the Government to say whether they are increasing the allowances in full or in part and to justify that to the House, according to the economic circumstances and to priorities. That is the benefit of the provisions that I warmly support. However, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) was effectively teased by the Financial Secretary for opposing them when they first came before the House. The provisions do not mean that it is always possible, year in and year out, to implement them. My right hon. and learned Friend the Chancellor of the Exchequer was fully justified last year in not implementing the provisions. The economic circumstances of the country made it impossible to implement them without expending a large sum of money and without increasing the public sector borrowing requirement to a quite unacceptable level.
At the time of the last Budget, the right hon. Member for Stepney and Poplar (Mr. Shore) and others warned us that if we introduced a Budget that reduced the borrowing requirement to the extent proposed by the Chancellor of the Exchequer the consequences would be dire in the extreme. Far from being dire, the Budget's introduction marked the beginning of this country's emergence from the recession. Because the Government were prepared to 468 take tough steps last year, a report that came out only today describes us, in common with only two other countries, as leading the world out of the recession.
This year, as we emerge from the recession, my right hon. and learned Friend introduced a Budget very different from that introduced last year. It was not a profligate Budget that sought to distribute largesse on a grandiose scale, as the right hon. Member for Stepney and Poplar desires, but it succeeded in giving assistance both to industry and to individuals over a wide sector.
Reference has been made to the national insurance contributions which were not in the Budget but which were necessarily increased to pay for the increased social security benefits. Rightly, the people of Britair, require such increases, and know perfectly well that they must be paid for. My right hon. and learned Friend the Chancellor of the Exchequer accurately met the needs of the situation by concentrating his assistance on industry. He concentrated on reducing the national insurance surcharge, on giving assistance to the construction industry, on developing the measures of assistance to new industry and to those concerned with technical innovation and on giving assistance to new industry and to those concerned with technical innovation and on giving assistance to heavy energy users. In an economy emerging from a recession, it was right to give that priority and not to give priority to assistance to the personal taxpayers.
Even within the content of a Budget that was rightly geared towards industry rather than the personal sector, my right hon. and learned Friend increased allowances by 14 per cent., which is 2 per cent. above the indexation provision. That was a reasonable and responsible response to the needs of the situation and it is reflected in the Bill.
It must be a question of judgment as to where to give the balance of reliefs as well as their total extent. The totality was responsible and reasonable. I shall deal with the alternatives put forward by the Labour and Liberal Parties. The distribution was right because it concentrated on industry while at the same time allowing more than an indexation provision on allowances.
What do the official Opposition say? The right hen. Member for Stepney and Poplar has put his name to a series of amendments which would give a 29 per cent. increase in allowances. This would cost over and above what my right hon. and learned Friend the Chancellor of the Exchequer thought appropriate as much as £2,080 million in a full year. When challenged in opening, the right hon. Member for Ashton-under-Lyne was slightly coy about it. He thought that we all ought to know but in the end he said that that money should be raised simply by borrowing.
Of course, other hon. Members from the Liberal and Social Democratic Benches, including the hon. Member for Gateshead, West (Mr. Horam), immediately joined those of us on this side who would regard that as being utterly irresponsible and likely to jeopardise the recovery which is emerging in the British economy. The impact of extra borrowing of that level would have a severe impact on interest rates and inflation. It is characteristic of the profligacy that passes for policy from the Labour Front Bench today that a proposition of that kind is put before the Committee.
Obviously the 17 per cent. increase which the Liberal Party and the Social Democrats propose is much more modest than the 14 per cent. put forward by the Government. That goes without saying. None the less I 469 must point out to the hon. Member for Come Valley (Mr. Wainwright) that, although he was modest in manner, the proposals that he put forward are not quite so modest in cost. In a full year they would cost £440 million—not an insubstantial sum.
Compared with the official Opposition Front Bench, whose propositions are plainly irresponsible, the difference between us and the Social Democrats and Liberal Party is more a question of judgment. The Chancellor has to make a judgment. In his judgment the £440 million that this would cost was better spent on assistance to industry and it would not have been possible both to give assistance to industry on the scale that he gave and to give further indexation of the kind proposed by the
§ Mr. Richard Wainwright
Is the right hon. and learned Gentleman not aware that the difference between us is not, as he has just said, only one of judgment but also that the fiscal relaxation which we are proposing we have always put across in accompaniment with the implementation of an incomes policy to protect us from the inflationary consequences?
§ Mr. Brittan
I appreciate that. The one difference between the hon. Gentleman and us is that in this respect the Opposition Front Bench and this Front Bench are united. We are united in that each party which has had the responsibility for being in power has had in different ways to try to implement an incomes policy and has seen the consequences of doing that and the long-term harm that it has done to the economy, quite apart from the social, economic and political disruption that was caused. Therefore, the hon. Gentleman can confidently call for incomes policies, never actually having had to face up to the consequences of introducing such a measure.
The Opposition Front Bench, now that they are safely out of office and are likely to be out for a long time, are toying with the idea of an incomes policy again under another name. This is only just peeping over the horizon in its true colours.
§ Mr. Brittan
Not on this point. The response of the Government in indexing and going beyond that by 2 per cent., and concentrating their fiscal assistance this year on industry, is the right one. I therefore commend it to the Committee and ask the Committee not to accept the amendments put forward by either of the opposition parties.
§ Mr. Cook
I begin by responding to the speech of the Chief Secretary. The right hon. and learned Gentleman made a passing reference to Britain leading the world in a return to growth and compared us with two other countries, France and Japan, both of which have achieved a steady increase in output and in GDP over the past three years. It takes necks of brass to compare with that experience the experience of Britain over the past three years, when Britain has led the world certainly, but with a massive, unprecedented and unequalled drop in output and GDP. It is to be prayed that the rest of the world does not follow that lead.
I turn from the Chief Secretary's passing reference to macroeconomic affairs to the more narrow points that he argued in relation to the tax thresholds and take him up on 470 two points. First, I return to the intervention which I made during his speech, when I asked him to clarify the calendar basis for his claim that the Budget will remove from taxation half a million people who were previously paying tax. He made it clear that in making that assertion he was comparing the numbers post-April 1982 with the numbers as at March 1982. It follows logically that after any Budget that increases the tax thresholds there must be some reduction in the number of taxpayers. Indeed, the only Budget when that has not applied in recent memory was the Government's Budget of last year, when precisely the same number were paying tax the day after as the day before, because there was no increase in tax thresholds.
If we are to have an honest comparison and truth in the statistical presentation, we must have, not the figures for April 1982 and March 1982, but those for April 1982 and April 1981, so that we can see what the change has been over the full financial year. When we have that figure, it will be nothing like the figure of half a million to which the Chief Secretary referred.
The other point on which I have to come back to the Chief Secretary is his argument that the Budget should be welcomed, because as a result people will be paying less in income tax. I think that I speak for all segments of the Opposition when I say that we accept that it is logically unanswerable that the Budget achieves a reduction in the income tax that people have to pay. However, what the Chief Secretary still resists grasping is that in assessing the effect of the total fiscal burden on an individual taxpayer, not only is it legitimate, but it is essential to take into account the combined effect of the changes in income tax and in national insurance contributions which came into operation at the same time. They are plainly designed to balance each other and have a similar impact on the individual taxpayer.
Whatever the attitude of the Chief Secretary when he opens his salary cheque each month, the average wage earner on receiving his wage packet does not eagerly study it to find out how much he has paid in income tax and how much in national insurance and heave a sigh of relief when he discovers that he has paid more in national insurance than he did the month before but not more in income tax. What he is interested in is how much has been deducted from his wage. It is right and proper that he should be concerned with that. It is the overall level of deductions that affects his standard of living.
If we have regard to how national insurance contributions have affected post-tax income, we find a different picture from the rosy glow cast by the Chief Secretary's speech. The Government have increased national insurance contributions three times in three years. Those increases have not been, as the Chief Secretary argued, to permit an increase in benefits. Over those three years national insurance benefits have gone down in real terms. Those drawing them have lost 5 per cent. in unemployment benefit and have lost an earnings-related supplement. They are worse off than before, yet when they are in work they are expected to pay even more in contributions than before.
When we put in the balance the increase of 1 per cent. in national insurance contributions introduced last November and payable from this month, we find that it has the effect of cancelling out the reduction in income tax as a result of the Budget increases in thresholds. Every 471 independent authoritative body that has examined the question has come to the same conclusion. The Library has pointed out that one needs to earn £36,000 a year to achieve a break even point. The Institute for Fiscal Studies, which provided much of the raw data on which the Library reached that conclusion, says that one would require a similar income to break even as a result of the Budget, inking into account all the other forms of taxation.
One could not expect to find a more independent authoritative body on statistics related to taxation and revenue than the Inland Revenue. Even the Inland Revenue comes to the conclusion that a married couple require an income of £20,000 a year to break even on the combined effect of national insurance contribution increases and income tax reductions. Those earning less—except those around the particular point of the threshold of £20 a week—are all worse off as a result of the changes in the Budget and the national insurance contributions added together.
The only body of opinion resisting that obvious, irrefutable, arithmetical conclusion is Treasury Ministers. Everyone else has grasped that that conclusion is unavoidable. I can understand why those on the Treasury Bench wish to resist it. The reason takes us back to a paradox which has been at the centre of this debate and to which a number of hon. Members have referred. My hon. Friend the Member for Workington (Mr. Campbell-Savours) referred to it at length in a powerful speech, the first of a number that we shall hear from him in the Committee sittings. My hon. Friend, who set himself a high standard for his future contributions, recalled his experience in the Workington by-election, when his Conservative opponent campaigned on the issue of tax and won on the basis of his promises.
The only contribution from the Conservative Back Benches was by the hon. Member for Lincoln (Mr. Carlisle), who was honest and candid enough to recall that in the general election he campaigned, not to increase the general level of income tax, but on the promise that his Government would reduce the overall level.
In case the hon. Gentleman is feeling isolated and lonely because he was the only Conservative Back Bencher to speak in this debate, I can tell him that he was not the only Conservative candidate to campaign on the basis of that promise. I have a press statement issued by the present Chancellor, based on a speech that he made on 30 April 1979; a speech which began with what in retrospect appears a richly ironic opening sentence:Labour have fought one of the most deceitful election campaigns in British political history.Even after opening on that basis, the right hon. and learned Gentleman went on to make an unequivocal commitment that a future Conservative Government would cut taxes. He said:Let me set the record straight on taxes. We shall make substantial cuts in income tax. And we shall be raising tax thresholds as well…This means that every taxpayer should be paying less taxes in total.That commitment is trenchant and unqualified. There are none of the niggling little caveats now entered by Treasury Ministers about the impossibility of comparing post-Budget and pre-Budget tax liability. The right hon. and learned Gentleman clearly and unequivocally stated that every taxpayer would pay less tax as a result of the Conservatives' tax programmes.
The reality is that, as speaker after speaker has pointed out, almost every taxpayer is paying more, not less, in tax. 472 A number of my hon. Friends—particularly my hon. Friends the Members for Walsall, North (Mr. Winnick) and for Fife, Central (Mr. Hamilton)—made the point that a favoured few had succeeded in reducing their tax burden even under this Government. I call in aid the statistics produced by the Institute for Fiscal Studies. A person with an income of £30,000 a year, which is well in excess of what is received by most hon. Members on the Opposition Benches and by most of our constituents, is paying 18 per cent. less in income tax than he was in 1979.
The hon. Member for Lincoln told the Committee, in a very good speech, that he could understand the need for an increase in the income tax burden to pay for the cost of recession induced by his own Front Bench. He must ask himself the following question, to which the Committee is entitled to an answer: if the income tax burden had to be increased because of the recession, why should it not increase for the man earning £30,000? Why should he, and he alone among the taxpayers of Britain, have a reduction in his tax burden while the rest of us face increases?
§ Mr. Kenneth Carlisle
The hon. Gentleman must not mislead the Committee. I did not say that the recession was induced by the Government. As he well knows, it was induced by not only world conditions, but high rates of inflation, which started under his Government.
§ Mr. Cook
The hon. Gentleman must pardon my rhetorical exaggerations. On an appropriate occasion I am prepared to debate with him the consequences of the recession.
The hon. Gentleman did not respond to the question that arises naturally out of his speech: why is it that the rest of the body of taxpayers should face an increase in their tax burden while the man earning £30,000, and he alone, has a reduction in his tax burden? By any standards—including, I suspect, by the standards of the hon. Gentleman himself—that contrast is a social outrage.
After three years of the present Government, after four out of the five Budgets that they will have the opportunity to present, there are now more people paying tax than there were before. That is a striking achievement, since there are 2 million people fewer at work than there were before. Those who are paying tax are paying on a larger proportion of their income. One now requires to earn only 30 per cent. of the average wage to be liable to the standard rate of tax, compared with 52 per cent. in 1978. When people start paying tax, they now pay at a higher marginal rate as a result of the abolition of the reduced rate band by this Government in 1980.
The only country with a tax structure in which people start paying tax at a higher level than in Britain is Australia. In all the other countries of the world the initial tax rate is lower than in Britain, and in nearly all the initial tax threshold is higher. That is the record. That is what has happened over the past three years.
I return to what the Chancellor said in a separate speech from the one to which I have referred. He said towards its conclusion:You need not take my word for what we will do. Just judge from your own experience.The nation now has the opportunity to judge from its own experience, and when the time comes it will pass the appropriate judgment on what the Government have done over its tax liability. But we can save even the present Treasury Bench from that judgment, by remedying its failure last year to uprate the tax thresholds. We can save 473 Treasury Ministers by carrying the amendments that the Opposition have tabled in a modest attempt to save them from the wrath of the electorate to come.
The Chief Secretary made much play of the fact that this year the increase in the tax threshold is marginally more than the increase that will be necessary to keep pace with inflation—precisely 2 per cent. more. The Chancellor referred to that increase as an important advance. If we are to test the extent to which it is an important advance, it is necessary to ask what would be the position if last year the Treasury Bench had revalorised personal allowances by the full amount required, had carried through a 15 per cent. increase in tax thresholds, and had this year asked by how much they would need to increase those revalorised tax thresholds in line with the RPI.
What is the answer? If we apply that calculation to the uprating of the married couple's tax threshold, we find that the figure required is £300, precisely the figure by which the Government propose to increase that threshold in the Budget and Finance Bill. In other words, they have done no more than increase by 12 per cent. last year's tax thresholds, which is what would have happened had they been uprated by the amount appropriate for that year. Taxpayers, both married and single, are still short-changed of the 15 per cent. that they were denied last year.
The question to which the Committee must address itself is whether those taxpayers are entitled to have that 15 per cent. restored to them. Here there is a division in the Opposition between the official Oppostion and those who are anxious to dissociate themselves from the official Opposition. I should describe them as the provisional Oppostion were it not that they are so much more effectively orthodox than we could ever hope to be.
The hon. Member for Gateshead, West (Mr. Horam) made a powerful speech about the need to increase tax thresholds in line with inflation. Indeed, the hon. Member said that there should be a major commitment to raise thresholds in line with tax. The hon. Member was so persuaded by his own speech that he promptly disappeared from the Chamber to speak outside the House and will not be present tonight when we vote on this issue. Before he disappeared, he condemned the official Opposition for being irresponsible in putting down amendments which are no more than what he described as a major commitment.
The hon. Gentleman has left behind to hold the fort the hon. Member for Colne Valley (Mr. Wainwright), who has his own set of amendments, which call for an increase in the tax threshold of 3 per cent. beyond the Government figures. The hon. Member for Gateshead, West said that the increase should be by as large an instalment as possible. The moderately balanced centre between zero and 15 per cent., which we are proposing, would appear for present purposes to be 3 per cent. The hon. Member will concur that if we accept his figure of 3 per cent., and if we accept as a desirable target returning to the position of 1980, the position before last year's Budget, which failed to revalorise the tax threshold, it will require a full Parliament of five years' increases of 3 per cent. to get back to where we were in 1980. I can say to the House that the official Opposition do not believe that we should wait that long for such an unsatisfactory outcome.
§ Mr. Richard Wainwright
It is uncharacteristic of the hon. Member for Edinburgh, Central (Mr. Cook) to take 474 such a narrow and pedantic line and suggest that the instalment by which the allowances can be recovered in line with inflation must be continuously 3 per cent. per annum. Does the hon. Member agree that the implementation of a fair and firm incomes policy will make it possible to take a leap next year to bring the whole thing back into line?
§ Mr. Cook
The only circumstance in which it will be possible to take a major leap next year is if we change the Treasury Bench before the next Budget. We cannot judge what amendments the hon. Member will put forward next year. All that we can judge is the extent to which this year he is prepared to make good lost ground, and the extent to which he is prepared to do that is 3 per cent. of 15 per cent. He must be prepared to defend that judgment. We believe that the situation is too serious to wait that long.
There are two reasons why we believe that what has happened over the last three years is a major scandal. The first is that not only are the poorer paying more in tax than before, but that they are paying more in tax for poorer public services. Secondly, not only are the poorer paying more tax, but the increase in their tax burden coincides with a sharp reduction in the tax burden on the higher paid.
The Chief Secretary referred to truth in taxation. I put it to him that as well as truth in taxation the Committee should have regard to truth in election pledges. When Conservative Members went into the election they promised that they would take the low-paid out of tax altogether. The only way in which they have done that is by taking many of the low-paid out of employment and even then they have taken special measures to tax them once they become unemployed. If Conservative Members remember that manifesto of three years ago, and if any of them are troubled by honourable notions about the need to adhere to manifesto pledges, they have the opportunity tonight to refresh their memories and vote with us on our amendments.
§ Question put, That the amendment be made:—
§ The Committee divided: Ayes 196, Noes 291.477
|Division No. 125]||[7.16 pm|
|Adams, Allen||Cocks, Rt Hon M. (B'stol S)|
|Allaun, Frank||Cohen, Stanley|
|Anderson, Donald||Coleman, Donald|
|Archer, RtHonPeter||Concannon, Rt Hon J. D.|
|Ashley, RtHonJack||Conlan, Bernard|
|Ashton, Joe||Cook, Robin F.|
|Atkinson, N. (H'gey,)||Cowans, Harry|
|Barnett, Guy (Greenwich)||Cox, T. (W'dsw'th, Toot'g)|
|Bamett, RtHon Joel (H'wd)||Crowther, Stan|
|Bennett, Andrew (St'kp'tN)||Cryer, Bob|
|Bidwell, Sydney||Cunliffe, Lawrence|
|Booth, RtHonAlbert||Cunningham, G. (IslingtonS)|
|Boothroyd, MissBetty||Davidson, Arthur|
|Bottomley, RtHonA. (M'b'ro)||Davies, Rt Hon Denzil (L'lli)|
|Bray, Dr Jeremy||Davies, Ifor (Gower)|
|Brown, Hugh D. (Provan)||Davis, Clinton (HackneyC)|
|Brown, R. C. (N'castle W)||Davis, Terry (B'ham, Stechf'd)|
|Browr, Ron (E'burgh, Leith)||Dean, Joseph (Leeds West)|
|Buchan, Norman||Dewar, Donald|
|Callaghan, Jim (Midd't'n&P)||Dixon, Donald|
|Campbell, Ian||Dormand, Jack|
|Campbell-Savours, Dale||Douglas, Dick|
|Canavan, Dennis||Dubs, Alfred|
|Cant, R. B.||Duffy, A. E. P.|
|Carmichael, Neil||Dunnett, Jack|
|Carter-Jones, Lewis||Dunwoody, Hon MrsG.|
|Clark, Dr David (S Shields)||Eadie, Alex|
|Eastham, Ken||Morris, Rt Hon C. (O'shaw)|
|Edwards, R. (W'hampt'n S E)||Morris, Rt Hon J. (Aberavon)|
|Ellis, R. (NE D'bysh're)||Moyle, Rt Hon Roland|
|English, Michael||Mulley, RtHonFrederick|
|Ennals, RtHonDavid||Newens, Stanley|
|Evans, Ioan (Aberdare)||Oakes, Rt Hon Gordon|
|Evans, John (Newton)||O'Neill, Martin|
|Field, Frank||Orme, RtHonStanley|
|Fitch, Alan||Palmer, Arthur|
|Flannery, Martin||Park, George|
|Fletcher, Ted (Darlington)||Parker, John|
|Foot, Rt Hon Michael||Parry, Robert|
|Ford, Ben||Powell, Raymond (Ogmore)|
|Forrester, John||Price, C. (Lewisham W)|
|Foster, Derek||Race, Reg|
|Fraser, J. (Lamb'th, N'w'd)||Radice, Giles|
|Freeson, Rt Hon Reginald||Rees, Rt Hon M (Leeds S)|
|Garrett, John (Norwich S)||Richardson, Jo|
|Garrett, W. E. (Wallsend)||Roberts, Allan (Bootle)|
|Gilbert, Rt Hon Dr John||Roberts, Ernest (Hackney N)|
|Golding, John||Robons, Gmilym (Cannock)|
|Graham, Ted||Robertson, George|
|Hamilton, W. W. (C'tralFife)||Rooker, J. W.|
|Hardy, Peter||Ross, Ernest (Dundee West)|
|Harrison, Rt Hon Walter||Rowlands, Ted|
|Hart, Rt Hon Dame Judith||Ryman, John|
|Hattersley, RtHonRoy||Sever, John|
|Haynes, Frank||Sheerman, Barry|
|Healey, Rt Hon Denis||Sheldon, Rt Hon R.|
|Holland, S. (L'b'th, Vauxh'll)||Shore, Rt Hon Peter|
|HomeRobertson, John||Silkin, Rt Hon J. (Deptford)|
|Homewood, William||Silkin, Rt Hon S. C. (Dulwich)|
|Howell, Rt Hon D.||Silverman, Julius|
|Hoyle, Douglas||Skinner, Dennis|
|Huckfield, Les||Smith, Rt Hon J. (N Lanark)|
|Hughes, Mark (Durham)||Snape, Peter|
|Hughes, Robert (Aberdeen N)||Soley, Clive|
|Hughes, Roy (Newport)||Spearing, Nigel|
|Janner, HonGreville||Spriggs, Leslie|
|Jay, Rt Hon Douglas||Stallard, A.W.|
|John, Brynmor||Stewart, Rt Hon D. (W Isles)|
|Johnson, Walter (Derby S)||Stoddart, David|
|Jones, Rt Hon Alec (Rh' dda)||Stott, Roger|
|Jones, Barry (East Flint)||Strang, Gavin|
|Kaufman, Rt Hon Gerald||Straw, Jack|
|Kerr, Russell||Summerskill, HonDrShirley|
|Kilfedder, James A.||Taylor, Mrs Ann (Bolton W)|
|Kilroy-Silk, Robert||Thomas, Dafydd (Merioneth)|
|Lamborn, Harry||Tilley, John|
|Lamond, James||Tinn, James|
|Leadbitter, Ted||Torney, Tom|
|Leighton, Ronald||Varley, Rt Hon Eric G.|
|Lewis, Arthur (N'ham NW)||Wainwright, E. (DearneV)|
|Litherland, Robert||Walker, Rt HonH.(D'caster)|
|Lofthouse, Geoffrey||Watkins, David|
|Lyon, Alexander (York)||Weetch, Ken|
|McCartney, Hugh||Welsh, Michael|
|McDonald, DrOonagh||WhiteJ. (G'gow Pollok)|
|McKay, Allen (Penistone)||Whitehead, Phillip|
|McKelvey, William||Whitlock, William|
|MacKenzie, Rt Hon Gregor||Wigley, Dafydd|
|McNamara, Kevin||Willey, RtHonFrederick|
|McTaggart, Robert||Wilson, Gordon (Dundee E)|
|Marshall, Dr Edmund (Goole)||Wilson, William (C'try SE)|
|Martin, M (G'gowS'burn)||Winnick, David|
|Mason, Rt Hon Roy||Woodall, Alec|
|Maxton, John||Woolmer, Kenneth|
|Maynard, Miss Joan||Wright, Sheila|
|Mellish, Rt Hon Robert||Tellers for the Ayes:|
|Mikardo, Ian||Mr. James Hamilton and Mr. George Morton.|
|Miller, Dr M. S. (E Kilbride)|
|Mitchell, Austin (Grimsby)|
|Adley, Robert||Amery, Rt Hon Julian|
|Aitken, Jonathan||Ancram, Michael|
|Alexander, Richard||Aspinwall, Jack|
|Alison, Rt Hon Michael||Atkins, Rt Hon H. (S'throne)|
|Alton, David||Atkins, Robert (PrestonN)|
|Atkinson, David (B'm'th, E)||Fry, Peter|
|Baker, Kenneth (St.M'bone)||Gardiner, George (Reigate)|
|Baker, Nicholas (Dorset)||Gardner, Edward (S Fylde)|
|Banks, Robert||Garel-Jones, Tristan|
|Beaumont-Dark, Anthony||Gilmour, Rt Hon Sir Ian|
|Beith, A. J.||Glyn, Dr Alan|
|Bennett, Sir Frederic (T'bay)||Goodlad, Alastair|
|Benyon, Thomas (A'don)||Gow, Ian|
|Benyon, W. (Buckingham)||Grant, Anthony (Harrow C)|
|Berry, HonAnthony||Gray, Hamish|
|Best, Keith||Greenway, Harry|
|Bevan, David Gilroy||Grieve, Percy|
|Biffen, Rt Hon John||Griffiths, E. (B'ySt.Edm'ds)|
|Blackburn, John||Griffiths, PeterPortsm'thN)|
|Body, Richard||Grimond, Rt Hon J.|
|Bonsor, SirNicholas||Grist, Ian|
|Boscawen, HonRobert||Grylls, Michael|
|Bottomley, Peter (W'wich W)||Gummer, JohnSelwyn|
|Bowden, Andrew||Hamilton, Hon A.|
|Boyson, Dr Rhodes||Hamilton, Michael (Salisbury)|
|Bradley, Tom||Hampson, Dr Keith|
|Braine, Sir Bernard||Haselhurst, Alan|
|Bright, Graham||Hastings, Stephen|
|Brinton, Tim||Havers, Rt Hon Sir Michael|
|Brittan, Rt.Hon. Leon||Hawkins, Paul|
|Brocklebank-Fowler, C.||Hawksley, Warren|
|Brooke, HonPeter||Hayhoe, Barney|
|Brotherton, Michael||Heath, Rt Hon Edward|
|Brown, Michael (Brigg&Sc'n)||Heddle, John|
|Brown, Ronald W. (H'ckn'y S)||Henderson, Barry|
|Browne, John (Winchester)||Hicks, Robert|
|Bryan, Sir Paul||Hill, James|
|Buck, Antony||Hogg, HonDouglas (Gr'th'm)|
|Budgen, Nick||Holland, Philip (Carlton)|
|Bulmer, Esmond||Hooson, Tom|
|Burden, Sir Frederick||Horam, John|
|Butcher, John||Hordern, Peter|
|Cadbury, Jocelyn||Howell, RtHonD. (G'ldf'd)|
|Carlisle, John (Luton West)||Howells, Geraint|
|Carlisle, Kenneth (Lincoln)||Hunt, John (Ravensbourne)|
|Chalker, Mrs.Lynda||Irving, Charles (Cheltenham)|
|Chapman, Sydney||Jenkin, Rt Hon Patrick|
|Churchill, W.S.||Jenkins, Rt Hon Roy (Hillhead)|
|Clark, SirW. (CroydonS)||Jessel, Toby|
|Clarke, Kenneth (Rushcliffe)||JohnsonSmith, Geoffrey|
|Cockeram, Eric||Johnston, Russell (Inverness)|
|Colvin, Michael||Jopling, RtHonMichael|
|Cope, John||Kaberry, Sir Donald|
|Corrie, John||Kershaw, Sir Anthony|
|Costain, Sir Albert||King, Rt Hon Tom|
|Cranborne, Viscount||Kitson, Sir Timothy|
|Critchley, Julian||Knight, Mrs Jill|
|Crouch, David||Knox, David|
|Dean, Paul (NorthSomerset)||Lamont, Norman|
|Dickens, Geoffrey||Latham, Michael|
|Douglas-Hamilton, LordJ.||Lawrence, Ivan|
|Dover, Denshore||Lawson, Rt Hon Nigel|
|du Cann, Rt Hon Edward||LeMarchant, Spencer|
|Dunn, James A.||Lennox-Boyd, Hon Mark|
|Dunn, Robert (Dartford)||Lester, Jim (Beeston)|
|Durant, Tony||Lewis, Kenneth (Rutland)|
|Dykes, Hugh||Lloyd, Ian (Havant&W'loo)|
|Eden, Rt Hon Sir John||Lloyd, Peter (Fareham)|
|Edwards, Rt Hon N. (P'broke)||Loveridge, John|
|Eggar, Tim||Luce, Richard|
|Elliott, SirWilliam||Lyell, Nicholas|
|Eyre, Reginald||McCrindle, Robert|
|Fairbairn, Nicholas||Macfarlane, Neil|
|Fairgrieve, Sir Russell||MacGregor, John|
|Faith, MrsSheila||MacKay, John (Argyll)|
|Farr, John||Macmillan, RtHonM.|
|Fell, SirAnthony||McNair-Wilson, M. (N'bury)|
|Finsberg, Geoffrey||McNair-Wilson, P. (NewF'st)|
|Fisher, Sir Nigel||McNally, Thomas|
|Fletcher-Cooke, SirCharles||Madel, David|
|Fookes, Miss Janet||Major, John|
|Fowler, Rt Hon Norman||Marland, Paul|
|Fox, Marcus||Marlow, Antony|
|Fraser, Peter (SouthAngus)||Marten, Rt Hon Neil|
|Freud, Clement||Mates, Michael|
|Mather, Carol||Shaw, Michael (Scarborough)|
|Maude, Rt Hon Sir Angus||Shelton, William (Streatham)|
|Mawby, Ray||Shepherd, Colin (Hereford)|
|Maxwell-Hyslop, Robin||Shepherd, Richard|
|Mayhew, Patrick||Shersby, Michael|
|Mellor, David||Silvester, Fred|
|Meyer, Sir Anthony||Sims, Roger|
|Miller, Hal (B'grove)||Skeet, T. H. H.|
|Mills, Iain (Meriden)||Smith, Dudley|
|Mills, Peter (West Devon)||Speed, Keith|
|Miscampbell, Norman||Spence, John|
|Mitchell, David (Basongstoke)||Spicer, Michael (S Worcs)|
|Mitchell, R.C. (Soton Itchen)||Sproat, Iain|
|Monro, SirHector||Squire, Robin|
|Montgomery, Fergus||Stainton, Keith|
|Moore, John||Stanbrook, Ivor|
|Morris, M. (N'hampton S)||Stanley, John|
|Morrison, HonC. (Devizes)||Steel, Rt Hon David|
|Morrison, Hon P. (Chester)||Steen, Anthony|
|Mudd, David||Stevens, Martin|
|Murphy, Christopher||Stewart, Ian (Hitchin)|
|Myles, David||Stokes, John|
|Neale, Gerrard||Stradling Thomas, J.|
|Needham, Richard||Taylor, Teddy (S'end E)|
|Nelson, Anthony||Tebbit, Rt Hon Norman|
|Neubert, Michael||Temple-Morris, Peter|
|Newton, Tony||Thomas, Rt Hon Peter|
|Onslow, Cranley||Thompson, Donald|
|Oppenheim, Rt Hon Mrs S.||Thorne, Neil (IlfordSouth)|
|Page, Richard (SW Herts)||Thornton, Malcolm|
|Parris, Matthew||Townend, John (Bridlington)|
|Patten, Christopher (Bath)||Trippier, David|
|Patten, John (Oxford)||van Straubenzee, Sir W.|
|Pattie, Geoffrey||Vaughan, Dr Gerard|
|Pawsey, James||Viggers, Peter|
|Penhaligon, David||Waddington, David|
|Percival, Sir Ian||Wainwright, R. (Colne V)|
|Peyton, Rt Hon John||Wakeham, John|
|Pink, R.Bonner||Waldegrave, Hon William|
|Pollock, Alexander||Walker, Rt Hon P. (W'cester)|
|Porter, Barry||Walker, B. (Perth)|
|Prentice, Rt Hon Reg||Wall, SirPatrick|
|Price, SirDavid (Eastleigh)||Waller, Gary|
|Proctor, K. Harvey||Walters, Dennis|
|Raison, Rt Hon Timothy||Ward, John|
|Rees-Davies, W. R.||Watson, John|
|Renton, Tim||Wellbeloved, James|
|RhodesJames, Robert||Wells, John (Maidstone)|
|RhysWilliams, SirBrandon||Wheeler, John|
|Ridley, HonNicholas||Whitney, Raymond|
|Ridsdale, SirJulian||Wickenden, Keith|
|Rifkind, Malcolm||Wiggin, Jerry|
|Roberts, M. (Cardiff NW)||Wilkinson, John|
|Roberts, Wyn (Conway)||Williams, D. (Montgomery)|
|Roper, John||Winterton, Nicholas|
|Rossi, Hugh||Wolfson, Mark|
|Rost, Peter||Wrigglesworth, Ian|
|Royle, Sir Anthony||Young, SirGeorge (Acton)|
|Sainsbury, Hon Timothy|
|St. John-Stevas, Rt Hon N.||Tellers for the Noes:|
|Sandelson, Neville||Mr. David Hunt and Mr. Ian Lang.|
|Shaw, Giles (Pudsey)|
§ Question accordingly negatived.
§ Amendment proposesd: No.2, in page 13, line25, leave out '£2,445' and insert '£2,510'. —[Mr Beith.]
§ Question put, That the amendment be made:—
§ The committee divided: Ayes 14, Noes 268.479
|Division No. 126]||[7.29 pm|
|Alton, David||Kilfedder, James A.|
|Cunningham, G. (Islington S)||Penhaligon, David|
|Edwards, R. (W'hampt'n S E)||Steel, Rt Hon David|
|Freud, Clement||Stewart, Rt Hon D. (W Isles)|
|Grimond, Rt Hon J.||Thomas, Dafydd (Merioneth)|
|Howells, Geraint||Wainwright, R. (ColneV)|
|Wigley, Dafydd||Tellers for the Ayes:|
|Wilson, Gordon (Dundee E)||Mr. A. J. Beith and Mr. Russell Johnston.|
|Adley, Robert||Finsberg, Geoffrey|
|Aitken, Jonathan||Fisher, SirNigel|
|Alexander, Richard||Fletcher-Cooke, SirCharles|
|Alison, Rt Hon Michael||Fookes, Miss Janet|
|Amery, Rt Hon Julian||Forman, Nigel|
|Ancram, Michael||Fowler, Rt Hon Norman|
|Aspinwall, Jack||Fox, Marcus|
|Atkins, Robert (PrestonN)||Fraser, Peter (SouthAngus)|
|Atkinson, David (B'm'th, E)||Fry, Peter|
|Baker, Kenneth (St.M'bone)||Gardiner, George (Reigatse)|
|Baker, Nicholas (N Dorset)||Gardner, Edward (S Fylde)|
|Banks, Robert||Garel-Jones, Tristan|
|Beaumont-Dark, Anthony||Gilmour, Rt Hon Sir Ian|
|Bendall, Vivian||Glyn, Dr Alan|
|Bennett, SirFrederic (T'bay)||Goodlad, Alastair|
|Benyon, Thomas (A'don)||Gow, Ian|
|Benyon, W. (Buckingham)||Grant, Anthony (Harrow C)|
|Berry, HonAnthony||Gray, Hamish|
|Best, Keith||Greenway, Harry|
|Bevan, David Gilroy||Grieve, Percy|
|Biffen, Rt Hon John||Griffiths, E. (B'ySt.Edm's)|
|Blackburn, John||Griffiths, PeterPortsm'thN)|
|Body, Richard||Grist, Ian|
|Bonsor, SirNicholas||Grylls, Michael|
|Boscawen, HonRobert||Gummer, JohnSelwyn|
|Bottomley, Peter (W'wich W)||Hamilton, Hon A.|
|Bowden, Andrew||Hamilton, Michael (Salisbury)|
|Boyson, Dr Rhodes||Hampson, Dr Keith|
|Braine, SirBernard||Haselhurst, Alan|
|Bright, Graham||Hastings, Stephen|
|Brinton, Tim||Havers, Rt Hon Sir Michael|
|Brittan, Rt.Hon.Leon||Hawkins, Paul|
|Brooke, Hon Peter||Hawksley, Warren|
|Brotherton, Michael||Hayhoe, Barney|
|Brown, Michael (Brigg & Sc'n)||Heath, Rt Hon Edward|
|BrowneJohn (Winchester)||Heddle, John|
|Bryan, Sir Paul||Henderson, Barry|
|Buck, Antony||Hicks, Robert|
|Budgen, Nick||Hill, James|
|Bulmer, Esmond||Hogg, HonDouglas (Gr'th'm)|
|Burden, SirFrederick||Holland, Philip (Carlton)|
|Butcher, John||Hooson, Tom|
|Cadbury, Jocelyn||Hordern, Peter|
|Carlisle, John (Luton West)||Howell, RtHonD. (G'ldf'd)|
|Carlisle, Kenneth (Lincoln)||Hunt, John (Ravensbourne)|
|Chalker, Mrs. Lynda||Irving, Charles (Cheltenham)|
|Chapman, Sydney||Jenkin, RtHonPatrick|
|Churchill, W.S.||Jessel, Toby|
|Clark, SirW. (CroydonS)||JohnsonSmith, Geoffrey|
|Clarke, Kenneth (Rushcliffe)||Jopling, RtHonMichael|
|Cockeram, Eric||Kaberry, SirDonald|
|Colvin, Michael||Kershaw, SirAnthony|
|Cope, John||King, RtHonTom|
|Corrie, John||Kitson, Sir Timothy|
|Costain, Sir Albert||Knight, MrsJill|
|Cranborne, Viscount||Knox, David|
|Critchley, Julian||Lamont, Norman|
|Crouch, David||Langford-Holt, SirJohn|
|Dean, Paul (NorthSomerset)||Latham, Michael|
|Dickens, Geoffrey||Lawrence, Ivan|
|Douglas-Hamilton, LordJ.||Lawson, RtHonNigel|
|Dover, Denshore||LeMarchant, Spencer|
|du Cann, Rt Hon Edward||Lennox-Boyd, HonMark|
|Dunn, Robert (Dartford)||Lewis, Ron (Carlisle)|
|Durant, Tony||Lloyd, Ian (Havant& W'loo)|
|Dykes, Hugh||Lloyd, Peter (Fareham)|
|Eden, RtHonSirJohn||Loveridge, John|
|Edwards, Rt Hon N. (P'broke)||Luce, Richard|
|Eggar, Tim||Lyell, Nicholas|
|Elliott, SirWilliam||McCrindle, Robert|
|Eyre, Reginald||Macfarlane, Neil|
|Fairbairn, Nicholas||MacGregor, John|
|Fairgrieve, SirRussell||MacKay, John (Argyll)|
|Faith, MrsSheila||Macmillan, Rt Hon M.|
|Farr, John||McNair-Wilson, M. (N'bury)|
|McNair-Wilson, P. (NewF'st)||Sainsbury, HonTimothy|
|Madel, David||St. John-Stevas, Rt Hon N.|
|Major, John||Shaw, Giles (Pudsey)|
|Marland, Paul||Shaw, Michael (Scarborough)|
|Marlow, Antony||Shelton, William (Streatham)|
|Marten, Rt Hon Neil||Shepherd, Colin (Hereford)|
|Mates, Michael||Shepherd, Richard|
|Mather, Carol||Shersby, Michael|
|Maude, RtHonSirAngus||Silvester, Fred|
|Mawby, Ray||Sims, Roger|
|Maxwell-Hyslop, Robin||Skeet, T. H. H.|
|Mayhew, Patrick||Smith, Dudley|
|Mellor, David||Speed, Keith|
|Meyer, Sir Anthony||Spence, John|
|Miller, Hal (B'grove)||Spicer, Michael (S Worcs)|
|Miller, Iain (Meriden)||Sproat, Iain|
|Mills, Peter (West Devon)||Squire, Robin|
|Miscampbell, Norman||Stainton, Keith|
|Mitchell, David (Basingstoke)||Stanbrook, Ivor|
|Monro, SirHector||Stanley, John|
|Montgomery, Fergus||Steen, Anthony|
|Moore, John||Stevens, Martin|
|Morris, M. (N'hamptonS)||Stewart, Ian (Hitchin)|
|Morrison, HonC. (Devizes)||Stokes, John|
|Morrison, Hon P. (Chester)||Stradling Thomas, J.|
|Mudd, David||Taylor, Teddy (S'end E)|
|Murphy, Christopher||Tebbit, Rt Hon Norman|
|Myles, David||Temple-Morris, Peter|
|Neale, Gerrard||Thomas, Rt Hon Peter|
|Needham, Richard||Thompson, Donald|
|Nelson, Anthony||Thorne, Neil (IlfordSouth)|
|Neubert, Michael||Thornton, Malcolm|
|Newton, Tony||Townend, John (Bridlington.)|
|Onslow, Cranley||Trippier, David|
|Oppenheim, Rt Hon Mrs S.||van Straubenzee, Sir W.|
|Page, Richard (SW Herts)||Vaughan, Dr Gerard|
|Parris, Matthew||Viggers, Peter|
|Patten, Christopher (Bath)||Waddington, David|
|Patten, John (Oxford)||Wakeham, John|
|Pattie, Geoffrey||Waldegrave, HonWilliam|
|Pawsey, James||Walker, Rt Hon P. (W'cester)|
|Percival, Sir Ian||Walker, B. (Perth)|
|Peyton, Rt Hon John||Wall, Sir Patrick|
|Pink, R.Bonner||Walier, Gary|
|Pollock, Alexander||Walters, Dennis|
|Porter, Barry||Ward, John|
|Prentice, Rt Hon Reg||Watson, John|
|Price, SirDavid (Eastleigh)||Wells, John (Maidstone)|
|Proctor, K. Harvey||Wheeler, John|
|Raison, RtHonTimothy||Whitney, Raymond|
|Rees-Davies, W. R.||Wickenden, Keith|
|Renton, Tim||Wiggin, Jerry|
|Rhodes James, Robert||Wilkinson, John|
|RhysWilliams, SirBrandon||Williams, D. (Montgomery)|
|Ridley, HonNicholas||Winterton, Nicholas|
|Rifkind, Malcolm||Wolfson, Mark|
|Roberts, M. (Cardiff NW)||Young, SirGeorge (Acton)|
|Roberts, Wyn (Conway)|
|Rossi, Hugh||Tellers for the Noes:|
|Rost, Peter||Mr. Ian Lang and Mr. David Hunt.|
|Royle, Sir Anthony|
§ Question accordingly negatived.
§ Amendment proposed: No. 5, in page 13, line 30, leave out '£3,295' and insert '£3,735'.n —[Mr.Robert Sheldon]
§ Question put, That the amendment be made:—
§ The Committee divided: Ayes 189, Noes 266.482
|Division No. 127]||[7.40 pm|
|Adams, Allen||Bidweil, Sydney|
|Allaun, Frank||Booth, RtHonAlbert|
|Anderson, Donald||Boothroyd, MissBetty|
|Archer, Rt Hon Peter||Bottomley, RtHonA. (M'b'ro)|
|Ashley, Rt Hon Jack||Bray, Dr Jeremy|
|Ashton, Joe||Brown, Hugh D. (Provan)|
|Atkinson, N. (H'gey,)||Brown, R. C. (N'castle W)|
|Barnett, Guy (Greenwich)||Brown, Ronald W. (H'ckn'yS)|
|Barnett, Rt Hon Joel (H'wd)||Buchan, Norman|
|Callaghan, Jim (Midd't'n& P)||Lamborn, Harry|
|Campbell, Ian||Lamond, James|
|Campbell-Savours, Dale||Leadbitter, Ted|
|Canavan, Dennis||Leighton, Ronald|
|Cant, R. B.||Lewis, Arthu r (N'ham NW)|
|Carmichael, Neil||Litherland, Robert|
|Carter-Jones, Lewis||Lofthouse, Geoffrey|
|Clark, Dr David (S Shields)||Lyon, Alexander (York)|
|Cocks, Rt Hon M. (B'stol S)||McCartney, Hugh|
|Cohen, Stanley||McDonald, DrOonagh|
|Coleman, Donald||McKay, Allen (Penistone)|
|Concannon, Rt Hon J. D.||McKelvey, William|
|Conlan, Bernard||MacKenzie, Rt Hon Gregor|
|Cook, Robin F.||McNamara, Kevin|
|Cowans, Harry||McTaggart, Robert|
|Cox, T. (W'dsw'th, Toot'g)||McWilliam, John|
|Craigen, J. M. (G'gow, M'hill)||Marshall, DrEdmund (Goole)|
|Crowther, Stan||Martin, M (G'gowS 'burn)|
|Cryer, Bob||Mason, Rt Hon Roy|
|Cunningham, G. (IslingtonS)||Maxton, John|
|Davidson, Arthur||Maynard, MissJoan|
|Davies, Rt Hon Denzil (L'lli)||Meacher, Michaei|
|Davis, Clinton (Hackney C)||Mellish, Rt Hon Robert|
|Davis, Terry (B 'ham, Stechf'd)||Mlkardo, Ian|
|Dean, Joseph (Leeds West)||Miller, Dr M.S. (E Kilbride)|
|Dewar, Donald||Mitchell, Austin (Grimsby)|
|Dixon, Donald||Morris, Rt Hon J. (Aberavon)|
|Dormand, Jack||Morton, George|
|Douglas, Dick||Moyle, Rt Hon Roland|
|Dubs, Alfred||Mulley, Rt Hon Frederick|
|Duffy, A. E. P.||Newens, Stanley|
|Dunnett, Jack||Oakes, Rt Hon Gordon|
|Dunwoody, Hon Mrs G.||O'Neill, Martin|
|Eadie, Alex||Orme, Rt Hon Stanley|
|Eastham, Ken||Palmer, Arthur|
|Edwards, R. (W'hampt'n S E)||Park, George|
|Ellis, R (NE D'bysh're)||Parker, John|
|English, Michael||Parry, Robert|
|Ennals, Rt Hon David||Powell, Raymond (Ogmore)|
|Evans, Ioan (Aberdare)||Price, C. (Lewisham W)|
|Evans, John (Newton)||Race, Reg|
|Field, Frank||Radice, Giles|
|Flannery, Martin||Rees, Rt Hon M (Leeds S)|
|Fletcher, Ted (Darlington)||Richardson, Jo|
|Foot, Rt Hon Michael||Roberts, Allan (Bootle)|
|Ford, Ben||Roberts, Gwilym (Cannock)|
|Forrester, John||Robertson, George|
|Foster, Derek||Robinson, G. (Coventry NW)|
|Fraser, J. (Lamb'th, N'w'd)||Rooker, J. W.|
|Freeson, Rt Hon Reginald||Ross, Ernest (Dundee West)|
|Garrett, John (Norwich S)||Rowlands, Ted|
|Garrett, W. E. (Wallsend)||Ryman, John|
|Gilbert, RtHonDrJohn||Sever, John|
|Golding, John||Sheerman, Barry|
|Graham, Ted||Sheldon, Rt Hon R.|
|Hamilton, W. W. (C'tralFife)||Shore, Rt Hon Peter|
|Hardy, Peter||Silkin, RtHonJ. (Deptford)|
|Harrison, RtHonWalter||Silkin, Rt Hon S. C. (Dulwich)|
|Hart, Rt Hon Dame Judith||Silverman, Julius|
|Hattersley, Rt Hon Roy||Skinner, Dennls|
|Haynes, Frank||Smith, Rt Hon J. (N Lanark)|
|Holland, S. (L'b'th, Vauxh'll)||Snape, Peter|
|HomeRobertson, John||Soley, Clive|
|Homewood, Willlam||Spearing, Nigel|
|Howell, Rt Hon D.||Spriggs, Leslie|
|Hoyle, Douglas||Stewart, Rt Hon D. (W Isles)|
|Huckfield, Les||Stoddart, David|
|Hughes, Mark (Durham)||Stott, Roger|
|Hughes, Robert (Aberdeen N)||Strang, Gavin|
|Hughes, Roy (Newport)||Straw, Jack|
|Janner, HonGreville||Summerskill, HonDrShirley|
|Jay, Rt Hon Douglas||Thomas, Dafydd (Merioneth)|
|John, Brynmor||Tilley, John|
|Johnson, Walter (Derby S)||Tinn, James|
|Jones, Rt Hon Alec (Rh'dda)||Torney, Tom|
|Jones, Barry (East Flint)||Varley, Rt Hon Eric G.|
|Kaufman, Rt Hon Gerald||Wainwright, E. (Dearne V)|
|Kerr, Russell||Walker, Rt Hon H. (D'caster)|
|Kilfedder, James A.||Watkins, David|
|Kilroy-Silk, Robert||Weetch, Ken|
|Welsh, Michael||Woodall, Alec|
|White, J. (G'gow Pollok)||Woolmer, Kenneth|
|Whitehead, Phillip||Wright, Sheila|
|Willey, Rt Hon Frederick||Tellers for the Ayes:|
|Wilson, Gordon (DundeeE)||Mr. Lawience Cunliffe and Mr. James Hamilton.|
|Wilson, William (C'trySE)|
|Adley, Robert||Fairbairn, Nicholas|
|Aitken, Jonathan||Fairgrieve, SirRussell|
|Alexander, Richard||Faith, MrsSheila|
|Alison, RtHonMichael||Farr, John|
|Amery, Rt Hon Julian||Finsberg, Geoffrey|
|Ancram, Michael||Fisher, Sir Nigel|
|Aspinwall, Jack||Fletcher-Cooke, SirCharles|
|Atkins, Robert (PrestonN)||Fookes, MissJanet|
|Atkinson, David (B'm'th, E)||Forman, Nigel|
|Baker, Kenneth (St.M'bone)||Fowler, Rt Hon Norman|
|Baker, Nicholas (Dorset)||Fox, Marcus|
|Banks, Robert||Fraser, Peter (SouthAngus)|
|Beaumont-Dark, Anthony||Fry, Peter|
|Bendall, Vivian||Gardiner, George (Reigate)|
|Bennett, SirFrederic (T'bay)||Gardner, Edward (S Fylde)|
|Benyon, Thomas (A'don)||Glyn, Dr Alan|
|Benyon, W. (Buckingham)||Goodlad, Alastair|
|Berry, HonAnthony||Gow, Ian|
|Best, Keith||Grant, Anthony (Harrow C)|
|Bevan, DavidGilroy||Gray, Hamish|
|Biffen, Rt Hon John||Greenway, Harry|
|Blackbum, John||Grieve, Percy|
|Body, Richard||Griffiths, E. (B'ySt.Edm 'ds)|
|Bonsor, SirNicholas||Griffiths, PeterPortsm'th N)|
|Bottomley, Peter (W'wich W)||Grist, Ian|
|Bowden, Andrew||Grylls, Michael|
|Boyson, Dr Rhodes||Gummer, JohnSelwyn|
|Braine, SirBernard||Hamilton, HonA.|
|Bright, Graham||Hamilton, Michael (Salisbury)|
|Brinton, Tim||Hampson, DrKeith|
|Brittan, Rt.Hon.Leon||Haselhurst, Alan|
|Brooke, Hon Peter||Hastings, Stephen|
|Brotherton, Michael||Hawkins, Paul|
|Brown, Michael (Brigg&Sc'n)||Hawksley, Warren|
|Browne, John (Winchester)||Hayhoe, Barney|
|Bryan, SirPaul||Heath, RtHonEdward|
|Buck, Antony||Heddle, John|
|Budgen, Nick||Henderson, Barry|
|Bulmer, Esmond||Hicks, Robert|
|Burden, SirFrederick||Hill, James|
|Butcher, John||Hogg, HonDouglas (Gr'th'm)|
|Cadbury, Jocelyn||Holland, Philip (Carton)|
|Carlisle, John (LutonWest)||Hooson, Tom|
|Carlisle, Kenneth (Lincoln)||Hordern, Peter|
|Chalker, Mrs. Lynda||Howell, RtHonD. (G'ldf'd)|
|Chapman, Sydney||Howell, Ralph (Norfolk)|
|Churchill, W.S.||Hunt, David (Wirral)|
|Clark, Sir W. (Croydon S)||Hunl, John (Ravensbourne)|
|Clarke, Kenneth (Rushcliffe)||Jenkin, RtHonPatrick|
|Cockeram, Eric||Jessel, Toby|
|Colvin, Michael||JohnsonSmith, Geoffrey|
|Cope, John||Jopling, RtHonMichael|
|Corrie, John||Kaberry, SirDonald|
|Costain, SirAlbert||Kershaw, SirAnthony|
|Cranborne, Viscount||King, Rt Hon Tom|
|Critchley, Julian||Kitson, SirTimothy|
|Crouch, David||Knight, MrsJill|
|Dean, Paul (North Somerset)||Knox, David|
|Dickens, Geoffrey||Lamont, Norman|
|Douglas-Hamilton, LordJ.||Lang, Ian|
|Dover, Denshore||Langford-Holt, SirJohn|
|du Cann, Rt Hon Edward||Latham, Michael|
|Dunn, Robert (Darfford)||Lawrence, Ivan|
|Durant, Tony||Lawson, Rt Hon Nigel|
|Dykes, Hugh||LeMarchant, Spencer|
|Eden, Rt Hon Sir John||Lennox-Boyd, HonMark|
|Edwards, Rt Hon N. (P'broke)||Lester, Jim (Beeston)|
|Eggar, Tim||Lewis, Kenneth (Rutland)|
|Elliott, SirWilliam||Lloyd, Ian (Havant & W'loo)|
|Eyre, Reginald||Lloyd, Peter (Fareham)|
|Loveridge, John||Roberts, M. (CardiffNW)|
|Luce, Richard||Roberts, Wyn (Conway)|
|Lyell, Nicholas||Rossi, Hugh|
|McCrindle, Robert||Rost, Peter|
|Macfarlane, Neil||Royle, SirAnthony|
|MacGregor, John||Sainsbury, Hon Timothy|
|MacKay, John (Argyll)||St. John-Stevas, Rt Hon N.|
|Macmillan, Rt Hon M.||Shaw, Giles (Pudsey)|
|McNair-Wilson, M. (N'bury)||Shaw, Michael (Scarborough)|
|McNair-Wilson, P. (New F'st)||Shelton, William (Streatham)|
|Madel, David||Shepherd, Colin (Hereford)|
|Major, John||Shepherd, Richard|
|Marland, Paul||Shersby, Michael|
|Marlow, Antony||Silvester, Fred|
|Marten, Rt Hon Neil||Sims, Roger|
|Mates, Michael||Skeet, T. H. H.|
|Mather, Carol||Smith, Dudley|
|Maude, Rt Hon Sir Angus||Speed, Keith|
|Mawby, Ray||Spence, John|
|Maxwell-Hyslop, Robin||Spicer, Michael (S Worcs)|
|Mayhew, Patrick||Sproat, Iain|
|Mellor, David||Squire, Robin|
|Meyer, Sir Anthony||Stainton, Keith|
|Miller, Hal (B'grove)||Stanbrook, Ivor|
|Mills, Iain (Meriden)||Stanley, John|
|Mills, Peter (West Devon)||Steen, Anthony|
|Miscampbell, Norman||Stevens, Martin|
|Mitchell, David (Basingstoke)||Stewart, Ian (Hitchin)|
|Monro, SirHector||Stokes, John|
|Montgomery, Fergus||Stradling Thomas, J.|
|Moore, John||Taylor, Teddy (S'end E)|
|Morris, M. (N'hampton S)||Tebbit, Rt Hon Norman|
|Morrison, HonC. (Devizes)||Temple-Morris, Peter|
|Morrison, Hon P. (Chester)||Thomas, Rt Hon Peter|
|Mudd, David||Thompson, Donald|
|Murphy, Christopher||Thorne, Neil (IlfordSouth)|
|Myles, David||Thornton, Malcolm|
|Neale, Gerrard||Townend, John (Bridlington)|
|Needham, Richard||Trippier, David|
|Nelson, Anthony||van Straubenzee, SirW.|
|Neubert, Michael||Vaughan, DrGerard|
|Newton, Tony||Viggers, Peter|
|Onslow, Cranley||Waddington, David|
|Oppenheim, Rt Hon Mrs S.||Wakeham, John|
|Page, Richard (SW Herts)||Waldegrave, HonWilliam|
|Parris, Matthew||Walker, Rt HonP. (W'cester)|
|Patten, Christopher (Bath)||Walker, B. (Perth)|
|Patten, John (Oxford)||Wall, SirPatrick|
|Pattie, Geoffrey||Waller, Gary|
|Pawsey, James||Walters, Dennis|
|Percival, Sir Ian||Ward, John|
|Peyton, Rt Hon John||Watson, John|
|Pink, R.Bonner||Wheeler, John|
|Pollock, Alexander||Whitney, Raymond|
|Porter, Barry||Wickenden, Keith|
|Prentice, Rt Hon Reg||Wiggin, Jerry|
|Price, SirDavid (Eastleigh)||Wilkinson, John|
|Proctor, K. Harvey||Williams, D. (Montgomery)|
|Raison, Rt Hon Timothy||Winterton, Nicholas|
|Rees-Davies, W. R.||Wolfson, Mark|
|Renton, Tim||Young, SirGeorge (Acton)|
|Rhodes James, Robert|
|Rhys Williams, SirBrandon||Tellers for the Noes:|
|Ridley, HonNicholas||Mr. Robert Boscawen and Mr. Tristan Garel-Jones.|
§ Question accordingly negatived.
§ Amendment proposed: No. 6, in page 13, line 30, leave out '£3,295' and insert '£3,387'.—[Mr. Beith.]
§ Question put, That the amendment be made:—
§ The Committee divided: Ayes 24, Noes 261.484
|Division No. 128]||[7.51 pm|
|Alton, David||Freud, Clement|
|Brocklebank-Fowler, C.||Grimond, Rt Hon J.|
|Brown, Ronald W. (H'ckn'y S)||Horam, John|
|Cunningham, G. (IslingtonS)||Howells, Geraint|
|Dunn, James A.||Jenkins, RtHonRoy (Hillhead)|
|Kilfedder, JamesA.||Wainwright, R. (Colne V)|
|McNally, Thomas||Wellbeloved, James|
|Mitchell, R. C. (Soton Itchen)||Wigley, Dafydd|
|Penhaligon, David||Wilson, Gordon (Dundee E)|
|Roper, John||Wrigglesworth, Ian|
|Steel, Rt Hon David||Tellers for the Ayes:|
|Stewart, Rt Hon D. (W lsles)||Mr. A. J. Beith and Mr. Russell Johnston.|
|Thomas, Dafydd (Merioneth)|
|Aitken, Jonathan||Eyre, Reginald|
|Alexander, Richard||Fairbairn, Nicholas|
|Alison, Rt Hon Michael||Fairgrieve, SirRussell|
|Amery, Rt Hon Julian||Faith, MrsSheila|
|Ancram, Michael||Farr, John|
|Aspinwall, Jack||Finsberg, Geoffrey|
|Atkins, Robert (Preston N)||Fisher, SirNigel|
|Atkinson, David (B'm'th, E)||Fletcher-Cooke, SirCharles|
|Baker, Kenneth (St.M'bone)||Fookes, MissJanet|
|Baker, Nicholas (N Dorset)||Forman, Nigel|
|Banks, Robert||Fowler, Rt Hon Norman|
|Beaumont-Dark, Anthony||Fox, Marcus|
|Bendall, Vivian||Fraser, Peter (SouthAngus)|
|Bennett, SirFrederic (T'bay)||Fry, Peter|
|Benyon, Thomas (A'don)||Gardiner, George (Reigate)|
|Benyon, W. (Buckingham)||Gardner, Edward (S Fylde)|
|Berry, HonAnthony||Glyn, Dr Alan|
|Best, Keith||Goodlad, Alastair|
|Bevan, David Gilroy||Gow, Ian|
|Biffen, Rt Hon John||Grant, Anthony (Harrow C)|
|Blackburn, John||Gray, Hamish|
|Body, Richard||Greenway, Harry|
|Bonsor, SirNicholas||Grieve, Percy|
|Bottomley, Peter (W'wich W)||Griffiths, Peter Portsm'thN)|
|Bowden, Andrew||Grist, Ian|
|Boyson, DrRhodes||Grylls, Michael|
|Braine, SirBernard||Gummer, JohnSelwyn|
|Bright, Graham||Hamllton, Hon A.|
|Brinton, Tim||Hamilton, Michael (Salisbury)|
|Brittan, Rt. Hon. Leon||Hampson, DrKeith|
|Brooke, Hon Peter||Haselhurst, Alan|
|Brotherton, Michael||Hastings, Stephen|
|Brown, Michael (Brigg&Sc'n)||Hawkins, Paul|
|Browne, John (Winchester)||Hawksley, Warren|
|Bryan, SirPaul||Hayhoe, Barney|
|Buck, Antony||Heath, Rt Hon Edward|
|Budgen, Nick||Heddle, John|
|Bulmer, Esmond||Henderson, Barry|
|Burden, SirFrederick||Hicks, Robert|
|Butcher, John||Hill, James|
|Cadbury, Jocelyn||Hogg, Hon Douglas (Gr'th'm)|
|Carlisle, John (LutonWest)||Holland, Philip (Carlton)|
|Carlisle, Kenneth (Lincoln)||Hooson, Tom|
|Chalker, Mrs.Lynda||Hordern, Peter|
|Chapman, Sydney||Howell, Rt Hon D. (G'ldf'd)|
|Churchill, W.S.||Howell, Ralph (NNorfolk)|
|Clark, Sir W. (Croydon S)||Hunt, John (Ravensbourne)|
|Clarke, Kenneth (Rushcliffe)||Irving, Charles (Cheltenham)|
|Cockeram, Eric||Jenkin, RtHonPatrick|
|Colvin, Michael||Jessel, Toby|
|Cope, John||JohnsonSmith, Geoffrey|
|Corrie, John||Jopling, RtHonMichael|
|Costain, SirAlbert||Kaberry, SirDonald|
|Cranborne, Viscount||Kershaw, SirAnthony|
|Critchley, Julian||King, Rt Hon Tom|
|Crouch, David||Kitson, SirTimothy|
|Dean, Paul (NorthSomerset)||Knight, MrsJill|
|Dickens, Geoffrey||Knox, David|
|Douglas-Hamilton, LordJ.||Lamont, Norman|
|Dover, Denshore||Lang, Ian|
|du Cann, Rt Hon Edward||Langford-Holt, SirJohn|
|Dunn, Robert (Dartford)||Latham, Michael|
|Durant, Tony||Lawrence, Ivan|
|Dykes, Hugh||Lawson, Rt Hon Nigel|
|Eden, Rt Hon Sir John||LeMarchant, Spencer|
|Edwards, Rt Hon N. (P'broke)||Lennox-Boyd, HonMark|
|Eggar, Tim||Lester, Jim (Beeston)|
|Elliott, SirWilliam||Lewis, Kenneth (Rutland)|
|Lloyd, Ian (Havant & W'loo)||Ridley, Hon Nicholas|
|Lloyd, Peter (Fareham)||Rifkind, Malcolm|
|Loveridge, John||Roberts, M. (Cardiff NW)|
|Luce, Richard||Roberts, Wyn (Conway)|
|Lyell, Nicholas||Rossi, Hugh|
|McCrindle, Robert||Rost, Peter|
|Macfarlane, Neil||Royle, Sir Anthony|
|MacGregor John||Sainsbury, Hon Timothy|
|MacKay, John (Argyll)||Shaw, Giles (Pudsey)|
|Macmillan, Rt Hon M.||Shaw, Michael (Scarborough)|
|McNair-Wilson, M. (N'bury)||Shelton, William (Streatham)|
|McNair-Wilson, P. (NewF'st)||Shepherd, Colin (Hereford)|
|Madel, David||Shepherd, Richard|
|Major, John||Shersby, Michael|
|Marland, Paul||Silvester, Fred|
|Marlow, Antony||Sims, Roger|
|Marten, Rt Hon Neil||Smith, Dudley|
|Mates, Michael||Speed, Keith|
|Mather, Carol||Spence, John|
|Maude, Rt Hon SirAngus||Spicer, Michael (S Worcs)|
|Mawby, Ray||Sproat, Iain|
|Maxwell-Hyslop, Robin||Squire, Robin|
|Mayhew, Patrick||Stainton, Keith|
|Mellor, David||Stanbrook, Ivor|
|Meyer, Sir Anthony||Stanley, John|
|Miller, Hal (B'grove)||Steen, Anthony|
|Mills, Iain (Meriden)||Stevens, Martin|
|Mills, Peter (West Devon)||Stewart, Ian (Hitchin)|
|Miscampbell, Norman||Stokes, John|
|Mitchell, David (Basingstoke)||StradlingThomas, J.|
|Monro, SirHector||Taylor, Teddy (S'end E)|
|Montgomery, Fergus||Temple-Morris, Peter|
|Moore, John||Thomas, Rt Hon Peter|
|Morris, M. (N'hamptonS)||Thompson, Donald|
|Morrison, Hon C. (Devizes)||Thorne, Neil (IlfordSouth)|
|Morrison, Hon P. (Chester)||Thornton, Malcolm|
|Mudd, David||Townend, John (Bridlington)|
|Murphy, Christopher||Trippier, David|
|Myles, David||van Straubenzee, Sir W|
|Neale, Gerrard||Vaughan, DrGerard|
|Needham, Richard||Viggers, Peter|
|Nelson, Anthony||Waddington, David|
|Neubert, Michael||Wakeham, John|
|Newton, Tony||Waldegrave, HonWilliam|
|Onslow, Cranley||Walker, B. (Perth)|
|Oppenhelm, Rt Hon Mrs S.||Wall, Sir Patrick|
|Page, Richard (SW Herts)||Waller, Gary|
|Parris, Matthew||Walters, Dennis|
|Patten, Christopher (Bath)||Ward, John|
|Patten, John (Oxford)||Watson, John|
|Pattie, Geoffrey||Wheeler, John|
|Pawsey, James||Whitney, Raymond|
|Percival, Sir Ian||Wickenden, Keith|
|Peyton, Rt Hon John||Wiggin, Jerry|
|Pink, R. Bonner||Wilkinson, John|
|Pollock, Alexander||Williams, D. (Montgomery)|
|Porter, Barry||Winterton, Nicholas|
|Prentlce, Rt Hon Reg||Wolfson, Mark|
|Price, Sir David (Eastleigh)||Young, SirGeorge (Acton)|
|Proctor, K. Harvey|
|Raison, RtHonTimothy||Tellers for the Noes:|
|Rees-Davies, W. R.||Mr. David Hunt and Mr. Tristan Garel-Jones.|
|Rhys Williams, Sir Brandon|
§ Question accordingly negatived.
§ 8 pm
§ Mr. Richard Wainwright
I beg to move amendment No. 11, in page 13, line 33, at end insert—'(3) In subsection (1A) of section 8 of the Taxes Act (personal reliefs: age allowance) for the words "of the age of sixty-five or upwards" wherever they appear there shall be substituted the words "of pensionable age"; and at the end of that subsection there shall be added the words "and the expression 'pensionable age' shall bear the same meaning as in Schedule 20 to the Social Security Act 1975".(4) At the end of section 15A of the Taxes Act (personal reliefs: widows' bereavement allowance) the following words 485 shall be added "and, to the extent that such deduction is not utilised by reason of an insufficiency of her total income, any amount so utilised shall be similarly available for the following year".This amendment is not very expensive to the Revenue, but it is related to two aspects of the tax structure that I and my hon. Friends regard as unfair. As it is not expensive, it gives the Chief Secretary, his fellow Treasury Ministers and the Government a small opportunity to redeem their reputation.
In the first place, as they cannot keep their promise to reduce the overall tax burden, surely they will grasp the opportunity to make that burden fall more fairly by removing from the deadweight of taxation some of the most jagged nails and spears that hurt the most vulnerable people in our community.
As the Chief Secretary now appears on television at frequent intervals and tells the nation that the negligence of the Foreign Office may result in higher taxes, surely he will welcome an opportunity to include a brief tailpiece saying that the Government are showing evidence of doing their best to ensure that those higher taxes will not in future be applied quite as unfairly as taxes have been in the past.
The amendment is two-pronged, and each part applies to clause 22 which deals with thresholds. The proposed subsection (3) deals with the unfairness that was commented upon adversely on both sides of the House during our Finance Bill and Budget debates last year, particularly by the hon. Member for Birmingham, Perry Barr (Mr. Rooker), who produced some appalling examples of this hardship, and by Liberal Members. The criticism is that, so long as we have these disgracefully low thresholds for liability to income tax, women who at the age of 60 draw a pension under the Social Security Act 1975 will be at risk until they reach 65, the earliest age at which income tax age relief applies.
In no way does the amendment, either in its wording or purpose, attempt to sanctify a particular age for women to start drawing a retirement pension. It carefully avoids using any stated age, and simply requires that the "pensionable age", as defined by law, shall become the point at which age relief for income tax shall apply to all taxpayers. In no way does the amendment judge the age at which women should become pensionable.
Rightly or wrongly, under the law as it now stands, that age is 60. If the amendment were to be applied now, women taxpayers would be eligible for income tax age relief at 60. As a result—this is the whole thrust of the amendment—women on a bare State pension plus a small graduated pension, or women who inherited a modest pension from their husbands' employers, would escape tax.
Among other things, that would end a particularly dangerous trap that I should like to describe. During the proper hubbub last year about the number of women pensioners between 60 and 65 receiving income tax demands merely because of their pensions, the Government replied that that was not a great hardship to many people because the Inland Revenue did not bother to collect tax of less than £30. We should be thankful for that highly irregular mercy.
However—and this is scandalous—if the amount due from the pensioner is £31, the whole of that sum is immediately payable. There is no question of the £30 486 being a threshold and the pensioner paying only the amount over £30. Not a bit of it. Immediately the liability exceeds £30, the lot becomes payable. That happens to a considerable number of women pensioners between 60 and 65.
If clause 22 goes through unamended, income tax relief for a single person will be £1,565. In November, these women will receive a pension of £1,708. At once, there is the obvious gap between the pension and the appallingly low threshold. In addition, everything in our tax system is based on the single, highly-insulated fiscal year. Therefore, one must have regard to the figure in the fiscal year.
If the Government's pension intentions are honoured, as I am sure they will be in dark November, the pension for such a person in the fiscal year 1982–83 will be £1,609. That by itself marginally exceeds the proposed single person's threshold. As I have already said, many of these people also receive a graduated pension from the State, for which they have paid in the past, or a pension, usually small, relating to their own past employment or their husbands' employment. Therefore, it will require only £56 of graduated or occupational pension to bring such a woman into tax until she reaches the age of 65.
That is wholly unacceptable. It is penalising people who are receiving a benefit—benefits that Parliament has decided people require and should be paid—and who do not have any other income in addition. I re-emphasise that I am talking not about women between 60 and 65 who have other substantial means—that is a different matter—but about people who are trying to live on the benefit that Parliament has considered to be appropriate for them.
The revenue loss involved would not be substantial, but the esteem in which the Government are held would rise considerably. Every hon. Member has his own surgery cases on this matter. The people who come to my surgery are appalled at the folly and administrative costs of putting a pension into someone's handbag and then taking out the tax.
I have been asked by thrifty Yorkshire women how much it costs the State, therefore the taxpayer, to go through that ridiculous rigmarole. I have not yet been able to obtain an estimate from the Inland Revenue, but the figure must be substantial. There are misunderstandings in some cases, because often the Revenue puts the whole tax burden on total income on the PAYE code for one sort of pension and people become confused because they think that they are being taxed in error.
It is the job of the Government to draft the amendment in proper form. That is one of the few jobs that they can perform with total satisfaction—or they should.
The second heading of my amendment is different, but it relates also to women. I refer to the proposed subsection (4). It is not a substantial matter, but it seems to cry out for relief. The amendment tries to remedy what I have always regarded as an unfortunate, pedantic and legalistic aspect of our tax structure.
Almost everything in taxation of the individual is confined to the one sacred tax year. If an incident occurs to someone immediately after 5 April, he will find that his tax circumstances are different from what they would have been if the incident had happened on 4 April. That is a feature of our tax structure that I regard as outmoded. I hope that in this instance we shall mitigate it.
487 In his Budget Statement in March 1980 the Chancellor of the Exchequer made the following unexceptionable and welcome remarks:I want also to do something more for widows in the difficult time immediately following bereavement. I therefore propose to increase the present single allowance that widows receive for the tax year in which they are bereaved. The addition for that year will, at its maximum, bring the single allowance for widows up to the level of the married allowance."—[Official Report, 26 March 1980; Vol. 981, c. 1477.]As we said in Committee in 1980, that was a civilised thing to do. However, even then we had to press the Government to amend and improve that proposal, which they did. The amount of the allowance that most widows, unless they have substanial means, can use depends on the sheer accident of the month in which they are bereaved. For example, the amount of allowance that a widow is able to use if she is bereaved in the first month of the tax year, if her income is appropriate, is £880. If she is bereaved in the last month of the tax year, there will be only £73 of the allowance available. The Committee will appreciate that that is not giving full expression to the Chancellor of the Exchequer's worthy purpose.
The amendment simply proposes that the allowance, if necessary, should run to a second year—not for ever. People in equal circumstances should be treated equally by allowing a carry-over of the allowance to the second year if the bereavement takes place in the latter part of the first tax year.
Those are the two parts of the amendment. I hope that both parts commend themselves to the Committee, and particularly to the Government.
§ Mr. Cook
I do not know whether the Liberal Party's procedure has been infected by its new alliance with defectors from the Labour Party, but it appears that the procedure for producing amendments has suffered from the process, well known to the Labour movement, of the production of composites through a compositing meeting. The hon. Member for Colne Valley (Mr. Wainwright) has produced what can only be described as a composite amendment. There are two separate issues rolled into one. I listened with interest to what he said about the widows' bereavement allowance. He has identified a genuine problem on which the official Opposition will reflect.
However, we are not immediately enamoured of the principle of carrying a personal allowance forward from one financial year to another. There might be diffiulties with the precedent that would be created. However, the hon. Gentleman has touched on a genuine problem. We shall take to heart what he has said and consider what can be done. We look forward with interest to hearing what the Government propose to do with the hon. Gentleman's amendment.
The other matter that the hon. Gentleman raised is also a genuine and real issue that probably affects more people more intimately than the first matter to which I referred. As the hon. Gentleman said, the position of single women pensioners between 60 and 65 exercised the minds of the Committee during the Finance Bill 1981. I join with the hon. Gentleman in paying tribute to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) because of the persistence with which he pursued the issue.
The position of women in that age group is an outrage. Over the past year a basic pension was sufficient to carry them over their personal tax threshold. They avoided tax 488 liability only because the amount by which they exceeded the threshold was within the administrative tolerance. However, that was by so narrow a margin that it required an additional income of only 33p a week to carry them over that administrative tolerance. In some cases a graduated pension payment would be sufficient to carry them over that small additional sum. That meant that for the first time in our history since the introduction of the State pension some pensioners found that they were liable to tax on nothing but the State pension.
I thoroughly endorse the hon. Gentleman's point. It is probably the most acute aspect of the difficulty. At the point at which those people enter tax liability, the administrative tolerance ceases to be a blessing and becomes a curse. At that point they are liable to tax not simply on the amount by which they have crossed the threshold into tax liability, but on the £100 that previously was covered by the administrative tolerance.
I should like to share with the Committee the case of one of my constituents. I am not seeking to make a constituency point, because there are similar constituents in the constituency of every hon. Member. My constituent had fallen foul of that aspect of the Finance Bill 1981. She received a graduated addition to her pension that carried her up to, but not over, the administrative tolerance. In the preceding year she had received notice of a roof repair that was required on her house, which in Scotland can be legally enforced by the local authority.
This is a tribute to the care with which that lady shepherded her money, given how little her income was. Over that year she had succeeded in saving £200 at the bank. She therefore became liable—I can only describe it as liable rather than entitled—to interest on her bank deposit of £20. That £20 of bank interest carried her over the administrative tolerance threshold and triggered off a tax liability not just for that £20 but for the full £120 by which she exceeded her personal tax threshold. As a result of the income of £20 of bank interest, she received a tax demand for £40—30 per cent. of £140. She was paying tax on that £20 at a marginal rate of 200 per cent.
I wrote to the Chancellor of the Exchequer to draw his attention to this case and to the extent to which it highlighted a danger of which several hon. Members, including myself and the hon. Member for Colne Valley, had warned during the passage of the 1981 Finance Bill. I received a reply from the noble Lord Cockfield, who has since been translated to higher office, in which he had the impertinence to suggest that my constituent should be indebted to the Government because they had cut the rate of tax she paid from 33 per cent. to 30 per cent.
To suggest that is to miss the point. Before the 1981 Finance Bill, my constituent did not pay tax at all Moreover, if she had been liable for tax, she would have paid it at the rate of 25 per cent., instead of the standard rate of 33 per cent. Indeed, as a result of what the Government did, she was paying tax at a higher rate than she otherwise would have done. The final lunacy is that I could advise my constituent—if she had been willing to do so, but in the circumstances she was not—to go to the DHSS and obtain a supplementary pension which would cover the extent to which she was liable for tax.
I come to the case of Miss D, who was mentioned by both myself and my hon. Friend the Member for Perry Barr, when we considered the matter on Report in 1981. As hon. Members who were present on that occasion may recollect, Miss D, was a client—if that is the right 489 word—of the social services department at Harlow new town. The case was brought to my attention and to the attention of my hon. Friend the Member for Perry Barr because the lady found that she was simultaneously paying £4.06 in tax and drawing £9.06 in supplementary pension. She was a woman aged 60 to 65, retired and drawing a State pension. The £9 that she drew in supplementary pension was calculated to reflect her tax liability.
The final touch of farce has occurred since we debated the matter on Report in 1981. On appeal, Miss D was successful in persuading the supplementary benefit appeal tribunal to backdate her entitlement to supplementary pension to cover her tax liability to the start of the 1981–82 tax year, on the ground that it was so unlikely that she would find herself liable to tax in that year that she could not have reasonably anticipated it at the start of the tax year.
That situation is an offence to reason. There is no need for us to become morally indignant or to describe it as a social outrage. It is irrational. It is preposterous that the House should lay down a level which represents a minimum income standard, and then find that there are people with less than that income paying tax. Yet that is precisely what happens, particularly with the 60 to 65 age group living on State pension.
To a degree, the problem is reduced this year because the tax threshold has been increased by 4 per cent. more than the State pension. Nevertheless, the problem remains, as the hon. Member for Colne Valley made clear. Women in this position still find that they have a State pension which exceeds the single person's allowance for 1982–83. Again, they are saved from being liable to tax on that State pension only by the operation of the administrative tolerance. This year, they require an additional income of £1.25 a week to become liable to payment of tax. If they receive such an income, it will then trigger a tax liability of 58p per week, or a marginal rate of tax of 46 per cent.
We are talking about a group of people whose income hovers around £30 a week. It is one of the poorest sections of the community, if the term "poorest" is to have any meaning at all. The situation is an outrage. It is an offence to reason that this group should be subjected to tax liability. It is particularly outrageous when we reflect that in this Finance Bill £400 million has been found to uprate the higher thresholds for the higher rate bands, which apply to people who have much less hardship in meeting their tax bill than the people whom we are considering in the amendment.
The Government have created a new defect in the British tax structure. That in itself is something of an achievement. As they have devised this anomaly, so they have a duty to resolve it. Because of the difficulty involved in the other part of the hon. Gentleman's amendment, it is not the appropriate vehicle for remedying it, but I warn the Chief Secretary that if, between now and Report, no remedy is put forward for the category of women in this position, we on the official Opposition Front Bench will press the matter strongly and divide on it on Report.
§ Mr. Brittan
If I follow the hon. Member for Edinburgh, Central (Mr. Cook) in this respect, it is to deal in reverse order with the two limbs of the amendment of the hon. Member for Colne Valley (Mr. Wainwright).
490 The cost of allowing the widow's bereavement allowance to be carried forward to the year after bereavement in the way that the hon. Member for Colne Valley proposes would be £15 million in a full year. The hon. Gentleman was good enough to say that it was this Government who introduced this allowance in 1980. It was aimed at helping widows in the difficult period immediately following breavement, when they have to make financial as well as personal adjustments to a difficult situation. It was well received and, I think, has been most welcome.
Although I understand the reason why the hon. Member for Colne Valley has put forward the amendment, I cannot commend it to the Committee, because, as the hon. Member for Edinburgh, Central said, it would be a radical departure from our tax situation. I am not suggesting that radical departures are never appropriate—they often are—but the amendment would be a strange vehicle by which to introduce a departure of this kind.
Our objection, leaving aside the question whether this is the vehicle to make a fundamental change of this kind, is that it would introduce considerable complexity, and therefore administrative cost, into the handling of these affairs. The Revenue would need extra staff. It would often be some time into the tax year before it could be established how much of the allowance was available to be carried forward, and if the amount had been over-estimated the widow would be faced with an increase in her tax bill part of the way through the year.
Moreover, in equity, the argument is not quite as straightforward as it might seem. The people most likely to have an unused part of the allowance are those whose husbands died towards the end of the tax year, but in the first part of the year, when the husband was alive, they are more likely to have been in a position to get the full benefit of the married man's allowance against the combined incomes of husband and wife, so that counter-balances it is some cases. I am not saying that there are not cases when that does not happen, but the situation is not quite as clear-cut as the hon. Gentleman would have us believe. The administrative complexity of making the change would be considerable, and there is a cost. For those reasons, I cannot commend that limb of the amendment to the Committee.
On the first limb of the amendment, the Committee will be grateful to the hon. Members for Colne Valley and for Edinburgh, Central for raising once again the question of widows and single women aged 60 to 64. As the hon. Member for Edinburgh, Central rightly said, their position is substantially eased by the Budget proposals.
In 1982–83, women with basic pension alone and no other income will not have to pay tax because of the £100 assessing tolerance. Women with earnings-related additions to their State pension will not have to pay tax unless those additions are more than £64 a year, which is well above the average amount of such additions to State pensions. That is a considerable improvement on last year. About half of the widows and single women in that age group will not pay tax at all. The number paying tax will be about 50,000 fewer than in 1981–82, even after taking account of the pensions increase in November 1982.
There has been a substantial improvement in the financial position of women this year simply because of the increase in the allowance. That is the right approach to the problem. Of course it would be nice to go further, but we have not been able to do so. It would be a mistake 491 to try to solve the problem by giving the age allowance to women aged 60. The cost of doing that would be quite substantial—about £85 million in a full year. That would not be the right approach in principle to the problem, because the age allowance is, as its name suggests, an allowance for old age—not for retirement as such.
If the proposals of the hon. Member for Colne Valley were enacted, they would introduce a number of anomalies. Many men stop working at 60 and many women keep on working after that age. The amendment would give age allowance at 60 to women who were still at work as well as to those who had retired, but deny it it men of the same age even if they had stopped work. Widows aged 50 or more receive the same pension as single women and widows over 60, and one of the results of the amendment would be to give the relief to a woman over 60 who was still working and had no pension, but deny it to a widow under 60 even though she is receiving a pension and is not working.
There are other anomalies with regard to married couples. The mischief, to the extent that it exists, and the extent to which it has not been met by the increase in allowances, is more to do with the fact that there is no common pension age for men and women. The White Paper on the elderly opened up for public discussion the possibility of men and women receiving a State pension at the same age. The Select Committee on Social Services is considering that.
The approach of the hon. Member for Colne Valley is not right. The mischief, to the extent that it exists, has been substantially ameliorated by the Budget. The costs of going further, whether in the direction and by the means that the hon. Gentleman suggests, or in any other way, would be substantial. I cannot, therefore, commend the amendment to the House.
§ Mr. Richard Wainwright
The Chief Secretary's reply to both heads of the Liberal amendment is disappointing. I should not have been at all miffed if he had pointed out some of the defects of the details of our proposal and showed how a superior measure could remedy the injustices that were well outlined by the hon. Member for Edinburgh, Central (Mr. Cook) and, I hope, myself. However, the Chief Secretary has done nothing of the kind.
He has belaboured the Committee, not for the first time, about the cost to the Revenue. The cost of each of the branches of the amendment is small compared with what the Government are prepared to spend on their friends. It is intolerable that women, who are vulnerable in many financial respects, should be deprived of reasonably fair treatment simply because the costs that are apparently not taken into account with regard to concessions to large taxpayers are regarded as insurmountable and mountainous when proposals of this kind are brought forward. There was an atmosphere about the Chief Secretary's reply—it was partly true also of the speech of the hon. Member for Edinburgh, Central—of the good old political firms of Box and Cox, of Punch and Judy, of Mr. See and Mr. Saw, of Tweedledum and Tweedledee. Both are wedded to keeping our dear old rickety tax machine in virtually its present state. The unfair Procrustean bed of the single fiscal year whereby all hope dies with regard to allowances on 5 April each year must apparently be maintained as part of the torture, the cold water treatment 492 of the British people, that has made us the great nation that we are. It is nonsense that in 1982, in the age of the computer, we should be imprisoned by the concept of the single fiscal year. I was disappointed that both Front Benches seemed to regard the single fiscal year as sacred, so the bereaved would just have to lump it. That is just not good enough.
§ Mr. Cook
The hon. Gentleman must not misrepresent our position. I entirely accepted that there was a problem with the bereavement allowance which would require solution. I urge the hon. Gentleman that he should not lightly concede the principle of allowances not being carried forward from one year to the other. If he is in any doubt as to the dangers that lie ahead on that path, he should reflect on what has happened with corporation tax, which has produced a yearly tax overhang which accrues faster than the total revenue from the tax.
§ Mr. Wainwright
I entirely part company with the hon. Gentleman on that. When I practised as an accountant, I could have laid my hand on my heart and said that, if there had been no carry-over of corporation tax from one year to the next, three quarters of the well-run businesses of this country would have been in the bankruptcy court. It is an extremely civilised principle, and it is notable that all Governments have been forced to admit it for the business sector. Otherwise there would be no corporate taxpayers left to milk. But the poor old individual, especially the woman, has to lump it Carry-over can be admitted for ICI, GKN, GEC and all limited companies, but not for the individual—and the alliance stands for the individual.
§ Mr. Wainwright
The rainbow alliance, as I said before—SDP and Liberal.
I was staggered at the Chief Secretary's extraordinarily callous defence of the present position when he said that ladies who were bereaved in the latter part of the tax year had enjoyed the benefit of the married allowance in the earlier part of the year. But the husband was not dead then. He had to be fed and looked after, his room had to be heated, and so on. The married allowance was needed for that. We believe that every widow who pays tax is entitled to 12 months of married allowance after bereavement. That is the only way to give proper effect to the admirable purpose outlined by the Chancellor in March 1980, and nothing that has been said today has convinced me or, I think, my hon. Friends otherwise.
The second and more substantial grievance, in which more people are involved, is that tax is simply levied on the amount to which the House decides that retired people are entitled in State benefit. In other words, the House contradicts on a Thursday what it has solemnly voted for on, say, a Monday. That brings the House into disrepute, and it makes the law and especially the Treasury look an ass in the eyes of many people.
In gathering ammunition on this, I have been assisted by one of the most reputable charities for the elderly, Help the Aged, which drew my particular attention to the added insult of the present tax position. As I hinted in my earlier speech, when women between the ages of 60 and 65 are taxed on a pension plus a graduated supplement or occupational pension, the tax is usually collected by applying an exorbitant rate of PAYE to the additional pension.
493 Help the Aged cites the case of one client whose papers it has carefully examined who, as a result of this, was given an F tax code on her occupational pension last year so that this iniquitous amount could be levied. The result was a tax rate of no less than 40 per cent. on her occupational pension. Not only had she to pay the money, but she had all the frustration of suddenly finding that, as an elderly and retired person, she was given a PAYE code resulting in tax at 40 per cent. Help the Aged assures me that a considerable number of people have very properly asked it why they have received such hefty PAYE codes.
One other part of the Chief Secretary's thin defence calls for comment. He said that we were trying to apply age relief to people who were simply retired. I must tell him that in the part of the country from which I come—the county of Yorkshire that he used to have a share in representing—this is still known as the old age pension. I am convinced that for the rest of my lifetime at any rate the vast majority of people in and around Collie Valley will rightly describe it by its proper Anglo-Saxon name and not apply the Latinised vague and meaningless term, retirement pension.
I had hoped to see some glint of civilisation in the Government's eyes and some sign that they would act to make the tax system in this respect less of a nonsense. Instead, we have had an implacable attitude from the Chief Secretary. I have no option but to recommend to my right hon and hon. Friends that we press the amendment to a Division.
§ Question put, That the amendment be made:—
§ The Committee divided: Ayes 19, Noes 236.495
|Division No. 129]||[8.40 pm|
|Alton, David||Steel, Rt Hon David|
|Brocklebank-Fowler, C.||Stewart, Rt Hon D. (W Isles)|
|Brown, Ronald W. (H'ckn'yS)||Thomas, Dafydd (Merioneth)|
|Horam, John||Wainwright, R. (Colne V)|
|Howells, Geraint||Wellbeloved, James|
|Johnston, Russell (Inverness)||Wigley, Dafydd|
|Kilfedder, JamesA.||Wilson, Gordon (DundeeE)|
|Mitchell, R. C. (Soton Itchen)||Tellers for the Ayes:|
|Penhaligon, David||Mr. A. J. Beith and Mr. Clement Freud|
|Alexander, Richard||Braine, Sir Bernard|
|Alison, Rt Hon Michael||Bright, Graham|
|Amery, Rt Hon Julian||Brinton, Tim|
|Ancram, Michael||Brittan, Rt. Hon. Leon|
|Aspinwall Jack||Brotherton, Michael|
|Atkins, Robert (Preston N)||Browne, John (Winchester)|
|Atkinson, David (B'm'th, E)||Buck, Antony|
|Baker, Kenneth (St. M'bone,)||Budgen, Nick|
|Baker, Nicholas (N Dorset)||Bulmer, Esmond|
|Banks, Robert||Burden, Sir Frederick|
|Beaumont-Dark, Anthony||Butcher, John|
|Bendall, Vivian||Cadbury, Jocelyn|
|Bennett, Sir Frederic (T'bay)||Carlisle, John (Luton West)|
|Benyon, Thomas (A'don)||Carlisle, Kenneth (Lincoln)|
|Benyon, W. (Buckingham)||Chalker, Mrs. Lynda|
|Best, Keith||Chapman, Sydney|
|Bevan, David Gilroy||Churchill, W.S.|
|Biffen, Rt Hon John||Clark, SirW. (Croydon S)|
|Blackburn, John||Clarke, Kenneth (Rushcliffe)|
|Body, Richard||Colvin, Michael|
|Bottomley, Peter (W'wich W)||Cope, John|
|Bowden, Andrew||Corrie, John|
|Boyson, Dr Rhodes||Costain, Sir Albert|
|Cranborne, Viscount||Lewis, Kenneth (Rutland)|
|Critchley, Julian||Lloyd, Ian (Havant & W'loo)|
|Dean, Paul (North Somerset)||Lloyd, Peter (Fareham)|
|Dickens, Geoffrey||Loveridge, John|
|Douglas-Hamilton, Lord J.||Luce, Richard|
|Dover, Denshore||Lyell, Nicholas|
|du Cann, Rt Hon Edward||McCrindle, Robert|
|Dunn, Robert (Dartford)||MacGregor, John|
|Durant, Tony||MacKay, John (Argyll)|
|Dykes, Hugh||McNair-Wilson, M. (N'bury)|
|Eden, Rt Hon Sir John||McNair-Wilson, P. (NewF'st)|
|Edwards, Rt Hon N. (P'broke)||Madel, David|
|Eggar, Tim||Major, John|
|Eyre, Reginald||Marland, Paul|
|Fairbairn, Nicholas||Marlow, Antony|
|Fairgrieve, Sir Russell||Marten, Rt Hon Neil|
|Faith, Mrs Sheila||Mates, Michael|
|Farr, John||Mather, Carol|
|Finsberg, Geoffrey||Maude, Rt Hon Sir Angus|
|Fisher, Sir Nigel||Mawby, Ray|
|Fletcher-Cooke, Sir Charles||Maxwell-Hyslop, Robin|
|Fookes, Miss Janet||Mayhew, Patrick|
|Forman, Nigel||Mellor, David|
|Fowler, Rt Hon Norman||Miller, Hal (B'grove)|
|Fox, Marcus||Mills, Iain (Meriden)|
|Fraser, Peter (South Angus)||Mills, Peter (West Devon)|
|Fry, Peter||Mitchell, David (Basingstoke)|
|Gardiner, George (Reigate)||Monro, Sir Hector|
|Gardner, Edward (S Fylde)||Montgomery, Fergus|
|Garel-Jones, Tristan||Moore, John|
|Glyn, Dr Alan||Morris, M. (N'hampton S)|
|Goodlad, Alastair||Morrison, Hon C. (Devizes)|
|Gow, Ian||Morrison, Hon P. (Chester)|
|Grant, Anthony (HarrowC)||Mudd, David|
|Gray, Hamish||Murphy, Christopher|
|Greenway, Harry||Myles, David|
|Grieve, Percy||Neale, Gerrard|
|Griffiths, E (B'ySt. Edm'ds)||Needham, Richard|
|Griffiths, Peter Portsm'th N)||Nelson, Anthony|
|Grist, Ian||Neubert, Michael|
|Gummer, John Selwyn||Newton, Tony|
|Hamilton, Hon A.||Onslow, Cranley|
|Hamilton, Michael (Salisbury)||Oppenheim, Rt Hon Mrs S.|
|Hampson, Dr Keith||Page, Richard (SW Herts)|
|Haselhurst, Alan||Parris, Matthew|
|Havers, Rt Hon Sir Michael||Patten, Christopher (Bath)|
|Hawkins, Paul||Patten, John (Oxford)|
|Hawksley, Warren||Pattie, Geoffrey|
|Hayhoe, Barney||Pawsey, James|
|Heath, Rt Hon Edward||Percival, Sir Ian|
|Heddle, John||Pink, R. Bonner|
|Henderson, Barry||Pollock, Alexander|
|Hicks, Robert||Proctor, K. Harvey|
|Hill, James||Raison, Rt Hon Timothy|
|Hogg, Hon Douglas (Gr'th'm)||Renton, Tim|
|Holland, Philip (Carlton)||Rhodes James, Robert|
|Hooson, Tom||Rhys Williams, Sir Brandon|
|Hordern, Peter||Ridley, Hon Nicholas|
|Howell, Rt Hon D. (G'ldf'd)||Rifkind, Malcolm|
|Howell, Ralph (N Norfolk)||Roberts, M. (Cardiff NW)|
|Hunt, David (Wirral)||Roberts, Wyn (Conway)|
|Hunt, John (Ravensbourne)||Rossi, Hugh|
|Irving. Charles (Cheltenham)||Rost, Peter|
|Jenkin, Rt Hon Patrick||Sainsbury, Hon Timothy|
|Jessel, Toby||Shaw, Giles (Pudsey)|
|Johnson Smith, Geoffrey||Sheldon, Rt Hon R.|
|Jopling, Rt Hon Michael||Shelton, William (Streatham)|
|Kaberry, Sir Donald||Shepherd, Richard|
|King, Rt Hon Tom||Silvester, Fred|
|Knight, Mrs Jill||Sims, Roger|
|Knox, David||Smith, Dudley|
|Lamont, Norman||Speed, Keith|
|Lang, Ian||Spence, John|
|Langford-Holt, Sir John||Spicer, Michael (S Worcs)|
|Latham, Michael||Stainton, Keith|
|Lawrence, Ivan||Stanbrook, Ivor|
|Lawson, Rt Hon Nigel||Stanley, John|
|Le Marchant, Spencer||Steen, Anthony|
|Lennox-Boyd, Hon Mark||Stevens, Martin|
|Lester, Jim (Beeston)||Stewart, Ian (Hitchin)|
|Stokes, John||Wall, Sir Patrick|
|Stradling Thomas J.||Waller, Gary|
|Taylor, Teddy (S'endE)||Walters, Dennis|
|Temple-Morris, Peter||Ward, John|
|Thomas, Rt Hon Peter||Watson, John|
|Thompson, Donald||Wheeler, John|
|Thorne, Neil (IlfordSouth)||Whitney, Raymond|
|Thornton, Malcolm||Wickenden, Keith|
|Townend, John (Bridlington)||Wiggin, Jerry|
|Trippier, David||Wilkinson, John|
|van Straubenzee, Sir W.||Winterton, Nicholas|
|Vaughan, DrGerard||Wolfson, Mark|
|Viggers, Peter||Young, Sir George (Acton)|
|Wakeham, John||Tellers for the Noes:|
|Waldegrave, Hon William||Mr. Robert Boscawen and Mr. Peter Brooke.|
|Walker, B. (Perth)|
§ Question accordingly negatived.
§ Clause 22 ordered to stand part of the Bill.