HC Deb 30 April 1984 vol 59 cc151-63

2 am

Dr. McDonald

I beg to move, in page 10, line 19, leave out from beginning to 'for' in line 23.

The Second Deputy Chairman

With this it will be convenient to take amendment No. 28, in page 134, line 11, leave out Schedule 7.

Dr. McDonald

The purpose of the amendment is to oppose the abolition of the investment income surcharge, but that purpose must be expressed in a somewhat obscure form, because the Government need not include in the Finance Bill any clause dealing with the investment income surcharge. The reasons for imposing the surcharge in the first place were to discriminate in favour of earned income, as opposed to unearned income. It was a matter of ensuring justice in taxation. This principle was recognised by a former Chancellor of the Exchequer, now Lord Barber, when he announced the Government's intention to introduce the investment income surcharge in his Budget speech in March 1971. He reiterated the principle in March 1972. The investment surcharge came into effect in 1973. It was part of the then right hon. Gentleman's reform of the tax system. The investment income surcharge was designed to replace the old surtax.

In March 1971, when Lord Barber, as he now is, introduced the surcharge, he said that

it will still be necessary to retain the distinction between earned and investment income, this distinction will be made by way of a surcharge on investment income in place of the present earned income relief. But it will be an essential feature of the new system that this surcharge will only apply above a certain level of investment income, so that the first slice of such income will be taxed at the rate applicable to earned income."—[Official Report, 30 March 1971; Vol. 814, c. 1387.] He reiterated those principles on 21 March 1972, when he said:

I have made it abundantly clear that I regard the present form of discrimination against investment income as unacceptable, the United Kingdom and France are the only two which draw such a distinction to any significant degree."—[Official Report, 21 March 1972; Vol. 833, c. 1386.] He still accepted the principle that there should be a difference between earned and unearned income.

The Tory Government of 1970 to 1973 introduced the investment income surcharge at the present level of 15 per cent. The only difference was that that Government exempted investment up to £2,000. Over the years that level has crept up to £7,100. The Tory Government of those days accepted that it was important to distinguish between those two types of income. They believed that the Government should look more kindly on people who had gone out to work to earn their wages than on those who acquired wealth by accident or inheritance and needed only to wait at home while the money mounted up.—[Interruption.] That was the important distinction which the Tory Government accepted. The hon. Member for Staffordshire, South (Mr. Cormack) was in the House of Commons at the time, and I do not recall reading any objection that he made then.

The present Chancellor has no such qualms. He has cheerfully abandoned the principles of his Tory predecessors. He claims that by abolishing the investment income surcharge he will help small business men. He says that the investment surcharge

hits the small business man who reaches retirement without the cushion of a company pension scheme".—[Official Report, 13 March 1984; Vol. 56, c. 293.] That is one group which the right hon. Gentleman sets out to help.

It is extraordinary that the right hon. Gentleman should pick out that group of business men for special protection, as there are many pension schemes for the self-employed small business man. As those schemes are subject to tax relief, I cannot see why the Chancellor should look so kindly on the foolish virgins who fail to save for their old age through a proper pension scheme.

The Chancellor also claims to protect the pensioners, but he will protect only those with income-yielding assets of £70,000 or more, assuming a pre-tax return of about 10 per cent. if the return is lower, greater total assets will be needed to benefit from the concession.

The purpose of abolishing the surcharge is to reduce by 15 per cent. the marginal income tax rates of the tiny minority of taxpayers—about 1 per cent.—previously subject to the surcharge and especially to reduce the top rate of income tax from 75 to 60 per cent.

Even before the Chancellor took this decision, most investment incomes were subject to a lower average tax liability than equivalent earned income because, unlike wages, investment incomes are not subject to national insurance contributions. Abolishing the surcharge therefore does not make the rate of tax the same for unearned as for earned income. It means that the rate for unearned income is much lower. For example, the tax on earned income of £7,000 per year is £1,154—assuming that the taxpayer has the married man's allowance only—plus £630 national insurance contributions. Taking the two elements together, this means that the tax as a percentage of gross income is 25 per cent. The total tax payable on unearned income of £7,000 will now be £1,154 only—a total tax take of 16 per cent., which is much lower than the rate payable on earned income.

In abolishing the surcharge the Chancellor is reducing the burden of taxation on unearned income to a far greater extent than that on earned income. Moreover, the benefit will go to a very small number of taxpayers. The Chancellor claims that he wishes to help pensioners, but only a tiny minority of pensioners—150,000 of them—are among the estimated 270,000 taxpayers who would otherwise pay the surcharge.

The hon. Member for Cannock and Burntwood (Mr. Howarth) regaled us with tales of visits to fish and chip shops in his constituency, where people seemed not only to welcome the imposition of VAT on their fish and chips but to be enraptured by the proposed abolition of the investment income surcharge. As they must all have al: least £70,000 tucked away in the bank, an additional 15 per cent. on their fish and chips, which seem fairly expensive in the hon. Gentleman's area, would presumably be no skin off their noses. Indeed, an unusually high proportion of the 270,000 taxpayers previously subject to the surcharge must live in Cannock for the fish and chip shops to be so full of people welcoming the news of its abolition.

I have mentioned a figure of £70,000, but many of those who will benefit from the abolition have more than that. The average level of investment income would have stood at about £16,000 in 1984–85. To get £16,000 of investment income, savings of about £133,000 would be needed if we assume a pre-tax yield of 12 per cent. The taxpayers concerned are extremely well-off. Some of those people are to be found among the 150,000 pensioners of whom the Chancellor seems to be so fond. Sixty thousand of the 150,000 pensioners would have had investment incomes of over £15,000 last year, and that would imply that they had savings of about £130,000. Abolition will cost £360 million in a full year.

The Chancellor told us that one of the reasons for introducing this measure was his anxiety to help pensioners. However, he could have helped a million pensioners at a cost of only £185 million by reversing the housing benefit cuts announced earlier this year. He could also have eliminated one of the main grievances over the Budget—the fact that the age allowance is to be raised by only 5.3 per cent. instead of 12.5 per cent. That would hae cost £130 million in a full year. It would have helped more than 2 million pensioners and brought 0.2 million pensioners out of tax altogether.

The Chancellor's claim to be helping the foolish business man who fails to make a proper pension arrangement for his old age, and his claim to be concerned about pensioners, are spurious. If he really had such concerns he would, with £360 million to spend, have done far better not to concentrate it all on 150,000 pensioners and a few others below pension age, most of whom do not need his help. He has poured £360 million down the drain by spending it on the rich. That is typical of the Budget and the present Government's earlier Budgets. If the Chancellor's claims had any foundation, he could have spent that money in a far more effective way.

Mr. Peter Rees

I—[HON. MEMBERS:"Hear, hear".] I am overwhelmed. I congratulate the hon. Member for Thurrock (Dr. McDonald) on the ingenuity of the amendment that has made it possible for this debate to take place, but there is little else on which I can congratulate her.

I thought that the encouragement of investment was common ground between the two major parties. The encouragement of investment at home has been the theme of many debates. If that is so, is it right to impose a surcharge on savings or investment income? I should also like to correct one misconception that I thought had been put to rest in earlier debates: that a person who pays investment income surcharge must necessarily possess a large capital sum. That would not necessarily be the case. If he had been—to use the hon. Lady's inelegant phrase—a foolish business man, he might just have been able to buy an annuity, and be paying investment income surcharge on it.

The outside world will not relish the harsh statement of the hon. Lady, which seems to derive more from the parable of the foolish virgins than from any contemporary view of modern life. I make no comment on the hon. Lady's own position. The repeal will, to a large degree, benefit the elderly—over half of the 280,000 who will be taken out of charge to tax—and people living on relatively small savings income.

On that basis, I hope that the Government's action will commend itself to the Committee and that the Committee will think it right to reject the hon. Lady's amendment, should she feel disposed to press it to a Division.

2.15 am
Dr. McDonald

It appears that the Chief Secretary has brought his fan club with him this evening. I wonder whether it is composed of beneficiaries of this change. A few are shaking their heads in disagreement. They must be the poor members of the club.

I find it extraordinary that the Chief Secretary should talk of £140 a week as a small income. There are many people for whom it is not, and it is about time that he and Conservative Members faced the reality of life in Britain.

There are about 7.5 million low-paid people, and many people live on the state pension or on an income a little above it. They have suffered badly from the changes to taxation and benefits that the Government have made. We shall naturally have to push the amendment to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 56, Noes 169.

Division No. 261] [2.15 am
Atkinson, N. (Tottenham) McDonald, Dr Oonagh
Barron, Kevin McKay, Allen (Penistone)
Beckett, Mrs Margaret Madden, Max
Bell, Stuart Meadowcroft, Michael
Bermingham, Gerald Michie, William
Boyes, Roland Miller, Dr M. S. (E Kilbride)
Caborn, Richard O'Brien, William
Campbell-Savours, Dale Parry, Robert
Clay, Robert Patchett, Terry
Cocks, Rt Hon M. (Bristol S.) Penhaligon, David
Cohen, Harry Pike, Peter
Cook, Frank (Stockton North) Prescott, John
Corbyn, Jeremy Redmond, M.
Cowans, Harry Robinson, G. (Coventry NW)
Dixon, Donald Rogers, Allan
Eadie, Alex Rooker, J. W.
Fatchett, Derek Sedgemore, Brian
Fisher, Mark Skinner, Dennis
Flannery, Martin Smith, C.(Isl'ton S & F'bury)
Fraser, J. (Norwood) Soley, Clive
Freeson, Rt Hon Reginald Spearing, Nigel
George, Bruce Wallace, James
Gould, Bryan Wardell, Gareth (Gower)
Hattersley, Rt Hon Roy Welsh, Michael
Hogg, N. (C'nauld & Kilsyth) Woodall, Alec
Hughes, Sean (Knowsley S) Young, David (Bolton SE)
Kirkwood, Archibald
Leadbitter, Ted Tellers for the Ayes:
Leighton, Ronald Mr. James Hamilton and
Lofthouse, Geoffrey Mr. Frank Haynes.
Alexander, Richard Cope, John
Amess, David Couchman, James
Ashby, David Cranborne, Viscount
Aspinwall, Jack Currie, Mrs Edwina
Atkins, Rt Hon Sir H. Dorrell, Stephen
Baldry, Anthony Douglas-Hamilton, Lord J.
Batiste, Spencer Dover, Den
Bellingham, Henry du Cann, Rt Hon Edward
Berry, Sir Anthony Dunn, Robert
Biggs-Davison, Sir John Edwards, Rt Hon N. (P'broke)
Blaker, Rt Hon Sir Peter Eggar, Tim
Bowden, A. (Brighton K'to'n) Fallon, Michael
Bowden, Gerald (Dulwich) Fenner, Mrs Peggy
Boyson, Dr Rhodes Finsberg, Sir Geoffrey
Brandon-Bravo, Martin Forman, Nigel
Bright, Graham Forth, Eric
Brinton, Tim Freeman, Roger
Brooke, Hon Peter Gale, Roger
Brown, M. (Brigg & Cl'thpes) Galley, Roy
Bruinvels, Peter Gardiner, George (Reigate)
Budgen, Nick Goodhart, Sir Philip
Bulmer, Esmond Goodlad, Alastair
Burt, Alistair Gorst, John
Butcher, John Gregory, Conal
Butterfill, John Griffiths, Peter (Portsm'th N)
Carlisle, Kenneth (Lincoln) Grist, Ian
Carttiss, Michael Ground, Patrick
Chapman, Sydney Grylls, Michael
Chope, Christopher Hamilton, Hon A. (Epsom)
Clark, Hon A. (Plym'th S'n) Hamilton, Neil (Tatton)
Clark, Dr Michael (Rochford) Hanley, Jeremy
Clark, Sir W. (Croydon S) Hannam, John
Clarke, Rt Hon K. (Rushcliffe) Hargreaves, Kenneth
Cockeram, Eric Harris, David
Colvin, Michael Havers, Rt Hon Sir Michael
Coombs, Simon Hawkins, C. (High Peak)
Hawksley, Warren Miller, Hal (B'grove)
Hayes, J. Mills, lain (Meriden)
Hayhoe, Barney Mills, Sir Peter (West Devon)
Hayward, Robert Mitchell, David (NW Hants)
Heathcoat-Amory, David Moate, Roger
Henderson, Barry Moore, John
Hickmet, Richard Morris, M. (N'hampton, S)
Hirst, Michael Morrison, Hon C. (Devizes)
Hogg, Hon Douglas (Gr'th'm) Morrison, Hon P. (Chester)
Holland, Sir Philip (Gedling) Moynihan, Hon C.
Hooson, Tom Murphy, Christopher
Howard, Michael Needham, Richard
Howarth, Alan (Stratf'd-on-A) Nicholls, Patrick
Howarth, Gerald (Cannock) Normanton, Tom
Howell, Ralph (N Norfolk) Norris, Steven
Hunt, David (Wirral) Osborn, Sir John
Hunter, Andrew Ottaway, Richard
Johnson-Smith, Sir Geoffrey Page, Richard (Herts SW)
Jones, Gwilym (Cardiff N) Pawsey, James
Jones, Robert (W Herts) Peacock, Mrs Elizabeth
Jopling, Rt Hon Michael Powell, William (Corby)
Kellett-Bowman, Mrs Elaine Powley, John
Key, Robert Proctor, K. Harvey
King, Roger (B'ham N'field) Rathbone, Tim
Knight, Mrs Jill (Edgbaston) Rees, Rt Hon Peter (Dover)
Knowles, Michael Roberts, Wyn (Conwy)
Knox, David Ryder, Richard
Latham, Michael Sainsbury, Hon Timothy
Lawler, Geoffrey Shersby, Michael
Lawrence, Ivan Sims, Roger
Leigh, Edward (Gainsbor'gh) Skeet, T. H. H.
Lennox-Boyd, Hon Mark Soames, Hon Nicholas
Lester, Jim Stanbrook, Ivor
Lewis, Sir Kenneth (Stamf'd) Stewart, Allan (Eastwood)
Lilley, Peter Stradling Thomas, J.
Lloyd, Peter, (Fareham) Sumberg, David
MacKay, Andrew (Berkshire) Taylor, John (Solihull)
MacKay, John (Argyll & Bute) Thompson, Donald (Calder V)
Major, John Viggers, Peter
Malins, Humfrey Wakeham, Rt Hon John
Malone, Gerald Wardle, C. (Bexhill)
Maples, John Warren, Kenneth
Marland, Paul Watts, John
Mather, Carol Wolfson, Mark
Maude, Hon Francis Yeo, Tim
Mawhinney, Dr Brian Young, Sir George (Acton)
Maxwell-Hyslop, Robin
Mayhew, Sir Patrick Tellers for the Noes:
Mellor, David Mr. Robert Boscawen and
Merchant, Piers Mr. Tristan Garel-Jones.
Meyer, Sir Anthony

Question accordingly negatived.

Dr. McDonald

I beg to move amendment No. 27, in page 10, line 27, at end add—

'(4) Payments to any person of invalidity benefit under the Social Security Act 1975 shall not be liable to income tax until the 5 per cent. abatement of invalidity pension, made under the Social Security (No. 2) Act 1980 shall have been made good.'.

The main purpose of the amendment, which is difficult to frame because of the rules of the House of Commons, is to ask the Government to restore at long last the 5 per cent. abatement of invalidity benefit. This is the long-term contributory benefit for men and women below retirement age unable to work because of disability or chronic sickness. Anyone still unable to work after 28 weeks on sickness benefit will automatically qualify, and most of the people who receive it will never be able to work again. They remain on invalidity benefit until they reach retirement age.

This benefit is currently claimed by a large number of people. Last year, 900,000 people claimed it, and it is an important benefit intended specifically for sick and disabled people.

Two forms of treatment have been dished out to these people by the Government. First, they cut the benefit by breaking the link between earnings and benefit, by which the benefit was to go up in line with earning or prices, whichever was the greater. Secondly, in 1980 the invalidity pension was uprated by 5 per cent. less than the expected rise in prices, because the Government said that this benefit, like others, should be subject to tax. They said that they would allow that cut until such time as it was possible to find a way of taxing the benefit.

Up to now the Government have been quite unable to do that. This means that a single person would be getting £34.05 a week had the invalidity pension been raised as much as the retirement pension, whereas he gets only £32.60 a week. Similarly, a married couple would get £54.50 a week instead of £52.15.

It is obvious that the Government think that such small differences of a couple of pounds a week are neither here nor there, and that is because the Treasury and social security Ministers have no idea of what it is like to live on this amount of money a week, where £1 or £2 a week can make quite a difference to the comfort of the people. The Ministers have therefore been happy to let this abatement go on year by year, and to allow the position of invalidity pensioner to deteriorate.

2.30 am

These are people who live in conditions of real poverty. Being ill or disabled imposes all kinds of extra costs, and the Government have chosen to do this group of people—the disabled—out of money that is due to them. Their other actions have imposed great burdens on these people, such as taking away from those who just get the invalidity pension any right to special payments on social security and allowing them to pay the £1.60 prescription charges, which soon get through a single person's £32 a week, which is a meagre amount of money to live on. Many of the invalidity pensioners are not entitled to free prescriptions, and did benefit from single social security payments.

After the way in which the Chief Secretary talked about £140 a week as being a modest income, I do not know how he can look at such sums and know that not only healthy people have to live on them, but the sick and the disabled. I am not surprised that he looks away—no doubt he is really ashamed that this is the kind of thing that the Government have imposed on 900,000 people. It is worth contrasting all this with the molly-coddling of 270,000 rich taxpayers, about whose position we have been talking.

Even the Social Security Advisory Committee report for 1982–83 said that the abatement should be made good, and that the Government had given firm assurances that the abatement of invalidity payment would be made good once that benefit was brought into taxation. That was 1982–83. In spite of those firm assurances, the Government admitted recently in a parliamentary reply that there were still no plans to tax invalidity benefit, and therefore the abatement will continue, and 900,000 people will suffer from living in miserable conditions, and are sick and disabled on top of everything else.

Out of those 900,000 people, it was shown, in that parliamentary reply, that one quarter would not be eligible to pay tax anyway, but they are suffering a 5 per cent. cut in benefit year on year while the Government are dithering about bringing the benefit into taxation, and allowing this appalling injustice to contine. That is why we have taken the chance offered to us, and have put down this amendment. We beg the Government to look kindly on 900,000 sick and disabled people and give them an extra couple of pounds a week, instead of squandering £360 million in a full year on people who manifestly do not need that amount of money.

Mr. Stuart Bell (Middlesbrough)

I support the amendment tabled by my hon. Friend the Member for Thurrock (Dr. McDonald). It is a pity that we have to debate such an important issue so early in the morning. It is an equal pity that we cannot, on this important occasion, have the undivided attention of the whole committee, especially that of Conservative Members.

This is a most important subject. My hon. Friend mentioned the various ways in which since 1979 the Government have attacked invalidity benefit of those who are sick and unable to work. She mentioned the first attack that had been launched by the Government when they cut the benefit, breaking the link between earnings and prices. She mentioned the second attack in 1980 on the uprating which was less than 5 per cent. The Government continue to launch perpetual attempts to move those who are sick on to the dole queue, from receiving invalidity benefit to unemployment benefit which is consistently less. They do that by medical examinations, most of them cursory, and by regulations that say that a person who is fit for some work is not fit for invalidity benefit but rather should receive unemployment benefit.

It is right that the Committee should know that. The amendment seeks to draw attention to the plight of 900,000 people. Even at this late hour the Government should accept the amendment and do a service to those who are in receipt of invalidity benefit.

Mr. Campbell-Savours

It is opportune that we should have this debate so soon after the previous debate in which the Government were handing back tens of millions of pounds to their friends. Is it not disgraceful that the Government should come to the Chamber tonight and refuse to accept the amendment when they know, as indeed do their supporters on the Conservative Benches, that every indication has been given to the lobbies outside that the Government intend to remove or to deal with the problem of the abatement? We want to know why they are breaking their promises tonight?

Many of my hon. Friends are in the Chamber tonight, as hon. Gentlemen will note, wishing to express their view. If it were not for the time, more of my hon. Friends would take the opportunity to speak. Indeed, there are many precedents for that support. During the previous Parliament on a number of occasions when the Finance Bill and similar matters in relation to unemployment benefit were debated, three Conservative Members were most vociferous in their criticism of this matter. It is significant they have all been promoted in this Parliament. The hon. Member for Bath (Mr. Patten) was banished to Ulster along with the former Secretary of State for Employment, now the Secretary of State for Northern Ireland. The hon. Member for Wiltshire, North (Mr. Needham) has also been promoted and the hon. Member for Watford (Mr. Garel-Jones) has been made a Government Whip.

The Government have been effective in removing those Members who were most vociferous during the previous Parliament. Indeed, they rose repeatedly to press the abatement question. The latest intake of Conservative Members has not been so keen to express such a view. It is significant that on previous amendments Conservative Members have been keen to jump to their feet to defend the interests of their friends who hve everything to lose in the event of the Bill not being enacted as the Government wish. All they have done is seek to protect them, not this group to whom they know that the Government have given clear undertakings. We are asking that the amendment be supported by the Government.

Mr. Bermingham

Does my hon. Friend agree that there seems to be a sick irony in the fact that within the space of a couple of hours an undertaking can be given—an undertaking with which I do not disagree—in respect of ancient monuments and heritage buildings, yet an undertaking cannot be given that sick and elderly human beings will receive about the same amount of money?

Mr. Campbell-Savours

My hon. Friend draws attention to the consistency of the Government. Indeed, my hon. Friends consistently during the debates today have drawn attention to the consistency of the Government.

I wish finally to draw attention once again to what my hon. Friend the Member for Thurrock (Dr. McDonald) referred to as the 250,000 people who would not be paying tax. They have directly lost as a result of the refusal of the Government to budge on this matter. I am told by my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) that they are short now to the tune of £3 per week. The Government owe them that money. They need that money far more than many of the groups that are being helped by the Minister and the Chancellor in the Budget. The Minister owes it to them to pay them. He should ensure equally that moneys are made available from those concessions that have been made to the better off in society to secure the interests of the worse off. That is what fairness in government is all about. Let us see a little fairness tonight.

Mr. Peter Rees

We have had some interesting contributions from the Opposition, but few of the matters raised relate to the Finance Bill, unless it be, of course, that the hon. Member for Thurrock (Dr. McDonald) and her hon. Friends are pressing my right hon. Friend the Chancellor to bring invalidity benefit into charge for tax. If so, my right hon. Friend will, I know, wish to consider when and how that could be done.

Mr. Rooker

We have been asking for that for four years.

Mr. Rees

The hour is late. The hon. Gentleman has had some exciting debates with which to contend, but he must contain himself.

In relation to that matter, an undertaking wss firmly given by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) in his Budget statement of 1981. Since we are in a new Parliament, I am happy to repeat that assurance. In relation to invalidity benefit, we have given an unqualified assurance that, when the benefit is brought into charge for tax, the 5 per cent. deduction made from the November 1980 uprating will be restored. I hope that will—

Mr. Bermingham


Mr. Rees

No, I have given my answer. The hon. Gentleman has not contributed, except in an intervention during his hon. Friend's speech.

As I said, I am happy to give that assurance. In the meantime, the amendment—and I appreciate why it is framed in this way, and I congratulate the hon. Lady on her ingenuity — is designed to force legislation on the Committee to deal with a situation that has not yet arisen.

On the basis of the unequivocal assurances that I have given, I hope that the hon. Lady will feel able to withdraw the amendment.

Dr. McDonald

I do not see how the Chief Secretary can expect us to accept his unequivocal assurance. This has been said since 1980. It is now 1984. Meanwhile, the living standards of 900,000 invalidity pensioners have fallen considerably. These people cannot wait for the Government to consider their assurances and to wonder when they can introduce taxation. This can be done if the Government have a mind to do it. Invalidity pensioners would be better off if the abatement were restored. Even if that pension were subject to tax, they would certainly be better off than they are now. We cannot accept these meaningless assurances that the Chief Secretary finds it easy and cheap to repeat, just as they have been repeated on more than one occasion by the Government without leading to any action. We shall press the amendment to a Division because, after all, only a vote might fix in the Chief Secretary's head that action now needs to be taken. A number of Conservative Members pleaded with the Government, on more than one occasion in the last Parliament to restore the abatement. Some of them, of course, have been silenced by promotion to the Government, but others have not. If they really mean what they say, if all their protestations of concern for the disabled and sick mean anything, let them join us in the Lobby tonight.

2.45 am
Mr. Bermingham

I had not intended to speak on this issue. I sought to make my point by way of an intervention to my hon. Friend the Member for Workington (Mr. Campbell-Savours), who gave way. However, the Chief Secretary refused to give way to me later and, to put it bluntly, he used a spurious excuse. I shall now make the point quite openly to the Committee, and perhaps the Chief Secretary will then do me the courtesy of replying.

It seems quite iniquitous that, after four years, the Treasury's best minds and the best lawyers available in England cannot find a way in which to calculate the tax and to honour the undertaking of 1980. The tax lawyers of this land have been ingenious enough over the years in finding ways of avoiding and evading tax and making a lot of money out of doing so, yet after four years the Government cannot find a simple way in which to calculate the tax so that an undertaking given in 1980 can be honoured.

The point is as mean and simple as this. We are talking about £3 per week for a married couple if they are liable to tax. That is less than the amount paid by many Conservative Members for a meal. But for a couple on invalidity benefit who live very much in poverty, it means the difference between existence and a little better than existence. That is the reality. Yet after four years the Government say that they cannot find a way of honouring that undertaking. During those four years a number of couples who would not have paid any tax at all, have been deprived of the £3 per week. If Conservative Members find the matter funny, it is a very sick response to a very serious issue.

A group of those least able to help themselves, who would not be the subject of taxation, must suffer a 5 per cent. or £3 a week abatement, while Government lawyers find time to work out a way of doing things. If the boot had been on the other foot, and the lawyers among Conservative Members had been asked to find a way of avoiding paying £3 a week in tax, they would have been quick enough to find an answer, particularly if someone else was picking up the tab. The Government's action is inexcusable, inexplicable and unjustifiable, and the undertaking that has been so happily and almost cavalierly repeated tonight is a disgrace to the sick and impoverished.

I feel very strongly about this issue, because it is a fundamental source of injustice about which the Government cannot be bothered to do anything. They will give money away to those who have it, but when it comes to those who need it, they can wait year after year. I hope that we shall not be given yet another undertaking in the next Finance Bill, and that somewhere, someone will get his finger out and do something about the situation.

Question put, That the amendment be made:—

The Committee divided: Ayes 55, Noes 162.

Division No. 262] [2.48 am
Atkinson, N. (Tottenham) McDonald, Dr Oonagh
Barron, Kevin Madden, Max
Beckett, Mrs Margaret Meadowcroft, Michael
Bell, Stuart Michie, William
Bermingham, Gerald Miller, Dr M. S. (E Kilbride)
Boyes, Roland O'Brien, William
Caborn, Richard Parry, Robert
Campbell-Savours, Dale Patchett, Terry
Clay, Robert Penhaligon, David
Cocks, Rt Hon M. (Bristol S.) Pike, Peter
Cohen, Harry Prescott, John
Cook, Frank (Stockton North) Redmond, M.
Corbyn, Jeremy Robinson, G. (Coventry NW)
Cowans, Harry Rogers, Allan
Dixon, Donald Rooker, J. W.
Eadie, Alex Sedgemore, Brian
Fatchett, Derek Skinner, Dennis
Fisher, Mark Smith, C.(Isl'ton S & F'huiy)
Flannery, Martin Soley, Clive
Fraser, J. (Norwood) Spearing, Nigel
Freeson, Rt Hon Reginald Wallace, James
George, Bruce Wardell, Gareth (Gower)
Hamilton, James (M'well N) Welsh, Michael
Hattersley, Rt Hon Roy Woodall, Alec
Haynes, Frank Young, David (Bolton SE)
Hughes, Sean (Knowsley S)
Kirkwood, Archibald Tellers for the Ayes:
Leadbitter, Ted Mr. Norman Hogg and
Leighton, Ronald Mr. Allen McKay.
Lofthouse, Geoffrey
Alexander, Richard Blaker, Rt Hon Sir Peter
Amess, David Boscawen, Hon Robert
Ashby, David Bowden, A. (Brighton K'to'n)
Aspinwall, Jack Bowden, Gerald (Dulwich)
Atkins, Rt Hon Sir H. Boyson, Dr Rhodes
Baldry, Anthony Brandon-Bravo, Martin
Batiste, Spencer Bright, Graham
Bellingham, Henry Brinton, Tim
Berry, Sir Anthony Brooke, Hon Peter
Biggs-Davison, Sir John Brown, M. (Brigg & Cl'thpes)
Bruinvels, Peter Gregory, Conal
Budgen, Nick Griffiths, Peter (Portsm'th N)
Bulmer, Esmond Ground, Patrick
Burt, Alistair Grylls, Michael
Butcher, John Hamilton, Neil (Tatton)
Butterfill, John Hanley, Jeremy
Carlisle, Kenneth (Lincoln) Hargreaves, Kenneth
Carttiss, Michael Harris, David
Chapman, Sydney Havers, Rt Hon Sir Michael
Chope, Christopher Hawkins, C. (High Peak)
Clark, Hon A. (Plym'th S'n) Hawksley, Warren
Clark, Dr Michael (Rochford) Hayes, J.
Clark, Sir W. (Croydon S) Hayhoe, Barney
Clarke, Rt Hon K. (Rushcliffe) Hayward, Robert
Cockeram, Eric Heathcoat-Amory, David
Colvin, Michael Henderson, Barry
Coombs, Simon Hickmet, Richard
Cope, John Hirst, Michael
Couchman, James Hogg, Hon Douglas (Gr'th'm)
Cranborne, Viscount Holland, Sir Philip (Gedling)
Currie, Mrs Edwina Hooson, Tom
Dorrell, Stephen Howard, Michael
Douglas-Hamilton, Lord J. Howarth, Alan (Stratf'd-on-A)
Dover, Den Howarth, Gerald (Cannock)
du Cann, Rt Hon Edward Hunt, David (Wirral)
Dunn, Robert Hunter, Andrew
Edwards, Rt Hon N. (P'broke) Johnson-Smith, Sir Geoffrey
Eggar, Tim Jones, Gwilym (Cardiff N)
Fallon, Michael Jones, Robert (W Herts)
Fenner, Mrs Peggy Jopling, Rt Hon Michael
Finsberg, Sir Geoffrey Kellett-Bowman, Mrs Elaine
Forman, Nigel Key, Robert
Forth, Eric King, Roger (B'ham N'field)
Freeman, Roger Knight, Mrs Jill (Edgbaston)
Gale, Roger Knowles, Michael
Galley, Roy Knox, David
Gardiner, George (Reigate) Lawler, Geoffrey
Garel-Jones, Tristan Leigh, Edward (Gainsbor'gh)
Goodhart, Sir Philip Lennox-Boyd, Hon Mark
Goodlad, Alastair Lester, Jim
Gorst, John Lewis, Sir Kenneth (Stamf'd)
Lilley, Peter Ottaway, Richard
Lloyd, Peter, (Fareham) Page, Richard (Herts SW)
MacKay, Andrew (Berkshire) Pawsey, James
MacKay, John (Argyll & Bute) Peacock, Mrs Elizabeth
Major, John Powell, William (Corby)
Malins, Humfrey Powley, John
Malone, Gerald Proctor, K. Harvey
Maples, John Rathbone, Tim
Marland, Paul Rees, Rt Hon Peter (Dover)
Mather, Carol Roberts, Wyn (Conwy)
Maude, Hon Francis Ryder, Richard
Mawhinney, Dr Brian Sims, Roger
Maxwell-Hyslop, Robin Skeet, T. H. H.
Mayhew, Sir Patrick Soames, Hon Nicholas
Mellor, David Stanbrook, Ivor
Merchant, Piers Stewart, Allan (Eastwood)
Meyer, Sir Anthony Stradling Thomas, J.
Miller, Hal (B'grove) Sumberg, David
Mills, Iain (Meriden) Taylor, John (Solihull)
Mitchell, David (NW Hants) Thompson, Donald (Calder V)
Moate, Roger Viggers, Peter
Moore, John Wakeham, Rt Hon John
Morris, M. (N'hampton, S) Wardle, C. (Bexhill)
Morrison, Hon C. (Devizes) Warren, Kenneth
Morrison, Hon P. (Chester) Watts, John
Moynihan, Hon C. Wolfson, Mark
Murphy, Christopher Yeo, Tim
Needham, Richard Young, Sir George (Acton)
Nicholls, Patrick
Normanton, Tom Tellers for the Noes:
Norris, Steven Mr. Archie Hamilton and
Osborn, Sir John Mr. Tim Sainsbury.

Question accordingly negatived.

Clause 17 ordered to stand part of the Bill.

Schedule 7 agreed to.

To report Progress and ask leave to sit again.—[Mr.Peter Rees.]

Committee report Progress; to sit again this day.