EMPLOYER-PROVIDED NURSERIES

HC Deb 11 July 1984 vol 63 cc1209-52

`In section 62 of the Finance Act 1976 (exceptions from general charge) the following subsection shall be added at the end:— (9) section 61 above does not apply to a benefit consisting in the provision by the employee's employer of nursery facilities for children under the age of five years provided the nursery facilities are provided for the children of staff generally .". '.—[Mr. Terry Davis.]

Brought up, and read the First time.

Mr. Terry Davis

I beg to move, That the clause be read a Second time.

The purpose of the new clause is to provide tax relief for employer-provided nurseries, or, as they are often called, workplace nurseries. I make no apology for raising this subject so late into the night that it is the morning. As we debate it, parents all over the country will be rising, getting up their children and going to work. Many of those parents will have children under the age of five, whom they will be taking to child minders. Other parents will be taking their children to nurseries provided by local authorities, and about 2,000 will be taking their young, pre-school age children to spend the day in nurseries provided by their employers. This clause concerns those parents.

Over the years, these workplace nurseries have been provided and, until a few years ago, there was a steady expansion. They numbered some 90 or 100 about 10 years ago, but that number has recently declined as a result of the recession and there are now about 70 or 80. These nurseries are provided for several reasons. They are the result of successful negotiations by trade unionists, who have managed to persuade employers that it is in their interests, and those of their employees, to provide nursery facilities for the children of their employees. Some are provided as a result of the benevolence and generosity of employers; others—more often—have been provided by employers in recognition of something that is in their interests. I suspect that most of the workplace nurseries have been provided for a mixture of these reasons.

The original workplace nurseries were provided because employers began to realise that it was in their interests to retain trained staff, especially those with scarce skills, and to encourage women with children to return to work as soon as possible after their children had been born. The original intention was to provide facilities that would enable women to return to work after their children had been born, which was in the interests of the employer who had difficulty recruiting women, especially women with scarce skills.

Recently, there has been an increasing recognition that if employers are to provide genuinely equal opportunities for women, facilities must be available for women to leave their children during the working day, and those facilities should be provided to a certain standard. That is what we are discussing in this debate, not child minders.

The new clause is supported not only by the Equal Opportunities Commission, which has no axe to grind, but by hon. Members on both sides of the House. One of the purposes of the new clause is to provide equal opportunities for women with children. That was the intention of the original nurseries. Women should have those opportunities whether they are single, divorced, widowed or married. The one thing that they have in common is children under the age of five.

The provision of workplace nurseries enables a woman, particularly a married woman, to return to work at an early date, which benefits the income of the family. I should have thought that that, too, would commend itself to this Government, as it enables many families, especially those with low incomes, to enjoy the benefit of two incomes. Thus, they avoid the need to claim family income supplement and other benefits, and they can enjoy a higher standard of living. It is no secret that many couples, particularly in the south-east of England, are able to obtain a mortgage and buy their own homes only with two incomes. The necessity of having two incomes drives many married women with children to work.

The new clause would also benefit men, who are sometimes single parents. it is often forgotten that many widowers, and divorced men who have been given the custody of their children, have all the problems experienced by women who are single parents. Therefore, the new clause would benefit men as much as women.

The new clause encourages the provision of workplace nurseries for all parents, including single parents, if they have children under the age of five years. The clause is especially important, of course, to single parents, both men and women.

In the general household survey carried out in 1982 it was estimated that one in eight of households with children are dependent on single parents. the new clause would provide equally for the sexes, and for employees, whether or not they are single parents.

Another point, often forgotten, is that the experience of a workplace nursery is as good for children as it is for parents. Many children of single parents are only children, and they in particular will benefit from the contact and social discourse with other children. I shall not enlarge, at this time of the night—or rnorning—on the benefits that arise for children, but that important point needs to be taken into account. We are discussing the provision for children as much as for their parents.

I stress that point because, in our first debate on new clause 19, which provided tax relief for stud farms, the hon. Member for Langbaurgh (Mr. Holt) referred to the effect on children of being able to enjoy riding ponies. I hope that the hon. Gentleman will support us on this clause, because it would provide a much more important benefit for many children — being able to attend nurseries.

We tabled a similar new clause in Standing Committee, but withdrew it after debate and before voting as a result of the Financial Secretary's comments. I accepted at the time, as I accept now, that his comments about the drafting of that clause were well meant. I bear no ill feeling about that. He pointed out that, in his opinion, the new clause contained four technical defects.

First, he told us that the word "children" was not defined. I should have thought that a child is a child is a child. But it seems that for Treasury purposes, a child must be defined. So we have made clear in the wording of the new clause that we are referring to children under the age of five years — children below the age at which they must attend school.

Secondly, the Financial Secretary pointed out that the words "nursery facilities" were not defined. He argued that, left as it was, the definition would include the benefit of an accompanying nanny provided for a director's child. The Financial Secretary may have been teasing me because he is well aware that the Opposition do not intend to provide tax relief on company nannies for directors' children. He also pointed out that the word "available" was not defined, which he regarded as a technical defect.

We have taken care of those technical defects in our rewording of the new clause. We have not sought to define "nursery facilities" tightly, because we want to allow the maximum flexibility for the provision of workplace nurseries. We have ensured, through the wording of the new clause, that the provision must be available to all employees. In no sense do we believe that could cover the provision of a company nanny for a director's child. We have used the words "staff generally", which are already incorporated in legislation. We have modelled the new clause on a specific provision which exempts workplace canteens in the Finance Act 1976.

The fourth technical defect to which the Financial Secretary drew our attention was that the new clause only exempted benefits under section 61 of the Finance Act 1976. He therefore argued that a taxation charge could still arise under schedule E if the employer met the employee's pecuniary liability under the vouchers legislation or as a reimbursement of expense under section 60 of the Finance Act 1976.

We have not amended the new clause to take account of that point because we are not seeking to exempt reimbursed expenses. In fact, the Financial Secretary is trying to push us into going much further than we want to go. Our intention is to exempt from tax the provision of a workplace nursery by an employer for all his employees' children under five. We are not seeking to exempt the provision of child minding or the reimbursement of expenses incurred by employees in arranging for private child care.

It is explicit in the new clause that the provision is available for all employees, in the same way that a workplace canteen is available for all employees. That is the purpose, intent and effect of the new clause.

In my opinion, it merely states a provision which was widely understood to have existed previously. It has always been understood by everyone concerned with the expansion, growth and provision of workplace nurseries that the benefit obtained by an employee in having a child attend a workplace nursery was not subject to tax.

Indeed, a manual published by the Equal Opportunities Commission a few years ago specifically included the comment that this provision was tax exempt. In our discussions in Committee, the Financial Secretary pointed out that that manual was published after the Kingsway Children's Centre had been established. That was a fair point, because our concern tends to concentrate on what has happened in the case of the Kingsway Children's Centre, for reasons that I shall explain later.

We did not seek—I certainly did not as Opposition spokesman—to attribute the problems of the Kingsway Children's Centre to the manual published by the Equal Opportunities Commission. Nevertheless, it is a fact that that manual gave wide credence to the idea that the provision of a workplace nursery was tax exempt. That was widely believed, and it reflected what was widely believed before the manual was published.

The Financial Secretary told us that the Inland Revenue did not know about that manual and had not been consulted about its wording — at least, not formally. I entirely accept what he has said. I do not seek to argue who was responsible for the mistake in the Equal Opportunities Commission manual. I seek only to make the point that it was generally accepted that the words in the manual were correct. They reflected general opinion.

The Consumers Association has for many years published tax guides, called the Which? tax guides. I have checked the guides that have been published since 1976, and in every year they have included the specific statement that a workplace nursery is tax exempt and that an employee whose child attends a workplace nursery will not incur any extra liability to income tax as a result.

I am prepared to accept that the Inland Revenue and Treasury do not read the manuals published by the Equal Opportunities Commission. On the other hand, I would expect them to read and check the Which? tax guides.

4.15 am

I am surprised that that mistake has apparently been made not once or twice, but year after year. It has been repeated annually without anyone from the Treasury or the Inland Revenue drawing it to the attention of the Consumers Association. Therefore, it was reasonable for the public to believe that those provisions were tax-free.

Now the Inland Revenue is seeking to charge some people tax on the employer's contribution to a particular workplace nursery known as the Kingsway Children's Centre in London. It is seeking to do so for up to six years. People are thus being faced with tax bills of up to £3,000, and most of them are single parents who are employed not as company directors or higher paid employees but as clerks, typists and secretaries.

The Government's tactic throughout has been to pretend that our new clause goes much wider than it does. I believe that they have adopted that tactic because they know that they have a weak case. They have deliberately sought to pretend that the new clause goes further than it does, so that they can produce inflated estimates of what it would cost. In Committee, the Financial Secretary told us that the new clause in itself would cost £1 million. For the reasons that I gave then, I do not accept that calculation. More importantly, however, he told us that it would lead to a cost of £600 million in total if tax relief were given to all parents with children aged under five. We are talking not about all parents with children aged under five, but about those parents who work, and the estimated 2,000 of them whose children now attend workplace nurseries.

Another Government tactic to obscure the issue has been to argue that the benefit is taxable only if someone is a director or higher paid employee. The definition of a higher paid employee is that he should receive a total in earnings of £8,500 per annum. That, of course, is a provision under the Finance Act 1976, and the sum of £8,500 was determined, I think, in 1979. That provision applies to all benefits and perks, such as company cars and all the other things that were being provided by employers before the Finance Act 1976. But it should be borne in mind when discussing the threshold that decides whether someone is regarded as a higher paid employee, that it is not only the earnings in the pay packet that are taken into account. The employer's contribution to a workplace nursery is also added to the wages.

The contributions of the employers who use the Kingsway Children's Centre amount to about £2,000 or £2,500 per annum. That is by no means exceptional. I understand that the contributions to some other workplace nurseries provided by London local authorities can amount to much more than £2,000 or £2,500 per annum. The contributions exceed those figures because many progressive local authorities in London arrange the workplace nurseries in such a way as to pay a higher subsidy for those with the lowest wages. Thus, the lower paid the employee, the higher the subsidy, and the more likely he is to be taxed on the employer's contribution to the workplace nursery. The subsidy even puts someone on £5,000 over that threshold of £8,500.

The case of the K.ingsway Children's Centre has given rise to much public comment. However, it is a fact that those who are employed and who are being paid about £6,000 a year will now be taxed as though they are directors or higher paid employees on £8,500 a year, because £2,000 or £2,500 is being added to their income of £6,000. Indeed, £6,000 a year is £120 a week, which is below the level of average earnings in this country. Those who get less than the average wage will now be treated as higher paid employees. I repeat that, in the case of the Kingsway Children's Centre, we are talking about secretaries, typists and clerical workers who work for NALGO. They are not paid enormous sums.

Other cases have been publicised. Hackney council, for example, provides a staff nursery. Among the people who take their children to that nursery are care assistants in old people's homes. They are not directors or high-paid employees, but working women — sometimes single parents—receiving low wages.

In the Finance Act 1976 some specific and limited exceptions were made. Taxed benefits included all benefits in kind provided at the cost of an employer. In 1976 I doubt whether anyone in the Labour Government envisaged that workplace nurseries would be taxed because they had never been taxed before. They were never taxed until 1983.

Earlier we discussed extra-statutory concessions by the Inland Revenue. One such concession is the luncheon voucher. Nothing in legislation states that luncheon vouchers should not be taxed. In theory, under the 1976 Act luncheon vouchers should be taxed, but the Inland Revenue, with the authority of Treasury Ministers, decided that they should not be taxed. That is an extra-statutory decision taken outside Parliament.

Sir William Clark

Luncheon vouchers are not taxed to help those who do not have canteen facilities. The provision is logical.

Mr. Davis

I am aware of the provisions that originally applied to workplace canteens. I accept that what the hon. Member for Croydon, South (Sir W. Clark) says is true, but he must bear in mind that some employees use neither a workplace canteen nor luncheon vouchers. Many people pay for their dinners and lunches. Many people go to cafes or pubs, take sandwiches or go without. They are treated unfairly. If they have to go to a local cafe because their employer provides neither a canteen nor vouchers they have to pay for lunch out of taxed income. That is unfair. My point is that luncheon vouchers were excluded, not by Parliament, but by the Inland Revenue with Ministers' approval, as an extra-statutory concession. Why cannot the same apply to workplace nurseries?

Mr. Neil Hamilton

The anomaly has survived over many years. If it were considered afresh it might be removed. However, the concession is limited to 15p a day. Surely that would not be sufficient to meet the hon. Member's ambitions for workplace nurseries.

Mr. Davis

The subsidy for workplace canteens is not limited to 15p a day. There is no limit on that subsidy. I have news for the hon. Member for Tatton (Mr. Hamilton). He says that if we were considering the legislation ab initio it would not be included, but his right hon. and hon. Friends are now discussing whether to abolish the concession for workplace canteens and luncheon vouchers. I shall prove that later with quotations from letters written with the authority of the Chancellor of the Exchequer

I told the Standing Committee of a bigger anomaly. How do the Government explain their treatment of car parks?

Mr. Moore

They are taxable.

Mr. Davis

I have yet to meet a Member of Parliament who confesses to being taxed on his use of the car park in the Palace of Westminster. The Financial Secretary says that they are taxable. But they are not taxed. I do not mind workplace nurseries being taxable so long as they are not taxed. I am happy to settle for that compromise. The same should apply to sports clubs and social clubs. Workplace nurseries should be treated in the same way as drinking and sporting facilities. Why cannot pre-school children be treated in the same way as people who enjoy drink?

I shall not be deflected from the question of car parks. Car parking is a valuable benefit, especially in a city such as London. It costs a lot of money to park in a National Car Park in Victoria street or in the City. A car park provided by an employer is a great benefit. It need not be a fancy one, with names marking parking spaces, but merely a place in a courtyard, as is provided by the Foreign Office. The employee does not pay tax on it. Are any civil servants in the Foreign Office taxed on their use of the car park, which enables them to avoid having to use the National Car Park in Victoria street? The Financial Secretary will not answer that question.

Mr. Neil Hamilton

I shall correct the hon. Gentleman. If an employer purchases the use of a car parking space in a National Car Park, it is a taxable emolument. If it were declared, the Inland Revenue would undoubtedly tax it.

Mr. Davis

I was not talking about buying a space from NCP. I have worked for several employers and have often had the use of a car park, but I have never been taxed on its use, even when it had my name on it. I have never met a person who has been taxed on the use of a company, factory or office car park. We know that canteens are not taxed, provided they are available to employees generally. The same presumably applies to car parks. I do not object to that. I do not think that they should be taxed; the Government do. My argument is that the Government should not exclude car parks and include workplace nurseries. They should be treated in the same way—neither should be taxed.

The Financial Secretary said that workplace nurseries have always been taxable. In Committee he told us that the media had blown one case up out of all proportion. He ignores the fact that this is the first time that any workplace nursery has been taxed to the best of anyone's knowledge. The Inland Revenue learned about the payments by two employers to the Kingsway Children's Centre in 1983 and proceeded to tax their employees. One of those employers was NALGO and the clerical workers affected were members of APEX.

The Financial Secretary told us that another employee was paying tax at the same time on the benefits that her employer had arranged at the same nursery. I appreciate the difficulties under which he works and realise that he would not have been given the name of that taxpayer. I know the name because the lady came to see me. I do not think that he was given complete information by the civil servants who briefed him.

It is true that a female employee who benefited from the Kingsway Children's Centre was told that she was liable to tax. The Revenue is trying to tax her for six years and is asking her to pay £3,000, although she is a single parent. She appealed, but withdrew the appeal because her trade union advised her that she could not win the appeal before the Commissioners and should rely on Parliament. Therefore, it is our job to take that decision. That is what the new clause is about. The NALGO employees, who have a good employer, will benefit.

NALGO has told the Inland Revenue that it will pay the back tax up to 1983. The Financial Secretary gave the Committee that information, so I do not feel inhibited in repeating it on the Floor of the House. But the Financial Secretary did not say that NALGO will not pay the back tax of people whom it no longer employs. What will happen to those who have left NALGO? Indeed, the lady who appealed has changed employment, so she cannot ask the employer who paid for the place at Kingsway Children's Centre to pay her back tax.

4.30 am

The reason why the Kingsway Children's Centre affair is so important is that I and my hon. Friends believe that it is the thin end of the wedge. As I said at the beginning of my speech, there are about 70 workplace nurseries in Britain. We have discovered none where the parents must pay tax on their employers' contributions. That happens only at Kingsway Children's Centre. I accept entirely that the staff of the Inland Revenue would have taxed themselves if their children had had places at the workplace nursery that used to be provided for the Inland Revenue Staff Federation at Cardiff, but none of them was taxed because none was above the threshold of £8,500.

The Government's case is that it would be difficult to distinguish in principle between the money paid for nursery provision for the under-fives and scholarships for older children to attend so-called public schools. But local authorities have a mandatory duty to provide secondary school places for all children living in their areas. A parent who opts out of the state provision for secondary education cannot then claim tax relief on scholarships. They have the freedom of choice. They can send their children to public schools if they wish, but they should not ask Parliament to grant tax relief on the fees. The Government agree with us on that, because they closed the loophole of company scholarships for employees' children.

However, there is no duty on local authorities to provide nurseries. Some local authorities provide them, but others do not. The number of nursery places is totally inadequate, as the Fawcett Society told the Chancellor in a letter. There was no answer to that point in the letter that it received from a civil servant in the middle of June.

Even if local authorities provide nurseries, often there are insufficient places for the children whose parents wish them to attend. Birmingham has 1,345 places at 33 day nurseries. Only 1,000 children can attend those nurseries as a direct result of cuts in local government expenditure. The city of Birmingham is short of 60 nursery nurses, with the result that 300 children cannot be admitted. The nurseries are full, in the sense that capacity is determined by the amount of staff employed.

What should people do? If an employer says, "I believe that I should provide equal opportunities for my women staff. Therefore, I shall make available workplace nursery places so that women can have the same opportunities as are enjoyed by my male employees," he knows that the women who take advantage of that provision will be taxed as though they are higher-paid employees.

Outside the metropolitan areas the position is even worse, because there the provision of nurseries is the responsibility of the county and shire councils.

The Association of County Councils—a body which is not dominated by the Labour party—has written since our discussion in Standing Committee to commend the new clause. It recognises that it, too, benefits from the provision of workplace nurseries by employers. It argues in its letter, a copy of which has, I believe, been sent to the Government, that the workplace nursery allows single parents to obtain work without needing public financial support.

I should have thought that that would appeal to the Government because it reduces demand for public expenditure. Yet the Government are discouraging employers from providing what they will not allow local councils to provide. The Association of County Councils says that it cannot in the present climate provide enough nursery places, and adds: Resources are unlikely to be available for local authorities to increase substantially their provision, so that it is in the interests of society that barriers should not be imposed by the taxation system against employers or voluntary organisations establishing such provision. In other words, the people whose job it is to provide nurseries are strongly in support of the new clause and believe that the provision of workplace nurseries is a necessary step towards adequate state provision.

The Government argue, however, that such provision is unfair. They take that view because some employers do not provide workplace nurseries, so that the employees of those employers must themselves meet the cost of child care out of their taxed income. The Government claim that here is an anomaly that cannot be defended. I have explained that canteens are an anomaly in that some employers, but not all, provide factory or office canteens. Employees whose employers do not povide canteen facilities must go elsewhere for their mid-day meal. The workplace nursery should be considered in exactly that light. The same applies to car parks; some employers provide them, others do not. Thus, some employees benefit from car parks while others do not. We do not complain about that situation.

The hon. Member for Devizes (Mr. Morrison) said in an earlier debate about stud farms that Opposition Members objected to concessions in that respect because they were not available to all. He was wrong. We do not object to all concessions which are not available to all. We are debating a concession which we are anxious to defend. We hope that more people will gradually benefit as more employers provide workplace nurseries as a result of the pressures which I outlined at the outset of my remarks.

The Government argue that it would be unfair if a workplace nursery were exempt from tax because other employees would be paying for child care out of taxed income. That is incorrect for two reasons. First, as I said, it is not reasonable to argue that because some employees do not enjoy the benefit, nobody should enjoy it. Secondly, it is based on a misunderstanding of the system of workplace nurseries.

Most employees using workplace nurseries contribute to their cost. All my researches show that every employee using every workplace nursery contributes. Indeed, in every case I examined I found that the employees paid about the same as those who paid for private child care or for their children to attend council nurseries. They all pay out of their taxed income. The difference is that the Government insist that they should pay tax on the employer's contribution. The Government pretend that workplace nurseries are free. I have shown that that is not so.

I hope that the hon. Member for Devizes will join my hon. Friends and I in the Lobby when we vote on this issue. I told him that I would refer to him during this discussion. He claimed that his proposal on stud farms was necessary because the tax arrangements for stud farms were changed in 1981 as the result of a decision by the Capital Taxes Office. He claimed that that changed the position which had existed since 1933. That is precisely our argument about workplace nurseries; that there was a change in 1983 from the position which had previouslyalways existed. The hon. Member for Devizes told us that the Government stuck to their line about stud farms, but the advocates of change persisted and that led to the introduction of new clause 19. If the Government are as stiff-necked about workplace nurseries, the issue will return year after year in the same way as the stud farm issues for we shall not let it rest.

The nursery tax is the thin end of an even greater wedge. Those whose children attend workplace nurseries will find that they are all taxed. The experience of the Kingsway Children's Centre will be shared by many workplace nurseries.

I have a letter from the private secretary to the Chancellor of the Exchequer. Mr. Roy Grantham, the general secretary of the Association of Professional, Executive, Clerical and Computer Staff, wrote to the Chancellor, but he did not receive a reply from the right hon. Gentleman. I make no complaint about that because I understand the pressure that is on him. Mr. Grantham received a reply from the right hon. Gentleman's private secretary. We must assume that his private secretary reflects his views when engaged in correspondence on his behalf. The secretary wrote: Mr. Lawson has asked me to explain that it is this Government's policy that all remuneration, whether in cash or kind, should be equally assessable to tax. Let us consider the implications of that statement. I challenge the Financial Secretary to deny that the Government are to tax workplace canteens. I ask him to deny that the Inland Revenue and the Government have no plans to tax car parks. Those items are not being taxed now but they are benefits in kind. We are told that the Chancellor has said that it is the Government's policy that all remuneration, whether in cash or kind, should be equally assessable to tax. That must mean that we shall find provisions in next year's Finance Bill to enable the Government to levy a tax on the provision of factory canteens and car parks.

I challenge the Minister to deny another paragraph in the letter from the Chancellor's private secretary. Is it the Government's policy to tax everyone who enjoys the benefit of a workplace canteen, a factory car park or a workplace nursery? The Government have said that only those whose income exceeds £18,500 will be taxed, and included in that calculation is the benefit itself of a workplace nursery. The Chancellor's private secretary has told Mr. Grantham that it was decided to keep the threshold in place for the time being, it was made clear in a reply to a Question in the House of Commons last year that the Government's long-term aim in this field should be the abolition of the threshold. That must surely mean that the Government will tax all benefits in kind, whatever the income of the employee. That is a new step that shows that the new clause is more important than it may appear at first sight. It is not confined to the interests of 2,000 who are mainly single parents. It is not only their interests that are at stake.

The Association of County Councils has no illusions about the importance of the new clause. It shows in its letter that it recognises the importance of the new clause to family life. This non-political body wrote: One of the most significant features which has come out of our discussions so far"— it is referring to its discussions on family policies— is that organisations which profess support for the maintenance of family life can take decisions which have an indirect, but adverse, effect upon the quality of family life. I am afraid that the Government falls into this category. Those are the words of the gentleman who wrote on behalf of the association.

The new clause is supported also by the Association of Metropolitan Authorities, the workplace nursery campaign, the Equal Opportunities Commission, the National Council for One Parent Families, the TUC and several individual trade unions. They all recognise that the Government's insistence on taxing the provision of workplace nurseries will be a deterrent to employers who would otherwise set up such nurseries. It is a matter of the interests not simply of those 2,000 people, but of all those other parents who could benefit if employers were persuaded to extend. the provision of workplace nurseries.

By levying this tax for the first time and refusing to allow Parliament to stop this iniquity, the Government are making it unlikely—I put it no higher than that, because I do not want to exaggerate—that any employer will set up any workplace nurseries. That is the reason why I shall be asking my hon. Friends to join me in the Division Lobby.

4.45 am

Mr. Don Dixon (Jarrow)

I support my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis). This year at a women's TUC conference at Torquay the delegates of the General, Municipal, Boilermakers and Allied Trades Union were successful in carrying a motion supporting workplace nurseries, and that idea subsequently became the TUC's policy. My hon. Friend has the support not only of the Equal Opportunities Commission but of millions of trade unionists.

Nursery provision is already inadequate. If the new clause is not accepted, we shall lose almost 70 workplace nurseries, and that will worsen the problem. France, Denmark and the Netherlands made educational and nursery provision for 20 to 30 per cent. of their two-year-olds. Britain makes no provision. Belgium, France and the Netherlands make educational and nursery provision for 95 per cent. of their four-year-olds. Britain provides for only 56 per cent.

A Council of Europe document states: The Government should realise the importance of pre-school education, both for the individual development of each child and for the general good of society. All children, irrespective of social class, should, by the age of three at the latest, be given the opportunity to attend a pre-school establishment. That document was signed in 1971 by representatives of the United Kingdom and 16 Council of Europe countries, when the Prime Minister was Secretary of State for Education and Science. Not only has the right hon. Lady not kept up with the position 13 years ago, but she is trying to go back on the Council's proposal.

Between 15 and 20 per cent. of families in the United Kingdom are single-parent families. Over the years, various surveys have shown that the majority of parents with children under five want to work. Almost 50 per cent. of those parents are mothers with children under three, who require nursery places. Without access to decent child-care facilities, parents with children under five cannot get the equal opportunities for which the Equal Opportunities Commission provides. Some parents —usually women—do not return to work after maternity leave, primarily because there are no nursery facilities.

It is no good the House passing legislation giving women at work maternity leave if they can be turned from work because of inadequate facilities. If the new clause is not accepted, the Treasury's decision will worsen matters. The state should provide nursery education for all children under five, as it provides education for those children over five. I hope that, as a first step the House will accept new clause 26.

Mr. Meadowcroft

I wish to support the new clause on behalf of my hon. Friends in the Liberal and Social Democratic parties, whether awake or asleep.

I sometimes find the arguments of Conservative Members suggest that their efforts are characterised by searching around for bits of income for the Treasury that come from the poorest sections of the community. It is sad that in this case they seem to wish to hit hardest those who are trying to fend for themselves. It is strange that the Government wish to clobber those who wish to take advantage of helpful employers who provide nursery places.

At this time of the morning it is not appropriate to rehearse the importance of nursery care and provision for both children and their parents, particularly mothers. I hope that Conservative Members accept that the provision of nursery education is beneficial to both children and parents. However, some Conservative Members might not accept that, in which case their reasons for opposing the new clause are very different from those of the Financial Secretary.

The Leeds city council summed up the argument succintly in a motion on the issue that it passed in April, when it recognised that the decision of the Inland Revenue (1) threatens the jobs both of those who work in nurseries and those who use them (2) challenges the right to work of those who cannot afford other forms of childcare (3) has serious implications for levels of nursery provision in Leeds". Not all benefits in kind are taxed. For instance, exceptions are made for canteens, as we have heard, and even for car park provision. The anomalies imposed on us by the tax principles that are enunciated are easy to get round if the Inland Revenue and the Treasury wish to do so.

One anomaly has not yet been pointed out. So far as I know, education authorities which provide nursery schools and education do not as a rule make any charge to the parents for the children who attend those schools. It is an anomaly to say that those who have children attending workplace nurseries should be charged, whereas those children go to nursery schools should not. Those whose children attend day nurseries and have to pay for child minders sometimes have the fees remitted or paid by social services departments.

Mr. Barron

The hon. Gentleman referred to paying for nursery education provided, presumably, by local education authorities. Does he believe in paying for education or does he believe that people should have it as of right?

Mr. Meadowcroft

The hon. Gentleman obviously was not listening. I said that, rightly, when local education authorities provide nursery schools, they do not make a charge to the parents. If the Treasury and Inland Revenue are to be consistent, they should levy a tax on the concessions that those parents have, but they would not dare to try. That is my point.

Mr. Jeremy Corbyn (Islington, North)

Does the hon. Gentleman believe that nursery provision should be free or that it should be charged for? The House needs to know what the alliance thinks about the matter.

Mr. Meadowcroft

What the hon. Gentleman says is ludicrous. Of course, nursery provision should be free. I am pointing out the anomaly that if the Treasury is trying to claw back tax from those who have the facility in workplace nurseries, why does it not try to claw back the part of nursery school provision put in by the local education authorities? It is an anomaly. Of course, the provision is necessary, not least because otherwise there would be discrimination against women in particular. That is the whole point.

If the Government argued against the new clause on the ground of an anomaly, no doubt those who support it would be prepared to withdraw it if the Government undertook to assist all those who sought nursery provision.

The hon. Member for Croydon, South (Sir W. Clark), who is temporarily absent, made a helpful intervention when he drew attention to the reason why luncheon vouchers were not taxed. If the same principle were applied to nursery provision, those unable to take advantage of workplace nurseries should have nursery vouchers. If the hon. Gentleman actually believes that, perhaps he will pursue the idea on some future occasion. If the Government will not accept the new clause, it must mean that they oppose the whole principle of workplace nursery facilities.

On purely fiscal grounds, the balance of the argument lies with the Government, especially as the poorer parents are more likely to have to use other types of nursery provision, but it is far less likely that wider help for parents with young children will be forthcoming if the new clause is rejected rather than used as a lever to help others. If the Government oppose the new clause on the ground that an anomaly needs to be ironed out, they should iron out the anomaly by being more generous rather than meaner.

We are not talking about rich people. As the hon. Member for Birmingham, Hodge Hill (Mr. Davis) pointed out, £8,500 is nothing like so generous as it looks. Taking into account the proportion provided by the employer, the point at which the tax would be charged is below the national average wage. That is ludicrous.

Mr. Harry Cohen (Leyton)

Is the hon. Gentleman aware that that figure has not been uprated since 1979, the year when the Conservatives came to power, and that, if it had been uprated, it would now be about £15,000?

Mr. Meadowcroft

The hon. Gentleman anticipates my next comment. If the Financial Secretary wishes to stick by his current interpretation of the regulations, he should at least tell us why the £8,500 has not been indexed and has not been increased since 1979. The employer's contribution has been indexed to take account of inflation. Therefore, why are the income levels of those taking advantage of the provision not dealt with on the same basis?

We believe that until we find a fairer way to help those who need nursery provision, it is important to accept the new clause.

Mr. Neil Hamilton

The hon. Member for Birmingham, Hodge Hill (Mr. Davis) is usually a model of politeness and it was a pleasure to debate with him in the Standing Committee, which on the whole was very good-humoured despite the length of time for which it sat. I am sorry, therefore, that he chose to cast aspersions on the number of times that I took part in the Committee's proceedings. The Committee established two records. The first was the length of time for which it sat. The second, I believe, was the record for the least effective Opposition. Garrulity and length of speeches must not be confused with achievement and it may be interesting in times to come to compare my effectiveness in helping to secure concessions from the Government with that of the Opposition. I am about to depart from my usual practice recently, and make a speech which will, I hope, be helpful to the Government. If that is a novelty, I make no apology for it.

5 am

I am opposed to the new clause calling for nurseries to be provided and paid for by employers as a tax-free benefit in kind. the Budget has been castigated by the Opposition as a Budget for the better-off. In his remarks on the new clause dealing with stud farms, the hon. Member for Workington (Mr. Campbell-Savours)—who, I am sure, is only temporarily absent— said that the new clause showed how the Government were working in the interests of the few. It is therefore ironic that new clause No. 26 conforms to the criteria which the Opposition attacked in Committee and have attacked tonight. If the clause were added to the Bill the only beneficiaries would be directors or higher-paid employees under the definition in the statute — the very people against whom so many strictures were levelled when we discussed extra- statutory concessions.

The hon. Member for Hodge Hill dragged a number of red herrings across the Floor of the House when he attempted to find analogies with other kinds of employer-provided benefits, as he chose to call them. He brought in the hoary question of car parks. When I was at the Bar I was involved in a case in which the Inland Revenue attempted to tax a benefit in kind of the type that the hon. Gentleman mentioned. It was not the kind of benefit that I mentioned in my intervention, where an employer might pay for an employee to use a National Car Park. That would be a taxable emolument which, if it was declared on the tax form as it ought to be, would be taxed accordingly.

Let us take the more difficult case of a car park of the kind that the hon. Gentleman mentioned—perhaps a car parking space at the Foreign Office—

Mr. Mikardo

Or in this House.

Mr. Hamilton

Indeed. In section 62(3) of the Finance Act 1976 there is a specific exemption for provision for the employee, in premises occupied by the employer or others providing it, of accommodation, supplies or services used by the employee solely in performing the duties of his employment. No one would quarrel with the non-taxability of some service provided for an employee to use solely in the course of his employment, but there is a further point which is relevant — the question of the value of the benefit provided. What is the cost to the Foreign Office of the provision of a car parking space — a space in an asphalt-covered area? That is the test applied in the general provisions about benefits in kind under schedule E of the tax code. In the vast majority of cases, the cost to the employer of providing that benefit is nil, or as near nil as one can imagine. In the example I have given, it would amount to a portion of the rates on a space measuring 6 ft by 10 ft—an amount of money so small that it is not worth collecting. That is why the Revenue does not assess such services as benefits in kind. However, where the value of the service is sufficient to make it worth collecting, it is assessed by the Revenue—assuming that it is declared in the first place. The hon. Gentleman's example does not prove his case. It proves the opposite.

Mr. Mikardo

What about someone who builds a new facility and who gets a site, of which he needs 1.5 acres for his works and one acre for the car park? The cost to that employer is the capital value of the extra one acre that he must buy to provide a car park, as well as the rates.

Mr. Hamilton

If he purchased the site specifically to provide a car park and the car park was not an incidental benefit, it is possible to construct an argument to the effect that that would be a taxable emolument. I want to relate the analogy of the car park to the cost of providing a nursery facility on the premises of an employer. In Standing Committee, we debated this matter at a more sensible hour and the hon. Member for Hodge Hill said, I believe, that the cost to the employer of the Kingsway nursery was £230 per child. I wonder whether that figure takes account of a notional rental value for the area of office space that is used for nursery facilities. I should be surprised if it did. It could be argued, for example, that the cost of the notional rental of a car parking space should be included in the calculation.

Mr. Terry Davis

The current cost is more than £300 and I believe that that includes the cost of the premises.

Mr. Hamilton

I should be surprised if it included a notional rental value. It might conceivably include a portion of rates, although I should be surprised if it did also. However, it might not be taxable as an emolument if it is merely incidental to the provision of office facilities.

I should like to return to the potential beneficiaries of new clause 26. Hon. Members might be aware that, immediately before coming here, I was employed by the Institute of Directors. To judge from the animated buzz from those who are awake, hon. Members might be aware of it. I am sure that I could provide application forms for membership for those who are eligible. It is an enlightened employer. I took a cut in pay to come here to perform this public service at this time in the morning. The institute believed in paying well to attract the highest possible calibre of staff—a very sensible policy. It also provided good fringe benefits. We had luncheon vouchers, for example, which I regularly exchanged for an ice cream on my way home from work.

Mr. Corbyn

I can see that the hon. Gentleman is a rather sad victim of the free market economy. Does he believe that the provision of nurseries has any place in the Valhalla of the free market economy that he is describing?

Mr. Hamilton

That is something for individuals to decide for themselves in a free market rather than something to be imposed on them by the tax system or the state.

Mr. John Golding (Newcastle-under-Lyme)

Does the hon. Gentleman realise that we are talking about people who, when they get luncheon vouchers, spend them on their dinner rather than on an ice cream on their way home?

Mr. Hamilton

I was merely drawing attention to the inefficiency of that method remuneration which spreads the benefit to people who do not need it and therefore imposes a burden on the rest of the tax system and other taxpayers. I am grateful to the hon. Gentleman for making the argument that I am about to advance. The same argument would apply if the Institute of Directors provided nursery facilities for its employees. In fact, the Institute of Directors does not provide such facilities, but I would be surprised if the hon. Member for Hodge Hill had in mind the kind of individuals who are employed by the Institute of Directors or other such organisations. Having earned the sort of salary that I earned before I came into the House, I would be surprised if such employees of the Institute of Directors were intended to be the beneficiaries of the kind of tax concession that the hon. Gentleman proposes.

I reiterate the point that I made in reply to the hon. Member for Newcastle-under-Lyme (Mr. Golding). This is an inefficient way of providing benefits through the tax system. If the proposal were agreed to, directors throughout the United Kingdom would be the beneficiaries of this system. This would include such gentlemen as Mr. Tucker and Mr. Plummer whose names have been mentioned frequently in the course of our discussion, and the company Rossminster. I would be surprised to discover that those two gentlemen who have occupied a high position in the Socialist valhalla were intended to be the beneficiaries of the legislation.

Other individuals would be equally undeserving of benefit, for example, Members of the House. I am not sure whether it was the hon. Member for Peckham (Ms. Harman) or one of her predecessors who proposed that there should be a creche for the children of Members of Parliament. It might be a good idea if the House had nursery facilities. However, I hope that it would not be restricted to individuals in the building under the age of five, because certain childish Opposition Members would benefit from being put in it.

It has been claimed that the purpose of the clause is to make it easier for certain taxpayers to get or keep jobs. However, the same arguments could apply to a tax concession to put aged parents in private old people's homes, to justify a concession for the payment of cleaners or cooks and to take away some of the domestic chores which women—and not only women—would otherwise have to perform and which would make it more difficult to go out to work. For those who have to work nights, there would be the provision of baby sitters. The same argument could be used for the provision of cars to cut down the waiting time at bus stops. There is no end to the arguments that could be put forward based on the Opposition arguments.

The provision of benefits in kind is generally an inefficient way of rewarding employees or workers because it distorts the pattern of choice of which employees might otherwise avail themselves, and brings forth the kind of anomalies that we have been discussing. The case of a works canteen has been mentioned, and it is worth remembering the origin of that concession. It was introduced in 1948 in a period of food shortages in an attempt to ensure that employees managed to get a decent meal in the middle of the day or whatever time they were working. The House is now debating economic and social conditions quite different from those of earlier days.

It would be interesting to know whether the value of unemployment benefits today is greater than the average wage of those who were in work in 1948. Whatever the economic and social difficulties today, they are obviously nothing compared with the position 30 years ago. The changes in the tax system should reflect the changes in society.

However, I agree that there may be a case for raising the £8,500 figure, if one is to retain the distinction. There is a case for indexation, otherwise there will be the ridiculous position of people being taxed as higher paid employees when they are earning less than the average wage.

Mr. Mikardo

That can happen now.

5.15 am

Mr. Hamilton

I accept that. This is particularly so because in the calculation of that £8,500 figure one has to include gross payments to the employee. This is a particular complaint of commercial travellers, because the sums that they receive by way of reimbursement for petrol used in their work is added to their income and grossed up for the calculation of this benefit. Many people are being taxed as higher paid employees who are not that by any stretch of the imagination. I hope that at some stage the Government, if they are to retain this distinction, will consider uprating the figure.

I also have some sympathy with what the hon. Member for Hodge Hill was saying about the back tax being levied on those who had thought that no tax would be levied in these circumstances. I am not saying that, simply because people were wrongly advised, there should, threfore, not be any liability. For the Inland Revenue to go back six years, over which it has not sought to levy the tax, would be wrong. In many instances, the tax has not been levied because the tax has not been declared. In those circumstances, the strictures that the hon. Gentleman was making against the Government and the Inland Revenue are rather unfair. For those reasons, which I hope are cogent, I trust that the House will reject this clause in the interests not just of fiscal nuetrality but in the interests of removing anomalies from the tax system and leaving choice with the individual.

Mr. Eric Deakins (Walthamstow)

I have three comments to make on the speech of the hon. Member for Tatton (Mr. Hamilton). First, no self-respecting director would turn down the opportunity to have his children looked after by a nanny if he could afford it. He would never take his young children to work where they might be contaminated by mixing with children from different social classes.

Secondly, on employees, while it is true that what is being proposed by the Inland Revenue directly affects higher paid employees, it could lead to the withdrawal of nurseries, and that will affect all employees, not merely those who are to be taxed because of this new ruling.

Thirdly, on car parking, I point out to the hon. Gentleman, who must know something about economics, that it is not just the cost of providing car parking space that must be taken into account. As is the case with the Foreign Office, the opportunity cost must also be taken into consideration. If the Foreign Office were to let out its car parking space to National Car Parks, or some such organisation, it would make a small fortune, which would help the Government's finances.

This ruling is a retrograde step. There are few workplace nurseries, as we heard from my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis). The issue is one of principle, not of size—helping women, and men, with young children, who wish to and can work with the help of facilities provided by the employers. This should be encouraged. We should be looking to more and more employers to provide such facilities, as they do in other countries not all of them Socialist. We should have such facilities here as well.

The hon. Member for Tatton may not know that many mothers cannot seek work, either because they cannot afford the facilities that are available to them, or because facilities, such as local authority nursery provision, are not available where they live. Even where such facilities do exist locally, they will be under increasing financial pressure from public expenditure cuts and the Government's rate-capping measures. Those who are taking advantage of such nurseries at the moment will not necessarily be able to rely on them in future.

I believe that nursery provision in many parts of the country, including my area of Waltham Forest and Walthamstow, is riot as good as it ought to be, and it is likely to get worse. That is why we should examine seriously the Government's attack on workplace nurseries. Basically, that attack is part of Government policy—enunciated on a number of occasions by the Prime Minister —to drive women back into the home. It is a measure, if you like, to ensure that workplace nursery provision is deterred. No one has claimed that the measure will raise revenue. Indeed, that would be ludicrous as so few workplace nurseries are involved.

The Government clearly regard the measure as a matter of principle, which most people who believe in sexual equality find retrograde. It is typical of the Government's sexist and reactionary attitude to women, and for that reason I believe that it should be opposed.

Mr. Golding

This is one of those rare occasions on which my hon. Friend the Member for Great Grimsby (Mr. Mitchell)—who is not speaking yet—has urged us to be brief. I take the hint.

There is a particular problem in London for those who want to work. The economies of the Kingsway Children's Centre are very straightforward for those who are using it. They could be on national rates of pay, as low as £4,740 a year, and still be caught if the London allowance is taken into account. There are additional costs of accommodation and travel to be taken into account. The new clause deals not with directors and the higher paid, but with those who are struggling to bring up a family. We are not dealing with those who use their luncheon vouchers to buy ice lollies on the way back to work, probably after enjoying a good expense account lunch.

When the hon. Member for Tatton (Mr. Hamilton) spoke, I thought that the Minister probably wished that he was attacking rather than supporting the Government. His contribution clearly showed that the debate is about the two Britains: those who have to struggle to make ends meet to bring up their families, and those who, like the hon. Gentleman, can afford to be supercilious in those circumstances.

Mr. Neil Hamilton

The hon. Member for Newcastle-under-Lyme (Mr. Golding) is completely wrong. I was trying to show that this is an inefficient way of providing tax concessions for the income groups for which he is speaking so eloquently. I was attempting, perhaps not very efficiently, to put across the point that, if we are to help that income group, a far better way of achieving our objective is to raise the £8,500 threshold and not to disburse the benefits among undeserving individuals, such as myself, who would not qualify for the tax concession on the basis of income.

Mr. Golding

My hon. Friend the Member for Walthamstow (Mr. Deakins) has answered that point. There is no way in which the hon. Gentleman will put a child in the back of his smart car and take him or her to work. It would never cross his mind. He only thought about that point when he had risen to speak. If he had thought about it before, that is a disgrace. He first uttered the words in the Chamber.

I can understand why the hon. Member for Dorset, South (Viscount Cranborne) has taken his hands away from his ears and raised his head for the first time. He covered his ears when the right hon. Member for Tatton was speaking. We should have put our hands over our ears, just like the hon. Member for Dorset, South.

Mr. Meadowcroft

I enjoyed it.

Mr. Golding

The hon. Gentleman enjoyed it because it was so out of place in the context of the debate.

We are debating whether women should go to work. I do not rest my argument on the basis of the single-parent woman who needs to go to work, nor on those who must help support unemployed husbands or those whose pay is inadequate to support a family. Those examples powerfully reinforce the argument, but we should not rest our case upon them. We should base our argument on the simple proposition that women have a right to work.

If the jobs that they want—perhaps the only jobs available to them — are in places such as central London, there should be nursery facilities. The one big advantage of having nurseries in close proximity to workplaces is that women prefer to be physically near their children while they are at work. Many women in London, who must travel considerable distances to work, are more content if they are within a few hundred yards or half a mile of their children than if they are 15 miles away. The Government are making that more difficult. In fact, they are creating a psychological and economic framework in which it is impossible for women to take those jobs. That we must condemn, because these women are entitled to work. Among the many reasons why that is so is the fact that women are able to live fuller lives by working.

The Government ought not to stop these nurseries in this way. I do not apologise for saying that it is absolutely essential to give all our children pre-nursery education. Some years ago I took an interest in the formation of language in children. It is clear that their language is formed by the age of five. It is also clear that the way in which they think—logically or otherwise—is determined by the age of five. In fact, our children have gone a long way along the educational path before they go to school. That is the irony. Inequalities in education are determined more between the ages of one and five than between the age of five and school leaving age.

There are very good reasons why nursery education should be provided for all. In an outstanding speech, my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) pointed out that the £8,500 limit did not preclude people on very low incomes being hit in the future. That is bound to happen, given the rise in inflation and the £8,500 peg. The answer does not lie in raising the £8,500 limit. In certain circumstances it might be right to cut for everyone the perk attaching to loans and mortgages. But it is certainly not right that those on lower incomes should have to pay tax because they need to put their children into nursery schools so that they can go to work. With the rise in inflation, more and more people will be hit.

My hon. Friend the Member for Great Grimsby is determined to terrorise me into making a brief speech. I am known for my moderation and sensitivity, and for my fear of Whips. However, I believe that this subject is very important. As has been said, it will not go away. I congratulate all those who have campaigned so far, and assure them that we shall campaign very hard indeed, because this provision affects the family life of many people.

5.30 am

Mr. Sedgemore

I rise to support the new clause. For all its modesty, it will—if passed—facilitate important social and economic change. In seeking to get this pernicious tax on women and babies withdrawn, we faced several difficulties. One was that it was impossible for members of the Committee to decide whether the background briefing material that we had was defective, or whether the Financial Secretary to the Treasury was seriously misleading the Committee. I believe that I can demonstrate later that the Committee was seriously misled, so the only question to arise is whether we were misled deliberately or inadvertently. I must ask the Minister to address his mind to that serious challenge.

The second difficulty was that all the reports of our Committee proceedings that I read were done by journalists who were not present when we debated this subject. That is a shame. I look up at the Press Gallery and I do not see members of the Lobby there, although they are fond of criticising hon. Members for not attending debates. However, at 5.30 this morning there are plenty of hon. Members here. In Committee we sat for 155 hours and barely saw a Lobby correspondent. We rang up Annie's Bar and drew maps and diagrams showing how to get from the Press Gallery Bar to the Committee Room, but they did not come. In particular, no one came from The Guardian. That might explain why, two days after we debated this issue in Committee, Mr. Stephen Cook wrote an article in which he got all his facts wrong. Most alarming of all, he said that the Financial Secretary and the Government had not made up their minds whether they would support this amendment.

I was present throughout that Committee sitting and have a copy of Hansard with me. The Financial Secretary poured scorn on the amendment, and in his very last sentence invited the whole Committee to "throw it out". How could Mr. Stephen Cook then produce a report in a national newspaper saying that the Government had not made up their minds? Such disgraceful journalism has caused considerable embarrassment to those of us who have been trying to explain events in Committee to the outside world.

When I first rose to speak in Committee, I argued—and I thought that it was a valid argument, although I am not now so sure—that this tax was a mean and stingy measure imposed by the Board of Inland Revenue and by administrative fiat with the consent of the Conservative Government. The Financial Secretary rose and effectively sought to refute the argument that I and other Labour Members had put.

I hope that I can summarise the Financial Secretary's argument fairly. He told the Committee that perks had been taxed since 1948 and that significant changes had been made in the law in 1976, when the £8,500 limit was set. He said that a tax on nurseries had been imposed by a Labour Government and had been collected.

The Minister gave me and other Committee members the impression that the tax had been collected from workplace nurseries since they first existed. As my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) said, it is certain that what the Financial Secretary told us was not true. Were his words untrue because he did not know what was happening or because he was misleading the Committee?

Two people who are helping me have contacted no fewer than 84 workplace nurseries since the issue was debated in Committee. They contacted almost every workplace nursery in the country. By talking to the people who run the nurseries and to the parents who send their children to them, they discovered that not one person has paid the tax. How is it that the Financial Secretary claims that the tax was imposed by a Labour Government, that there has been no change in the law, that the tax has been collected and that no administrative or judicial decision has been made at the last moment? His claim does not fit the information given by the 84 nurseries contacted on my behalf. If we were misled in Committee I am sure that it was not deliberate. If it had been, the Financial Secretary would have had to resign.

I have been caused an enormous amount of embarrassment. My sitting room is supposed to be a place of peace, grace and charm. Yesterday morning one of the campaigners, Sue Finch, turned up with a colleague. She insisted that the Financial Secretary had told the Committee a pack of lies. I told her that the Financial Secretary did not lie, would have no reason to lie and that if he did lie he would have to resign. I told her that basically he was a decent person, except that he was a Tory.

When I defend the Financial Secretary like that I am open to criticism. It seems that I am the enemy. It is not right that I should get an earful of verbal GBH from a constituent because I defend a Tory Financial Secretary. He must explain what he meant.

Sue Finch had seen Hansard and she told me to examine it to discover exactly what the Financial Secretary said. She said that almost every sentence was ambiguous. When I examined Hansard I discovered that she was right.

Replying to questions from my hon. Friend the Member for Hodge Hill and myself the Financial Secretary said that the Government would lose £1 million if our proposals were adopted. It requires only a little inversion to change that to the Government collecting £1 million. It is clear that the Government are not doing that because they are collecting nothing from 84 of the nurseries.

The Financial Secretary said that fewer than 2,000 people pay the tax. How many fewer than 2,000? If 1,000 or 1,500 people pay the tax he would be justified in his view that our briefing was wrong, because the tax had been imposed by a Labour Government and collected regularly. If only 50 or 100 people pay the tax we are justified in claiming that we were misled and that the tax is new. Claiming that the law has always enabled the Revenue to collect a tax is different from saying that it started to collect it only in the past 18 months. That means that the tax was imposed recently by administrative fiat, for reasons which the Financial Secretary must explain. I defended him in my home. He must now defend me or apologise to the House for his address to the Committee.

The hon. Member for Tatton (Mr. Hamilton)—the director from Berlin—said that only the better-off would benefit from the proposal. Children of people with a wide variety of incomes attend a workplace nursery in Hackney called the Mary Woollstonecroft nursery in Hoxton square. It is odd that the local authority financial directors who earn thousands of pounds knew nothing about the tax, which has been regularly collected since 1966. No one there pays tax—I checked on it. The Hackney borough council finances every place in the nursery to the tune of £3,640 per annum. With the £8,500 cut-off, it means that everyone who earns more than £4,860 pays tax. That is greatly below the national average wage. If the new clause is not agreed to, 90 per cent. of parents at that nursery will each pay £1,213 tax a year, which is £23 a week. Al the moment they pay £17.40. That means they will pay a total of £40.40. People who earn £4,860 a year cannot afford to pay that. Even the director of Berlin with his mental blockage, will understand that.

The Government are making a mammoth attack on the concept of workplace nurseries. As I said in Committee, at best it is shabby and chauvinist, and at worst it is vindictive. It is an exercise in Victorian values designed to prevent women from expressing themselves and developing their power and influence.

I regret that much of this issue has turned on the Kingsway nursery because it has put the matter out of focus. The Hackney nursery, where some of the parents are single-parent families, is radically different from the Kingsway nursery. I have a delightful letter from a typist called Oona Sugrue who works for NALGO and sends her daughter to the Kingsway nursery. She thanked me for supporting the nursery and said that she sent her 15-month old daughter to the nursery. She admitted to being on the bottom end of the scale at NALGO and that the children of the fifth largest earner at NALGO also attend the nursery. She hastened to acid, in view of an aside I made in Committee, that she was not a middle-class Tory.

Finally, according to the New Statesman scores of hon. Members will vote with the Opposition tonight. I had to tell Sue Finch, when I was defending the Financial Secretary, that that is nonsense. If we get the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) into the Lobby, he will be about the only one. Where journalists get hold of such rubbish I do not know.

The central argument in the New Statesman was that the Government might be defeated because there would not be a number of Labour Members here, and they would get massive support from Conservative Members. We know that that is nonsense. Therefore my remarks are not even addressed to the Financial Secretary. They are addressed to my hon. Friend the Member for Hodge Hill (Mr. Davis), because when he replies to the debate we want a categoric assurance, on behalf of the shadow Cabinet and with all the authority of the Leader of the Labour party, that when we are returned to power we will abolish this tax We do not want a "Solomon binding" commitment, but a pledge that will be carried out.

5.45 am

I say to the Government, but without much hope, that one would think that in memory of Mary Woolestonecroft, Selina Cooper, Emily Pankhurst and even little Oona Sugrue, they would accept this modest new clause as a token of their respect for all those who fought hard in the feminist movement.

Ms. Jo Richardson (Barking)

I am not replying to the debate—my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) will do that — nor am I a member of the shadow Cabinet, but I am a member of the national executive committee of the Labour party. I can say that the national executive would certainly be against the Government's proposal.

Since just before March not only the parents at the Kingsway Children's Centre—I accept what my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) said about it being regrettable that publicity has centred on that workplace nursery—who have been directly and immediately affected, but many thousands of people, mainly women, are living in fear of what may happen. If the Government do not give way and correct what should have been put right many years ago, those parents will be in a tax bracket similar to the one in which the parents at the Kingsway Children's Centre have found themselves. The latter may have to pay extra tax of about £20 a week. The House should not forget, although some people have ignored it, that the parents already pay to send their children there. If we do not persuade the Government to accept the new clause, they will have to pay even more and they will also have to pay the back tax. That will ruin—there is no other word for it—many families. Who among our constituents—I am not talking about people in the higher tax brackets—could lay their hands on about £3,000 in back tax, even if the payments were spread? It is impossible, and it is something that is completely unbudgetable.

The Minister will recall the meeting we had in his office on 12 April, together with my hon. Friends the Members for Holborn and St. Pancras (Mr. Dobson) and for Cumbernauld and Kilsyth (Mr. Hogg). As we walked back from the Treasury after the meeting, we believed that the Minister had not taken the point that we had tried to make. In the letter that he sent to me after the meeting—it had been fairly widely circularised to different organisations and used in one form or another—he did not seem to seize the point that disadvantage would be caused not only to these parents but to others. He did not see it then. I only hope that he is beginning to see it now, particularly after the powerful speeches made tonight by my hon. Friends.

There has been great confusion about this whole issue. There was a generally held belief that such provision was not taxable. I do not knock the Equal Opportunities Commission when I say that it did not know that it was taxable. Indeed, in its documents about establishing workplace nurseries it said that they were not taxable. As my hon. Friend the Member for Hodge Hill said, Which? got it wrong in its tax guide. One would expect such publications to be checked by the Treasury . Are they? If not, and if they can be faulty, who knows how similar tax guides could be misleading people? Will the Minister say whether those documents were seen and read?

There has also been confusion about whether a large number of taxpayers are affected. In fact, only a small number are involved. Indeed, I wish that virtually everybody came into it in the sense that we had far more nursery provision than exists today.

I agree with the comments of my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) about the provision of nurseries near to the place of work. On the other hand, we should also think—we in the Labour party are giving much thought to this—about the greater provision of nurseries and cr é ches nearer home. I mean not child minders, but local authority nurseries. In some cases it is more convenient for mothers to leave their children near home and to pick them up again from that point later, particularly if they have some distance to travel. In other words, both types of nursery have an important part to play.

The attack by the Inland Revenue affects only a small number of taxpayers and their children. The figure of up to 2,000 children has been mentioned. However great the cost for parents, in Revenue terms it is peanuts. It is not worth collecting. The awful fact is that if the Government insist on collecting it, the nurseries will probably close, and then the Government will no longer be able to collect the tax from those parents, because they will not have nurseries into which to place their children.

I have been concerned with workplace nursery and other campaigns and I am aware of the confusion that has been caused by the belief by many people that this service is free. It must be emphasised that those—the people who are now to be taxed—who place their children in these nurseries pay for the facility, and in most cases they pay at least as much as they would pay for child minding facilities at home, which are not always as adequate as nursery provision.

As other hon. Members have said, the exacting of this tax has wide social implications. The unwillingness of the Government to rectify the position confirms our belief that they are continuing with policies which will drive women back into the home. It is true that some fathers take their children to nurseries, but, by and large, it is the women who use and need them. I wish that there were more shared responsibility in two-parent families and that more fathers got their children up and took them to a nursery. Some do, but most do not. Women who work have the prime responsibility of coping with their children. When both parents work, it is normally the woman who has to arrange for child care, for the baby sitter, for baby minding and to get the kids to the nursery before she starts her paid job each day.

A number of my hon. Friends have talked about one-parent families. The majority are women, and many of them are in low-paid jobs. however, when the employer's contribution is added, many women in low-paid jobs find that they are over the £8,500 threshold and into the taxable category. Women need this provision. We should not penalise their chances of employment. There are already enough obstacles in the way of women getting employment, including poor training opportunities, and now we are adding the insurmountable obstacle of causing them to pay the full cost of nursery places.

It is strange that this saga developed at almost the same period as discussions on the Matrimonial and Family Proceedings Bill, which was in Committee from March until a few weeks ago. One of the main aims of the Bill was said to be the need to make first wives economically independent, to encourage them to stand on their own feet, to get a job, to be able to fund their children's attendance at a nursery and therefore not to be a "drain upon their ex-husbands". The Bill passed through the other place and through its various stages in this place. The difficulties facing divorced women with children were raised in many debates and Members asked how they were to find training and employment and to cope with the lack of child-care facilities in their own areas or at their places of work.

I recall in one such debate the Solicitor-General trying vainly, at least for me, to reassure us that when the courts were determining maintenance they would have to consider what facilities were available for employment and child care in the area where the divorced woman lived or worked. The Government cannot have it both ways. They cannot have a piece of legislation which suggests that women should become independent and stand on their own two feet—I wish that the state would make available the provision that would enable them to do so—and seek to withdraw the provisions that are available, in part by taxing them out of existence. They are presenting an image that they want women to match, yet they are making sure that they cannot achieve it.

Much has been said about women's needs and the value to women and parents of workplace nurseries. Some reference has been made to the value to children of workplace nurseries, which is an important topic. I am sure that some hon. Members in the Chamber will recall that during the second world war, most men left their factories and went off to the war and women took their places in the factories. Nursery facilities were provided almost immediately. Children had the company of other kids and were looked after with expert help. No child seemed to be harmed by that experience. Some of those children are now aged between 45 and 55, and they are moaning about the children of today not being like they were. Many of those people spent part of their day in a workplace nursery, and that facility was of value to them.

6 am

By not accepting the new clause, the Government are withdrawing a valuable asset not only from women workers but from the children of those workers who have been using workplace nurseries and could do so in future. A small number of parents are able to do a job and a small number of children use those nurseries. The Government are jeopardising the future of those parents and children by their skinflint attitude. There is no other word to describe the position. The Government are squeezing pennies out of men and women with children in workplace nurseries. I hope that the Government will think seriously about their actions. As my hon. Friends have said, the problem will not go away. If we fail this time—I hope that we shall not—we shall return to the matter on every conceivable occasion, until we get the Government to see sense and change the legislation.

Mr. Cohen

The Opposition have made an excellent exposition of the case, and I shall try not to repeat some of the points that have been made. This is the Government's kindergarten tax on working mothers, and it must be opposed. The main purpose of a tax is to raise revenue, but the method of raising the tax and the exemptions from it have always been used by the Government of the day to encourage measures which they believe are socially, politically or economically desirable. There have been many examples of the regular use of tax perks, loopholes, legal avoidance schemes, which we discussed earlier, and benefits for investors, shareholders, directors and employers, which the Tories have encouraged. The Government's attitude to working mothers and workplace nurseries is a different story. The nurseries are seen as an unjustified perk, but they are necessary for working mothers and those on low incomes.

It has been clearly said that all the organisations concerned with workplace nurseries are opposed to the tax that the Government support. The Tory chairman of the Equal Opportunities Commission and the Tory Association of County Councils are opposed to that tax, and my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) quoted their statements.

On 2 May 1984 I wrote to the Chancellor of the Exchequer calling for the exemption of workplace nurseries. On 8 June he replied, saying that he would support the tax. Many of his arguments have been cruelly exposed by my hon. Friends. The Chancellor made it clear in his reply on 8 June that canteens are an anomly in the legislation, and I am sure that he will return to that issue later, and impose a tax on them. However, the argument is still there, If canteens, work recreation grounds and social clubs are exempt under the Finance Act 1976, nurseries should be as well. The only argument that the Chancellor was able to put in his letter was that all benefit in kind should be taxed. As I said earlier, there are always exemptions for what are considered socially desirable welfare provisions. This is one. The right hon. Gentleman cannot use the loss of tax revenue as an argument because it is a pittance—the numbers involved are small. As the Inland Revenue's ruling bites, nurseries will close, staff will be sacked and many of the women workers in the nurseries will be thrown onto the dole queue, and parents will be forced to leave their jobs. As a result less tax will be collected overall.

Therefore, such tax exemptions should be extended to encourage employers to expand provision of workplace nurseries. That would be private provision, which is what the Tories are supposed to support. There would be less pressure on public provision—on local authorities that are suffering from cuts in any case. The Government are supposed to support that line.

My hon. Friend the Member for Hodge Hill gave examples of benefits in kind that are exempt at the moment, but if the Government's logic is followed through, they will be taxable. An example that has not been mentioned yet is employer's contributions to the pension funds of their employees. If the logic of the Government's argument is followed through, that benefit in kind will also become taxable. It is another thing that is at risk.

It is ludicrous that the provision of a parking space is regarded as a welfare provision and so is not taxable, but a nursery place is not, so it is taxable. That is a prime example of the upside-down, reactionary values of the Government. Women are the worst affected, particularly working women with children. They do not get equal employment opportunities. Workplace nurseries help the small numbers involved in a small way, but the Government are trying to tax them out of existence. In a way, they are sniping at the maternity leave arrangements because working mothers will find it impossible to return to work. It is also cynical sexual discrimination. The Government do not care a fig about working women. They are forcing them out of work; they think that they are less likely to go on the unemployment register.

I make it clear that I support uniform nursery provision for all under-fives as of right, if their parents want it. I argued that at the last general election and shall argue it at all he elections that I fight. Tax arrangements and fiscal policy can be used for the social good. Workplace nurseries are a social good in this context and should encouraged. There should be a tax exemption for them. I support the new clause.

Mr. Jeremy Corbyn (Islington, North)

I shall be brief because many of the points have been ably made by my hon. Friends. It is ludicrous that at this time of the morning we should be debating a proposal so disgusting as a tax on nurseries which is, in effect, a tax on children. We should be discussing not whether the Government should accept a very basic and reasonable new clause but the need for free nursery provision for all children, to be provided either by local authorities or at the workplace. Once more,we are attempting to defend something that should never have been attacked.

It is clear that the Government are simply trying to drive women back into the home, as women are usually responsible for child care. If the tax goes through many nurseries will be closed and the possibility of others developing will disappear. Other countries provide far better pre-school facilities which are not taxed and for which parents do not have to pay. The Soviet Union makes far greater nursery provision than this country, as do many other countries in both eastern and western Europe, including West Germany. The Government, however, prefer to ignore that and to push through this sordid little manoeuvre which attacks women for having children and for being largely responsible for looking after them.

Many parents who use the Kingsway day nursery and other day nurseries are constituents of mine. I have received a letter written by Ms. Judy M. Barker on behalf of the Parents User Group of the Polytechnic of North London Carlton Grange day nursery. It states: Workplace nurseries are not taxable perks like company cars, but are an essential means of enabling people, particularly women, to work. Benefits which help to meet socially desirable welfare provisions, such as workplace canteens or occupational pensions, are exempt from tax by law. Workplace nurseries should be looked upon in a similar way. In that they enable people to work, they are similar to the tax free allowances for the second homes of MP's which have just been agreed in the committee stage of the Finance Bill. The immediate effect of such a tax on workplace nurseries such as the Kingsway Nursery in London will be disastrous, as many parents, unable to afford up to a 65 per cent. rise in fees, will have to leave the nursery and possibly lose their job, whilst the nursery itself will eventually be forced to close, with the loss of further jobs. It will be the end of practical help with childcare from the employer, which has been a major plank in the programmes of employers implementing an equal opportunities policy. There is thus a great deal more at stake than the miserable pittance that the Government are trying to get out of taxation. It is a reversal of the whole equal opportunities programme that many progressive employers have been forced by trade unions to adopt. It is yet another attack on the right of working women and of working people in general to have their children looked after safely and cheaply in day nurseries.

I strongly believe that the new clause should be accepted and that there should be a major debate on the need for nursery provision. I have some experience of this, having been a NUPE organiser before becoming a Member of Parliament, having organised nursery workers, who are often very badly exploited themselves, and having dealt with the problems of nurseries and creches and the fees charged for them. As many people know — the hon. Member for Twickenham (Mr. Jessel) may even wake up and join us, although I doubt it—many nurseries charge extremely high fees. When Barnet general hospital in the constituency adjacent to that of the Prime Minister decided to increase the fees for its creche, I was told that this was necessary to cover the economic costs, but the increase was so great that if part-time domestic workers in the hospital had placed their children in the nursery they would have received a bill rather than a wage packet at the end of the week because their entire weekly wage was less than the fee charged for the day nursery.

We must show a sense of proportion here and demand free nurseries for all children irrespective of where they are or where they come from. If we allow charges to be made, only a small number of children will be able to benefit and if this taxation is accepted the few workplace nurseries that now exist will be closed or put at serious risk.

6.15 am

I hope that, even at 6.15 am, Conservative Members will think for a moment about what they are doing and the serious social reversal which they are trying to push through the House. When people judge the Members of this Parliament, there will be several issues at which they will look very carefully. The roll of shame will include those who came here on a Friday afternoon to defeat the Chronically Sick and Disabled Persons (Amendment) Bill. That defeat can have been welcomed by no one except the foxes who were not hunted that afternoon by Tory Members. There have been many vicious, mean and nasty pieces of legislation, but little as vicious, mean and nasty as a measure to tax children, nurseries and parents.

Those children will not be able to go to nurseries and will lose the important opportunity for pre-school development, and many of their parents will have to give up work, so that their standards of living will fall. Once again, the Government are creating greater divisions in our society rather than greater unity. Conservative Members are keen on tax concessions for stud farms and horses. They are more interested in such concessions, which benefit the wealthy, than in nurseries for working-class children.

I hope that the House will recognise that our provision of nursery facilities is very inadequate. We are far behind the rest of Europe and many other parts of the world, and there is an enormous demand for an increase in nursery facilities. In my own borough there is a huge dispute on the matter, and many demands are being made for increased nursery provision. I would hope that the House could discuss measures to increase the provision, rather than this dirty little move by Conservative Members.

Mr. Stuart Randall (Kingston upon Hull, West)

I have been impressed by the quality of the debate on new clause 26. The passion on the Opposition side has been authentic. The new clause is about the quality of life, in particular for single-parent women and young children. The comments of the hon. Member for Tatton (Mr. Hamilton) and the reactionary nonsense expressed by other Conservative Members made me feel almost ashamed to be a Member of this House.

This country is very backward in the provision of nursery facilities when compared with other European countries, which have made great strides in providing nurseries as part of their economic and social structure. The development of the industrial systems in those countries has embraced the family as a whole, whether that family consists of a husband, and wife or of a single male or female parent.

The new clause is very important. Government Members have reacted meanly, quibbling over little figures that would have no effect on the Government's economic strategy. The figures are trivial. The Government are trying, as my hon. Friend the Member for Barking (Ms. Richardson) said, to push women back into the home. That is a disgraceful, retrogade step. It shows that the thinking of the Government is backward.

We should develop workplace nurseries for all children. They should be freely available and provided either through state funding or, like the nurseries that we have been discussing, by business enterprises. Such provision is crucial. Without it, women's opportunities to go out to work to exploit their qualifications and to develop their careers, or simply to do what they are motivated to do, will clearly be inhibited.

It is remarkable how few facilities we have. We are discussing fewer than 100 schemes and, I imagine, no more than 2,500 children. It beats me why the Government will not encourage such arrangements. The number of workplace nurseries has remained static, or declined, because of the recession. There will be no rapid increase, so why are the Government reacting in this way? It is phoney to compare the cost of nurseries with car park and accounting facilities but we have to do so as the Government think only in terms of pound notes. Nursery facilities are important to industry as we have valuable resources that should be exploited, not inhibited just because a woman has had a family. One company employs women as computer programmers. They have to go around the country, so they must have care arrangements for their children. If we fail to provide such facilities, that valuable resource cannot be tapped. Industry, women and their children therefore have an interest in them. So, too, must the Government as they should be concerned about our resources and how we exploit them.

There have been changes in opportunities for women. It is widely accepted that women should not be penalised in work because they have children. Family life as between a husband and wife should be encouraged and preserved. It is sad that the number of single-parent families has increased, but that is the result of our society as much as it is the fault of individuals. The Government are being mean.

I was asked to describe what I thought was the key to the Government's attitude in Committee. It is undoubtedly the number of schemes that the Government have introduced that have shifted wealth from the poor to the rich. People who earn £50,000 a year are about £109 a week better off as a result of the past four years of Tory rule. Those whom we are considering in respect to workplace nurseries will be between £2 and £3 a week worse off. We have seen this tremendous shift, just as we saw a shift on stud farms in an earlier debate. That was another example of taking money from the poor and giving it to the rich. It is a tragedy that workplace nurseries are being penalised in this way.

The hon. Member for Tatton, to whom I ought not to refer too much, because so much contempt is felt towards him on the Opposition Benches, referred to the scheme being of benefit to directors. That was an outrageous and silly suggestion. The people about whom we are talking are on a wage equivalent to that of an average secretary. They are on a salary of £5,000 or £6,000 a year.

This proposal will affect the quality of life of young children, women and single-parent families. Hon. Members who hold surgeries will have come across the great problems of single-parent families. If the Government had any compassion, they would support the clause and ensure that children, women and single-parent families have a better deal in future.

Mr. Tony Banks

It is clear that the Opposition consider the Government's proposal typically mean, squalid and petty-minded. I hope that that message can go out from the House, because it is typical of the Government's general attitude as reflected in the Budget.

Most of the points have been well made, and I do not wish to repeat them. I hope that the Financial Secretary is aware of the depth of feeling on the Opposition Benches towards the proposal, because it smacks of Government vindictiveness.

What level of responsibilty will the Government accept for the advice that the Revenue apparently gave the Equal Opportunities Commission? The concept of asking for up to six years' back tax from parents smacks of petty vindictiveness by the Government of the worst possible kind. I cannot believe that the Financial Secretary would wish to persist in the proposal. Even if he is not prepared to agree to the new clause that we seek, will he say something about the six years' back tax? Surely he will not insist that that back tax be paid, if, indeed, he continues with the measure. Secondly, is it fiscal neutrality that makes the proposal so attractive to the Government? If so, they are being inconsistent yet again.

The Bill is riddled with exceptions. Mention has been made of canteens and car parks. Will the Financial Secretary be coming back next year to propose that the canteen and car parking facilities in the House should be taxed? I very much doubt that he would be prepared to do so. If he wishes to be consistent, the interests of fiscal neutrality would require him to do that.

Perhaps the purpose of the new ruling is to raise revenue, which is one of the purposes of having a Budget. If so, the Financial Secretary can tell us how much money has been raised so far from this tax, which, as my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Segemore) pointed out in his characteristically powerful way, the Financial Secretary said had been imposed by the last Labour Government.

6.30 am

If there are only between 70 and 90 workplace nurseries now, it cannot be consistent for the Financial Secretary to suggest that the new clause will lead to a vast upsurge in the number of workplace nurseries. Up to now, everyone has assumed that there was no tax anyway—even if the benefit was taxable, no tax was paid. There has not been a vast explosion in the number of such nurseries because people were acting under a misconception. How can the Financial Secretary say, as I believe he did in Committee, that if our suggestion were carried, there would be a massive increase in the number of workplace nurseries?

There is some equivocation in the Labour party' s stand on the provision of workplace nurseries by the employer. Clearly, we want free nursery education at the point of need for all children under the age of five. That does not exist now, and it will not exist under the policies of this Government. The number of nursery places is continually being cut as local education authorities are savagely attacked by the Government's policies. As we cannot have what we want under this Government, we are prepared to support this new clause, because, unsatisfactory though the provision of nursery education by employers is, it is better than nothing, and nothing is what we shall have if the Government persist with this squalid and petty measures.

Mr. Fisher

I support new clause 26. This is the only opportunity that our debates on the Finance Bill have given us to talk about the effect on children and parents of the Government's measures. Like my hon. Friends, I believe that the only long-term solution to this problem is the provision of nursery education and facilities throughout the country. I am glad that the Financial Secretary appears to be accepting that point.

In Committee, the Financial Secretary, with characteristic generosity, described the speech of my hon. Friend for Birmingham, Hodge Hill (Mr. Davis) in introducing the amendment that predated the new clause as being: one of the most excellent advocate cases that I have heard for employer-provided nurseries." — [Official Report, Standing Committee A, 26 June 1984; c. 1470.] I hope that the Financial Secretary will remember the logical and passionate drive of the introduction to the new clause by my hon. Friend the Member for Hodge Hill. His speeches in Committee were good, but his speech this morning was superb. It was a wonderful exposition of the case, and I think that it carried all hon. Members who were fortunate enough to be in the Chamber to hear it.

In particular, I hope that the Financial Secretary reads the speech, and remembers it, because when he addressed the House he limited himself to talking about the definition of nursery facilities, of children and of the word "available", and about the tax considerations. There is a possibility that a child could come under the general rule in Schedule E, if the employer met the employee's pecuniary liability under the Budget legislation, or under section 60 of the Finance Act 1976. In choosing to take that line of purely semantic definitions and tax considerations, the Financial Secetary lost sight of what the new clause should be about. It is really an educational matter. That is what I want to concentrate my remarks on.

My hon. Friend the Member for Hodge Hill has already demolished the whole idea that it is a perk. It can only be considered a perk by Conservative Members if they regard education as a perk. Only the most extreme and bigoted Conservative Members, none of whom are present today, and those who consider that only private education is true education would consider this a perk. It is an important right.

As my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) said, pre-school education is valuable for language development and manipulative skills. Most important, even from the age of two, it is important for the development of social skills. Speaking as a former teacher, I can say that the advantages provided to children by preschool and nursery education in social contacts are enormous and easily observed in the speed of progress made by children who have enjoyed those advantages.

I suspect that most Conservative Members who pay for private education for their children take up the advantage of private education before their children reach the age of five because they recognise the importance to their children of social and educational contacts at the earliest possible age.

If the Financial Secretary limits his wind-up remarks to the tax problems that may arise from the new clause or, indeed, the problems of definition in relation to facilities and availability, and the definition of children, which remain unchanged from our previous amendment, he will not be doing his cause or his Government's case a service. We are putting forward educational arguments.

I remind the Financial Secretary of the arguments adduced by the late Lord Butler, when he introduced the Education Act in 1944 as Secretary of State. It is clear, and it is accepted in the teaching profession, that he intended nursery and pre-school education to be comprehensive and universal. He hoped that education authorities throughout the country would introduce that policy as soon as they were able to do so. It was only Lord Butler's romantic or naive expectation that caused him, or those who drafted the 1944 Act, not to tie down the statutory obligations on education authorities to provide such nursery facilities and education. All of us involved in education feel that that was a great pity, and that it was a great loss to the country that that was not tied up in 1944 and has not been changed since. It should be done as soon as possible.

The city of Stoke-on-Trent is lucky enough to have some of the best and most widely available nursery provision in the country. I can testify to its valuable role in the education of the community as a whole. I hope that the Financial Secretary will at least pay some acknowledgement to the vital and central importance of nursery facilities in discussing the matter of its educational aspects, rather than deal with merely the tax implications.

Dr. Marek

I can see here the stamp of the Government in its usual form. The proposal will benefit parents on average and low income much more than those on high incomes. Because of that, the Government are not being generous or doing anything, so far as I can see, to ensure satisfacion for those members of the public who will be affected.

I associate myself with all the remarks made by previous Opposition speakers. I shall not repeat them. I have made my contribution in Committee and I have no intention of repeating that. I hope that the Government will accept the new clause. They may advise Conservative Members to vote against it. In that case I have one question, which has been touched on by my hon. Friend the Member for Newham, North-West (Mr. Banks). Some parents may be faced with bills of £3,000, £4,000, £5,000 or even £6,000, and that would be manifestly unfair.

During progress on the Bill there have been instances when the tax position was unclear, and on those occasions the legislation has reflected the position as people thought it to be.

Mr. Moore

indicated dissent.

Dr. Marek

There have been at least two cases, which for the moment I cannot recall, when it was generally accepted that the tax position was unclear and open to different interpretation. The benefit of the doubt fell as previously stated.

This has been recognised by the Equal Opportunities Commission and by parents. As far as I can see, it has also been accepted by the Inland Revenue, because we are not aware of anyone paying tax. Therefore, it would be manifestly unfair if these sums, considered by some to be large, were now obtained by the Inland Revenue.

Cannot the Government introduce a moratorium —perhaps by creating an extra-statutory concession terminating today—to ensure that no tax is demanded by the Inland Revenue from people who have taken advantage of these services and who have hitherto not paid tax? I am quite sure that about 99 per cent. of those people have not paid tax because they genuinely believed that no tax was payable.

If the Financial Secretary accepted that suggestion, he would go a long way towards retaining his credibility as someone doing his ministerial job but with a human face. I shall certainly vote for the new clause. This is not a question of getting a few thousand pounds from the wealthy, who may have £100,000 to play with and may consider such sums to be peanuts. Many ordinary people will face hardship unless something is done. That hardship will be caused because, possibly, they have been ill-advised by bodies such as the Equal Opportunities Commission. Let us see whether the Financial Secretary has some humanity.

Mr. Austin Mitchell

I shall be brief, partly to set a good example and partly because I had hoped that the parliamentary sketch writers would have arrived by now. As they have not, my journey is a little unnecessary, but, some basic arguments must be put.

This question involves two systems of welfare—the publicly provided system and the tax allowance system. The new clause argues for the tax allowance system of welfare so far as it applies to nurseries. If section 62 remains unamended, it would be unreasonable if the tax allowance system were cut at the same time as the Government are cutting the publicly provided system of nursery education by forcing economies on local government.

There may well be a case for cutting the tax allowance system of welfare in order to widen the tax base, but it is justifiable to do that only if, at the same time, one extends public provision, and makes it universal and free. Therefore, it is justifiable to do what the Government are doing only if they intend to spend public money on providing a universal system of nursery education. Since the Government are now cutting back both systems of nursery education, their proposal is unforgivable.

6.45 am

The Government's proposal, which our amendment would cancel out, is particularly cruel to those who must pay large sums of money in back tax, and is understandably unacceptable to them. It is one of those anomalies in the tax system that the Financial Secretary can justify, as he did in Committee. He can no doubt put forward a tenable argument that has been provided by his departmental officials, but in their heart of hearts everyone knows that it is wrong. Conservative Members have sat silent, with the exception of the hon. Member for Berlin, East. He provided us with the usual insane free market justification. However, the end result of his free market economics would be the provision of nannies for the upper class and the abolition of nurseries for the rest. That is the logical conclusion of a free market. It would be a step towards the nanny state, but it would be unacceptable to us.

Conservative Members know in their hearts that the Government's proposals are wrong. The new hon. Member for Surrey, South-West (Mrs. Bottomley) has been benignly smiling throughout this debate, but it cannot be at the rapturous experience of seeing the dawn come up for the first time from this parliamentary dustbin. It must be that she agrees with the arguments that have been put forward on behalf of women by Opposition Members. It would be amazing if that were not so.

I shall comment briefly on the sums of money involved. The figure of £8,500 at which people become liable for tax has not been changed since 1976. If it was uprated in line with inflation, it would now be £15,000 a year. More importantly, if the employer's subsidy is £2,000 per year for each nursery place, the parent need only earn £6,500 per annum to be caught in the tax net. It would seem that the Inland Revenue has been arguing not that the tax has been collected, but that since 1948 people have had the opportunity to pay it. Now, under the extension of the opportunity state—which this Government concentrate on—everyone will have the opportunity of having that opportunity made compulsory. The tax will be collected.

Will that tax, and all the back tax owing on those nurseries where parents have not been paying it for many years, now be collected? How many people will be affected? How will the whole process affect the number of workplace nurseries available? Can the Financial Secretary forecast the effect of this enforcement of opportunity on those parents and children who now benefit from workplace nursery education?

Labour Members are convinced that the effect will be detrimental. There has already been a reduction in the number of workplace nurseries. Up until the mid-1970s, the number was increasing as the number of female employees, single-parent families and opportunities for women to work brought nurseries to the fore. The recession has reduced the number of nurseries and the Government's proposals will almost certainly reduce them further.

In this day and age, child care in a workplace nursery should not be regarded as a perk. It is essential and should be treated as such. It is particularly essential for women workers who will suffer disproportionately from the Government's ruling. They are most likely to want to use nurseries for their children and are more likely to be low paid. They will be particularly hard hit.

Mr. Canavan

The debate has exposed the Tory party's double standards and hypocrisy. Members of the Tory party are content with legislation under which they can gain big tax concessions by sending their children to fee-paying schools while discriminating against parents whose pre-school age children attend workplace nurseries. That is disgusting, and the new clause seeks to remedy it.

I hope that hon. Members, irrespective of party, will think about family interests, particularly single parents and their young children. I appeal to hon. Members to consider what the existing legislation does other than to discriminate against working mothers who send their children to workplace nurseries.

Not long ago the Tory Government passed legislation, despite opposition, to remove the statutory obligation on local education authorities to provide nursery education. That was done not on education grounds, but on financial grounds. Ministers told us that they would not give education authorities enough money to provide pre-school places for educational reasons or because the mother had to work. There are many reasons for expanding pre-school education, whether in workplace or local authority nurseries. Nursery places are needed not just to allow the mother the freedom to work, but to expand the pre-school child's educational opportunity.

Many of my hon. Friends have referred to research and the difference in opportunity offered to children from different evironments. One way of equalising opportunity is by maximising the number of nursery places, whether in the educational sector or in workplaces. The Government have removed the legal obligation on education authorities to provide places for children whose parents wish them to have the advantage of pre-school education. At the same time, they are tolerating and defending a system of discrimination through the taxation system, which we seek to abolish through the new clause. The sum that will go to the Treasury as a result of maintaining the status quo will be minimal.

Mr. Mikardo

The sum that will go to the Treasury will be not minimal, but negative. Against the £1,000 or so that the Treasury will collect in tax from women who use a workplace nursery must be offset the fact that women will not go to work if a nursery is not available, and will instead draw state welfare benefits, and they will be greater than the revenue.

Mr. Canavan

My hon. Friend is right, and he has exposed my usual fault of understatement.

In a letter dated 26 June, in reply to my letter on behalf of organisations which were worried about the Finance Bill and urged me and other hon. Members to seek appropriate amendments, the Minister said: Employer subsidised nurseries are, however, only available to a very few employees (perhaps less than 2,000). Will the Financial Secretary give the House the evidence behind that statistic? What is the estimated income to the Treasury, which he is defending? My hon. Friend the Member for Bow and Poplar (Mr. Mikardo) pointed out that it would be negative because some of those 2,000 working mothers would probably have to pack in their jobs completely and, in the words of Tory Members, become a burden on the state and make no contributions to the Treasury through income tax and national insurance.

Yesterday afternnon a Minister asked the House not to make this a party political divide. He was almost asking us not to bring politics into the House of Commons. I appeal to Tory Members, whose minds may not be as closed as those of Cabinet Ministers by Tory party dogma. The Tory party has always prided itself on being the party that projected the philosophy of freedom of choice for the individual and defence of the family as the basic social unit. If Tory Members believe in freedom of choice, they should consider the negation of freedom, which voting against the new clause will mean for many young mothers who will face an agonising choice if they are fortunate enough to have employment combined with a workplace nursery for their children. They will be denying freedom to those young working mothers. They say that they believe in the sanctity of family life, but if they vote against the new clause they will be denying an opportunity not just to mothers, but to children who would benefit from pre-school care or education. I appeal to Tory Members to vote with us if they truly believe in freedom of choice, in the expansion of opportunities for women and children, and in family life in general.

Mr. Wrigglesworth

I support the arguments that have been deployed in favour of the new clause, but some of those arguments should be reinforced before we vote on it. The hon. Member for Falkirk, West (Mr. Canavan) mentioned the commitment, not just of the Conservative party but of all hon. Members, to sustaining and strengthening family life. Like other hon. Members I want many more nurseries at workplaces, which would provide opportunities to many women who could not fulfil their potential by staying at home and looking after their children. That in itself would be a major contribution to family life, not just for the obvious economic reasons but because, as our population becomes increasingly highly skilled and educated, housewives and mothers with professional and educational qualifications could use them in the community. They become increasingly frustrated if they cannot use their qualifications effectively.

Anyone who studies the maladies that affect society today will know that alcoholism grievously afflicts many housewives who stay at home and do not have the opportunity to work. Those who have the qualifications should have the freedom to be able to work.

Another major factor is that workplace nurseries and the freedom that they provide will make a substantial economic contribution to the entire community, so we should seek to extend such nurseries rather than restrict them. Women have made an increasing contribution to the wealth creation and economic well-being of the community in recent years, and the continued and increased provision of workplace nurseries will help to perpetuate that process. For all those reasons, and the many others adduced from the Opposition Benches, I hope that the House will accept the new clause.

Mr. Moore

We have had a long and interesting debate that has followed closely the debate initiated in Standing Committee by the hon. Member for Birmingham, Hodge Hill (Mr. Davis). The discussion has been about workplace nurseries, the rights of women to work and pre-school education. Hon. Members on both sides of the House can have sympathy with the social importance of many of the points that have been made, though that is not the subject of the new clause. That is about tax relief on employer benefits to employees or directors, and it is that to which we should address our attention, as opposed to the general acceptance by people of rational views on the important social benefit that workplace nurseries can provide.

After another all-night sitting—we had many such long sittings in Committee upstairs—I will answer some of the main questions that have been asked, and then argue why I must advise my hon. Friends to vote against the new clause. Any points that I fail to answer I shall seek to cover in correspondence. Much of the debate that has taken place on this issue, both tonight and upstairs in Committee, merits some detailed comments to illustrate the precise legal position on the taxable nature of certain benefits, particularly as many people do not seem to realise that they are taxable, and I will seek to inform hon. Members who are interested in having information as opposed to having only a simple debate on that score.

The hon. Members for Hackney, South and Shoreditch (Mr. Sedgemore) and for Hodge Hill—I shall come to the latter's substantive points later—asked how often the benefit had been assessed in the past. As hon. Members who understand Revenue matters will appreciate, my reply is that it is difficult to say. It is not the sort of information that would normally be held centrally, nor would it be reasonable to expect it to be so held.

For workplace nurseries, I suspect that the answer is not often. There are only 2,000-plus employer subsidised nursery places in the country. To judge from my post-bag and the debates we have had since the issue become more public, many of the employers providing workplace nurseries argue that they were unaware of their responsibilities for tax. I accept many of the comments that have been made about the nature of the ways in which there were doubts in people's minds on the issue. However, that does not change the law and the need for people to act in accordance with it.

I repeat what I said upstairs in Committee. On the information and advice I have been given—obviously, I cannot identify the person concerned—I have mentioned that at least one employer at the Kingsway Children's Centre has made returns for a number of years. In addition, a number of employers are discussing with the Revenue the valuation of similar benefits for tax purposes.

Several hon. Members referred to the cost of the new clause and the fact that the purpose throughout was not to suggest that it was a massive revenue sum. I accept that. It was simply to illustrate the theoretical cost relating to the clause. The estimated cost is worked out on the basis that all receiving the benefit would be declaring it for tax purposes and paying tax on it.

On that basis, the Exchequer would, we believe, receive about £1 million in tax, and that would be the cost of exempting the benefit. To the extent that some recipients of the benefit are, for whatever reason, not paying tax on it, revenue lost from exempting it would be reduced. To what extent it would be reduced it is difficult to say. As there are no central records of the numbers paying tax on the benefit, it is impossible to be more precise about the actual revenue loss.

I have been asked whether there was any change of practice and also about the law. The benefit has been taxable in the hands of directors and those employees covered by the special rules for the taxation of benefits in kind—in the same way an other benefits in kind—since the special rules were first introduced in 1948.

I have not sought to suggest that this is a Labour party measure. It was introduced in 1948 and confirmed in 1976. Its application seems to have found the agreement of both sides of the House. All benefits in kind under this legislation are taxable, with certain specified limited exemptions, in the hands of directors and employees who come within the special rules. In the most notable recent House of Lords case on the tax treatment of benefits in kind, Lord Templeman, in Wicks v. Firth and Johnson v. Firth, said: Not only does section 61, of the Finance Act 1976, deliberately apply to every conceivable form of benefit to the cost of an employer which may be said to enure in any way to the advantage of the employer, without exception, but it would be illogical to provide any exception. The hon. Member for Hodge Hill asked about the Government"s plans to tax all benefits equally with cash. He quoted at length from a letter to Mr. Grantham from the private secretary to my right hon. Friend the Chancellor of the Exchequer. I am surprised by the apparent surprise that hon. Members are expressing at parts of the letter. Much of the letter has been covered in parliamentary questions and I shall supply the hon. Gentleman with the Hansard references. The letter sets out our long-term policy, which has been stated on a number of occasions. There are a number of anomalies, however, including the exemption of canteens and the £8,500 threshold. However, my right hon. Friend the Secretary of State for Transport, when he was Financial Secretary to the Treasury, made it clear that there can be no question of our moving precipitately. He said that action would be taken only after full consideration had been given, in the context of the long-term policy, to simplifying and rationalising our personal tax system.

Mr. Deakins

rose—

Mr. Moore

I have many points to which to respond. I ask the hon. Gentleman to allow me to continue. I have listened to the debate with considerable patience and I should like to place some points on the record as well as dealing with the argument. I imagine that the hon. Member for Hodge Hill wishes to catch your eye, Mr. Deputy Speaker, when I resume my place.

The hon. Member for Walthamstow (Mr. Deakins) asked about the threshold. The Government's policy has always been clear. My right hon. Friend the Secretary of State for Transport, when a Treasury Minister, explained that it is our long-term aim to work towards the abolition of the threshold and to have equal treatment for benefits in kind. That was made clear in public by my right hon. Friend.

The hon. Member for Leeds, West (Mr. Meadowcroft) asked about the position of local authority nurseries and why we should not tax the parents' benefit. The tax under schedule E can be assessed only on income, including benefits in kind, from employment. With workplace nurseries there is a clear link with employment, but that is not so with local authority nurseries. The place is provided by the authority as a social service, not because of employment.

There has been much discussion about the relative position of car parking spaces. As I explained earlier, such spaces are taxable. No charge would arise under the normal rules of schedule E where the employer uses his own land for a car park because the car parking space cannot be turned into "money's worth", in Revenue terminology. The employee cannot sell or sub-let the parking space. However, a charge may arise under the special rules applying to directors and employees earnang about £8,500 a year. That is what I meant when I said that the benefit was taxable. Where the employer owns or leases the land in question, the cost in law is the annual value of the land as defined in section 531(1) of the Income and Corporation Taxes Act 1970. In practice, where land is owned by the employer, the Inland Revenue takes the annual value to be the gross rateable value of the car parking space. My hon. Friend the Member for Tatton (Mr. Hamilton) partly explained this matter to the House. This will usually be a small de minimis amount. The Inland Revenue does not seek to assess any tax due, because that would not be cost-effective on the de minimis operation.

7.15 am

Mr. Mikardo

Has the hon. Gentleman ever had a look at the multi-storey staff car park at Heathrow which cost a fortune? That was not a minimal amount.

Mr. Moore

I shall answer the hon. Gentleman at more length in a written reply.

There is a clear difference between land owned and used and land rented out and the arrangements made about that land. They are all taxable. The question is whether the tax benefit fits under the assessment for the de minimis rule or whether there is a benefit above the £8,500 threshold that merits collection. Because this is a complex matter, I shall let the House have more details later.

The hon. Members for Barking (Ms. Richardson) and for Hodge Hill asked about the inclusion for a number of years of employer-subsidised nurseries in a list of fringe benefits on which, according to the "Which? (Tax Saving Guide",) one does not have to pay tax. I understand that this year the item was omitted. The hon. Member for Barking is right — it is only recently that employees generally receiving this benefit would have been earning at a rate to come within the scope of the special rules for higher paid employees. I note that the Consumers Association has changed the wording to make the position clear. I shall certainly look into the points raised by the hon. Lady about whether there has been a Treasury comment on the matter and ascertain what I can do to ensure that we assist organisations where we can.

However difficult the matter, the position has always been clear. In law, the benefit has always been taxed. the hon. Member for Hodge Hill has not disputed this point; He recognised the legal position.

I have been perplexed at the attention that has been given to this whole issue by the Opposition Front Bench during the whole debate on the Finance Bill. As the hon. Member for Barking rightly reminded me, I met a delegation of senior members of the Opposition to discuss the matter. I explained the facts in detail. They are not palatable when people are hurt or uncomfortable. I discussed generally—I was not seeking a commitment—the principle that I thought was shared by both sides of the House. That principle, which has continued over many years, concerned the way in which this country should move from what by some are called "perks", or employer-provided benefits. I did not expect a response from the Opposition. I believed that there was common ground on that principle.

I was even more perplexed, because—this might be bad for my political career— I have come to respect greatly the hon. Member for Birmingham, Perry Barr (Mr. Rooker). I think that I share with the hon. Gentleman a distaste for the type of perquisite avoidance society which has existed. I share with the hon. Gentleman what are in many ways puritanical attitudes towards some aspects of society that we find distasteful. To that extent, I was perplexed when the issue was raised in Committee. I expected the official Opposition to make a clear statement of principle about a change in their attitude towards all tax reliefs so that such reliefs were regarded as legitimate, but there was no such change.

If there had been such a clear statement, I should have understood the nature of the debate more. If there had been a statement of a change of policy, I should have wondered why the House was asked to address this relief, as opposed to so many other potentially socially beneficial reliefs—care for the disabled and reliefs for those who travel to work. I could go on about the types of reliefs about which all Treasury Ministers have received, and resisted, pressure. I could have wondered why those reliefs were not the ones that the House was asked to address on this occasion. As we were asked to address only this relief, I was even more surprised at the discriminatory and limited nature of the selection.

I said in Committee, and I repeat, that I respect in every way the excellent speeches by the hon. Member for Hodge Hill and his argument, which has been well put, about the nature and importance in our society of pre-school education and workplace nurseries. I understand and have great sympathy for what he said, I had great difficulty in disagreeing with much of what he said. However, that is not what we are discussing. We are discussing a proposal specifically relating to a tax relief that seeks to isolate one section of the community. I do not want to discuss the numbers. I accept that they are limited. I accept that the figure is only approximately 2,000 children and that it could grow if such reliefs were allowed.

The hon. Member for Leeds, West honourably argued that he saw the relief as a lever and an opportunity. That was an honourable argument along the lines of the equity case that I would have expected the Opposition to argue, in the tradition of Attlee. As I said in Committee and as has often been reported in the media, the figure of £600 million is the potential cost. In equity, I would have expected the Opposition — or Conservative Members would—not to believe that one could offer a relief only to those who were already blessed with the fact that their employers were far-sighted enough to provide nurseries. What about, not the 2,000, but the millions of women with children of pre-school age who do not have such a benefit? Do they not merit relief?

Mr. Barron

If the Rates Bill were removed, we could expand nursery services.

Mr. Moore

That is not the proposition before the House. The proposition before the House is for the exclusion of those with over £8,500 of earnings, including taxable benefits, who already have employer-supported nurseries. I would have understood it fully if the Opposition had argued—perhaps after the debate they will seek to argue it—that generally the issue is so important that one should argue for the general case. However, they have not. I find it very strange. The case that created so much public attention was associated with the Kingsway Children's Centre, which happened to have among its employers Thames Television, London Weekend and other media organisations. I have not noticed those organisations giving platforms for relief for people such as the disabled as opposed to the platform that they have given, where, to put it mildly, they may have an interest.

No one in the Conservative party underestimates the difficulties of women at work, who have children. No one could fail to welcome the activities of far-sighted employers who develop nursery facilities, but I am sure that all of us would not want to subscribe to this elitist, discriminatory clause that would ignore the needs of the majority while seeking to benefit the few.

Mr. Terry Davis

It is significant that so many of my hon. Friends have stayed throughout the night. [Interruption.] The hon. Member for Eltham (Mr. Bottomley) may laugh, but he has been in and out in his usual way—a bleeding heart that never bleeds all the way to the Lobby. Members from all parts of the Opposition have stayed to debate the new clause because we believe in it and we make no apology for that.

I am also grateful to my hon. Friend the Member for Barking (Ms. Richardson) who has contributed as Labour spokesperson on women's rights. She will agree, however, that on some issues men must also be prepared to stand up and argue for women's rights. In this case we are arguing not just for women's rights but for men's rights as well. This is a Socialist new clause and we intend to press it to a Division.

It was even more significant that the only Conservative Back Bencher to take part in the debate was the hon. Member for Tatton (Mr. Hamilton). I shall be kind in my comments about his speech because at least he had the courage of his convictions, unlike some of his hon. Friends who express sympathy in letters and telephone calls and when they are lobbied by parents affected by this but are not willing to speak on the subject in the Chamber, still less to join us in the, Lobby and vote for the new clause.

The hon. Member for Tatton was wrong, however, when he argued, and was echoed by the Financial Secretary, that only directors and higher paid employees would benefit from the new clause. He obviously did not listen to my explanation of the way in which the £8,500 was calculated and the way in which the cost to employers of workplace nurseries was added to low wages so that an employee on £100 per week or even less would be liable for tax. When we say that the person on £5,000 or £6,000 per year will be liable for tax we assume that that person has only one child in the workplace nursery. It is not unknown for single parents to have more than one child under five years old. Before we have any cheap sneers from some Tory Members, let them recall that that group includes many widows. The hon. Gentleman seems not to have listened to his hon. Friend the Financial Secretary either, as it is the Government's policy to abolish the threshold and to tax everyone as soon as they can get round to it—not precipitately, not next week, but perhaps next year.

We do not disagree with the hon. Gentleman that directors and higher-paid employees will benefit, but he is wrong to say that only they will benefit. A workplace nursery benefits every child and every parent involved. The Government's new tax will jeopardise workplace nurseries throughout the country. We seek to exempt them because we believe that that will encourage empoyers to provide nurseries.

I do not mind if a director sends his or her child to the workplace nursery because under the new clause, which the hon. Member for Tatton has clearly not read carefully, the tax benefit will be available only if the nursery is available to the children of all employees. I do not mind the director getting the tax benefit if it means that there will be places for the children of the typists, the cleaners and the man on the door. Everyone will benefit if employers are encouraged to provide workplace nurseries by the provision of tax exemption, provided that places are available to all staff, just as the factory canteen is available to all staff. I have never seen many directors in factory canteens, but they are entitled to go there and I have no objection to that. That is why canteens were exempted from tax by parliament and that is why nurseries should be exempted on the same basis.

I agree with all those who say that nursery places should be provided free of charge for all children everywhere. That is our ideal. In the meantime, we must use every tool and lever that we can find to encourage the provision of nursery facilities wherever we can, including provision by employers. Just as the working class movement fought for a National Health Service by getting employers to provide a service in the old days until a Labour Government provided it for everybody, so we should get nurseries from those employers who can be persuaded to provide them until, eventually, they are available for everyone.

The Financial Secretary agrees with me about the importance of workplace nurseries. The only difference between us is that he wills the end but not the means. He talks about inequity, and about those who are unable to benefit, but he has never answered the direct question that we put to him in Committee and again in this debate. Some employers provide factory canteens, and some do not. The employees of employers who provide canteens benefit from those canteens. The employees of employers who do not provide them cannot benefit. Exactly the same argument as applies to workplace canteens applies to workplace nurseries. That is why the new clause is not inequitable.

7.30 am

The Financial Secretary believes that both parties accept the principle that perks should be taxed. He could have fooled me. I remember the debates of 1976, in which the Conservative party opposed the taxation of perks. To the Opposition, the workplace nursery is not a perk. It is like the workplace canteen and should be provided on the same basis.

The Financial Secretary asks why we are so concerned about the Kingsway Children's Centre. It is a slur to suggest, as he does, that the reason why we are upset is that some media employers have empoloyees whose children attend that centre. The senior managers and directors of London Weekend Television are not my friends. It is the Financial Secretary whom they telephone—though to no effect.

Why are we so concerned about the centre? We are concerned because that is where it started. What happened at that centre was the thin end of the wedge. The parents whose children attend that centre were the first parents to be taxed by the Government. They were the first to pay the nursery tax. They did not mount the campaign by choice. The Government, by their refusal to restore the position to what it had previously been put those parents in the front line.

The new clause is not about those 25 parents. It is not about the 2,000 parents whose children attend other workplace nurseries. In voting for the new clause we shall be voting for genuinely equal opportunities for women, for greater support for single parents of both sexes and for more nursery places for children.

Question put, That the clause be read a Second time:—

The House divided: Ayes 58, Noes 220.

Division No. 405]	[7.34 am
AYES
Atkinson, N. (Tottenham)	Cocks, Rt Hon M. (Bristol S.)
Banks, Tony (Newham NW)	Cohen, Harry
Barron, Kevin	Cook, Robin F. (Livingston)
Beckett, Mrs Margaret	Corbyn, Jeremy
Beith, A. J.	Cowans, Harry
Bell, Stuart	Cox, Thomas (Tooting)
Bennett, A. (Denfn & Red'sh)	Dalyell, Tam
Blair, Anthony	Davis, Terry (B'ham, H'ge H'l)
Campbell-Savours, Dale	Deakins, Eric
Canavan, Dennis	Fields, T. (L'pool Broad Gn)
Carlile, Alexander (Montg'y)	Fisher, Mark
Clay, Robert	Golding, John

Harrison, Rt Hon Walter	Randall, Stuart
Hogg, N. (C'nauld & Kilsyth)	Richardson, Ms Jo
Holland, Stuart (Vauxhall)	Rooker, J. W.
Kennedy, Charles	Ross, Stephen (Isle of Wight)
Kirkwood, Archy	Rowlands, Ted
Litherland, Robert	Sedgemore, Brian
Lloyd, Tony (Stretford)	Skinner, Dennis
Loyden, Edward	Smith, C.(Isl'ton S & F'bury)
McDonald, Dr Oonagh	Spearing, Nigel
McTaggart, Robert	Strang, Gavin
McWilliam, John	Thompson, J. (Wansbeck)
Marek, Dr John	Wallace, James
Maxton, John	Wigley, Dafydd
Meadowcroft, Michael	Wrigglesworth, Ian
Mikardo, Ian	Young, David (Bolton SE)
Mitchell, Austin (G't Grimsby)
Nellist, David	Tellers for the Ayes:
Pike, Peter	Mr. Don Dixon and Mr. Allen McKay.
Powell, Raymond (Ogmore)

NOES
Alexander, Richard	Freeman, Roger
Alison, Rt Hon Michael	Gale, Roger
Amess, David	Galley, Roy
Ashby, David	Gardiner, George (Reigate)
Atkinson, David (B'm'th E)	Goodhart, Sir Philip
Baker, Rt Hon K. (Mole Vall'y)	Goodlad, Alastair
Baker, Nicholas (N Dorset)	Gorst, John
Baldry, Anthony	Gower, Sir Raymond
Banks, Robert (Harrogate)	Gregory, Conal
Batiste, Spencer	Griffiths, Peter (Portsm'th N)
Beaumont-Dark, Anthony	Grist, Ian
Bellingham, Henry	Ground, Patrick
Best, Keith	Hamilton, Hon A. (Epsom)
Bevan, David Gilroy	Hamilton, Neil (Tatton)
Biffen, Rt Hon John	Hannam, John
Biggs-Davison, Sir John	Hargreaves, Kenneth
Blaker, Rt Hon Sir Peter	Harris, David
Bonsor, Sir Nicholas	Hawkins, C. (High Peak)
Boscawen, Hon Robert	Hawksley, Warren
Bottomley, Peter	Hayes, J.
Bottomley, Mrs Virginia	Hayhoe, Barney
Bowden, A. (Brighton K'to'n)	Hayward, Robert
Bowden, Gerald (Dulwich)	Heathcoat-Amory, David
Brandon-Bravo, Martin	Heddle, John
Bright, Graham	Henderson, Barry
Brinton, Tim	Hickmet, Richard
Browne, John	Hind, Kenneth
Bruinvels, Peter	Hirst, Michael
Buck, Sir Antony	Hogg, Hon Douglas (Gr'th'm)
Burt, Alistair	Holt, Richard
Butterfill, John	Hooson, Tom
Carlisle, Kenneth (Lincoln)	Howard, Michael
Cash, William	Howarth, Alan (Stratf'd-on-A)
Chalker, Mrs Lynda	Howarth, Gerald (Cannock)
Chope, Christopher	Hubbard-Miles, Peter
Clark, Dr Michael (Rochford)	Hunt, David (Wirral)
Clark, Sir W. (Croydon S)	Hunter, Andrew
Cockeram, Eric	Irving, Charles
Colvin, Michael	Jessel, Toby
Conway, Derek	Johnson-Smith, Sir Geoffrey
Cope, John	Jones, Robert (W Herts)
Cormack, Patrick	Kellett-Bowman, Mrs Elaine
Couchman, James	Key, Robert
Cranborne, Viscount	King, Roger (B'ham N'field)
Currie, Mrs Edwina	Knight, Gregory (Derby N)
Dickens, Geoffrey	Knight, Mrs Jill (Edgbaston)
Dicks, Terry	Knowles, Michael
Dorrell, Stephen	Lang, Ian
Douglas-Hamilton, Lord J.	Latham, Michael
Dover, Den	Lawler, Geoffrey
du Cann, Rt Hon Edward	Leigh, Edward (Gainsbor'gh)
Eggar, Tim	Lennox-Boyd, Hon Mark
Evennett, David	Lester, Jim
Fallon, Michael	Lightbown, David
Favell, Anthony	Lilley, Peter
Fenner, Mrs Peggy	Lloyd, Peter, (Fareham)
Forman, Nigel	Lord, Michael
Forsyth, Michael (Stirling)	McCurley, Mrs Anna
Forth, Eric	Macfarlane, Neil

MacKay, Andrew (Berkshire)	Smith, Tim (Beaconsfield)
Maclean, David John	Soames, Hon Nicholas
Major, John	Speller, Tony
Malins, Humfrey	Spencer, Derek
Malone, Gerald	Spicer, Jim (W Dorset)
Maples, John	Spicer, Michael (S Worcs)
Marland, Paul	Squire, Robin
Mather, Carol	Stanbrook, Ivor
Maude, Hon Francis	Stanley, John
Mawhinney, Dr Brian	Steen, Anthony
Maxwell-Hyslop, Robin	Stern, Michael
Merchant, Piers	Stevens, Lewis (Nuneaton)
Meyer, Sir Anthony	Stevens, Martin (Fulham)
Miller, Hal (B'grove)	Stewart, Allan (Eastwood)
Mills, Iain (Meriden)	Stewart, Andrew (Sherwood)
Mills, Sir Peter (West Devon)	Stewart, Ian (N Hertf'dshire)
Mitchell, David (NW Hants)	Stokes, John
Moate, Roger	Taylor, John (Solihull)
Moore, John	Taylor, Teddy (S'end E)
Morris, M. (N'hampton, S)	Temple-Morris, Peter
Morrison, Hon P. (Chester)	Terlezki, Stefan
Moynihan, Hon C.	Thompson, Donald (Calder V)
Neale, Gerrard	Thompson, Patrick (N'ich N)
Needham, Richard	Thurnham, Peter
Nelson, Anthony	Townsend, Cyril D. (B'heath)
Newton, Tony	Tracey, Richard
Nicholls, Patrick	Trippier, David
Norris, Steven	Twinn, Dr Ian
Oppenheim, Philip	Viggers, Peter
Ottaway, Richard	Waddington, David
Page, Richard (Herts SW)	Wakeham, Rt Hon John
Parris, Matthew	Waldegrave, Hon William
Pawsey, James	Walden, George
Porter, Barry	Walker, Bill (T'side N)
Powell, William (Corby)	Wall, Sir Patrick
Powley, John	Ward, John
Proctor, K. Harvey	Wardle, C. (Bexhill)
Raffan, Keith	Warren, Kenneth
Rathbone, Tim	Watson, John
Rees, Rt Hon Peter (Dover)	Watts, John
Rhys Williams, Sir Brandon	Wells, Bowen (Hertford)
Robinson, Mark (N'port W)	Wheeler, John
Roe, Mrs Marion	Whitfield, John
Rowe, Andrew	Winterton, Mrs Ann
Rumbold, Mrs Angela	Winterton, Nicholas
Ryder, Richard	Wolfson, Mark
Sackville, Hon Thomas	Wood, Timothy
Sayeed, Jonathan	Woodcock, Michael
Shelton, William (Streatham)	Young, Sir George (Acton)
Shepherd, Colin (Hereford)
Silvester, Fred	Tellers for the Noes:
Sims, Roger	Mr. Michael Neubert and Mr. Tim Sainsbury.
Skeet, T. H. H.

Question accordingly negatived.