SOCIAL SECURITY BENEFITS

HC Deb 13 July 1982 vol 27 cc861-915 3.50 pm

Mr. Jim Lester (Beeston)

I beg to move amendment No. 57, in line 43 at end insert: 'but this section shall cease to have effect as from 22nd November 1982 unless on or before that date the five per cent. abatement of the adult rates of unemployment benefit, made under section 1 of the Social Security (No. 2) Act 1980, is made good.'. I notice that since five of my hon. Friends and I tabled the amendment it has attracted support from other parts of the House. The names of 30 Liberal and Social Democratic Members have been added to it. It must be the first time that the Liberals and the Social Democrats have been in one place at one time on the same issue. They are welcome to join us.

That this is the third time that the House has debated the issue in one form or another demonstrates the anxiety of hon. Members on both sides of the House about it. It has become a House of Commons rather than a narrow party issue. I am sure that if it were presented on a free vote, it would be carried overwhelmingly. I am sad that the arguments that have so far been advanced by my right hon. and hon. Friends have not convinced the Government of the deep sincerity of some hon. Members on the issue. That is why we have tabled the amendment.

The issue will not be settled tonight by skilled Whipping, trips to the Lebanon or other means to secure a narrow Government majority. I must point out gently and kindly that the issue will not go away. The longer it is left, the harder it will be to settle. More extraneous issues will be introduced and it will become more difficult for the Government to honour their agreement that the reduction in unemployment benefit is not permanent.

I shall briefly spell out the difference between those who support the amendment and the Government. I shall try to be scrupulously fair, not give a raft of quotations and distil the central points. I shall first trace the relationship between the 5 per cent. abatement and the Social Security (No. 2) Act. I was a member of the Committee on that legislation.

The Bill, when introduced, was accepted as a blunt instrument to obtain immediate reductions in the social security budget and a cut in overall public spending. Despite misgivings, many hon. Members accepted a variety of unpalatable measures. There was no question but that the 5 per cent. abatement and the reasoning behind it was linked to advance deduction before proper taxation. It was an administrative argument that taxation of short-term benefits could not be introduced and that therefore the 5 per cent. abatement was in advance of that because the Government needed the money. The benefits may not be taxed before 1982, but it was argued that the national need required a payment on account. The debates in Committee demonstrated that it was roughish justice, but we accepted the measure.

My right hon. Friend now the Secretary of State for Industry, for whom I have the highest regard, did not commit himself to an automatic restitution of the cut when taxation was introduced. He did so for invalidity benefit because, as he pointed out at the time, invalidity benefit is a long-term benefit and unemployment benefit is short-term. He never admitted that it was a deliberate act of policy permanently to reduce the level of unemployment benefit. He used words that are familiar to all hon. Members when faced with pressure to make a pledge two years ahead. He said: I am not in a position to give any comparable undertaking on the other benefits. There the words we have used before apply—that we will look at the position at the time in the light of all the circumstances and determine the appropriate level of gross benefit to apply to those benefits when they become part of taxable income. I cannot go further than that.—[Official Report, Standing Committee B, 30 April 1980; c. 460.] Does one require any further commitment? Since then, there have been two debates on the issue. There have been 13 speeches from Conservative Members, all of whom have urged the Government to restore the cut to take account of circumstances at the time. The Government now know that the yield from taxing benefits will be about £650 million. They can see the unexpected and unwelcome increase in the number of unemployed, many of whom remain so for a year before exhausting their benefit. The Government must be aware of the increased numbers of unemployed receiving supplementary benefit, which is the most expensive way of helping the unemployed. They must be aware of the political and moral implications and of the fact that there is no case for not restoring the cut in the year that taxation is introduced. It is beyond belief that the Government should draw the taxation line to catch the unemployed. If the line were moved, the 5 per cent. would be restored, the book could be closed, and we could concentrate on measures to deal with long-term unemployment and reviving the economy. The point at issue is where the line should be drawn. If matters are left as they are, we shall effectively double the amount of tax paid by an extremely vulnerable group. They may claim benefit only if they have a contribution record in work covering the year ahead. Those with savings of more than £2,500 may not claim supplementary benefit. Between 500,000 and 750,000 people are involved.

I sum up with the words of my hon. Friend the Minister for Social Security who, on 18 March, said: My right hon. Friends on the Front Bench have promised to keep this matter under review. We have said that the abatement will not be a permament reduction. It is equally clear that the abatement cannot be made good now, but it will be made good. My right hon. Friends have the matter under review. At the right time it will be made good.—[Official Report, 18 March 1982; Vol. 20, c. 536.] Now is the right time to make it good. There can only be one right time to restore the reduction—the year in which the tax has been introduced.

There is then the argument that we cannot afford £60 million, despite the tenfold yield that taxation has brought to the Treasury. To a simple man like me, it sounds an enormous sum, but colleagues who have been Treasury Ministers describe it as candle ends. That may be going too far the other way, but it is certainly not an impossible amount for the Chancellor to find. The Government argued that the yield of £525 million originally estimated had been allocated to various other forms of social security benefit, but that cannot apply to the extra £120 million that has been found on the re-estimate.

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I have no doubt that others will make a variety of helpful suggestions about sources of revenue that will not involve extra taxes, increasing the public sector borrowing requirement, higher interest rates or defeating the Government's economic strategy. I offer one.

When my right hon. and learned Friend the Chancellor introduced his Budget on 9 March, he mentioned the possibility of a community work scheme. He suggested that the Manpower Services Commission and the Department of Employment should work out a scheme based on benefit-plus. I understand that that is now proceeding. He suggested that the Government would reach a decision later this summer. Although he did not spell out the exact sums that he had in mind in advance of seeking advice, he gave illustrative figures suggesting that a net additional expenditure of £150 million would be available. He further stated: We should indeed be ready to back this kind of development on an even larger scale if the demand is there. I submit that that scheme is unlikely to make any demands on the Chancellor's Budget in the current year, and that, even if it did, the amount would be nowhere near the £150 million that he was prepared to commit in the first place with the possibility of a further £150 million if the demand was there. Therefore, I cannot believe that it is impossible for my right hon. and learned Friend to find £60 million.

In opening the section on jobs and pay in his Budget Statement, my right hon. and learned Friend used the following very moving words: To have millions of people at a time without work, many of them for long periods, is a tragic loss to any community. To be unable to find work is an affront to personal self-respect. This waste of human resources is today the misfortune of many societies besides our own. It is naturally a cause of deep concern to every Member of this House."—[Official Report, 9 March 1982; Vol. 19, c. 730–32.] I could not have put it better myself. It is of such deep concern to us that we suggest that it should not be impossible for my right hon. and learned Friend to find £60 million.

There is then the moral and political argument. The Government must be seen to be scrupulously fair in their behaviour towards the unemployed, who could be described as the walking wounded of the economic battles to which all Conservative Members have turned their hands in trying to revive and restore the economy.

When unemployment is 3 million and rising, it cannot be the fault of those affected. It cannot be the fault of the people who are in overmanned industry or in the wrong part of the country. It is not the fault of the employees if a company is forced to close because of exchange rates or has perished because it cannot meet its overheads due to falling demand.

No Conservative Member could argue that when we fought the 1979 general election we expected or anticipated the present level of unemployment, either national or locally in our constituencies. This issue is particularly close to me, because when I was a junior Minister at the Department of Employment I visited unemployment benefit offices throughout the length and breadth of the country. I stood behind the counters and saw the queues of people snaking through. They were good, decent British citizens waiting to sign on, often in premises that were not equipped to handle the numbers involved. That certain knowledge of my own eyes makes me feel strongly that the Government should take this matter in hand and restore the 5 per cent.

We must bear in mind that a high proportion of the people now out of work have become unemployed for the first time in their lives after many years of work. For the first time in their lives, they must face the challenge of finding fresh employment, perhaps retraining or moving away from where they live. That is challenge enough. If they are also short of money and have to worry about trying to balance an impossible budget, we are adding too much to their burdens.

Let us consider the cash amounts. From November, a single person will be able to claim £25 per week unemployment benefit and a married couple £40.45. Anyone who has more than £2,500 in savings cannot claim any addition to that. The restitution that we seek amounts to £1.10 for a single person and £1.75 for a married couple. That is less than the cost of a round of drinks in this place.

Can we really think only of the gross figures—the 3 million unemployed and the £60 million cost? Should we not consider the individual budgets involved? To be unemployed and looking for work costs money. Constituents have proved to me that they have written 50 or 60 letters in their search for a job. How can they afford the postage charges to send those letters? Telephone calls cost money. Bus fares cost money to go to the jobcentre and to parade around going to the various jobs that they may or may not get.

One has only to compare those sums with the amounts received by old-age pensioners to realise how minimal that income is. The £25 per week compares with £32.85 for a single pensioner and the £40.45 with £52.55 for married pensioners. Therefore, we are dealing with those at the bottom of the scale. They have no additional claim on supplementary benefit, because my arguments do not apply to such people. If unemployment benefit is raised, their supplemetary benefit falls, so they do not receive any more money. We are talking about the 500,000 or 750,000 unemployed who have no claim on supplementary benefit.

My final point is political. In voting on this matter today, Conservative Members have their last chance to restore the cut in the year in which the benefit has been taxed, because it came into taxation on 6 July this year. It is not beyond reason to believe that there may be a general election in 1983. We should be a very foolish party and Government if we were not prepared for a general election some time in that year. Whenever it comes, there is no question but that unemployment will be one of the key issues for which we shall have to answer.

It has been suggested that our action today is a test of our loyalty to the party. I do not believe that is the issue. None of my right hon. and hon. Friends who put their names to the amendment could in any way be regarded as disloyal to the party. Our loyalty is unquestioned, but we cannot have loyalty on command or demand. On such issues a case must be made and one must judge one's loyalty against a wider loyalty to one's constituents and, in this case, to those constituents who are unfortunate enough to be unemployed, because they have no one else to speak for them. We could argue that, although it is important to reduce interest rates, to make industry leaner and fitter and to get our economy thriving again, the corollary must be that we are seen to treat our unemployed fairly.

Should there be an election before this matter is settled, how will each of us stand when we are defending the matter to our constituents? We can explain the reason for the increase in unemployment. It may be difficult, but we can sustain the argument. We can probably explain why the Government have removed earnings-related supplement. It is a long argument and I will not enter into it now, but that removal reduced the standards of many unemployed people by 11 per cent. We can explain why we introduced taxation on short-term benefits. Many hon. Members wished that. It is a major step forward that deals with the "Why work?" syndrome and enables the Chancellor to have an intelligent taxation policy by raising thresholds regardless of the source of income. We can explain all those matters, but it will be difficult.

What about the 5 per cent.? Can we really say to the electorate "It was not the Government's intention for it to be permanent although it is now in its third year"? Can we say "The Government have it under review and will restore it at the right time" and expect to be believed?

Mr. Robert Sheldon (Ashton-under-Lyne)

The hon. Member for Beeston (Mr. Lester) said in his opening remarks that this is a House of Commons issue. Credit is due to him and to other determined Conservative Members for ensuring that it is a House of Commons issue, and the signatures of Members of all parties, including the Liberal Party and the SDP, have ensured that it will remain so. In the many debates that we have had on the subject, speaker after speaker has been in full agreement, until we have come to the Minister's reply. That happened in the debates on 18 March and on 26 April. Such all-party agreement is not uncommon when an effort is being made to extract money from the Treasury, but unity today is not as simple as that.

There have been charges of errors by Ministers, of misleading statements and even some accusations of deception. I do not make any such accusation, and I shall confine myself to three quotations. The first is from the Secretary of State for Industry, then the Secretary of State for Health and Social Services, who said on 15 April 1980: There are benefits that ought to be taxed but are not. We propose that pending the introduction of proper taxation it would be right to go for an interim scheme providing for a limited uprating … next November. The right hon. Member for Daventry (Mr. Prentice), then the Minister of State, said on the same day: We have a rough and ready substitute to last until 1982, when we hope to bring in proper taxation."—[Official Report,15 April 1980; Vol. 982, c. 1034–1042.] My third quotation is again from the present Secretary of State for Industry, who said on 30 April 1980: The hon. Gentleman asked specifically about abated unemployment benefit. That will make no difference because as the unemployment benefit comes into tax so the rationale for the 5 per cent. abatement ends. It is an interim scheme in lieu of taxation. One will give way to the other."—[Official Report, Standing Committee B, 30 April 1980; c. 526.] 4.15 pm

With such clear statements it should not be necessary to indulge in the "Kremlinology" to which we have been subjected, such as "examining with care what was really intended", asking at what time of the day the speech was made and the subsequent explanations that were attempted. If we were to take account of such considerations, even if they were true, there would be an end to debate as we know it and an end to the record in Hansard, which states clearly what has been said and which forms the basis of our continuing arguments and discussion. If an hon. Member wishes at any time to refute what appears in Hansard, the method by which that is done is known to all. The House accepts readily a personal statement and forgives readily those who make mistakes. However, that was not done and there should be no tampering with the record.

The Chancellor of the Exchequer, in an important speech to the Conservative Political Centre summer school at Cambridge on 3 July—he was talking about the future as he saw it—said: I can make clear what I believe should be the heart of our approach. It is to continue in three main directions. First, and no one should doubt our determination in this, it is to tackle the root causes of the scourge of unemployment which weakens our economy and threatens to embitter our national life. No one can deny that the House is beginning to realise the significance of such embitterment.

However, many of the unemployed are already embittered. At the time of the debate on the 5 per cent. abatement on 15 April 1980, there were 1,522,000 unemployed. Today there are 3,070,000 unemployed. What would it cost to relieve that embitterment? It would be £60 million out of the £650 million obtained from the taxation of benefits. If, without being partisan, I contrast that £60 million with the £750 million that is being provided in the Bill to the better off in concessions on capital transfer tax, capital gains tax and the higher levels of income tax, some may compare what we are doing for one section of the population—perhaps for good reasons that I do not wish to examine now—with what is being done for a much more hard-pressed part of the population that we have the honour to represent.

During the past two years the unemployed have lost the earnings-related supplement and the child addition, but the 5 per cent. abatement reduces the income of everyone who receives unemployment benefit. That is why so many believed that the abatement was harsh. If, as the Secretary of State said, the 5 per cent. was in lieu of taxation, those who did not pay tax had no tax advantage to offset against the loss of benefit. For them it was not rough justice; it was clear injustice.

Unfortunately, this is not the only indignity suffered by the unemployed. The taxation of the unemployed is harsher and more cruel than that devised by the Government for any other citizens. It still amazes me to read section 28 of the Finance Act 1981, which becomes operative this week. The House of Commons is rightly concerned about—indeed, solicitous of—the rights of the taxpayer, and, when dealing with the taxation of the unemployed, that section makes one almost rub ones eyes.

We are dealing with the poorest people in our midst. Under the legislation passed last year, the benefit officer notifies the unemployed person of the amount by which he is to be taxed. Section 28(1) states that after receiving notice in writing from the benefit officer the unemployed person, may object to the notification by notice in writing given within sixty days after the date of issue of the notification. If he does not object in that time, the section states that the amount shall not be questioned in any appeal against any assessment in respect of income including that amount. That applies to the poorest people in our society. If they do not or cannot obey the bureaucratic injunction to object to an assessment that is provided for them, the amount of tax is certain. It is irrevocable and has the force of law.

It is no use such a person protesting that an error was made, that he was ill or overwhelmed with difficulties at the time through being unemployed, that he was not experienced at putting pen to paper, that he did not retain all his pay slips, that he did not add them together, that he did not subtract the part of the tax year when he was unemployed, that he did not deduct the personal allowance or the married allowance, that he did not compute the rate of tax on the balance, or that he did not check it with the benefit officer's assessment within the 60 days allowed. If he has not done all those things, it is no use his going to the advice bureau of his Member of Parliament, because he will not be able to do anything to help. The right to appeal has been forgone and there is no chance to raise the matter again. Members of Parliament are powerless to help a constituent in that respect. That legislation was a grievous error, because it removed the rights of our unemployed constituents.

There will, of course, always be errors. Sir Lawrence Airey, the chairman of the Board of Inland Revenue, stated that 10 per cent. of Inland Revenue codings are wrong. That refers to work that is carried out by tax officials—people who are accustomed to operating in this area. The scheme starts this week, but those operating it do not have wide experience of tax matters. They deal with benefits, and have come fresh to these complicated and rather tiresome calculations.

About 6 million people a year, or about 120,000 each week, will be liable to tax on their unemployment benefit. If we take Sir Lawrence Airey's estimate of experienced tax officials making errors of 10 per cent., about 12,000 people will be wrongly assessed each week. If those people do not object, they will be compelled to pay, without the right of redress by their Members of Parliament. That is almost certain to be happening now, in the first week of the introduction of the new scheme. This legislation will embitter the nation.

The Government started their life believing that it was necessary to increase the incentive to work. At that time unemployment was about 1.5 million. It is now more than 3 million. All hon. Members know of constituents who have applied for hundreds of jobs and received only a handful of interviews, with no job at the end. We all know of companies that advertise a vacancy and are so overwhelmed by the response that no normal method of selection is possible. We are proceeding towards the alienation of an important part of the population.

We know the Government's priority. They have stated it again and again. It is to reduce inflation. Although that might mean increased unemployment, they hope that unemployment will eventually decrease. They believe that unemployment is an unfortunate consequence of their policies. If they believe that, these poor unfortunate constituents who are unemployed, not because of their inadequacies, but because of a wider national goal, should be helped. Through no fault of their own, but in response to a higher necessity, their average wage of £150 will drop to a little over £50. Apart from their wounded pride and the injury to the confidence, these people have commitments to meet, such as mortgage repayments. They will suffer a collapse in their standard of living, which for many will never be restored.

I know that the Minister will point to some of the administrative problems. It is a favourite device used by all Governments to intimidate their Back Benchers. We have all seen it used. It was used in the context of the petrol duty.

The great advantage of the House of Commons is that it is sovereign. It is able to correct administrative errors. Hon. Members can do this by going into a Lobby against the wishes of the Government. There were much bigger problems with the petrol duty. How could one reimburse those who had paid tax on petrol? That was a formidable argument, but at the end of the day the House of Commons decided that there were other, more important, matters and a way was found to deal with the problem. Even as the Finance Bill proceedings come to an end, the House, with its sovereignty, can resurrect many of the clauses in a new shape.

We have the famous Rooker-Wise amendment. That fundamental change was accommodated by the Government of the day. The earnings rule is another example of a change. The hon. Member for Islington, South and Finsbury (Mr. Cunningham) was instrumental in obtaining a change in the earnings rule, again to the consternation of the Government. It is right that now and again the Administration should be given a reminder. As the hon. Member for Beeston said, these are House of Commons matters and the House of Commons should decide on them, even if they are awkward—in fact, particularly if they are awkward. A lesson needs to be learnt by Governments who are insufficiently responsive to attitudes that are not hopelessly expensive and can be accommodated within the broad strategy of the Government.

This is one of those instances. The hon. Member for Hornsey (Mr. Rossi), the Minister for Social Security, said that the abatement will be made good … At the right time it will be made good."—[Official Report, 18 March 1982; Vol. 20, c. 536.] The hon. Member for Beeston said that the issue would not go away, and we must therefore ask: when is the right time? The promise has been made and been reaffirmed in the last few months, so when is the right time? Will it be when the Government can claim a great economic success? Will it be when unemployment declines considerably? I believe that the right time is this week, now that the tax has begun and is impinging upon those whom we represent. The House of Commons should decide accordingly.

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Mr. Richard Needham (Chippenham)

I am sorry, for three reasons, that we are having to debate social security benefits again this afternoon. The first is that we are doing so without the support of my hon. Friend the Member for Bath (Mr. Patten) and my right hon. Friend the Member for Chesham and Amersham (Sir. I. Gilmour). We have a powerful team but we are without two of our strikers.

Secondly, I regret even more having to debate the matter in the presence of my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe), as it falls upon him to give the Government's case. He must feel slightly like Uriah the Hittite: David wrote a letter to Joab, and sent it by the hand of Uriah. And he wrote in the letter, saying, Set ye Uriah in the forefront of the hottest battle, and retire ye from him, that he may be smitten, and die. Thirdly, and most of all, I regret that we have to debate the matter again when I genuinely believe that the Government would accept the case that we have already made.

I am beginning to doubt the Government's real reasons, and certainly the original case that they put forward. Whatever the Minister concerned—my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) and my hon. Friend the Member for Hornsey (Mr. Rossi)—may or may mot have said, they did not at any time argue about the principle; they argued, as we have all said, about the restoration and the timing of that restoration. It is very important to me that they accepted the case.

The money comes out of the national insurance fund, which is a hypothecated fund. That means, if it means anything at all—I am beginning to doubt whether it does—that it is a fund separate from the Treasury. The Treasury has been playing along with this belief because it has been reducing the Consolidated Fund supplement. It is clear that people look on the contributions that they pay into the fund as payments that enable them to have a reasonable level of benefit in line with the increased contributions that they have had to make. For many of those people, that benefit is the last fall-back position, as my hon. Friend the Member for Beeston (Mr. Lester) said, between losing one job and finding another. They believe—wrongly, as it appears—that it is not something to be tampered with at the whim of some Treasury mandarin.

If the Treasury is to argue that the national insurance fund is no different from any part of public sector borrowing and no different from any part of public sector finance, why does it have £4 billion sitting in Treasury stocks in the fund? If it is nothing more or less than an extension of Government spending, why does not the Treasury say so? Then at least people will know.

If the Government continue to argue that they cannot pay the 5 per cent. out of the NIF, after they have increased the direct revenue into the Treasury by about £650 million, reduced the Consolidated Fund element, and abolished the earnings-related supplement, let us call off the whole charade.

If the national insurance fund is not an insurance fund of any sort, if payments into it are in no way related to benefit, and if they can be altered at the whim of Treasury Ministers, let us at least be honest with the public and say, "It is a pay-as-you-go scheme, it is just part of the taxation that you and your employers have to pay, and the Government can alter what goes in and out of it as they will". But as long as the Government maintain that it is a national insurance fund, and that contributions to it relate to benefits that come out of it, they must restore the 5 per cent.

If the Treasury is so worried about public sector borrowing or public spending, perhaps it should try to find ways of getting back some of the £1 billion which, apparently, is still outstanding as a result of the Civil Service dispute.

I do not, however, believe any longer that the Treasury's argument holds water or that the Treasury has the argument in its heart. I have a nagging suspicion that the real reason for the Government's obduracy in regard to reinstatement of the abatement is that they believe that wage levels in the United Kingdom have to fall if unemployment is not to rise, and that benefit must fall with them. Sir John Hoskyns in The Times and Professor Minford and others have used the elegant phrase "clearing the labour markets". I was never quite sure whether the Chancellor of the Exchequer agreed with that concept.

Sometimes the Chancellor of the Exchequer—as in the quotation given by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon)—seems to have real concern, compassion and sympathy for the unemployed, but on other occasions his economic views make Bismark look like a wet. If it is the Treasury view that it is necessary to restore competitive labour costs, I suppose it can be argued that the level of benefit should correspondingly decline; at least, increases in benefit should not narrow the gap. In replying to the debate, the Minister may make the point that this year the level of benefits has increased at a higher rate than the level of earnings, but I ask the House to consider what has happened in the past five years and to take a rather longer look at the relationship between benefit and earnings.

In 1978, unemployment benefit rose by 7.1 per cent. and earnings rose by 13.3 per cent. In 1979, unemployment benefit rose by 17.5 per cent. and earnings rose by 19.1 per cent. In 1980, unemployment benefit rose by 11.6 per cent. and earnings rose by 18.9 per cent. In 1981, benefit rose by 9 per cent. and earnings rose by 11.3 per cent. In 1982, unemployment benefit rose by 11.1 per cent. and earnings rose by 9.5 per cent. So only in regard to the last year can it be argued that benefit has begun to creep back and narrow the gap between benefit and earnings.

What evidence is there for the argument expressed in the elegant words that labour markets "clear on price'"? Recently, I asked my hon. Friend the Member for Dorking (Mr. Wickenden) whether he would be prepared to move from Felixstowe to Liverpool if dockers in Liverpool were £20 cheaper than clockers in Felixstowe. He said that he did not think that that would be the incentive for which he was looking. I accept that there may be a price at which labour markets clear. Today in The Guardian there is a report that seamen from the "Canberra" are being laid off, to be replaced by Indian seamen from the Asian continent who are to earn £70 a month in comparison with the £120 a week earned by British seamen.

Are the Government really suggesting that we should try to put people back into work by cutting and continuing to cut the level of wages of those who are currently employed? Should we try to test the theory of the "Why work?" syndrome by reducing benefit? What would be the effect of forcing people at that level to find work? My hon. Friend the Member for Bridlington (Mr. Townend) feels strongly on that issue, but would he, as an employer, take on a married man with three children, at a wage on the margin of the poverty line? Does he believe that that employee will be a hard-working, reasonable and active member of his staff, or will he turn into the most radical militant unionist that he has? I should have thought that to try to reduce unemployment by clearing labour markets is not something that a Conservative Government should consider.

Furthermore, is it not right that it is usually the lowest paid who are sacked first, because it is they who are the ones who have the least skills and who are therefore very often the least important? If there were this demand for labour at a lower price, surely it would be showing itself up somewhere in the vacancy figures. There is no evidence of that. It is interesting to note that, when Japanese companies invest in the United Kingdom, they always make it their first priority to pay more than other local United Kingdom employers.

I do not want to see a low-wage economy. I want a high-wage economy. I do not want to see a country employing millions of coolies who cannot find work except at the margins. It is not right, and it is not something that the Government should even think about.

Once we have disposed of the "Why work?" argument, there is another argument that is put forward, that about people who earn low wages. It is asked whether they will resent having to shell out of their contributions towards unemployment benefit for those who have lost their jobs. My hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) made that point. That ignores the fact that people are entitled to unemployment benefit out of contributions that they have paid earlier. Further, as I have pointed out, the facts of the case do not bear that out.

I do not accept or believe for one moment that the ordinary people of this country who are in work, even in low-paid work, are so mean and small-minded that they are not prepared, even if they had to, to contribute out of their wages something towards those colleagues less fortunate than themselves who find themselves out of jobs.

I wish to quote from a speech made by the then hon. Member for Stockton-on-Tees—Mr. Harold Macmillan—in 1936, when the argument about contributions was being made in exactly the same sort of debate, with exactly the same arguments on both sides as we have today. He said: Against that there is—and on balance in my mind I come down against the Government—"— that has not changed much— the undoubted fact, which was put forward by the right hon. Gentleman who spoke for the Official Opposition, that this contribution has become accepted by the men in employment, and that if you were to take, in any industrial area, a plebiscite of the men in or out of work, you would get a majority of men in work who would be prepared to continue to pay their penny, and to see a shilling, or whatever may be the additional benefit, go to their comrades who are out of work."—[Official Report, 8 April 1936; Vol. 310, c. 2830.] I do not believe that there is an argument that, in this year, the first in which benefit has been increased more than wages for the first time, there is a groundswell of bad feeling among those in work against those people out of work. I do not accept the "Why work?" argument, I do not accept the argument about those on low earnings and I do not accept the third argument that is advanced by my right hon. and hon. Friends—that unemployment benefit levels determine basic wage demand. I do not see the connection. If one examines the relationship that I have described between unemployment benefit and increases in wages, one finds that the figures do not bear that theory out.

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Therefore, there is no basis to the argument that the money is not there. There is no basis to the argument that the low-paid will be resentful and there is no basis to the argument about wage settlements being dependent on unemployment benefit. The central argument is the Government's supposed belief that, if we reduce the level of benefit, people will find their way back into work. That is a belief that rests on the free market and on the concept of labour markets finding their levels.

Another quotation from the then hon. Member for Stockton-on-Tees is relevant. In a debate on unemployment in 1932 he said: There is a great deal to be said for the free market policy, but there is a great deal to be said against it. To my mind, the great objection to it is that you cannot attain it. To have a free market policy means a world free market. Who is going to get that? It means the abolition of tariffs and exchange restrictions; it means moreover—and let us face the fact—the abolition of trade union restrictions, of insurance schemes, of social services. It means the right of private enterprise to compete, by reducing all costs—and after all social service costs are just as important as wage costs—down to the basis of the very lowest competitor. That is the true free market policy. Is there any party in the House prepared to go ahead and seek to win support from the electors on that policy?"—[Official Report, 4 November 1932; Vol. 269, c. 2203.] It may be unfashionable to be a Tory in the Tory Party at the moment, but the welfare of the unemployed and their families is not something that I and many of my hon. Friends are prepared to see diminished. If my hon. Friends on the Front Bench are not prepared to give in to us today on this issue, we shall return to it and we shall return to it again and again because it is the basis of Tory Party philosophy that we help those who cannot help themselves.

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

It is a privilege to follow the speech of the hon. Member for Chippenham (Mr. Needham). I speak as one of the signatories to the amendment, although because of the quirks of Commons procedure it is only the signatures that are added on the day before the debate that appear on the Order Paper. It is not by accident that the SDP signed this amendment last night. I hope that all its members will vote for the amendment because, of the members of that party who signed this amendment, 18 were missing on 18 March when the Government came close to defeat on this issue. I hope, as all except one member of the SDP has signed the amendment, that they will all be here to vote.

The hon. Member for Beeston (Mr. Lester) said that this was a House of Commons matter, and he was right to make that point. Many quotes will fly around the House today and among them there will be some from the Tory Party manifesto. I wish to remind the House, because I agree with the hon. Member for Beeston, of what is said on page 21 of the manifesto about the supremacy of Parliament: We will see that Parliament and no other body stands at the centre of the nation's life and decisions, and we will seek to make it effective in its job of controlling the Executive. There was never a more opportune moment for Parliament to seek to control the Executive than by a vote in favour of amendment No. 57 tonight. That will put reality on those words, with all of which I and any other parliamentarian would agree. There can be no argument across the Floor of the House on that.

We had two separate debates on this subject earlier in the year, which were different in some respects. Some hon. Members used statistical arguments to try to convince the Government, but the Government know that they cannot win on that argument. Hon. Members raised the issue of the morality of Government giving promises, in whatever words they are spelt out at whatever time in the morning, that are not kept. That did not have much effect on the Ministers. I do not feel sorry for them. We are pleased to see the Ministers from the Department of Health and Social Security today. That Department was responsible for the original legislation. The Government were forced to promise in 1980, both to Conservative Members and Opposition Members, that the 5 per cent. reduction in unemployment benefit was an interim measure in lieu of proper taxation. No one can argue that we shall not have proper taxation from this month.

I want to raise three or four salient points that show that the Government are not being as moral as they should be in the way they handle this issue, and to point out how unemployed people have been treated by the Government. That is what this debate is about.

This is the first of the five benefits that were cut by 5 per cent. that has become taxable. None of the others has been caught by the tax system yet. We shall have to wait for each one to become taxable to see whether the Government keep their promise. All the benefits are included—sickness benefit, injury benefit, maternity allowance and invalidity pension. The last benefit is the most unfair because there is no sign of it being taxed, and it is grossly unfair to people who have lost 5 per cent.

I want to raise the point about how the Financial Secretary deals with the matter. He is the Minister—although one would not realise it today—who has answered letters to the Treasury on that issue. He is also answering letters that have been sent by hon. Members to the Secretary of State for Social Services. He has a standard letter in which he points out: It has long been accepted by successive Governments that there is a strong case in principle for taxing unemployment and social security benefits of an income nature. In the first year of the national insurance scheme in 1948 benefits were taxable. It turned out to be administratively impossible to continue the system and it was dropped. The letter continues: We have received a number of inquiries on this subject"— I bet they have— so I have prepared a summary—in question and answer form—of the questions most commonly raised. He suggests that the letter he sent to the constituent, as it gives the Government's view. A two-page question and answer form is attached. It asks for example: Why is the Government making benefits paid to the unemployed taxable? The answer mentions the principle but not the fact that benefits were cut by 5 per cent. in lieu of tax.

I consider that question and answer exercise conducted by the Treasury, which hon. Members who inquire are asked to feed to their constituents for whom they have made representations, as utterly dishonest. There is no mention of the groundwork laid for two years to bring benefit into tax by cutting such benefit in lieu of proper taxation. That is pretty disgraceful conduct. It is as if the Treasury is ashamed of what it is doing, and rightly so in my opinion. The problem with legislation that is rushed through, as was the Social Security (No. 2) Act 1980 by means of a guillotine announced the day after the Budget, is that such matters are not properly debated. The public did not appreciate the content of the Act until they lost earnings-related supplement. Hon. Members still receive letters asking why earnings-related supplement is not paid. We explain that the matter was dealt with in Parliament two years ago.

I turn to the Department of Employment and the June edition of Employment News. It contains a centre page spread on the taxation of benefits. The article says: It is only fair, says the Chancellor that we should tax these benefits. There is no mention that the benefits were cut by 5 per cent. The article continues: It is not a new idea. Sir Geoffrey Howe, Chancellor of the Exchequer, reminded the House of Commons in 1980. There is then the usual twaddle about successive Governments. I do not deny that successive Governments have wanted to bring all forms of income into the taxable net if it can be done. There is no argument about that. But there is no mention of the 5 per cent. cut in the centre page spread of the DoE Employment News. That article is not fair.

Today is 13 July, which is the third anniversary of the Inland Revenue's raid on the offices of Rossminster. During that three years, hardly any action has taken place. Hundreds of millions of pounds could be lost to the Revenue. However, during those three years, the Government have managed to find time to cut unemployment and other benefits by 5 per cent. and to legislate to tax unemployment benefit without restoring the 5 per cent. The Government have found time to take some actions but not others as the anniversaries roll by. Those members of the public who note what has been said and done in the House will realise what the Government's priority is in their treatment of unemployed people. As many hon. Members have mentioned, there has been an increase in the number of unemployed people. Those hon. Members who have done the calculations know that during the first three years that the Government have been in office one person has joined the dole queue every minute. That is what we are debating.

I disagree with the hon. Member for Chippenham, who gave the impression that unemployment benefit was racing ahead of earnings or the rate of inflation. A 5 per cent. cut in unemployment benefit might seem a relatively small amount. Benefits to unemployed people have been cut or abolished. I want to give the House a statistic that reinforces the argument for putting back the 5 per cent. That 5 per cent. is only a small part of the loss that unemployed people have suffered under the Government. There are arguments for putting back the other cuts, but we are not debating them today. A man's average earnings, according to official figures, are £160 a week. My constituents do not believe that figure. Therefore, a man with average earnings, with a wife who is not earning and two children—the average family—becoming unemployed after 22 November this year—the date of the annual increase in social security benefit mentioned in the amendment—will receive £41.05 a week. Flat rate unemployment benefit for the man will be £25 a week, for his wife £15.45 and 60p a week for the children. If none of the changes relating to unemployment benefit—the 5 per cent., the earnings-related supplement, tax refunds and the fiddling of the child dependency—had been made by the Government, the same man earning the same wages would have received £79.50 a week. He would have been paid that the week after he lost his job. He is therefore taking a big drop. His unemployment benefit would have been £26.10—putting back the 5 per cent. for the single person. The wife, instead of receiving £15.45, would receive £16.10.

The increase to the two children under the national insurance scheme, as it was when the Government took office, would have been £4.60. The formula for dependants has been changed. He would have received £18.60 in earnings-related supplement. That has gone. He would have received a tax refund of £14.10 a week, on the assumption that he would have been unemployed from November until the end of the tax year. The House will not want me to go into detail, but I am prepared to publish any of the assumptions. The Library answered my questions.

Let us compare the profile of a two-child family whose wage earner became unemployed after 22 November with what it would have been had none of the changes affecting the unemployed taken place, including the 5 per cent. For the man on average earnings the income will drop to £41.05 from £79.50. That is half. We are asking for only a small part of the massive gap to be closed. We are asking for only a few quid out of the £38.45 difference.

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Supplementary benefits are not included in the figures. If a man has savings or redundancy payments of over £2,500, supplementary benefit does not come into it. Surely we cannot tell a man on £41 a week who does not have that sum to go on supplementary benefit. Do we tell all the unemployed to go straight on to the means test the first day on the dole? That is the consequence of the Government's action.

We are talking about a person on average earnings, whose family will take a catastrophic drop in income, anyway. They will lose half their income, and all we are asking for is to have the 5 per cent. back. It is £2 or £3 a week. The Government will get 10 times as much tax from taxing the benefit as it would cost to put back that few pounds a week. Why in heaven's name can they not do it?

Mr. Kenneth Lewis (Rutland and Stamford)

I have some sympathy with the Minister who is to reply. But there is safety in numbers; various Ministers have previously dealt with various points on this subject. Representing, as he does, the Treasury, he is a mountebank. A few months ago the Treasury found a fortune that it did not know it had—£2 billion. It had made a mistake in the right direction. Consequently, in relation to that we are arguing for petty cash. My hon. Friend the Minister of State is now joined by the Financial Secretary, who I hope will also use his influence. I am sorry that my right hon. and learned Friend the Chancellor of the Exchequer is not here. This is an important debate on a matter that worries the country and the House.

I shall not give financial statistics. My hon. Friends the Members for Beeston (Mr. Lester) and Chippenham (Mr. Needham) dealt with the details. Indeed, we have had them in every debate, including in Committee, and I have read some of the proceedings. My argument is simple. The Government say that they recognise the case for putting back the 5 per cent. They must therefore have considered the finances. We do not have to convince them about that.

The Government may say that they did not give a firm promise. An oil magnate once boasted about his position until it was pointed out that sardines were also in oil, but they were not clever because they left the key on the outside of the tin. The Treasury and the DHSS have done the same. They offered the key, and that has led to the debate. They have said that the Government will do something. There are promises and promises. We know that in Parliament when dealing with Ministers of whatever Government. But the Government cannot gainsay the fact that there was, to say the least, definitely a nod and a wink—"Do not worry. It will be all right. We shall get round to it." They may not have given a firm "Yes" or a date, but they said that in due time they would tell us that the 5 per cent. was being put back.

I shall not vote unless we are given a clear date early next year. Let us have no pussyfooting. We want the change in this tax year. It will not be a full financial year—no more than one quarter—so it will not cost the Government much this year.

In our debate in March the Minister said that the abatement would not be a permanent reduction; it was related to taxation of benefits. I wanted the previous Conservative Government to tax unemployment benefit. There might have been an argument against cutting fully the wage-related unemployment benefit, but most of us went along with it. When the Government introduced the 5 per cent. cut, had we understood that it was an actual cut and not just to make room for taxing unemployment benefit we would not have accepted it. We believed that it was temporary, because that was what we were told. The Government still say that it is temporary, but what is temporary?

Unemployment is here to stay. It will not greatly decrease in the next two years. A large section of the population will not easily find jobs. It is argued that unemployment benefit should not be too high compared with the lower rates of wages, but we are not talking about people with large families on higher benefits. Those most affected will be getting about £38 a week. Many will be on this benefit for a long time. Even if they are doing their best and are prepared to travel, they will not find jobs.

There are extraordinary new definitions about politicians of both parties. For example, there has been an attempt to split the Conservatives into wets and dries. I do not know what those of us in the middle are—perhaps somewhat dripping damp. When the wets speak at a meeting of wets they to try go a little to the right—just to get the balance correct. With the dries, it is the opposite way.

My right hon. Friend the Secretary of State for Employment spoke recently at a Primrose League meeting. He has a reputation for being somewhat dry. At that meeting, in the presence of my hon. Friend the Member for Halesowen and Stourbridge (Mr. Stokes), who has a reputation for being equally dry, my right hon. Friend made a number of wet remarks. That is a great advance. He is beginning to move from the right into the middle. He said that there was no likelihood of getting unemployment down, particularly among young people, to any great extent before the next general election. So he was not making an electioneering speech. He said that he had hopes, once the general election was over. So have I. He then went on to say: But something has to be done in the meantime to ease the problems of this period of transition. One cannot be more moderate than that, and that is exactly where I and many of my right hon. and hon. Friends on the Back Benches stand. We want the Government to recognise that the period of transition should be eased. The Government have already said that they intend to do that. When will that be? If they are not careful, they will find themselves in a difficult position. The general election is approaching. If they deal with the 5 per cent. near that time, people will say "They have done it only to buy votes in the general election." We do not want that to happen. We want the Government to deal with the problem because they recognise the need to do so.

We are told that the Government—we are told this about all Governments—might lose face if they were to concede tonight. We are told that if the Minister announces at the Dispatch Box that he is prepared to grant the concession that I and my hon. Friends would like, the Government will lose credibility. I have been in this House a long time—some might say too long—and I have seen many Governments. I have known occasions—they occur in almost every Parliament—when Governments or Ministers—sometimes even Prime Ministers—have to concede to the will of the House of Commons. That is good for democracy, it is good for them, and, on the occasions when I have seen it happen, it has almost always proved to be right. We should avoid having a dictatorship for the term of a Parliament, with the Whips arranging everything and the Government making no concessions.

This may be a minor matter, but it is important for the country, and it is particularly important for the low-paid unemployed. Therefore, I ask the Government to accept the will of the House of Commons. It will do the Government a power of good, it will do democracy a power of good, and it will avoid much embarrassment later for the Government.

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Mr. John Golding (Newcastle-under-Lyme)

The hon. Member for Beeston (Mr. Lester) took over my job at the Department of Employment after the election. I thought then, and I still do, that it was a change for the worse. However, every cloud has its silver lining, and the silver lining here was that at least one Conservative Member of Parliament went around the country to see the tragedy of unemployment.

When I was at the Department of Employment I, too, travelled the country, talking to the unemployed, visiting unemployment benefit offices and looking at the queues. However, the characteristics of the queues were different before May 1979, and the differences are important to this debate.

First, the people in the queue today have less money in their pockets in redundancy payments from their firms. Before 1979, workers had a great desire to draw redundancy benefits because they thought that it would be easy to get jobs after they had been paid off. Employers were often only too willing to pay substantial sums. Those substantial sums are less today, so the unemployed in the queue have less in their pockets.

Secondly, those in the queue would, on average, have been there for fewer weeks, months or years than is the case now. As the period of unemployment gets longer, so people's poverty gets deeper. I would not campaign or give up one weekend's fishing to try to get rid of unemployment for, say, two weeks in a year. Short-term unemployment is no great traumatic experience. Long-term unemployment is very different. Part of the trauma of long-term unemployment is the growing burden of poverty that the unemployed have to carry. So the fact that, before 1979, the number of weeks, months or years was that much shorter is important.

The money in the pockets of the unemployed would have been substantially more, partly because of the presence of wage-related benefits. Those benefits were introduced to make it possible for craftsmen, in particular, to retain their pride and sense of status during periods of unemployment. I well remember the argument at the Labour Party conference over the abandonment of the principle of equality in benefits—a principle to which the Labour Party had been wedded. Wage-related benefits were introduced because it was realised that craftsmen, particularly in the Midlands, wanted a social security scheme which gave them unemployment benefits very much nearer to their incomes than could be provided by a flat-rate benefit. Before 1979 the people on the dole queue had wage-related benefits in their pockets. Today, they do not.

I could have referred to the fact that before 1979 more would have qualified for supplementary benefit and that benefits were not taxed, but my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) eloquently spelt out the gap between what was paid to the unemployed under a Labour Government and what is being paid today.

I do not pretend that those in the group to whom the 5 per cent. cut is being applied are the worst hit. The people for whom I feel most sorry are those who have exhausted unemployment benefit. There are over 1 million people who have been unemployed for over a year and who are not entitled to any unemployment benefit. If their wives work, they are not entitled to any benefit at all. They have no income and are dependent upon their wives.

I turn to those who are drawing benefits—£22.50 now, £25 in November. Another difference between now and 1979 is that in areas like mine working people's savings are falling. Before people become unemployed, their overtime may have been cut. That may not be a bad thing, but what is bad as the probability that they were on prolonged short-time working before they were declared redundant. How do such people finance long-term short-time working from their savings? The average savings of working people are slight. They cannot withstand a year on short-time working.

I visited a friend in Newcastle-under-Lyme in the middle of a period of his short-time working and looked at his pay slip. He is a skilled engineer, yet he was earning about £40 a week. That is what he was paid for going to work. I found what I knew anyway, which is that the only way that such families can survive is to draw on their savings.

With the growing incidence of short-time working, that has been the general situation in North Staffordshire since the general election. It was partly cushioned by the part-time working compensation scheme, which the Government have now cut. Earnings have collapsed and savings have diminished. When unemployment comes there are just not sufficient savings to fall back on.

Hon. Members should put themselves in the position of an unemployed man with a family, whose savings have gone. They will receive £40.45. I do not like being too personal in the House, but I must ask Conservative Members to consider the situation of a man with his savings gone being told, as a result of something for which he is not responsible, that his income will be £40.45—a quarter of the national average earnings.

That must be an appalling prospect to any Conservative Member and, to be fair, to any Labour Member too. For working people with pride who want to work, have worked and who get their status from work, it is a devastating experience, which we cannot tolerate. It is distressing that people should have to come to my advice bureaux with gas and electricity bills which they cannot pay. They ask how they can afford a suit to go for an interview for a new job. One sits there ashamed of society, because they cannot be given a decent answer.

It is against that background that we are talking about the Government taking away £1.5 from the single person and £1.70 from a married couple.

I put in a special plea for the young. I am not talking about the 16 to 17-year-olds for whom the Government are doing their level best in the new training scheme. However, let us consider the youngster who was unemployed when I was in the Department of Employment. Perhaps all that he has had since then is six months on a YOP scheme, which we were proud to introduce and which I shall continue to defend. That youngster now will be 20 or 21 years of age. He will never have earned any money. If he had worked and qualified—which he has not—the most that he would get—which he does not, because he is not entitled to it—is £25 a week unemployment benefit.

How are such youngsters to have any start in life at all? At least adults often have their own houses and furniture. How will such young people be able to get married? The situation arises of a youngster who has never worked, cannot get work, and who, at the age of 20, having fallen in love with a girl who is earning £30 to £40 a week, is not eligible for any benefit at all. He has nothing whatever with which to marry and contribute to a family. That is disgraceful.

Sir William Clark (Croydon, South)

He should not get married.

Mr. Rooker

The vice chairman of the Tory Party says that such a person should not get married.

Sir William Clark

The hon. Gentleman should get his facts right. I am not the vice chairman of the Conservative Party.

Mr. Golding

If the hon. Gentleman did say that such youngsters should not get married, what has happened to Toryism? What has happened to our one nation? Is it to be a condition of getting married that one must have the good fortune to have a wealthy parent and to live in an area where work is available?

The hon. Member for Beeston can bear me out when I say that there are estates in Liverpool and areas throughout the country where decent youngsters who desperately want work cannot get it because there is no work to do. If the Tories say that in those circumstances our youngsters should not get married, I must say that that is an abhorrent—

Sir William Clark

I should like to—

Mr. Jack Straw (Blackburn)

Did the hon. Gentleman say that they should not get married?

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Sir William Clark

I did not get married until I could afford to do so and it is legitimate for me to say that if a person is taking on the responsibility of marriage he should be able to afford to get married before thinking that the State should enable him to marry.

Mr. Golding

The burden of my remarks was not that people should get married before they can afford to do so.

But rules should not make it impossible for thousands of young people to be able to afford to get married. The least that we must do is to change the rules so that the long-term unemployed are entitled to a benefit as of right.

Mr. Robert C. Brown (Newcastle upon Tyne, West)

My hon. Friend should not be surprised at anything that the hon. Member for Croydon, South (Sir W. Clark) says, because if the hon. Gentleman had had his way we would not be having the debate. He objected to the selection of the amendment and tried to prevent the debate from taking place.

Mr. Golding

One of the reasons why I entered politics was that I believed that working people in the 1930s were not given a square deal and were not allowed to maintain their pride or to live in dignity. I have always been conscious of the need to have the highest possible benefits, as of right, for those who, through no fault of their own, have no income.

The first case that I fought was that of my mother against what is now the Supplementary Benefits Commission. We should not tolerate a society in which people who want to work, but do not have the opportunity to do so, have to go to the SBC or any other commission to ask for handouts. They should receive the benefits for which they have paid.

Working people have paid for the 5 per cent. and they believe that they are being cheated out of it. If the Government persist in their actions there will be tremendous resentment among those who cannot speak for themselves in the House.

Mr. Bob Dunn (Dartford)

This has been a debate of great sincerity, with telling speeches having been made by my hon. Friends the Members for Beeston (Mr. Lester), Chippenham (Mr. Needham) and Rutland and Stamford (Mr. Lewis) and by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon).

I am the rose among the thorns because I shall vote for the Government. The debate has centred on a vexed question and my hon. Friend the Member for Beeston argued with great competence and sincerity that the 5 per cent. abatement should be withdrawn. We have become used in the House to the vision of hon. Members petitioning in their own way for changes to take place or not to take place. On this occasion hon. Members are petitioning for a restoration of what was changed.

The issue raises more points than it answers in the short term. My hon. Friend the Member for Beeston referred indirectly and briefly to the "Why work?" syndrome and my hon. Friend the Member for Chippenham outlined his views on that problem. The syndrome is a manifestation to which our attention hs been drawn on many occasions by my hon. Friend the Member for Norfolk, North (Mr. Howell) and it needs to be examined.

It can be argued that the restoration of the 5 per cent. abatement will contribute to reinforcing the problem facing the man who is financially better off by being unemployed. Let me outline the problem facing one of my constituents who works in a London retail shop, receives low pay and faces an annual bill of about £500 for British Rail travel—money which must be found from net income. How can he be expected to behave when faced with the choice of staying at home and being financially better off or working in London and being worse off?

We have heard nothing from any hon. Member about how the "Why work?" syndrome and the problems associated with it can be solved. The restoration of the 5 per cent. abatement will indeed close a book, as suggested by my hon. Friend the Member for Beeston, but it will not provide a solution to the problems associated with the "Why work?" syndrome.

Mr. Straw

Is that it? Is that the defence of the Government?

Mr. Clement Freud (Isle of Ely)

The debate has been interesting, in that we have had nine speeches from the heart supporting an amendment which it is indefensible to oppose. We have now heard a speech read with a very small amount of verve by the hon. Member for Dartford (Mr. Dunn), and they are the only words that we have heard in support of the Government.

What the hon. Member for Beeston (Mr. Lester) said was right and what those who support his amendment have said was equally right. One juggles with the advisability of saying it again, saying it more loudly or saying it with a regional accent. The fact is that this is a proper amendment and the House is absolutely right to say that in this instance the Government are wrong and they must listen to the majority.

Dante, who was before my time, said: The hottest place in Hell is reserved for those who remain silent on a moral issue. I put it to Conservative Members that remaining silent on a moral issue does not simply mean abstaining. The place in Hell is also earmarked for those who follow the weasel words of the Whips, shuffling through the Lobby without thinking what they are doing.

Liberal Members and our colleagues in the SDP support a tax credit scheme and therefore do not object to the principle of bringing benefits into taxation. However, we do object to midnight raids on the poorly stocked benefits larder and the surreptitious clawing back of small amounts, in the hope that no one will notice.

It is easy for us to oppose, because we are in the business of opposition. It is what the Opposition are here for, just as it was when those sitting on the Conservative Benches were on this side. We are paid to say no to whatever the Government propose.

I wish to pay tribute from the Opposition Benches to those on the Government side who manifest the courage of their convictions, to those who have the decency to say that the needs of their constitutionts are more important than the political ambitions of those of their colleagues who sit on the Front Bench. We shall watch those who vote for what is a proper amendment and we shall see who abstains. We shall salute all those who do what we would consider to be the honourable thing.

Mr. Patrick Cormack (Staffordshire, South-West)

When the hon. Member for Birmingham, Perry Barr (Mr. Rooker) was speaking, I could not help but think, "Lawson! thou shouldst be living at this hour." I thought that because the Rooker-Wise amendment, which is so frequently quoted, would never have got on to the statute book had it not been for that happy marriage of sensitivity and expediency. My right hon. Friend the Member for Blaby (Mr. Lawson), the Secretary of State for Energy, was the sensitive one. If only he could be here now I am sure that the amendment would be passed tonight.

What saddens me is that the debate is being held at all. I congratulate my hon. Friend the Member for Beeston (Mr. Lester) on what I considered to be a cogent and moving speech. I thought that my hon. Friends the Members for Chippenham (Mr. Needham) and for Rutland and Stamford (Mr. Lewis) made admirable contributions. It is distressing that the Government have placed some of their most loyal supporters in the position of having to table the amendment.

In a debate on 18 March some of us felt obliged to go into the Lobby against our own side. We did not want to do that but we thought it was necessary to demonstrate resolve. We received a reply from my hon. Friend the Minister for Social Security which indicated that, yes, the Government had seen our point and that, yes, the time would come. I fondly expected that the time would come about now.

When we had that debate in April we were in the middle of a grave crisis and a number of us deliberately and consciously did not vote against the Government because we felt that it was wrong to do so at that time. We also felt that we had better give a few more weeks for the implicit pledge of my hon. Friend the Member for Hornsey (Mr. Rossi) to come to pass. It grieves me enormously that we need to have this debate today, and that my hon. Friend the Member for Chippenham and I and many others have felt obliged to table the amendment.

We are asking for very little for all too many people. They are the victims of the recession and the casualties of the quest for efficiency. The Government knew, when they pursued certain policies, that there would be casualties. Most of the people who are out of work are out of work through absolutely no fault of their own. There was a time, when I first came to the House 12 years ago, when a Member could say that a significant proportion of the unemployed were unemployed because they wanted to be so. At that time, there was more than a grain of truth in that. There is very little truth in it today.

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In my constituency in the West Midlands, which has been so devastated and which is the heartland of our industrial greatness and must be the cradle of any resurgence from the recession, thousands upon thousands of good working men and women are without hope and must be given hope. The two categories that particularly distress me are those in their early 50s who feel that they will never find another job, and those young people coming out of school many of whom, if they do not have the opportunity to work within two or three years, will adopt the attitude "Is it worth it? Is there any chance?" Some of them will not want to work. That would be a destructive and cancerous feeling in our society, if it were to develop.

What help have we given those people, our constituents, who are out of work through no fault of their own? I pay tribute to the new training initiative for the young. I wonder sometimes "Training for what?" We must give a great deal more thought to that, but I pay tribute to what has been done.

But when we come to the other categories, is the ceiling of £2,500, which was bumped up by £500 in the Budget, really the encouragement that one expects from a party that has always believed in encouraging saving and thrift, virtues of which my right hon. Friend the Prime Minister has so proudly boasted in the past, from which she has benefited and which she sought to inculcate in other people? Is it much help when we say "£2,500 and we cut you off"? What about the abatement?

When it was said that unemployment benefit would be taxed—I, like my hon. Friend the Member for Rutland and Stamford, agree with the taxing of benefits; I do not believe that it is wrong—there was an implicit undertaking in a number of speeches that we would deal with the 5 per cent. We have a moral commitment to do so. It is tragic that we must plead with the Government to change their mind. As Members of Parliament, we know, perhaps more than any other group, what it is to be insecure in a job. There are Members on the Government Front Bench who had to travel from constituency to constituency seeking to get themselves adopted as candidates, wondering whether they would find jobs. They should have a fellow feeling and sympathy with those in the dole queues. I believe that they have, I trust that they have and I only wish that they would translate that sympathy into action by accepting the amendment.

To me, the Tory Party means many things but it means at home a real concern for the disadvantaged. It means a real determination to do for others as one would be done by and to ensure that people who through no fault of their own are in real trouble are helped. We are not suggesting that largesse be heaped from the Treasury and that the fires of inflation be stoked. All we suggest in the amendment is that some modest restitution should be made; it is restitution that we are discussing. The hard Gradgrind image is not the image of the Tory Party as I know it and believe in it.

Mr. Gradgrind talked about facts. The facts that face Britain in 1982 are that 3 million people are unemployed, that 1 million have been unemployed for a year or more and that we in the House of Commons today have the opportunity for a small cost in comparison with the sums that have rightly been spent recently on grave national endeavours to restore what we promised would be restored. I believe that it was a promise, I believe that it was a pledge and I believe that it is a pledge that should be honoured.

I hope that we will have a sympathetic and sensitive reply from my hon. Friend the Minister of State. It is no criticism of him to say that the Chancellor of the Exchequer should have been here to listen to the arguments and to answer the debate. This is a significant issue. It is the third time that the House of Commons has debated it and the Chancellor should have been here to answer. I regret that he is not. The reason, I hope, is that he has given my hon. Friend a message. I hope the message reads: "We accept the logic of your arguments. We accept the equity of your cause. We shall accept what you say."

The debate could be shortened if my hon. Friend was now to go to the Dispatch Box and say just that. That is all we want—no more and no less. If we get it, we shall all rejoice and remain totally united. If we do not get it, some of us will be moved, as my hon. Friend the Member for Croydon, South (Sir W. Clark) was moved time after time on the Northern Ireland Bill, to vote against our party.

I shall take lectures from no one on loyalty. What I am doing tonight is certainly no worse than voting against the guillotine on the Northern Ireland Bill. My right hon. and hon. Friends know in their hearts that, if there was a free vote on this issue, there would be no question of the result. I urge them for once to put this matter first, to say that they will vote for the amendment supported by their hon. Friends, to restore some traditional Toryism to the Conservative Party in the Lobby and to ensure that those who are least able to look after themselves are looked after by us in the House.

Mr. David Ennals (Norwich, North)

The hon. Member for Staffordshire, South-West (Mr. Cormack) is my pair. I want to make it clear that we are not paired tonight. It is with some pleasure that I shall accompany the hon. Gentleman through the same Division Lobby. This is probably the most important debate in our discussion of new clauses and amendments to the Finance Bill. I agree profoundly with the hon. Gentleman that the Chancellor of the Exchequer should have been present.

I intend to concentrate on the narrow issue before the House. There has been only one contribution lasting 1½ minutes, if I do not exaggerate, in support of the Government's position. The hon. Member for Dartford (Mr. Dunn), having delivered that oration, has left the Chamber.

We are discussing a moral issue and not a party political issue. I hope not to embarrass the hon. Member for Beeston (Mr. Lester) by congratulating him. There are times when it is good for a Government, from whichever party it happens to be formed, to be defeated. I congratulate my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) on the Rooker-Wise amendment. There is no doubt that, although gracefully accepted by the Front Bench, it was a defeat for the Labour Government. That was right. Parliament is at its best when the views and feelings of hon. Members can cross the party boundary and morality can come through.

At the time when this proposal was introduced in 1980, no one in the House, let alone those involved in the legislation, believed that it was other than a temporary expedient. As explained by the then Secretary of State, the right hon. Member for Wanstead and Woodford (Mr. Jenkin), it was a temporary expedient until taxation could be introduced for what are called short-term benefits. In fact, for many of the unemployed, it is long term and getting longer. Many Conservative Members, I believe, only supported what was then proposed in the confident belief that at some stage, when the Government could introduce a system of taxing short-term benefits, the blunt instrument would be withdrawn. I believe that the Ministers who said this at the time intended that it should happen.

It is therefore a matter of great dishonour that the Government, having found the means to introduce legislation to tax unemployment benefit, should decide not to remove the abatement. One wonders why they have acted in such a manner. Do they believe, genuinely and honestly, that there are 3 million people who do not want to work? No hon. Member can believe that. The vast majority of unemployed people are unemployed through no fault of their own. It is not their fault that they are unemployed. They want desperately to work. Why in heaven's name should we decide to penalise them?

I am not arguing against taxation of short-term benefits. I am arguing only that the Government should do the honourable thing and fulfil what Ministers at the time had every intention of doing. They should remove the abatement and restore the 5 per cent. One cannot believe that the Government have set morality totally aside. It has been proved that the living standards of working people are going down. One of the first questions to which the recently arrived Member for Beaconsfield (Mr. Smith) received an answer revealed that between 1979–80 and 1981–82 there was a 6.2 per cent. decline in the real value of net income for those on half average earnings compared with a real increase of 8.1 per cent. during the last three years of the previous Labour Government. It is known that living standards are going down.

Are the Government arguing that, because the living standards of working people are going down, the living standards of the unemployed must be pushed down still further? I cannot believe that the Government would be so heartless. My hon. Friend the Member for Perry Barr made a brilliant case with the figures that he produced. Ministers are aware of the figures. This information does not come as a spark from Heaven. I cannot understand what argument the Government can sustain unless it is that they simply do not understand the humiliation of being unemployed. On top of that, the unemployed are brought into taxation but still receive a reduced level of benefit. This has resulted in great poverty.

The arguments of Conservative Back Benchers are much more important to the Government than those made by Opposition Members. The Government would expect these arguments from us, yet they have also been put with great force by all but one of the Conservative Members who have spoken. The moment arrives when one says that morality has to come before party commitment, before Whips and before total loyalty. I believe that loyalty to a moral belief will do great honour and credit to those who express it positively tonight. If the Government are defeated, as the previous Labour Government were defeated from time to time when it was right that that should happen, it will be an achievement for democracy of which all hon. Members can be proud.

6 pm

Mr. David. Crouch (Canterbury)

I, too, am sorry that the Chancellor of the Exchequer is not here and has not been here at all during this serious debate. It must be said over and over again that we are debating one of the most serious aspects of this long Finance Bill at the end of the Session. For a brief moment the Chief Secretary appeared. We were grateful for that. Of course, we are grateful for the appearance at times of Ministers from the Department of Health and Social Security. I am glad to see my hon. Friend the Minister of State, Treasury on the Front Bench.

This is a serious occasion when the House of Commons is trying to make a point to the Executive. Hon. Members are trying to make the Executive understand that we are concerned about the state of the people and the state of taxation of the people. When Parliament is concerned about taxation, Parliament is dong its primary job. When Parliament is concerned about disadvantaged people, Parliament is doing the most serious job of all.

I know that the Chancellor of the Exchequer is a busy man at present. It is possible that he is considering and consulting about an adjustment to the Finance Bill as a result of the serious concern voiced on Government Benches about what is proposed in the Bill. I am sorry that he was not present to hear the serious speeches that have been made on both sides of the House by members of all parties, who expressed, not over-emotionally but seriously, with fact and figure, their argument that at this time there is not just a recession but a serious depression for families, for wives at home whose husbands are unemployed and for children who see that their parents are unemployed and wonder whether they will get a job when they leave school at 16 or over. We live in a grave age.

Serious speeches have been made this afternoon. Parliament has been at its best—not in Committee, but on the Floor of the House. This is when the great moments occur when Governments are sometimes stopped in their tracks and think again.

The hon. Member for Birmingham, Perry Barr (Mr. Rooker) has broken through your barrier about names being mentioned, Mr. Speaker, in giving his name and the name of a former hon. Member to the Rooker-Wise amendment, which amended another Finance Bill, to which the right hon. Member for Norwich, North (Mr. Ennals) referred. I still hope that after tonight two other names will break the barrier—those of Lester and Needham—in the Lester-Needham amendment. It is in the name of the people and of the Tory Party that we need to pass the amendment tonight. I am speaking not against the Government but for the heart of the Tory Party.

Let me remind the House of the Government's approach. Of course they are not unthinking. They are faced with giant problems, as is the House. The Government, faced with those problems, have to make decisions. Perhaps as they face the Finance Bill they face the eternal question of how to make savings, cut expenditure and get rid of some of the anomalies.

The Government might ask: "Is it not right to reduce unemployment benefit now that the rate of inflation has been reduced so considerably and is still going down? Is it not right to ensure that unemployment benefit does not go up when wage settlements are coming down? Is it not right to do all that we can to ensure that the rate of unemployment benefit is not so high that it is an attraction for people not to work?" The Chancellor of the Exchequer and the Cabinet might ask: "Is it not right for the Government to strive all the time to keep down public expenditure?" There must be a limit to the amount that we as a nation can afford to allocate towards social provision.

The answer to all those questions should be "Yes, in certain circumstances," from any responsible Government, whether Conservative, Labour or of any colour, because that would be responsible. I said "in certain circumstances". However, the circumstances are not right at the moment. We still have inflation. The rate is coming down, but inflation is still between 9 per cent. and 10 per cent.

Wage settlements are lower but wages are still going up. It is still better to have a job than not to have one. Some would dispute that. Perhaps we shall hear more about that when we ask the electors what they think in a year or so. We know what one advisory body to the Government said about a wage for work and a wage for being unemployed. The Social Security Advisory Committee has observed that very few people are actually worse off in work than out of work; those who are tend to be in very poorly-paid occupations and have large families. That is an anomaly. Those of us who advance the case for generous treatment of the unemployed must accept that. Therefore, some people might find it better to stay out of work. We all acknowledge that.

Perhaps 3 or 5 per cent. of the unemployed believe that it is better to stay out of work, Will we accept that as the norm, tell that to the electors and ask them to vote for us on it? Will we say in our manifesto that that is the norm? Of course we shall not. No Tory, Labour, Social Democratic or Liberal candidate would say that to the electors. The Chancellor of the Exchequer is not saying that now. He is saying merely that we should move in that direction.

I say again that the Chancellor of the Exchequer is right to strive continually to cut Government expenditure, remove anomalies and cut out waste. In November 1980 the Government decided, as an interim measure in lieu of taxation, to cut adult unemployment benefit. That was decided not just by the Government. Measures must be blessed and voted on by the House, which was done. Why did we do that? Because it was an interim measure. The House went along with that as an interim measure. There is no gainsaying that that was the meaning of what we understood to be a temporary measure. The whole House agreed that it was just that taxation should apply to those benefits. However, it could not be applied two years ago. Therefore, there was to be a temporary reduction of 5 per cent. in lieu of taxation.

The ultimate intention was to treat unemployment benefit like wage earnings and to make it subject to tax. The House agreed to that. The Conservative Party agreed with the then Secretary of State for Social Services, my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin). We were guided by his observations and the assurance that as the employment benefit comes into tax so the rationale for the 5 per cent. abatement ends."—[Official Report, Standing Committee B, 30 April 1980; c. 526.] We are not foolish in the House. What does that mean? My right hon. Friend is an honourable man. We believed what he said. Fair enough. That was helpful, sensible and responsible. The House of Commons acted in the same conditions of being helpful, sensible and responsible. We were considering an interim measure in lieu of taxation.

Now there is the proposal to tax unemployment benefit. We are not jibbing at that. We accept it. I accept it. I also accept that it will mean lower benefit to unemployed people, who are trying to keep their finances together, hold their families together, face the world, find a future and find a job. We also know that the decision now will mean that there will be a cut in the benefit unless hon. Members stand up for people irrespective of what party hats they wear. The House of Commons should stand up for people wherever they are—the 3 million disadvantaged people—and say that it does not believe that the Government have got it quite right. Some of us still maintain that, although the Government are not entirely wrong, they are not quite right. We are standing for the people tonight. We must ensure that they are not put at a serious disadvantage.

We were promised that the 5 per cent. cut was in lieu of taxation and would be reinstated eventually. Indeed, whether it was an understanding in the heart and mind of every Member of Parliament, it was on that understanding that we voted for the 5 per cent. reduction of unemployment benefit.

It may now be Government policy not to reinstate the 5 per cent. but it is not Tory philosophy. That policy goes against the very heart of Conservative principles. I am not speaking against anything. I speak for the principles of Toryism. Our principles do not allow the disadvantaged to suffer the effects of economic realism and recession. We have always talked of a safety net to protect the disadvantaged from the workings of the economics system.

I do not know who invented the phrase "safety net". I have used it often when talking to my constituents. Perhaps it was my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph). [HON. MEMBERS: "It was Churchill."] Then it has even greater authority. As a good Tory I do not rely on edicts from the Central Office in Smith Square to tell me what Tory philosophy is or is not. I knew it when I joined the party. I know it whenever I address an audience or when I speak in the House. I know in my heart and mind what Tory philosophy and principles are. I shall not forget them tonight. My right hon. and hon. Friends should not forget them either. We must not forget the safety net.

I have loyally supported the Government's economic policies for the past three years. I am aware of their advantages. Inflation has been reduced, greater productiv-ity has been encouraged, industry has been streamlined and over-manning has been reduced. We all know what that entails. Some people suffer. Some people are made unemployed, even if only temporarily. We all realise that disadvantages can occur. I believe in economic realism, but the party also stands for compassion. We must remember that tonight. Economic realism is important but compassion is essential.

I was guided into the Tory Party by Rab Butler, Harold Macmillan and the reading of Disraeli's anxiety about the underprivileged nation in British society. For more than 100 years the party has tried to solve the problem of the two nations. The Conservative Party has a duty to remember its traditions. I shall vote for them tonight. I shall vote not against the Government but for my interpretation of Tory philosophy.

6.15 pm

Mr. John Horam (Gateshead, West)

I never thought that I would wholly agree with a speech from a Tory, but the hon. Member for Canterbury (Mr. Crouch) made such a one. I congratulate him on injecting instinctive philosophy into an otherwise rather emotional occasion.

The debate has been one-sided. I calculate that there have been 2½ hours of speeches in favour of the amendment and a speech of only 1½ minutes, if the right hon. Member for Norwich, North (Mr. Ennals) is right—

Mr. Ennals

I exaggerated—four minutes.

Mr. Horam

—in support of the Government's case.

The hon. Member for Dartford (Mr. Dunn) rested his case solely on the "Why work?" syndrome. It is odd if that argument is being used to muster Conservative support for the Government. Conservative Members who have been here for some time must educate the hon. Member for Dartford on what is at issue. It is not the "Why work?" syndrome. That is a problem, but it is overwhelmed by the present scale of unemployment.

The real problem that we must face is the gap in the living standards between those who are lucky enough to have work and those who are unlucky enough to be out of work. Moreover, acceptance of the amendment would make no difference to the "Why work?" syndrome. A sum of £1.75 a week for a married couple will not make a profound difference to whether people are prepared to go to work.

Cutting unemployment benefit is no answer to the "Why work?" syndrome. Indeed, if it were, the logical progression of the Government's course would be an additional cut in unemployment benefit. The Government have never argued in that way, nor have they ever justified the 5 per cent. cut in those terms. They have justified it as an interim measure in lieu of the taxation of benefits. As the hon. Member for Canterbury said, it is a matter of believing or not believing what the Government said to their supporters when they introduced the measure. The hon. Member for Canterbury used one of the sacred texts of the Minister, who said that as the unemployment benefit comes into tax so the rationale for the 5 per cent. abatement ends."—[Official Report, Standing Committee B, 30 April 1980; c. 526.] There can be only one interpretation of such a precise statement. It is now a question of honour. Do the Government believe that they can resile from so clearly stated a position when the measure was introduced?

The Bow Group put the matter even more brutally than the hon. Member for Canterbury. It said that: the Government should restore the 5 per cent. abatement on the grounds that … the Conservative Party should not be seen to cheat.

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

Will the hon. Gentleman clarify some confusion in many of my hon. Friend's minds? If he and his colleagues in the Social Democratic Party had attended the debate in March, today's debate would not have been necessary, because we would have defeated the Government then. Where were the hon. Gentleman and his right hon. and hon. Friends on that occasion?

Mr. Horam

The hon. Member for Workington (Mr. Campbell-Savours) should make clear why more Labour Members were not present.

Mr. Campbell-Savours

We were all here.

Mr. Horam

It does little good to rake over the past. Will there be sufficient hon. Members present to defeat the Government tonight? That is the more pertinent point.

First, therefore, is there a question of honour for the Government? Certainly there is a question of good faith. That is one reason why the amendment must be accepted.

Secondly, the amendment must be passed because the unemployed need the money. That is the most important consideration. The unemployed face the cumulative effect of the withdrawal of £1.10 for a single person and £1.75 for a married couple from the real value of unemployment benefit, the withdrawal of a further £1.90 through the recalculation of the child addition, and the abolition of the earnings-related supplement, which may mean a cut in average weekly pay of no less than £11.20. We are dealing with people who have to survive on about £50 per week—a situation difficult for most Members of Parliament to envisage, as we have rarely had to face it.

The Government have made the position even worse than they intended. By extending the 5 per cent. cut to all the unemployed, they have affected those whose income was so low that they would not have been taxed. Therefore, it is not just the links with the taxation of benefit. People whose earnings were so low that they would otherwise have escaped tax have also been harmed and have suffered as a result. Moreover, they are not people who are in and out of unemployment perhaps twice in a year. This is the core of the problem. They are the long-term unemployed, so we are dealing with real hardship and real poverty. The amendment would at least be a gesture to people facing that situation.

Thirdly, the Government can afford the amendment. The facts are perfectly clear and are not disputed by the Treasury. The taxation of benefits would raise approximately £650 million in a full year and the amendment would cost about £60 million in a full year. Moreover, as Tory Back Benchers have made clear, we are not even talking about a full year, because we are already well into the financial year.

There is no doubt that the moral, social and financial arguments all point in the same direction. I salute the very small band of Tories who, for that reason, have consistently proposed and supported amendments of this kind. No doubt other Conservatice Members are wrestling with their consciences on this issue. I hope that they will give themselves the chance, well away from the Whips, the party machine and the rest, to consider this calmly and with real perspective. If they did that and voted for the amendment, they would not only do something genuinely good and helpful, small though it may be, but they would help in a small way to restore the good name of their party.

Mr. Charles Morrison (Devizes)

I return the compliment of the hon. Member for Gateshead, West (Mr. Horam). There was little in his speech with which I disagreed. Unemployment is high and likely to become higher in the short term. The situation is extremely serious. In the interests of national cohesion—or, as we would put it, of one nation—it is essential to give the unemployed confidence that the Government and the House at least understand their plight, limited by circumstance though our ability to cope with it may be. I cannot see how a 5 per cent. cut in unemployment benefit can help in that.

I supported the temporary abatement of unemployment benefit as an interim measure until benefits could be brought into tax. That has now been done, so my support for the abatement is at an end. Until now, the Government's justification was, very reasonably, for a temporary abatement. If the amendment is not accepted, they will have to justify a permanent cut in unemployment benefit. Once the period in which the abatement could be justified as temporary has ended, as it has with the application of tax, in the minds of most people the abatement becomes permanent.

So far as I can discover, unemployment benefit has been cut on only three previous occasions—in 1921, 19:28 and 1931. It would be a pity if we now added the year 1982, breaking a record of 50 years. Admittedly, we now have indexation, but the situation is entirely different because, despite the improvement, prices are still rising too sharply, whereas in 1931 they were falling.

My right hon. Friend the former Secretary of State for Social Services gave no absolute commitment to reinstate the abatement. I realise that in taking that view I disagree with some of my hon. Friends. It seemed to me, however, that my right hon. Friend carefully qualified his remarks. Nevertheless, his words were taken by many, if not most, people as an absolute commitment. Had they not been taken in that way, I very much doubt whether the Tory Party would have agreed to the abatement.

Most, if not all, Tory Members who support the amendment consider ourselves traditional Tories. As my hon. Friend the Member for Chippenham (Mr. Needham) said, whether we are in or out of fashion is neither here nor there. Some of us, too, have Tory origins and connections which go back a long way—to the time when some of our forebears left a Liberal Party which was pursuing a policy of laissez-faire, or what would now be called a free market policy, to the point of harshness and hardship. Our forebears joined a Tory Party based on a philosophy of compassion and one nation.

To me, therefore, not least because it is contrary to the traditions of the Tory Party, cuts in unemployment benefit are utterly repugnant. There are, of course, occasions in politics when some overriding need or consideration causes us to act in a way which in any other circumstances would be repugnant, but that need or consideration must be overriding. In the case before us today, I cannot see that it is.

The Government cannot argue that ending the abatement is too expensive or more expensive than was originally envisaged, given the latest estimates of the taxation yield and the cost of restoring the abatement. Nor can they argue that it would affect the "Why work?" syndrome. Several of my hon. Friends have dealt with that. I add one further point which may sound cynical but which I believe is none the less real. Given the level of unemployment and the fact that there are between 10 and 15 unemployed for every vacancy, even if some people were encouraged to wonder "Why work?" and to decide not to do so the only effect would be to relieve the pressure on those who want to work. In any case, research by the Policy Studies Institute has shown that there is no evidence that benefits reduce the incentive to find work. I believe that that is correct.

Nor can it be argued that the relationship between unemployment benefit and average earnings has done anything but worsen the position as my hon. Friend the Member for Chippenham said. In the present circumstances of high unemployment and low economic growth, it is a thin argument to pretend that the present unemployment benefit or an increase of it will have any effect on wage demands. Nor can it be claimed, given the quiet but no doubt sensible optimism of recent speeches by my right hon. and learned Friends the Chief Secretary and the Chancellor, that the economy is in such poor shape that it cannot withstand the cost of replacing the abatement. In any case, after overestimating the PSBR by £2 billion last year—even without taking into account the effect of the Civil Service strike—it seems inappropriate to become excited about a mere £60 million to £65 million this year.

6.30 pm

Nor should it be forgotten that one consequence of a cut in unemployment benefit, thus leaving many more people on social security benefit, would be to encourage people to run down their savings or capital so as to be able to qualify for social security. Yet the Tory Party is the party of savings and capital.

For the life of me, I cannot see why any overriding consideration should overcome my repugnance at the thought of cutting unemployment benefit in that way. Nor can I see how at the next election the Tory Party will gain any points from claiming that it cut unemployment benefit by 5 per cent. or even from being accused of so doing.

Despite my remarks, the Minister of State may say that that abatement remains temporary. Perhaps in one sense it will remain temporary but I remind him that there is a danger, if not a certainty, that after today the reinstatement of unemployment benefit will be seen as an election gimmick. Rightly or wrongly, the electorate is sceptical of politicians' actions. In this instance, it would be better not to give people that opportunity for scepticism, just as it would be better to avoid the Conservative Party being accused of reducing unemployment benefit. I ask my hon. Friend to think again about accepting the amendment.

Mr. Don Dixon (Jarrow)

If the amendment has achieved anything, it has concentrated our minds on those who are unemployed and living on the pittance that the State gives them. Every time that we are given unemployment figures we have a debate on the subject, and as the employment figures increase, so do the crocodile tears, but no hon. Member talks about the unemployed as individuals. They are discussed in terms of percentages. The unemployed are human beings and not part of a percentage. They have the right to work. When the House divides on the amendment, I hope that we shall go some way towards helping them.

When the hon. Member for Beeston (Mr. Lester) moved the amendment, he spoke with some compassion about the time when he was a Minister and visited an employment office. He saw the long queues of men and women waiting to sign the book and draw unemployment benefit. I know that the hon. Gentleman has compassion. That was probably why he was sacked from the Front Bench. He visited a ship repair yard in my constituency and showed that compassion to those who were unemployed and threatened with the sack.

I speak not with the knowledge of being on the other side of the counter at the employment exchange watching the queues, but of standing in the queue and waiting to sign the book with 1½ in of pencil tied to 3 ft of string so that it cannot be stolen, and then of going along to the office to pick up my dole money at the end of the week. Society has denied the unemployed the right to fend for their families. We are talking about breadwinners who have families to keep. The hon. Member for Croydon, South (Sir W. Clark) said that people should not get married if they are unemployed and cannot afford it. That is nonsense. Both my parents were unemployed when they were married. I am glad that they got married and that they took no notice of such statements.

The hon. Member for Gateshead, West (Mr. Horam) mentioned the "Why work?" syndrome. In my constituency the job of a receptionist at a community centre was advertised and attracted 267 applications. I do not know where all the "Why work?" syndrome people live. Millions of our unemployed would take any job tomorrow.

We have heard many flowery speeches, some concerned speeches, and many words of three of four syllables, and have seen many crocodile tears in the House on unemployment. I have received from a constituent a letter that sums up what it is like to be unemployed: Please help me! Through no fault of my own, I have been out of work for over a year now. I assure you sir I have tried, I have looked for work. Within the last year sir, I have had over 52 formal interviews within South Tyneside and out—including places as far as Dover, Hull and London. Some of these interviews I've even hiked it. Even whilst I write this letter sir, I promise I am seeking fitfull employment. I feel despair, I feel degraded, no longer a member of the human race. The Government should show concern for such a person.

There are more than 6,000 unemployed in my constituency. The last pit in the constituency closed a fortnight ago, and the last ship repair yard more than 12 months ago. For those 6,000 who are denied the right to work, there are 35 vacancies registered at the employment exchange. When Labour Members talk about the unemployed, they do not talk about those who have money. Many people in Britain have never done a useful day's work in their lives, but they have money. We are talking about people who must work to fend for themselves and their families—people who do not have money.

It is bad enough being unemployed under this Government, but if one is aged over 45 and lives in the North-East it is a tragedy. I do not suggest that unemployment was introduced by the Government. In May 1979 there were 1,250,000 unemployed. Some of my colleagues on the Labour Benches have talked about acceptable levels of unemployment. There is no acceptable level of unemployment. My brother, who died two years ago, was unemployed for three years under the Labour Government. I need no lectures from either Conservative or Labour Members about unemployment. I am talking about people who are denied the right to work and who know that their only means of earning money is to work for it.

The Government, by not accepting the amendment, are doing a disservice not only to the unemployed who vote Labour but to those who vote Conservative. I hope that Conservative Members will join us in the Lobby tonight and do something for the 3 million unemployed who are struggling on the pittance that they receive.

Mr. Cyril D. Townsend (Bexleyheath)

Unlike many of my hon. Friends, this is the first time that I have debated this subject. I trust that the words and actions of those who have signed the amendment will make it the last time. As the House knows, the stakes are high. They involve the political integrity of the Government and financial and social justice to those in our constituencies who are at present registered as unemployed.

We have been told that the abatement was temporary—indeed, an emergency measure. Many of us will have taken the trouble to refer to the various Hansard reports. Those who have approached the subject with a fresh mind will have come to the conclusion that, when economic circumstances permitted, the abatement would be made good.

I cannot claim to come to this debate with a fresh mind. In 1979 I was Parliamentary Private Secretary to the Minister for Social Security. I have loyally voted with the Government on every occasion that this measure has come before the House. However, on 4 July the rates of unemployment benefit for adults were brought into tax, and the position is thus totally transformed. This must be the moment for action.

In an admirable, cool and rational leader today, The Times stated: It is unsatisfactory for explicitly temporary arrangements to be continued indefinitely when the occasion for them has passed. Surely every right hon. and hon. Member can find truth in those words.

What are the arguments that the Government are shortly to deploy? I do not believe that it has been seriously suggested, for once, that the cost of £60 million is the clinching argument. Frankly, that cannot be, when the revenue savings are far outweighed by the official estimates of the revenue that will be derived in a full year from taxing benefit, and I support the taxing of benefit.

Will the Minister seriously suggest that the PSBR is the crucial point and defend the PSBR like a lioness defends her cubs? I do not believe so, because the PSBR is falling and that is an old, tired argument that we can wisely disregard, as we disregard old carcases.

A more subtle suggestion—I should respect my hon. Friend if he deployed it—might be that the £60 million could be better used. We all have our pet projects in social welfare, but I should hazard a guess that most of my hon. Friends would agree that the topic tonight rates high in the batting order.

Is it really the "Why work?" syndrome? Does that keep the Minister awake in the small hours? With 3 million out of work, and the number forecast to rise, I find that argument unconvincing. The case against the "Why work?" syndrome was well argued earlier in the debate.

Research was carried out by the Policy Studies Institute in 1980, when there was far less unemployment. It concluded: In the vast majority of cases, and for 95 per cent of unemployed men there is a clear economic incentive to find work. I trust, therefore, that the Minister will not waste the time of the House talking too much about the "Why work?" syndrome. If the Minister says that that is the main plank of the Treasury's case, the Chancellor is wrong to seek to use a measure introduced with one aim in mind for an entirely different and highly questionable purpose.

6.45 pm

A remarkable letter appeared in The Times a few days ago. It was signed by the director of the National Council for Voluntary Organisations., the acting director of the National Association of Citizens' Advice Bureaux, the director of the Low Pay Unit, the director of Age Concern, the assistant director of the National Association for Mental Health, the director of Youth Aid, the director of the Child Poverty Action Group, the director of Disability Alliance, and others. The final paragraph of the letter states: We hope that, if the issue can be raised again at the report stage of the Finance Bill … the Government will finally concede that, as a matter of simple political morality, it must now restore to the unemployed the money which is owed to them. We all have some knowledge, from our advice bureaux, of the plight of the unemployed. It would also be wise to take into account the feelings of those who produced that letter, the organisations they represent and, of course, the unemployed.

I have said previously in the House that Treasury Ministers would be prudent to give greater care and consideration to the unemployed, who are the victims of the drive to achieve greater competitiveness in British industry.

When, during a world recession, bigger burdens must be borne in the heat of the day, it is surely common ground in this country—and, I hope, in the Chamber—that the weakest members of society should not bear the major part of those burdens. To use a military analogy, one does not give the extra weight of ammunition to those at the back of the march who are already straggling and suffering. If I had to argue my position to my constituents, I would not have much trouble in convincing them. The historic duty of the Conservative Party has been to seek to unite the many and varied groups in this great country and certainly not to exploit divisions.

Mention has already been made of Sir Winston Churchill. Many years ago, when talking about the social problems of his day, he used the splendid phrase "Bringing the rearguard in". That was his concept of social welfare. It is a concept that since the war has proudly served the Conservative Party and our people.

My vote for the amendment will be in support of that concept. I suggest, with respect to my right hon. and hon. Friends who will be voting against the amendment, that a vote for the Government will be in favour of letting that rearguard get further behind, increasingly isolated, dangerously dispirited and vulnerable.

Mr. Robert C. Brown

I add my congratulations to the hon. Member for Beeston (Mr. Lester) on tabling the amendment. I remember the hon. Gentleman, as a Back Bencher, coming to see me when I was a Minister. He had considerable compassion for his constituents who were made unemployed as a result of a decision that I had to implement. I remember his tenacity in fighting the case for his constituents.

As the hon. Member for Canterbury (Mr. Crouch) rightly said, this type of debate shows the House at its very best. I am only sorry that just before the vote is taken on the amendment the House will not be seen at its very best, because we shall then be listening to a reply from the Minister of State who will no doubt be at his smarmy best in an endeavour to convince Conservative Back Benchers that they should not take the ultimate action of voting against the Government, or even abstaining. I have the greatest sympathy for Conservative Back Benchers. I have been in exactly the same situation.

I feel great concern for the 23,156 unemployed in the city of Newcastle upon Tyne at the last count in June, and for the 230,000 unemployed people within the Northern region. The national figures show that over 1 million people have been unemployed for longer than a year. On that basis, 8,000 people in the city of Newcastle upon Tyne have been unemployed for longer than a year, and in the Northern region 80,000 people have been unemployed for longer than a year.

I hope that no one on the Treasury Bench, or anywhere else in the Chamber, will suggest that the 8,000 people in Newcastle who have been unemployed for a year or longer are unemployed of their own free will. I do not believe that any man has been unemployed for that long of his own volition.

My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) talked about the man on average earnings, with two children and a non-working wife, who would immediately lose about £80 a week on first becoming unemployed. Many of my constituents who are members of my union, the General and Municipal Workers Union, and are among the 23,000 unemployed in the city of Newcastle, were earning very much less than average earnings when they were employed. It might be said that the hardship that they suffer on losing their jobs is therefore not so great, and I accept that their monetary loss is not as great as that of the man on average earnings.

We should remind ourselves that it was in November 1980 that the Government imposed the cut of 5 per cent. in real terms on the adult rates of several short-term benefits, including unemployment benefit. At that time, something else was happening that has not been mentioned in the debate so far. Those who were already swimming in very rich gravy were almost drowned in November 1980 when the extra gravy swept over them from the tax handouts of the Chancellor of the Exchequer in his earlier Budget. None of us can afford to forget that the top rates of tax were massively cut, and that even the standard rate was cut by about 3 per cent.

There is no real issue between the House and the Government tonight in relation to the ultimate making good of the so-called abatement. It is a matter not of "if" but of "when". There can be only one time when it should be done, and that is tonight. There should be no more prevarication. The Government should accept the amendment with good grace. Indeed, the debate should not have been allowed to go on for as long as it has. The Chancellor of the Exchequer should have been here at the start of the debate and within a short time he should have been on his feet announcing, without leaving it to the Minister of State, that the Government were prepared to accept the amendment.

In the course of the debate the hon. Member for Croydon, South (Sir W. Clark) seemed to get very agitated when my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) referred to him as the vice-chairman of the Tory Party. It was not a great error, and it was forgivable, because I understand that the hon. Gentleman is a past vice-president of the Tory Party.

The amendment seeks to remove unemployment benefit from taxation in November of this year if the Government do not by then restore the abatement. The amendment is not motivated by an outright opposition to the taxation of benefits in principle. I certainly do not oppose in principle the taxation of any income, and I do not think that anyone can do so. The amendment is simply a device to remind the Government publicly of their duty to make good the interim abatement once unemployment becomes taxable. I remind the Minister of State that unemployment benefit became taxable a week ago yesterday. We should put matters right tonight by accepting the amendment.

Mr. Alan Haselhurst (Saffron Walden)

Tonight I shall be voting against the Government for the third time—each time on the same issue. Without getting involved in needless repetition, I should like to say why I have felt so strongly on this one issue when I have had a reasonable record of loyalty to the Government on almost everything else. To me it is a gut reaction—a political judgment.

As a Conservative, the one thing for which I am not in politics is to hurt those who are at a disadvantage in the community. It is wrong, at a time when many people have become unemployed, to be seeking to save small amounts of money by paring away at the benefits that should be paid to them. I do not believe that is right, and I do not think that it is sensible for the Government to adopt that stance when in the not too distant future they will have to face the electorate.

In my view, the Government gave a commitment on the issue. If they did not give a commitment, they allowed an impression to be created. If they did not allow an impression to be created, they dropped a hint. If they did not drop a hint, there was a nod to the effect that it would be a temporary matter. In whatever way we describe in the records of the House what has taken place, most of us believed that it was a temporary provision that would be put right with all speed. That is all we are seeking to encourage the Government to do on this occasion.

Why are the Government failing to deliver? Is it the money? It cannot be the money. Is it the "Why work?" syndrome? It cannot be the "Why work?" syndrome. Sufficient examples have been presented by my hon. Friends. Those who have any doubt about the "Why work?" syndrome may wish to give examples put to them by constituents of people who have refused to accept jobs that they have been offered, but against those examples are an equal, if not greater, number of cases from constituents who say "It has broken my heart when, having advertised a job, I have had to turn away the other 59 people." I do not believe that the "Why work?" syndrome is the correct argument for the Government to cite tonight in defence of their stubbornness.

Is it the wrong time? That is surely the tiredest excuse in politics. The Government are in severe danger of being misunderstood by the electorate if they do not realise that their honour is bound up with making good their pledge in the period in which the taxation has come into effect.

If the money were to be available, would it be better spent on something else? That is a question that I have heard from the Government side. Whether the Minister will refer to it tonight I do not know, but it is an extraordinary argument. On that basis, one could say that another 5 per cent. could be deducted temporarily from unemployment benefit, and then, when its restoration arose, the Government could say that it would be better to spend it on the death grant, retirement pensions or the handicapped. That is not the way to proceed.

We are discussing the matter within the terms and confines of unemployment benefit and the needs of the unemployed. The Government are raising a large extra sum—more than they expected to raise—so there is certainly room for £60 million on this occasion.

Is it the Government's pride that is at stake? Is it because we have become so bound up with the language of concessions and defeats that the Government find it difficult to come to the House and have a genuine change of line? If so, it is a pity. It does not help us if the Government always feel that it is somehow an act of weakness ever to concede to the arguments of right hon. and hon. Members. The Government would not be misunderstood in the country, and the party would not stand divided if they conceded. My impression—I can speak with the greatest confidence for my constituency—is that the party as a whole takes the view that we need to be as sympathetic as possible to the unemployed. It is surprised that the Government feel that this is a great issue of principle.

7 pm

This may be only a small point when set against the Government's strategy as a whole, but it is, as my hon. Friend the Member for Rutland and Stamford (Mr. Lewis) said, a major point of honour for most of us. I could not hold up my head when facing the unemployed in my constituency or elsewhere and say that I am concerned about their plight if I do not vote for the amendment tonight. It may be that that is my individual sense of honour, but it should be the collective sense of honour of the Conservative Party.

Mr. Frank Field (Birkenhead)

One of the advantages of catching your eye, Mr. Speaker, fairly late in the debate is that most of the arguments have been made and contributions can therefore be short. I have spent a fair amount of time listening to the debate, and the most distinguishing characteristic that has come across has not been the power with which a number of Government supporters have put the case on why they will not support the Government tonight, but that, with all the power at the Government's disposal, they have so far managed to persuade only one Conservative Member to speak in support of them.

The hon. Member for Dartford (Mr. Dunn) stood up, swallowed hard and spoke for about four minutes. I draw attention to the shortness of his contribution, not only because I hope that all of us will follow that example in the remainder of this debate, but because in other debates the hon. Member and I have conversed across the Chamber, sometimes at great length. Normally, the hon. Member does not have any difficulty in deploying a case at length. Tonight, the only Government supporter from their Benches has managed only four minutes in defence of their case. That is worrying for the Government.

The hon. Member for Canterbury (Mr. Crouch) was right to say that the feeling knitting the debate together was that of the House of Commons trying to make its will felt against the Government. I hope that as he and his colleagues spoke, many of my colleagues listened carefully and learnt the lesson of how important it is, should we have the opportunity to be in a similar position, to act with similar courage.

The other theme that has knitted the debate together is that no hon. Member has disagreed with the original reason for the 5 per cent. abatement. We have moved on that issue and are now in favour of bringing all income into tax, and tonight's debate is about bringing benefit into tax. There is no dispute there, although many hon. Members on both sides of the House have reminded the Government that they first introduced the 5 per cent. when there were two problems.

The first of these was that the abatement was a crude substitute for taxation; many people who would not pay tax would suffer the 5 per cent. deduction. The second was that while nobody had any objection to the taxation of benefits, one should not tax benefits until the tax threshold had been brought above the supplementary benefit poverty line. However, the Government went ahead and are now in difficulties of their own making.

Many hon. Members have asked what the Government's defence of continuing the 5 per cent. abatement is now that benefits have this month been brought into tax. The hon. Member for Gateshead, West (Mr. Horam) stripped the argument down to one central point, which is that the only argument that the Government can advance is the "Why work?" syndrome. The hon. Gentleman went on to say that no hon. Member could say that people are voluntarily unemployed. No hon. Member who goes about the country, talks to his constituents, and sits in his surgery and sees the private grief of the unemployed could advance that argument.

I have a much more important argument against this defence of the Government's position. It is that if the 5 per cent. strategy was working the unemployment figures would show a fall. However, the unemployment figures have risen, so the strategy is not working. The strategists may assume that if one does not succeed the first time one tries and tries again. One would then be on the horrendous course of continually cutting unemployment benefit until the unemployment figures come down. To put it this way is to show that that is not an argument that can be advanced.

I wish to introduce a different note into the debate. There is a real sense of grievance among many of the low-paid, not at the income that they might get when they are out of work, and how little different that is from their income in work, but at the amount that they pay in taxation. About 25 to 30 per cent. of wages are deducted in tax, and the real charge against the Government is that, while this is an important issue for millions of people, they do almost nothing about it.

The farce of this debate and the farce of the Finance Bill Committee debates is that there is no mention of, and no debate on, the fact that each year we allow 50 per cent. of personal income to be exempted from tax. And yet we debate the need to bring unemployment benefit into tax when about half of gross personal income does not concern the Chancellor of the Exchequer. If we were courageous enough to start a debate about how to rein back on all those tax benefits that have grown like Topsy, we could be talking about a standard rate of tax of about 12 to 13 per cent. in the pound and could be making a major difference to the tax bill of millions of low-paid workers.

Mr. Campbell-Savours

Regressive.

Mr. Field

I am not advocating that we have a single standard rate of tax at 13 per cent. I am using this as an illustration of the scale of changes that one has to make if all personal income is brought into tax. It would make such a difference to the amount of revenue that the Government take that they could not only raise the tax threshold above the poverty line, but could make substantial changes in the marginal rate of tax, and there would be money to make big increases in child benefit. All the issues that we have been talking about tonight could be dealt with and we could begin to build a floor on which people could build by their own efforts rather than having a welfare system which traps them into poverty or, worse than that, into deceit.

There are four reasons why we should support the hon. Member for Beeston (Mr. Lester) in his amendment. First, it gives a bad name to the slow process that we are starting of bringing all income into tax. There is a nasty flavour left in most people's mouths. It will be difficult enough to get the support of our constituents in the campaign to bring all income into tax without having to defend the Government on this issue.

Secondly, it is wrong because it undermines the national insurance fund. That has been the Opposition's argument. The argument of Government Back Benchers has been that it is against Tory policy, principles and beliefs. They believe that people should be encouraged to put money away for a rainy day to look after themselves. That is done individually, and it is done collectively through the national insurance fund. We have a Tory Government with a high priestess running them who preaches endlessly about the need to stand on one's own two feet, and yet the Government take measures to clobber people who do precisely that by trying to save through the insurance system. That is the second reason for supporting the amendment.

The third reason is the sense of grievance felt by millions of low-paid workers at the amount that they lose every week in taxation. We shall remedy that grievance only if we bring most income into tax. The 5 per cent. abatement is a decoy rather than an issue for essential debate.

There is a fourth reason, and every hon. Member who has spoken, even the hon. Member for Dartford, mentioned it, and that is that the 5 per cent. abatement is an attack on unemployed people. If we believe the Prime Minister when she puts forward the argument that it is necessary to increase the number of unemployed people so that the rest of us can benefit by a fall in the rate of inflation, then tonight we are kicking on the shins—if not higher up their anatomy—those who are bearing our unemployment.

Mr. Matthew Parris (Derbyshire, West)

I apologise to my hon. Friends the Members for Beeston (Mr. Lester) and Chippenham (Mr. Needham) for missing the earlier part of their remarks. I am not on the Left, the Right or the Centre of the Party. I suppose one might say that I was elsewhere.

I felt anxious about our failure to restore the abatement, because I served on the Social Security (No. 2) Bill Standing Committee. I asked myself which of my hon. Friends might share my anxiety so that I could educate myself a little more on the background to the issue. I thought of my hon. Friend the Member for Bristol, West (Mr. Waldegrave). It then occurred to me that there would not be much point in consulting him. I thought of my hon. Friend the Member for Watford (Mr. Garel-Jones), and a similar reason struck me. I then thought of my hon. Friend the Member for Oxford (Mr. Patten), and I realised that that would not be a sensible avenue to pursue. Something dawned on me that should have dawned on me a great deal earlier.

I want to confine myself to the rather legalistic point that an explicit undertaking has been broken. I do not want to deal with whether this money—had we made no previous undertakings—should be spent for this purpose at this time. The hon. Member for Gateshead, West (Mr. Horam) said that all the moral, social and financial arguments pointed to the need for the money to be spent in this way. For any of the purposes for which the Government spend money to help people, there are always moral, social and financial reasons for helping them more. A decision has to be taken after the competing claims, which are not properly explored in a debate such as this, have been looked at. I should be ruled out of order if I were to detail those competing claims.

Perhaps we should spend the money in the way suggested, but, despite what we have heard, that is capable of argument. However, it cannot be argued that an undertaking that is clearly given should be lightly broken.

I served on the Social Security (No. 2) Bill Committee. The grounds on which my right hon. Friend the Secretary of State for Social Services, who is now the Secretary of State for Industry, was arguing for the abatement to take place were clear to me and, I am sure, to all members of the Committee. It would have been open to him to argue the point upon the grounds advanced by my hon. Friend the Member for Dartford (Mr. Dunn) upon whose head much calumny has been heaped this evening. I do not agree with him, but I believe that they are intellectually respectable grounds. My right hon. Friend could have argued that unemployment benefit was too high, but he most notably did not. He simply suggested that unemployment benefit should be taxed, that it was to be taxed and that in the interim there would be a 5 per cent. abatement. Now that unemployment benefit is to be taxed, it is not honest to refuse to restore that abatement. I do not regard this as a massive betrayal of faith, nor the most shameful thing that this or any Government have done. It is a shabby thing to do. I hope that the Minister will not insist on taking us with him into the Lobby against the amendment.

7.15 pm

Mr. David Winnick (Walsall, North)

I apologise for not having been present earlier, but I was at a Select Committee meeting. In the speeches that we have heard, particularly those of the hon. Member for Bexleyheath (Mr. Townsend) and the hon. Member for Canterbury (Mr. Crouch), we have listened to the Tory conscience. Those Conservative Members who support the amendment have no need to justify their conduct in any way. It is those who follow the Government on this issue who need to find some justification for their vote.

It is a simple issue of injustice. We all know the background. In November 1980 the increase in unemployment benefit was abated by 5 per cent. in lieu of taxation. Now that taxation is being applied to unemployment benefit, that 5 per cent. is not being restored. It is important to remember that we are dealing with the most vulnerable section of the community, those who are living on the lowest incomes.

From November, unemployment benefit will be £40.45 for a married person and £25 for a single person. The action taken over the 5 per cent. is only part of the action taken by the Government against unemployed people. The earnings-related supplement was phased out and finally abolished, and that has meant that on average unemployed people have lost £11.20 a week. I find it difficult, as I have said previously, to understand how the abolition of the earnings-related supplement can in any way be justified.

The change in child dependency has meant the loss of about £1.20 for each child of an unemployed person. Tax rebates cannot now be claimed until the end of the year. Under the new arrangement, someone who becomes unemployed, and who desperately needs all the money that he can possibly get, cannot claim the tax refund to which he is entitled until the end of the financial year.

Hon. Members on both sides of the House have made the point that those who have saved have been penalised. My constituents, like those of other hon. Members, having become unemployed may have their redundancy money and some savings and so on, but if they have more than £2,000 they cannot claim a penny in supplementary benefit. The £500 increase—a ceiling of £2,500—from November is not sufficient. It is a disincentive to save and causes resentment.

Constant reference has been made today to the ways in which the unemployed will be liable to taxation, but in reply to a parliamentary question I was informed that about 1¼ million, or 40 per cent., of the unemployed will not be subject to tax. Their income is too low. People whose income is so low that it is not liable to tax will be penalised as well, and those subject to taxation will be doubly taxed. They will pay ordinary tax, and the 5 per cent. has been taken away from them. The system is equally unjust to both. The poorest are being hit both ways.

That is the result of Government action. In the past two or three years the Government have benefited the richest. But the poorest people may get only £40 a week if they are married and £25 if they are single. No one in the House, including the Chancellor and the Minister of State, would try to live on that money. The people about whom we are talking are the most deprived and vulnerable and are the victims of the Government's economic policy. Even though taxation of benefits is being introduced this month they are still not receiving the 5 per cent. back. But the people with the largest incomes, who least need tax reductions, have done very well. In the past two or three Budgets their taxes have been reduced.

One cannot help comparing how the Government treat the most prosperous and the poorest. The rich have been well rewarded with money that they do not need, while those who are trying desperately to survive are being penalised and punished. That is why even Conservatives have today spoken against, and I hope will vote against, the Government.

The most interesting speech, I think, came from my hon. Friend the Member for Jarrow (Mr. Dixon), who understands unemployment. He mentioned his brother. He comes from a background where there are a great number of unemployed and he mixes with his constituents. I wonder whether the House always understands what it means to be unemployed, not only for the young, but for the middle-aged who have had a job and sufficient money to make ends meet for some time. Suddenly, at 45 or 50, they may become unemployed, and in parts of the country, including now the West Midlands, they have the awful prospect of being unemployed for years on end and having to live on the most limited income. They cannot properly care for their families and have to think of every penny that they spend.

I wonder whether the Prime Minister, the Chancellor and the other members of the Cabinet appreciate the harm that they are doing to the unemployed. The amendment is justified, and I hope that it will be carried.

Mr. Andrew F. Bennett (Stockport, North)

This has been a useful debate and many issues have been covered.

I challenge the Chancellor and the other Treasury Ministers whether unemployment benefit is adequate. That is the central question. I challenge them to restrict their spending to that of an unemployed man for two or three months. They would quickly realise that it was not adequate. Many thousands of people find it virtually impossible to get by on the benefit.

Last Friday I came across two constituents having a whispered row by the pre-packed meat counter in a supermarket about whether to spend a little more on a joint and enjoy the sort of meal to which they were accustomed when the husband was at work or to skimp and spend the money on something else. Many thousands have to make such choices. If Ministers listened to such conversations they would see that the benefit is not adequate.

A constituent came to my last advice bureau apologising for being late. He had walked three miles. He wanted advice on housing, but another problem was gnawing at him: how could he give his kids a holiday? He felt it was impossible to save from his unemployment benefit. All he could hope for for them was a day in Blackpool, and that would mean saving each week what he would spend on bus fares to cope with the necessities of life. Can it be said that his unemployment benefit is adequate?

Another constituent at the same bureau blamed the Chancellor for ruining his sex life. For years he had worked shifts. The only privacy that he and his wife had was in the mornings, first when his children were at school and then when they were at work. Both his teenagers are now out of work and have to stay at home all the time because they cannot afford to go anywhere as it costs money. His children do not have sufficient money to go out and mix with their friends who are in work, thereby giving their parents some peace and quiet.

Yet another constituent on the same occasion was upset about his debts. The family were borrowing from the rent money to pay the gas bill and from the gas money to pay the electricity bill. Two or three years ago they were a happy family with young children, but there are now continual feuds over why the debts are getting worse. The same problems crop up time and again for people on these incomes. The wife admitted to me that last week she had a row with her husband about their debts and the fact that they could not manage. He stormed out of the house. She assumed that he had gone to the pub, but he had cooled off, bought some flowers, and brought them home. Of course, she made the mistake of grumbling that that made their debts worse. One can see how the feuds are fuelled by poverty and unemployment.

7.30 pm

I challenge the Chacellor to say that this unemployment pay is adequate, and to tell us how he would get by on it. What about the 60-year-old in my constituency who has no chance of getting work? He not only sees the lifestyle gone that he enjoyed during the past few years, but he sees all opportunities of saving for his old age gone. He knows that, when he draws his pension at 65, it will be reduced because, for the next five years, he will not be able to contribute to the earnings-related part of it.

I challenge the Chancellor to talk to some of the shopkeepers in my constituency. Their incomes are going down because an increasing number of their clients are on unemployment benefit and cannot afford to spend money in their shops. A constituent set himself up as a window cleaner a few years ago. He did quite well, but he has now lost almost half his clients, because they are on unemployment benefit and can no longer afford to pay someone to clean their windows. They clean their windows themselves. He sees his little business disappearing before his eyes because of the lack of money in the area to pay for such a service.

The Chancellor should tell us whether unemployment benefit is adequate. In my opinion, it is not, and I am sure that most of my constituents who have to survive on it do not consider it adequate. They believe that he should put back the 5 per cent. immediately, and that that should be only a first step in raising unemployment benefit to an adequate level and thus avoiding the misery and hardship of the many people who are struggling to get by on inadequate incomes.

Mr. Allen McKay (Penistone)

I shall not detain the House long. First, I congratulate the hon. Member for Beeston (Mr. Lester) on his amendment. Recently, I had the priviledge of serving on the Mental Health (Amendment) Bill Committee with him. I saw the House at its best in those proceedings. All disciplines were working together to bring out the best that there is in legislation.

That spirit has continued in this debate. I am sure that the Government realise that, whatever the outcome of the vote tonight, they have lost the argument, both physically and morally. If they have any sense of honour, the Minister will acknowledge, when he comes to the Dispatch Box, that he has lost the argument and concede the amendment, because we are not asking for a lot.

Taxation is always subject to criticism, because no one likes paying taxes. However, the unemployed are the only people who are taxed twice. Not only are they subject to income tax in the normal way, but, unless the 5 per cent. abatement is returned, they are taxed again. In my opinion, these people should never have been taxed at all. People argue that all incomes should be taxed, if that can be done with equity, but it is difficult to explain that to people who are taxed twice. It is hard to sell that argument to my constituents.

If the Minister tells us about the workshy syndrome, he should look at what has happened in part of my constituency. In the Thorncliffe Valley, during the short period of two years, two collieries have closed. Green's foundry and Paramour's foundry have closed. Aurora Steel was closed because of the import of special steels. There were redundancies at British Steel. In fact, last week Mr. MacGregor told me that another 10,000 jobs would have to go if the industry was to slim down, and that some of those jobs would be in my constituency. Then there is Ransome and Rapier and Newton Chambers engineering works. They are all world-renowned names. Among the workers at Ransome and Rapier who will have to go are 450 craftsmen engineers and 36 apprentices. The whole training scheme and the apprentice shop will close. Never before has the area heard of 36 engineering apprentices being made redundant. That is the blight of unemployment that has hit the Thorncliffe Valley.

I am sure that many people saw the return of the "Canberra", and many of us cheered the Army coming back from the Falkland Islands. It is ironic that some of the parents of the people whom we cheered are the people who will be hurt by this legislation.

I have spoken to shop stewards about the situation, and they say that it is becoming harder and harder to ask people to take redundancy or early retirement. They are now looking at the £2,000 cut-off scheme, which is going up to £2,500, and the superannuation benefits or pension benefits from the trade unions, because the pound for pound that is taken off unemployment pay is also having an effect. It is no longer possible to make way for younger workers.

The Government did great harm when they took away the earnings-related supplement. When people come to me and complain I say to them "You knew what you were voting for when you voted this Government into power, because it was spelt out—admittedly, not always very clearly." However, they did not vote for unemployment. On that, the Government have really let the people and the country down, because unemployment has risen ever since they came to power. Now the Government are putting the boot in. Not only have people been made unemployed and their benefits cut; they are now being taxed twice. That is what the Government are doing.

I have listened to what Conservative Members have argued today in this debate, and I am sure that they should be with us in the Lobby tonight. I was told many times the saying Our country, right or wrong!", until I found out that there was a little bit to add to it. It is: Our country, right or wrong! When right, to be kept right; when wrong, to be put right! Right hon. and hon. Members how have the chance to put the Government right.

The Minister of State, Treasury (Mr. Barney Hayhoe)

I have listened to every speech in this important and serious four-hour debate. One of the themes that has run through all the speeches has been the concern felt on both sides of the House about unemployment generally and, in particular, its effects on individuals and their families. Many hon. Members have said that this is a House of Commons matter. I do not dissent from that. How could it be otherwise? The House will decide this issue by its vote tonight. That is our way, and that is why we are here.

I congratulate my hon. Friend the Member for Beeston (Mr. Lester) on his presentation of the amendment. His humanity, moderation, commitment and concern showed through, and his speech and the speeches of many of my hon. Friends were in somewhat sharp contrast to the more strident notes of the speeches of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), and the hon. Members for Birmingham, Perry Barr (Mr. Rooker), Walsall, North (Mr. Winnick), and others. To some extent, we have had a rerun of our earlier debates of 18 March and 26 April.

It has been said that the Government are going back on clear pledges that were given by my right hon. Friend the Secretary of State for Industry, and that there was a clear commitment by the Government to the automatic restoration of the 5 per cent. abatement when unemployment benefit was brought into taxation. In opening the debate, my hon. Friend the Member for Beeston made no such suggestion. However, that suggestion was made by the right hon. Member for Ashton-under-Lyne and several other hon. Members. My hon. Friend the Member for Beeston was right, because no such pledge was given.

In all fairness, I should put on the record what was said by my right hon. Friend the Secretary of State for Industry, then Secretary of State for Social Services, when he gave the clear assurance that when invalidity benefit was brought into tax the 5 per cent. abatement would be restored. In Standing Committee on 29 April, he said: For the other benefits affected,"— that includes unemployment benefit— which are quite different, I cannot at this stage go beyond the more general assurance I have given that we shall consider what should be their gross rates in the light of economic and other circumstances prevailing at the time that each of them comes into tax."—[Official Report, Standing Committee B, 29 April 1980; c. 393.] I readily and willingly acknowledge that some of my hon. Friends, as they have said clearly in debate today, genuinely and sincerely believed that when unemployment benefit came into taxation—[Interruption.] I know the quotations as well as the hon. Gentleman. I have read them all. I quite properly quoted one which supports the view of the hon. Member who introduced the amendment that there was no clear commitment. I believe that that is so.

Mr. Robin F. Cook (Edinburgh, Central)

rose—

Mr. Hayhoe

I shall not give way now.

My right hon. and learned Friend the Chancellor of the Exchequer made it clear in his 1980 Budget that the 5 per cent. abatement decision was not taken solely as a proxy for taxation but as part of a public expenditure savings package and that it was likely to improve work incentives.

Mr. Cook

rose—

Mr. Hayhoe

No, I shall not give way now. I have listened to the arguments. It is only fair that I should have an opportunity to reply to them.

Mr. Cook

I refer the Minister to the most recent statement from his own Front Bench when we debated the matter last March. As has been pointed out, in the course of his speech, the Minister for Social Security said: At the right time it will be made good."—[Official Report, 18 March 1982; Vol. 20, c. 536.] If the right time is not the moment at which unemployment benefit enters into tax, when is the right time?

7.45 pm

Mr. Hayhoe

I should not have given way. I shall come later to what was said by my hon. Friend the Minister for Social Security.

I was challenging what was said by Labour Members—that a matter of honour was involved because a clear pledge and commitment had been made by my right hon. Friend. I utterly repudiate that. No such clear pledge and commitment were made.

Mr. Rooker

rose—

Mr. Hayhoe

I shall not give way now. The yield from taxing unemployment benefit in a full year is £650 million. I confirm that the gross cost of reinstating the 5 per cent. abatement would be £60 million. It has been said that we are talking about reductions in unemployment benefit. My hon. Friend the Member for Canterbury (Mr. Crouch) said "It is not right to reduce unemployment benefit." Both he and my hon. Friend the Member for Devizes (Mr. Morrison) spoke of a cut in unemployment benefit this year. The truth is that unemployment benefit will be increased by 11 per cent. in November 1982. The argument today is whether it should be increased by 16 per cent. or 11 per cent. Those are the figures relating to the increase later this year.

Much has been said about the 3 million unemployed. Again, as my hon. Friend the Member for Beeston made clear, fewer than one in four of the total number unemployed are directly affected. The hon. Members for Gateshead, West and Newcastle-under-Lyme (Mr. Golding) spoke of the long-term unemployed. However, they should know that those who have been unemployed for more than a year are not affected by the abatement in any way because they are not entitled to unemployment benefit after that time. They are on supplementary benefit We must get all these matters into perspective. The full year cost of reinstating the abatement is, as I said, £60 million. My hon. Friend the Minister for Social Security made it clear in an earlier debate that his Department has many claims for additional spending. There are many deserving causes. I have since reaffirmed that at the right time this benefit will be made good. The matter is under review, it will be kept under review, and I can only repeat that at the right time it will be made good.

Mr. Cook

In The Guardian yesterday we read that two Ministers had secretly conveyed a message to the rebels that the Government hoped that they would succeed with their amendment. Having listened to the Minister's brief and tawdy response to a debate involving major issues and in which several Conservative Members went to great length to explain their difficulties in supporting the Government, I am tempted to suspect that the Minister is one of the two who would like to see the amendment carried.

I hope that the Minister will acquit me of any disrespect. Hitherto, he has been one of the Government Members for whom I have had a warm regard, but it is an offence to the House that on such a major issue, when the debate has continued for four hours and raised major issues of principle and brought into question some of the statements by senior Government Members over the past two or three years, a junior Treasury Minister should respond. The House was entitled to a reply from one of the two Cabinet Ministers.

Hon. Gentlemen may wonder why I respond at this stage. Let me make it perfectly clear. Some Conservative Members have not been present throughout the debate. They may not be aware that this is the second intervention from the Opposition Front Bench. We take the matter seriously enough to believe that it merits two interventions. The earlier intervention was by the Opposition analogue to the Chief Secretary to the Treasury. Hon. Members who tabled the amendment were entitled to a response from the Chief Secretary or the Chancellor.

Mr. Geoffrey Dickens (Huddersfield, West)

The hon. Gentleman has just claimed that Labour Members take the matter seriously. Where are the Labour Members of whom he speaks?

Mr. Cook

We welcome the hon. Member for Huddersfield, West (Mr. Dickens) to our debate. The answer to his question will be given at the conclusion of the debate when we see who is in which Lobby. We shall watch with interest to see which Lobby the hon. Gentleman goes into.

Mr. Dickens

It will not be the hon. Gentleman's.

Mr. Cook

I must correct the hon. Gentleman. It is not a question of our Lobby; it is a question whether he goes into the Government Lobby or that of his hon. Friends who are seeking to save the Government from their own breach of faith.

The House owes a debt to the courage and persistence of a number of Conservative Members who have continued to try to expose what they regard as an injustice. Once again we have seen an almost unanimous condemnation of the Government from their own Benches. As on the previous occasion when we debated this matter, only one Conservative Member could be found on the Back Benches to speak in support of the Government. This time it was the hon. Member for Dartford (Mr. Dunn), who spoke, by various estimates, for between two and four minutes and immediately rushed from the Chamber, so overcome was he by embarrassment at what he had done.

It is always difficult to know what to do in a situation like this. Perhaps the cruellest thing that an Opposition spokesman can do is to praise the Conservative Members who support the amendment. That may merely get them into even greater trouble with their Whips. Perhaps the kindest thing for us to do is to flail them mercilessly for having failed to convince their Government.

In kindness to those hon. Members, I begin by putting on the record the fact that there is a gulf between them and the Opposition. We are not yet convinced that the Government's scheme to bring unemployment benefit into taxation is fair, practicable or necessary. On the contrary, we see the scheme as yet another demonstration of the way in which the Government are remorselessly and desperately hunting among the lower deciles of national income to find additional tax revenue so that they can give tax handouts to the wealthy.

The hon. Member for Chippenham (Mr. Needham) asked an interesting parliamentary question last month about what tax payments would be made, as a result of the scheme, by those who are unemployed for part of the year. I point the House in particular to the column in the answer given to the hon. Gentleman that sets out the figures for a married couple on three-quarters of average income—that is an income well below the national average. If the head of the household falls unemployed in the second half of the year after the couple had been employed for the first half of the year, the household will pay £305 more in tax as a result of the scheme that we are debating. It is scandalous that we should be asking those with below average incomes to pay more, when the wealthy are time and again being asked by the Government to pay less tax. That is one division between the Opposition and the Conservative Members who support the amendment.

However, we are with those hon. Members on the major issue that is at the centre of the debate, which is the proposal to introduce the scheme to bring unemployment benefit into tax without restoring the 5 per cent. that was docked from the benefit two years ago on the pretext—let us be clear about that—that unemployment benefit was not then taxed.

A number of independent commentators and bodies have argued that unemployment benefit should be brought into tax. We recognise that the idea has a long and respectable pedigree. Professor Atkinson has proposed it, and the Institute of Fiscal Studies has proposed it, but each has argued that the benefit should be taxed and the proceeds from the tax revenue used to increase the benefit. Until the Government obtained success at the last general election, no one had ever seriously contended that we should bring the benefit into tax and simultaneously cut the level of the benefit. There is no excuse for that.

As a number of hon. Members have said, the scheme will result in a large revenue to the Treasury. Hon. Members have calculated that the revenue will be 10 times the amount required to make good the 5 per cent. abatement. The pertinent figures are even clearer. One of the great unresolved mysteries of the business has been the extent to which the Treasury's estimate of the revenue has varied. Last year we were told that the revenue would be £250 million. This year the Treasury estimates that, for some unexplained reason, it will get £650 million. If the Treasury has such a wide margin of error in its calculation of the revenue that it will receive, it obviously has not the faintest idea of how well the scheme will work when it hits the unemployed.

We can see that the Treasury will get from taxing unemployment benefit £410 million more than it expected last year: it will have a windfall of over £400 million. In all fairness and decency, the first charge on that £400 million must be the restoration of the 5 per cent. abatement, which will cost a mere £60 million.

The restoration of the abatement must be the first charge for a number of reasons. First, the House was led to believe that that would happen. It is necessary to take up a point made by the Minister in his brief response. He put to the House a quotation to rebut another quotation that he did not read into the record. Hon. Members have spared the Minister that other quotation, because we assumed that it was known. Since he has chosen to challenge it, let us be clear what was said. Let us also be clear that the undertaking that I shall quote was given the day after the quotation that the hon. Gentleman read into the record.

The then Secretary of State for Social Services, referring to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker), said: The hon. Gentleman asked specifically about abated unemployment benefit. That will make no difference, because as the unemployment benefit comes into tax so the rationale for the 5 per cent. abatement ends. It is an interim scheme in lieu of taxation. One will give way to the other."—[Official Report, Standing Committee B, 30 April 1980; c. 526.] It is pointless to argue whether that statement constituted a legally binding contract that would stand up in a court of law, but it is perfectly clear that the Committee was led to believe by the Secretary of State that when taxation of the benefit was brought in the 5 per cent. abatement would be restored. The right hon. Gentleman's comments lent colour to that belief. If we are now told that that is not what was intended by the right hon. Gentleman and that the Committee was wrong to draw that conclusion, we are being invited to say that we should not have taken a Minister's remarks at face value. What the right hon. Gentleman said was perfectly clear.

The hon. Member for Derbyshire, West (Mr. Parris) suggested that this was not a large but a minor breach of faith. The House cannot tolerate a relative scale in breaches of faith. A breach of faith is a matter of absolute concern. The House, and particularly Conservative Back Benchers, cannot permit the Government to commit a breach of faith. We were led to believe that the 5 per cent. abatement would be restored when taxation was brought in. Taxation was brought in earlier this month and the 5 per cent. must, therefore, be restored.

Another reason why the 5 per cent. abatement must be restored takes me to the speech of the hon. Member for Dartford, who argued that it was necessary to withhold the abatement because of the "Why work?" syndrome. While we have 3 million unemployed, and an increasing trend of unemployment, it is an insult to the unemployed to suggest that they are out of work because they lack the motivation, the will or the financial incentive to find work.

I will give the hon. Member for Dartford an example from my area. Last month, Strathclyde regional council advertised 31 apprenticeships. There were 7,000 applications. It is a grotesque offence to the 6,969 children who did not get an apprenticeship to say that they are out of work because of the "Why work?" syndrome. They are out of work because they cannot find work.

8 pm

I shall spare the House the argument about whether the Government are to blame for the 3 million unemployed. Some of us have a view on that matter, and doubtless it is not shared by the hon. Member for Beeston (Mr. Lester), who tabled the amendment. All that I would ask the House to agree, and I would ask even the hon. Member for Dartford to agree, is that the 3 million unemployed are not to blame for the fact that there is such a high level of unemployment. Because they are not to blame, it is incumbent upon us not to penalise them for being unemployed. That is the third reason why we should restore the 5 per cent.

As my hon. Friend the Member for Perry Barr and some of my other hon. Friends have said, the withdrawal of the 5 per cent. is not an isolated act. There has been a series of cuts in the level of benefit enjoyed by the unemployed. There was the withdrawal of earnings-related supplement, the changed basis on which child additions are calculated, and the withdrawal, under this scheme of taxation, of the tax refunds. Those changes have had a major impact on the standard of living of the unemployed. Indeed, we know from the Social Security Advisory Committees latest survey that half of all those families now have an income from benefit that less than half the income that they had in work.

Plainly, any household faced with a halving of benefit will not be troubled about a financial incentive to remain in work—members of that household will look for work. Given the dramatic reduction in the standard of living of the unemployed over the last three years, in all fairness we should accept the recommendation of the Social Security Advisory Committee and make the first priority of our increased expenditure on the social security budget the restoration of that 5 per cent.

I shall not suggest that financial hardship is the greatest problem faced by the unemployed. I have met many unemployed in my constituency, as I am sure other hon. Member have done in theirs in the past two years. What distresses me most about them is that they are concerned not simply with financial hardship but with the humiliation of being denied a work place in society. It is through the work place that most citizens make their contribution to society. It is through their jobs that they achieve their identity with the community. It is their job that provides the most fulfilling and creative thing that they are likely to do with their lives. If we deny a man his job, if we deny him that work place, we are denying him an identity with society and robbing him of his dignity and self-respect.

I do not suggest that if we give 5 per cent. to the unemployed we will give them back that dignity and self-respect, but we will at least go some way to ease the severe financial problems that they face. We will go some way to help them to meet the cost of searching for work—to meet the cost of the postage, the phone calls, the travel and the decent appearance that is necessary if they are to find work. Therefore, we should restore the 5 per cent. to the unemployed.

We know that that view is shared by at least two DHSS Ministers, because The Guardian tells us so. Yesterday, it said: Some Ministers at the Department of Health and Social Security are secretly hoping that the Government will be defeated tomorrow … two of them have indicated to the Tory rebels that they sympathise with the revolt. I am invited by that article to speculate about the two Ministers concerned. Is it the Minister of State, who sat throughout most of our debate and was kept carefully bound, trussed and gagged, two Treasury Ministers away from the Dispatch Box, in case he said to us what he appears to have said to The Guardian? Is it the Undersecretary of State, the hon. Member for Braintree (Mr. Newton)? That would be a pleasing thought, because he was formerly the Finance Bill Whip. It would be pleasing to reflect that someone who spent the first two years of the Government's term of office helping to get Finance Bills enacted has now undergone such a reformation that he is seeking to undo the damage of this Finance Bill. I do not expect that we shall find out who the two Ministers are when the Division Bell rings in two or three minutes. I do not expect that we will find DHSS Ministers in the Lobby with us. I hope, though, that we shall find a large number of the hon. Members who have spoken and their hon. Friends in the Lobby with us.

When we divided on this matter in April, we were told that that was not the time to divide the House because there were other matters that concerned the nation. This is the last chance for the House to restore the 5 per cent, before taxation takes effect. This is the day and this is the hour for hon. Members to restore that 5 per cent. The Opposition will go into the Lobby to vote enthusiastically to restore the 5 per cent. We will do it because we believe that it is an elementary justice owed to the unemployed who need that 5 per cent, and who are entitled to that 5 per cent., and the House, in all earnest decency, owes them the restoration of that 5 per cent.

Question put, That the amendment be made:—

The House divided: Ayes 283, Noes 291.

Division No. 268]	[3.40 pm
AYES
Adley, Robert	Farr, John
Alexander, Richard	Fell, Sir Anthony
Amery, Rt Hon Julian	Fenner, Mrs Peggy
Ancram, Michael	Finsberg, Geoffrey
Aspinwall, Jack	Fisher, Sir Nigel
Atkins, Rt Hon H. (S'thorne)	Fletcher-Cooke, Sir Charles
Atkins, Robert (Preston N)	Fookes, Miss Janet
Atkinson, David (B'm'th,E)	Forman, Nigel
Baker, Kenneth (St.M'bone)	Fowler, Rt Hon Norman
Baker, Nicholas (N Dorset)	Fox, Marcus
Banks, Robert	Fraser, Rt Hon Sir Hugh
Beaumont-Dark, Anthony	Fraser, Peter (South Angus)
Bendall, Vivian	Garel-Jones, Tristan
Bennett, Sir Frederic (T'bay)	Glyn, Dr Alan
Benyon, Thomas (A'don)	Goodlad, Alastair
Bevan, David Gilroy	Gow, Ian
Biffen, Rt Hon John	Greenway, Harry
Biggs-Davison, Sir John	Griffiths, E. (B'y St. Edm'ds)
Blackburn, John	Griffiths, Peter Portsm'th N)
Blaker, Peter	Gummer, John Selwyn
Boscawen, Hon Robert	Hamilton, Hon A.
Bottomley, Peter (W'wich W)	Hamilton, Michael (Salisbury)
Bowden, Andrew	Hampson, Dr Keith
Boyson, Dr Rhodes	Hannam, John
Braine, Sir Bernard	Haselhurst, Alan
Brinton, Tim	Hastings, Stephen
Brittan, Rt. Hon. Leon	Hawkins, Sir Paul
Brooke, Hon Peter	Hawksley, Warren
Brotherton, Michael	Hayhoe, Barney
Browne, John (Winchester)	Heath, Rt Hon Edward
Bruce-Gardyne, John	Heddle, John
Budgen, Nick	Heseltine, Rt Hon Michael
Burden, Sir Frederick	Higgins, Rt Hon Terence L.
Chalker, Mrs. Lynda	Hogg, Hon Douglas (Gr'th'm)
Channon, Rt. Hon. Paul	Holland, Philip (Carlton)
Chapman, Sydney	Hunt, David (Wirral)
Churchill, W. S.	Hunt, John (Ravensbourne)
Clark, Hon A. (Plym'th, S'n)	Irvine, Bryant Godman
Clark, Sir W. (Croydon S)	Irving, Charles (Cheltenham)
Clarke, Kenneth (Rushcliffe)	Jenkln, Rt Hon Patrick
Cockeram, Eric	Jessel, Toby
Cope, John	Johnson Smith, Sir Geoffrey
Cormack, Patrick	Jopling, Rt Hon Michael
Costain, Sir Albert	Kellett-Bowman, Mrs Elaine
Cranborne, Viscount	Kershaw, Sir Anthony
Douglas-Hamilton, Lord J.	Kimball, Sir Marcus
Dover, Denshore	King, Rt Hon Tom
Dunn, Robert (Dartford)	Knox, David
Durant, Tony	Lamont, Norman
Edwards, Rt Hon N. (P'broke)	Lang, Ian
Eggar, Tim	Latham, Michael
Elliott, Sir William	Lawrence, Ivan
Fairgrieve, Sir Russell	Lee, John
Faith, Mrs Sheila	Lester, Jim (Beeston)

Lewis, Kenneth (Rutland)	Scott, Nicholas
Lloyd, Ian (Havant & W'loo)	Shaw, Giles (Pudsey)
Luce, Richard	Shelton, William (Streatham)
Macfarlane, Neil	Shepherd, Richard
MacGregor, John	Shersby, Michael
MacKay, John (Argyll)	Silvester, Fred
Macmillan, Rt Hon M.	Sims, Roger
McNair-Wilson, M. (N'bury)	Skeet, T. H. H.
Madel, David	Smith, Dudley
Major, John	Smith, Tim (Beaconsfield)
Marland, Paul	Speed, Keith
Marten, Rt Hon Neil	Spicer, Jim (West Dorset)
Mawby, Ray	Sproat, Iain
Mawhinney, Dr Brian	Squire, Robin
Maxwell-Hyslop, Robin	Stanbrook, Ivor
Mayhew, Patrick	Stanley, John
Mellor, David	Stevens, Martin
Miller, Hal (B'grove)	Stewart, A. (E Renfrewshire)
Mills, Sir Peter (West Devon)	Stewart, Ian (Hitchin)
Mitchell, David (Basingstoke)	Stokes, John
Moate, Roger	Stradling Thomas, J.
Montgomery, Fergus	Tapsell, Peter
Morris, M. (N'hampton S)	Taylor, Teddy (S'end E)
Morrison, Hon C. (Devizes)	Tebbit, Rt Hon Norman
Morrison, Hon P. (Chester)	Temple-Morris, Peter
Mudd, David	Thatcher, Rt Hon Mrs M.
Murphy, Christopher	Thompson, Donald
Myles, David	Thorne, Neil (Ilford South)
Needham, Richard	Thornton, Malcolm
Nelson, Anthony	Townend, John (Bridlington)
Neubert, Michael	Townsend, Cyril D, (B'heath)
Newton, Tony	Trippier, David
Nott, Rt Hon John	Trotter, Neville
Onslow, Cranley	van Straubenzee, Sir W.
Osborn, John	Vaughan, Dr Gerard
Page, John (Harrow, West)	Viggers, Peter
Parris, Matthew	Waddington, David
Patten, John (Oxford)	Wakeham, John
Pattie, Geoffrey	Waller, Gary
Pawsey, James	Walters, Dennis
Percival, Sir Ian	Ward, John
Peyton, Rt Hon John	Warren, Kenneth
Pink, R. Bonner	Watson, John
Pollock, Alexander	Wells, Bowen
Porter, Barry	Wheeler, John
Price, Sir David (Eastleigh)	Whitelaw, Rt Hon William
Raison, Rt Hon Timothy	Whitney, Raymond
Rathbone, Tim	Wickenden, Keith
Rees, Peter (Dover and Deal)	Wiggin, Jerry
Rees-Davies, W. R.	Wilkinson, John
Rhys Williams, Sir Brandon	Winterton, Nicholas
Ridley, Hon Nicholas	Wolfson, Mark
Ridsdale, Sir Julian	Young, Sir George (Acton)
Roberts, M. (Cardiff NW)
Roberts, Wyn (Conway)	Tellers for the Ayes:
Rossi, Hugh	Mr. Anthony Berry and
Rost, Peter	Mr. Carol Mather.
Rumbold, Mrs A. C. R.
NOES
Allaun, Frank	Campbell-Savours, Dale
Alton, David	Canavan, Dennis
Archer, Rt Hon Peter	Cant, R. B.
Atkinson, N.(H'gey,)	Carmichael, Neil
Bagier, Gordon A.T.	Carter-Jones, Lewis
Barnett, Guy (Greenwich)	Clark, Dr David (S Shields)
Barnett, Rt Hon Joel (H'wd)	Clarke, Thomas C'b'dge, A'rie
Beith, A. J.	Cocks, Rt Hon M. (B'stol S)
Benn, Rt Hon Tony	Cohen, Stanley
Bennett, Andrew (St'kp't N)	Coleman, Donald
Bidwell, Sydney	Cook, Robin F.
Bottomley, Rt Hon A.(M'b'ro)	Cowans, Harry
Bradley, Tom	Craigen, J. M. (G'gow, M'hill)
Brown, Hugh D. (Provan)	Crawshaw, Richard
Brown, R. C. (N'castle W)	Crowther, Stan
Buchan, Norman	Cryer, Bob
Cunliffe, Lawrence	Martin, M (G'gow S'burn)
Cunningham, G. (Islington S)	Maxton, John
Dalyell, Tam	Maynard, Miss Joan
Davis, Clinton (Hackney C)	Meacher, Michael
Davis, Terry (B'ham, Stechf'd)	Millan, Rt Hon Bruce
Deakins, Eric	Mitchell, Austin (Grimsby)
Dean, Joseph (Leeds West)	Morris, Rt Hon A. (W'shawe)
Dewar, Donald	Morris, Rt Hon C. (O'shaw)
Dixon, Donald	Morton, George
Dobson, Frank	Moyle, Rt Hon Roland
Dormand, Jack	Newens, Stanley
Douglas, Dick	O'Neill, Martin
Dubs, Alfred	Orme, Rt Hon Stanley
Duffy, A. E. P.	Owen, Rt Hon Dr David
Dunwoody, Hon Mrs G.	Palmer, Arthur
Eadie, Alex	Park, George
Eastham, Ken	Parry, Robert
Edwards, R. (W'hampt'n S E)	Pendry, Tom
Ellis, R. (NE D'bysh're)	Penhaligon, David
Ellis, Tom (Wrexham)	Price, C. (Lewisham W)
English, Michael	Radice, Giles
Ennals, Rt Hon David	Rees, Rt Hon M (Leeds S)
Faulds, Andrew	Richardson, Jo
Flannery, Martin	Roberts, Albert (Normanton)
Fletcher, Ted (Darlington)	Roberts, Gwilym (Cannock)
Ford, Ben	Robertson, George
Forrester, John	Robinson, G. (Coventry NW)
Foster, Derek	Rooker, J. W.
Foulkes, George	Roper, John
Freud, Clement	Ross, Ernest (Dundee West)
Garrett, John (Norwich S)	Ross, Stephen (Isle of Wight)
Garrett, W. E. (Wallsend)	Sever, John
Golding, John	Sheerman, Barry
Gourlay, Harry	Sheldon, Rt Hon R.
Graham, Ted	Shore, Rt Hon Peter
Grimond, Rt Hon J.	Short, Mrs Renée
Hamilton, James (Bothwell)	Silkin, Rt Hon J. (Deptford)
Hamilton, W. W. (C'tral Fife)	Silverman, Julius
Hardy, Peter	Skinner, Dennis
Harrison, Rt Hon Walter	Smith, Cyril (Rochdale)
Hattersley, Rt Hon Roy	Soley, Clive
Haynes, Frank	Spriggs, Leslie
Healey, Rt Hon Denis	Stallard, A. W.
Heffer, Eric S.	Steel, Rt Hon David
Hogg, N. (E Dunb't'nshire)	Stewart, Rt Hon D. (W Isles)
Home Robertson, John	Stoddart, David
Hooley, Frank	Strang, Gavin
Horam, John	Straw, Jack
Hoyle, Douglas	Summerskill, Hon Dr Shirley
Huckfield, Les	Taylor, Mrs Ann (Bolton W)
Hughes, Mark (Durham)	Thomas, Dafydd (Merioneth)
Hughes, Robert (Aberdeen N)	Thorne, Stan (Preston South)
Hughes, Roy (Newport)	Torney, Tom
Jay, Rt Hon Douglas	Urwin, Rt Hon Tom
Jenkins, Rt Hon Roy (Hillh'd)	Wainwright, E. (Dearne V)
John, Brynmor	Wainwright, R. (Colne V)
Johnson, James (Hull West)	Wellbeloved, James
Jones, Rt Hon Alec (Rh'dda)	Welsh, Michael
Kaufman, Rt Hon Gerald	Whitehead, Phillip
Lamond, James	Whitlock, William
Leadbitter, Ted	Wigley, Dafydd
Leighton, Ronald	Willey, Rt Hon Frederick
Lewis, Ron (Carlisle)	Williams, Rt Hon A. (S'sea W)
Litherland, Robert	Wilson, Gordon (Dundee E)
Lofthouse, Geoffrey	Winnick, David
Lyons, Edward (Bradf'd W)	Woodall, Alec
Mabon, Rt Hon Dr J. Dickson	Woolmer, Kenneth
McCartney, Hugh	Wrigglesworth, Ian
McDonald, Dr Oonagh	Wright, Sheila
McElhone, Frank	Young, David (Bolton E)
MacKenzie, Rt Hon Gregor
McNally, Thomas	Tellers for the Noes:
Marks, Kenneth	Mr. Allen McKay and
Marshall, Jim (Leicester S)	Dr. Edmund Marshall.

Division No. 269]	[8.05 pm
AYES
Abse, Leo	Cartwright, John
Adams, Allen	Clark, Dr David (S Shields)
Allaun, Frank	Clarke, Thomas C'b'dge,A'rie
Alton, David	Cocks, Rt Hon M. (B'stol S)
Anderson, Donald	Cohen, Stanley
Archer, Rt Hon Peter	Coleman, Donald
Ashley, Rt Hon Jack	Concannon, Rt Hon J. D.
Ashton, Joe	Cook, Robin F.
Atkinson, N.(H'gey,)	Cormack, Patrick
Bagier, Gordon A.T.	Cowans, Harry
Barnett, Guy (Greenwich)	Cox, T. (W'dsw'th, Toot'g)
Barnett, Rt Hon Joel (H'wd)	Craigen, J. M. (G'gow, M'hill)
Beith, A. J.	Crawshaw, Richard
Benn, Rt Hon Tony	Critchley, Julian
Bennett, Andrew (St'kp't N)	Crouch, David
Benyon, Thomas (A'don)	Crowther, Stan
Booth, Rt Hon Albert	Cryer, Bob
Boothroyd, Miss Betty	Cunliffe, Lawrence
Bottomley, Rt Hon A. (M'b'ro)	Cunningham, G. (Islington S)
Bradley, Tom	Cunningham, Dr J. (W'h'n)
Bray, Dr Jeremy	Dalyell, Tam
Brocklebank-Fowler, C.	Davidson, Arthur
Brown, Hugh D. (Provan)	Davies, Rt Hon Denzil (L'lli)
Brown, R. C. (N'castle W)	Davis, Clinton (Hackney C)
Brown, Ronald W. (H'ckn'y S)	Davis, Terry (B'ham, Stechf'd)
Brown, Ron (E'burgh, Leith)	Deakins, Eric
Buchan, Norman	Dean, Joseph (Leeds West)
Callaghan, Rt Hon J.	Dewar, Donald
Callaghan, Jim (Midd't'n & P)	Dixon, Donald
Campbell, Ian	Dobson, Frank
Campbell-Savours, Dale	Dormand, Jack
Canavan, Dennis	Dorrell, Stephen
Cant, R. B.	Douglas, Dick
Carmichael, Neil	Dubs, Alfred
Carter-Jones, Lewis	Duffy, A. E. P.

Dunnett, Jack	Mabon, Rt Hon Dr J. Dickson
Dunwoody, Hon Mrs G.	McCartney, Hugh
Eadie, Alex	McDonald, Dr Oonagh
Eastham, Ken	McElhone, Frank
Edwards, R. (W'hampt'n S E)	McGuire, Michael (Ince)
Ellis, R. (NE D'bysh're)	McKelvey, William
Ellis, Tom (Wrexham)	MacKenzie, Rt Hon Gregor
English, Michael	Maclennan, Robert
Ennals, Rt Hon David	McMahon, Andrew
Evans, loan (Aberdare)	McNally, Thomas
Evans, John (Newton)	McNamara, Kevin
Ewing, Harry	McTaggart, Robert
Faulds, Andrew	McWilliam, John
Field, Frank	Madel, David
Fitch, Alan	Magee, Bryan
Flannery, Martin	Marks, Kenneth
Fletcher, Ted (Darlington)	Marshall, D (G'gow S'ton)
Foot, Rt Hon Michael	Marshall, Dr Edmund (Goole)
Ford, Ben	Marshall, Jim (Leicester S)
Forrester, John	Martin, M (G'gow S'burn)
Foster, Derek	Mason, Rt Hon Roy
Foulkes, George	Maxton, John
Fraser, J. (Lamb'th, N'w'd)	Maynard, Miss Joan
Freeson, Rt Hon Reginald	Meacher, Michael
Freud, Clement	Mellish, Rt Hon Robert
Garrett, John (Norwich S)	Mikardo, Ian
Garrett, W. E. (Wallsend)	Millan, Rt Hon Bruce
Ginsburg, David	Miller, Dr M. S. (E Kilbride)
Golding, John	Mitchell, Austin (Grimsby)
Gourlay, Harry	Mitchell, R. C. (Soton Itchen)
Graham, Ted	Morris, Rt Hon A. (W'shawe)
Grant, John (Islington C)	Morris, Rt Hon C. (O'shaw)
Grimond, Rt Hon J.	Morrison, Hon C. (Devizes)
Hamilton, James (Bothwell)	Moyle, Rt Hon Roland
Hamilton, W. W. (C'tral Fife)	Needham, Richard
Hardy, Peter	Newens, Stanley
Harrison, Rt Hon Walter	Oakes, Rt Hon Gordon
Hart, Rt Hon Dame Judith	Ogden, Eric
Haselhurst, Alan	O'Halloran, Michael
Hattersley, Rt Hon Roy	O'Neill, Martin
Haynes, Frank	Orme, Rt Hon Stanley
Healey, Rt Hon Denis	Owen, Rt Hon Dr David
Heffer, Eric S.	Palmer, Arthur
Hicks, Robert	Park, George
Hogg, N. (E Dunb't'nshire)	Parker, John
Holland, S. (L'b'th, Vauxh'll)	Parry, Robert
Home Robertson, John	Pavitt, Laurie
Homewood, William	Pendry, Tom
Hooley, Frank	Penhaligon, David
Horam, John	Pitt, William Henry
Howell, Rt Hon D.	Powell, Rt Hon J.E. (S Down)
Howells, Geraint	Powell, Raymond (Ogmore)
Hoyle, Douglas	Prescott, John
Huckfield, Les	Price, C. (Lewisham W)
Hudson Davies, Gwilym E.	Race, Reg
Hughes, Mark (Durham)	Radice, Giles
Hughes, Robert (Aberdeen N)	Rees, Rt Hon M (Leeds S)
Hughes, Roy (Newport)	Rhys Williams, Sir Brandon
Janner, Hon Greville	Richardson, Jo
Jay, Rt Hon Douglas	Roberts, Albert (Normanton)
Jenkins, Rt Hon Roy (Hillh'd)	Roberts, Allan (Bootle)
John, Brynmor	Roberts, Ernest (Hackney N)
Johnson, James (Hull West)	Roberts, Gwilym (Cannock)
Johnson, Walter (Derby S)	Robertson, George
Jones, Rt Hon Alec (Rh'dda)	Robinson, G. (Coventry NW)
Jones, Barry (East Flint)	Rodgers, Rt Hon William
Kaufman, Rt Hon Gerald	Rooker, J. W.
Kilroy-Silk, Robert	Roper, John
Kinnock, Neil	Ross, Ernest (Dundee West)
Knox, David	Ross, Stephen (Isle of Wight)
Lambie, David	Ross, Wm. (Londonderry)
Lamond, James	Rowlands, Ted
Leadbitter, Ted	Ryman, John
Leighton, Ronald	Sever, John
Lester, Jim (Beeston)	Sheerman, Barry
Lestor, Miss Joan	Sheldon, Rt Hon R.
Lewis, Ron (Carlisle)	Shore, Rt Hon Peter
Litherland, Robert	Short, Mrs Renée
Lofthouse, Geoffrey	Silkin, Rt Hon J. (Deptford)
Lyons, Edward (Bradf'd W)	Silkin, Rt Hon S. C. (Dulwich)

Silverman, Julius	Wainwright, E. (Dearne V)
Skinner, Dennis	Wainwright, R. (Colne V)
Smith, Cyril (Rochdale)	Walker, Rt Hon H. (D'caster)
Smith, Rt Hon J. (N Lanark)	Walters, Dennis
Soley, Clive	Weetch, Ken
Spearing, Nigel	Wellbeloved, James
Spriggs, Leslie	Welsh, Michael
Squire, Robin	White, Frank R.
Stallard, A. W.	White, J. (G'gow Pollok)
Steel, Rt Hon David	Whitehead, Phillip
Stewart, Rt Hon D. (W Isles)	Whitlock, William
Stoddart, David	Wigley, Dafydd
Stott, Roger	Willey, Rt Hon Frederick
Strang, Gavin	Williams, Rt Hon A. (S'sea W)
Straw, Jack	Williams, Rt Hon Mrs (Crosby)
Summerskill, Hon Dr Shirley	Wilson, Gordon (Dundee E)
Tapsell, Peter	Wilson, Rt Hon Sir H. (H'ton)
Taylor, Mrs Ann (Bolton W)	Wilson, William (C'try SE)
Thomas, Dafydd (Merioneth)	Winnick, David
Thomas, Jeffrey (Abertillery)	Woodall, Alec
Thomas, Dr R. (Carmarthen)	Woolmer, Kenneth
Thorne, Stan (Preston South)	Wrigglesworth, Ian
Tilley, John	Wright, Sheila
Tinn, James	Young, David (Bolton E)
Torney, Tom
Townsend, Cyril D, (B'heath)	Tellers for the Ayes:
Urwin, Rt Hon Tom	Mr. Allen McKay and
van Straubenzee, Sir W.	Mr. George Morton.
Varley, Rt Hon Eric G.
NOES
Adley, Robert	Carlisle, Kenneth (Lincoln)
Aitken, Jonathan	Carlisle, Rt Hon M. (R'c'n)
Alexander, Richard	Chalker, Mrs. Lynda
Alison, Rt Hon Michael	Channon, Rt. Hon. Paul
Amery, Rt Hon Julian	Chapman, Sydney
Ancram, Michael	Churchill, W. S.
Arnold, Tom	Clark, Hon A. (Plym'th, S'n)
Aspinwall, Jack	Clark, Sir W. (Croydon S)
Atkins, Rt Hon H.(S'thorne)	Clarke, Kenneth (Rushcliffe)
Atkins, Robert (Preston N)	Clegg, Sir Walter
Atkinson, David (B'm'th,E)	Cockeram, Eric
Baker, Kenneth(St.M'bone)	Colvin, Michael
Baker, Nicholas (N Dorset)	Cope, John
Banks, Robert	Corrie, John
Beaumont-Dark, Anthony	Costain, Sir Albert
Bendall, Vivian	Cranborne, Viscount
Bennett, Sir Frederic (T'bay)	Dickens, Geoffrey
Benyon, W. (Buckingham)	Douglas-Hamilton, Lord J.
Best, Keith	Dover, Denshore
Bevan, David Gilroy	du Cann, Rt Hon Edward
Biffen, Rt Hon John	Dunn, Robert (Dartford)
Biggs-Davison, Sir John	Durant, Tony
Blackburn, John	Eden, Rt Hon Sir John
Blaker, Peter	Edwards, Rt Hon N. (P'broke)
Body, Richard	Eggar, Tim
Bonsor, Sir Nicholas	Elliott, Sir William
Boscawen, Hon Robert	Emery, Sir Peter
Bottomley, Peter (W'wich W)	Eyre, Reginald
Bowden, Andrew	Fairbairn, Nicholas
Boyson, Dr Rhodes	Fairgrieve, Sir Russell
Braine, Sir Bernard	Faith, Mrs Sheila
Bright, Graham	Farr, John
Brinton, Tim	Fell, Sir Anthony
Brittan, Rt. Hon. Leon	Fenner, Mrs Peggy
Brooke, Hon Peter	Finsberg, Geoffrey
Brotherton, Michael	Fisher, Sir Nigel
Brown, Michael (Brigg & Sc'n)	Fletcher, A. (Ed'nb'gh N)
Browne, John (Winchester)	Fletcher-Cooke, Sir Charles
Bruce-Gardyne, John	Fookes, Miss Janet
Bryan, Sir Paul	Forman, Nigel
Buchanan-Smith, Rt. Hon. A.	Fowler, Rt Hon Norman
Buck, Antony	Fox, Marcus
Budgen, Nick	Fraser, Rt Hon Sir Hugh
Bulmer, Esmond	Fraser, Peter (South Angus)
Burden, Sir Frederick	Fry, Peter
Butcher, John	Gardiner, George (Reigate)
Butler, Hon Adam	Gardner, Edward (S Fylde)
Cadbury, Jocelyn	Garel-Jones, Tristan
Carlisle, John (Luton West)	Glyn, Dr Alan

Goodhart, Sir Philip	Moate, Roger
Goodhew, Sir Victor	Monro, Sir Hector
Goodlad, Alastair	Montgomery, Fergus
Gorst, John	Moore, John
Gow, Ian	Morris, M. (N'hampton S)
Gower, Sir Raymond	Morrison, Hon P. (Chester)
Grant, Anthony (Harrow C)	Mudd, David
Gray, Hamish	Murphy, Christopher
Greenway, Harry	Myles, David
Grieve, Percy	Neale, Gerrard
Griffiths, E. (B'y St. Edm'ds)	Nelson, Anthony
Griffiths, Peter Portsm'th N)	Neubert, Michael
Grylls, Michael	Newton, Tony
Gummer, John Selwyn	Normanton, Tom
Hamilton, Hon A.	Nott, Rt Hon John
Hamilton, Michael (Salisbury)	Onslow, Cranley
Hampson, Dr Keith	Oppenheim, Rt Hon Mrs S.
Hannam,John	Osborn, John
Hastings, Stephen	Page, John (Harrow, West)
Havers, Rt Hon Sir Michael	Page, Richard (SW Herts)
Hawkins, Sir Paul	Parkinson, Rt Hon Cecil
Hawksley, Warren	Parris, Matthew
Hayhoe, Barney	Patten, John (Oxford)
Heath, Rt Hon Edward	Pattie, Geoffrey
Heddle, John	Pawsey, James
Henderson, Barry	Percival, Sir Ian
Heseltine, Rt Hon Michael	Peyton, Rt Hon John
Higgins, Rt Hon Terence L.	Pink, R. Bonner
Hill, James	Pollock, Alexander
Hogg, Hon Douglas (Gr'th'm)	Porter, Barry
Holland, Philip (Carlton)	Prentice, Rt Hon Reg
Hooson, Tom	Price, Sir David (Eastleigh)
Hordern, Peter	Prior, Rt Hon James
Howe, Rt Hon Sir Geoffrey	Proctor, K. Harvey
Howell, Rt Hon D. (G'ldf'd)	Pym, Rt Hon Francis
Howell, Ralph (N Norfolk)	Raison, Rt Hon Timothy
Hunt, David (Wirral)	Rathbone, Tim
Hurd, Rt Hon Douglas	Rees, Peter (Dover and Deal)
Irvine, Bryant Godman	Rees-Davies, W. R.
Irving, Charles (Cheltenham)	Renton, Tim
Jenkin, Rt Hon Patrick	Ridley, Hon Nicholas
Jessel, Toby	Ridsdale, Sir Julian
Johnson Smith, Sir Geoffrey	Rifkind, Malcolm
Jopling, Rt Hon Michael	Rippon, Rt Hon Geoffrey
Joseph, Rt Hon Sir Keith	Roberts, M. (Cardiff NW)
Kaberry, Sir Donald	Roberts, Wyn (Conway)
Kellett-Bowman, Mrs Elaine	Rossi, Hugh
Kershaw, Sir Anthony	Rost, Peter
Kimball, Sir Marcus	Royle, Sir Anthony
King, Rt Hon Tom	Rumbold, Mrs A. C. R.
Knight, Mrs Jill	Sainsbury, Hon Timothy
Lamont, Norman	St. John-Stevas, Rt Hon N.
Lang, Ian	Scott, Nicholas
Latham, Michael	Shaw, Giles (Pudsey)
Lawrence, Ivan	Shelton, William (Streatham)
Lawson, Rt Hon Nigel	Shepherd, Colin (Hereford)
Lee, John	Shepherd, Richard
Le Marchant, Spencer	Shersby, Michael
Lennox-Boyd, Hon Mark	Silvester, Fred
Lloyd, Ian (Havant & W'loo)	Sims, Roger
Lloyd, Peter (Fareham)	Skeet, T. H. H.
Loveridge, John	Smith, Dudley
Luce, Richard	Smith, Tim (Beaconsfield)
Lyell, Nicholas	Speed, Keith
Macfarlane, Neil	Speller, Tony
MacGregor, John	Spence, John
MacKay, John (Argyll)	Spicer, Jim (West Dorset)
McNair-Wilson, M. (N'bury)	Spicer, Michael (S Worcs)
McNair-Wilson, P. (New F'st)	Sproat, Iain
Major, John	Stainton, Keith
Marland, Paul	Stanbrook, Ivor
Marten, Rt Hon Neil	Stanley, John
Maude, Rt Hon Sir Angus	Steen, Anthony
Mawby, Ray	Stevens, Martin
Mawhinney, Dr Brian	Stewart, A. (E Renfrewshire)
Mayhew, Patrick	Stewart, Ian (Hitchin)
Mellor, David	Stokes, John
Mills, Iain (Meriden)	Stradling Thomas, J.
Mills, Sir Peter (West Devon)	Taylor, Teddy (S'end E)
Mitchell, David (Basingstoke)	Tebbit, Rt Hon Norman

Temple-Morris, Peter	Watson, John
Thatcher, Rt Hon Mrs M.	Wells, Bowen
Thomas, Rt Hon Peter	Wells, John (Maidstone)
Thompson, Donald	Wheeler, John
Thorne, Neil (Ilford South)	Whitelaw, Rt Hon William
Thornton, Malcolm	Whitney, Raymond
Townend, John (Bridlington)	Wickenden, Keith
Trippier, David	Wiggin, Jerry
Trotter, Neville	Wilkinson, John
Vaughan, Dr Gerard	Williams, D.(Montgomery)
Viggers, Peter	Winterton, Nicholas
Waddington, David	Wolfson, Mark
Wakeham, John	Young, Sir George (Acton)
Waldegrave, Hon William	Younger, Rt Hon George
Walker, Rt Hon P.(W'cester)
Walker, B. (Perth)	Tellers for the Noes:
Waller, Gary	Mr. Anthony Berry and
Ward, John	Mr. Carol Mather.
Warren, Kenneth

Question accordingly negatived.

Mr. Peter Shore (Stepney and Poplar)

We have had a remarkable vote, one of the closest votes certainly in this Parliament, and certainly on this Finance Bill.

Mr. Straw

The closest vote.

Mr. Shore

Indeed, the closest vote in the whole of this Parliament. The vote was on a matter on which the House of Commons was ranged against the Executive. I should like to think that the Chancellor of the Exchequer, who again is an absentee from the House and, if not, the Chief Secretary, will consider carefully the meaning of the vote and the fact that 44 members of his own party have voted against the Government. I hope that he will be prepared to come to the House again and tell us when he intends to honour the implicit commitment to make good the 5 per cent.