§ 6 pm
§ Mr. Jeff Rooker (Birmingham, Perry Barr)
I beg to move amendment No. 29, in page 12, line 27, leave out `£3,955' and insert '£4,225'.
§ The Chairman of Ways and Means (Mr. Harold Walker)
With this we shall take the following amendments: No. 30, in page 12, line 27, leave out '£3,955' and insert '£4,085'.
No. 31, in page 12, line 27, leave out '£3,955' and insert '£4,230'.
No. 32, in page 12, line 28, leave out '£2,490' and insert '£2,570'.
No. 33, in page 12, line 28, leave out '£2,490' and insert '£2,660'.
§ Mr. Rooker
On Second Reading, the Chief Secretary described clause 21 as one of the brighter jewels in the budgetary crown. I intend to show that it is not such a jewel for the over-65s because of the way in which they have been cheated on the age allowance increase.
Since both major parties accepted the principle of indexation of tax allowances in 1977, the difference between the ordinary personal allowance and the age allowance has never been more than 1 per cent. Even when both allowances were frozen in 1981, they received the same treatment. That year, the Government increased income tax by freezing both personal and age allowances. This year a gap of seven percentage points is working against the over-65s. Therefore, the Bill discriminates against the over-65s compared with the rest of the population.
The Committee—and certainly the millions of over65s—needs to know why 40 per cent. of elderly people—some 2.5 million people—should be singled out for that discrimination in tax. It is grossly unfair. Sometimes the Government make great play of what they do for pensioners, but, as I shall show, they are selective in what they do. When they are not holding back a pension increase for two weeks, they are breaking the link with earnings. Now, in 1984, they are widening the gap between the age allowance and other personal allowances for the first time in many years. There is no satisfactory explanation for it. The explanation is certainly not money. In the interests of equity and justice, the Government should accept the amendment.
According to Treasury figures, 2.4 million people over 65 will pay an extra £130 million in income tax this year, so that 150,000 very rich pensioners who, before the Budget, had an income of over £140 every week from interest payments or other things, such as annuities, can have a tax handout of an extra £25 a week. That is what 235 the Government are doing for pensioners. Some 2.4 million people over 65 will pay more tax than they would have done if they had been fairly treated. The amount of money that the Government will save is virtually the same as what they are giving away to 150,000 rich pensioners who have access to capital or annuities worth approximately £80,000 and who, every week, receive income from interest payments of about £140. They will receive a minimum tax handout from the Budget of £25 a week.
When the Chancellor delivered his Budget statement, I remember the cheers from Conservative Members when he announced that he had abolished the duty on paraffin. He said that that would be of particular benefit to many pensioners, but he did not say that many pensioners were forced to use paraffin because he had jacked up the price of electricity. He did not remind the full House of Commons on that day that the extra duty on paraffin was 1p per gallon, but that the price of a gallon of paraffin was approximately £1.47. Pensioners know that they do not get a good deal on that. That was a sick joke. We shall deal with that on another clause in Committee.
I want to highlight the way in which the Government have treated pensioners in the Budget with their tax changes. Rich pensioners will receive an extra £25 a week because of the abolition of the investment income surcharge, but everybody else will have an increase in tax.
The Treasury will save £130 million by not making the age allowance increase 12.5 per cent. Some 2.5 million people aged over 65 will have to pay extra tax as a result of the measure, and 200,000 more people over 65 will pay tax than would otherwise have been the case if the Government had given them a square deal by making the age allowance increase 12.5 per cent. The Government have dragged into income tax an extra 200,000 people over 65 who would not have paid tax this year if the age allowance had been increased by 12.5 per cent., as it has been increased for me, the vast majority of hon. Members and 20 million other taxpayers. To remedy that defect, unfairness and injustice, amendments Nos. 29 and 33 seek to increase the age allowance for a married couple and a single person by 12.5 per cent.
Amendments Nos. 30 and 32 give the Government a get-out if they want it. If they say that they cannot afford the increase, we are prepared to do a deal on 9 per cent.—midway between 5 per cent. or 5.3 per cent. and 12.5 per cent. Let us have an arrangement to mitigate the injustice.
So far, I have talked in global figures. If a married couple over 65 do not receive an age allowance increase of 12.5 per cent., they will pay an extra £81 a year— £1.50 a week — in income tax as a result of the meanness and cheating of the Government. A single person over 65 will pay an extra £51 a year—£1 a week—in income tax, just because the Government could not bring themselves to increase the age allowance, not by the 5.3 per cent., the rate of inflation, but by 12.5 per cent., as it has been increased for everybody else. That shows how the global sum of £130 million affects individuals.
The Government will ask, as they did yesterday, where the money is to come from. It will cost only £130 million. That, as the Tory Government and Members know, is chicken feed when one is dealing with a Budget and taxation matters running into billions. The best way to 236 judge the smallness of the cost is to compare this increase with the relief for the 20 million people who will be getting a 12.5 per cent. increase in personal allowances, which will cost the Government £2 billion. The age allowance increase of a meagre 5.3 per cent., the rate of inflation, will cost £100 million. That is one twentieth of the cost of what the Government have set aside for the increase in personal allowances.
Instead of giving a 12£5 per cent. increase in personal allowances for the 20 million people paying tax, the Government could have restricted the increase to 11 per cent., which is still twice the rate of inflation. The Chancellor could have said that he was increasing personal allowances by twice the rate of inflation, which is double what he is required to do by indexation. There would have been cheers from the Government Benches and satisfaction on the Opposition Benches. By cutting the increase from 12£5 per cent. to 11 per cent. — a difference that most people would not even notice—he could also have said that he was going to increase the age allowance by 11 per cent. If he had restricted the personal allowance to 11 per cent., he would have had the money to pay the 11 per cent. increase in the age allowance. If only the Chancellor had sat down and looked at this in a fair way, there would have been an obvious alternative for him to take.
One can look at it another way. The ready reckoner at the back of the autumn statement shows that to increase the personal allowance by £20 for a married man would cost £64 million. To increase the age allowance for a married man over 65 by £20 would cost £5 million. That is one thirteenth of the amount of money involved. It would have been easy to have achieved equity, justice and fairness for the 2.5 million over-65s who have been treated most unfairly compared with the 150,000 very rich over-65s who were already getting £140 a week income before the Budget gave them another massive tax handout. We have tabled the amendment in order to right a wrong, an injustice that, I warn the Government — their Back Benchers will have told them—has not gone unnoticed by the over-65s
§ Mr. Andrew Bowden (Brighton, Kemptown)
It is with considerable sadness that I rise to support the amendment, not least because I find myself happy to agree with a substantial part of the speech made by the hon. Member for Birmingham, Perry Barr (Mr. Rooker). I am sad because the Government have not acted in a fair and just way towards retired people. I deeply regret that my right hon. Friend the Chancellor has not seen his way to increase the age allowance in line with the personal allowance.
I must say, yet again, as I have done on a number of occasions in recent years that many pensioners are getting the feeling that they are being forgotten, that their problems are being overlooked and that they are not getting just treatment. It is easy for us, as the years fade since the second world war, to forget that today's pensioners, many of whom have lived through two world wars, lived in days that were infinitely more difficult than those faced by generations today. Wars, depressions, in some cases real poverty, were the lot of a number of today's pensioners.
I cannot understand why—and I cannot see the logic, let alone the fairness, of it—we are increasing personal 237 allowances by 12.5 per cent. for those of us who are in full-time occupation and by only 5.5 per cent. for the retired. Would it not have been a much fairer and more honest thing to have increased personal allowances by 10 per cent. across the board? I do not think that many who are now getting 12.5 per cent. would have complained about that. The Government could rightly have said that they were giving a substantial increase in the age allowance and the personal allowance for all sections of our society.
We have often talked about the poverty trap for those in employment. There is also a poverty trap for pensioners. The way in which the levels of age allowance and the tax system works is a direct discouragement to anybody to save. Pensioners with an occupational pension of about £15 a week are caught in the poverty trap because of the existing allowances and the way in which they operate. They have no chance of earning their way out of the trap.
Some time ago, my right hon. Friend the Secretary of State for Social Services described inflation as a social disaster. I fully endorse that, and full credit must be given to the Government for the action that they have taken in, if not beating, certainly damming, inflation. It is the retired people more than any other section of the nation who have suffered from the horrendous inflation rates of the past 10 or 12 years.
In 1972, a pensioner couple in receipt of a £50 a week occupational pension—not a massive sum—plus their state pension, would have lived quite comfortably. They probably worked long and hard to get that occupational pension. They may have saved and sacrificed to be independent both of the state and of their families when they retired. However, the value of that £50 a week occupational pension, allowing for the fact that the vast majority of occupational pensions are not index linked, is now less than £10. In addition, the couple will be paying tax, if my mathematics is correct, although it was always one of my weak subjects, of £6 per week or more. The value of the 1972 occupational pension of £50 per week is now less than £10. I hope that the House can appreciate the bitterness of many pensioners who, having worked and saved for their retirement, are now near the poverty line.
There is no doubt that Governments have largely created this situation. I believe that Governments have a moral responsibility to help, and not further to penalise, a group that faces this appalling situation. I submit that is yet another reason for a complete review of the contributory and non-contributory tax benefit system. It is in a mess, and is working heavily against the interests of the country's retired people. I shall have no alternative but to support the amendment.
§ Mr. Mark Fisher (Stoke-on-Trent, Central)
It is a privilege to be called after the courageous and knowledgeable speech of the hon. Member for Brighton, Kemptown (Mr. Bowden). As hon. Members on both sides of the House have come to expect from the hon. Gentleman's views on other matters concerned with social policy, his speech was consistent with those views. I believe that hon. Members on both sides of the House will have great respect for his views. When the Minister of State replies to the debate, I hope that he will not only respect but heed the views expressed by the hon. Member for Kemptown.
The hon. Gentleman said that he may be weak on mathematics, but his mathematics seemed sound to me. If 238 he was in any way weak on mathematics, he was strong on his sense of social justice and fairness. Those were the words that he used when describing this measure, or non-measure. He said that it was not fair and just. In doing do, he echoed what my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) said about the inequity and unfairness of this non-measure. The hon. Member for Kemptown wanted to know the logic of the Government. Surely he knows the logic of the Government. Their logic is that to those who hath shall be given more, and to those who hath not shall be taken away, or not given. He knows, Opposition Members know, and pensioners throughout the country know that that is so, because they have not got, and it will not be given to them.
When the hon. Member for Kemptown was speaking, one could detect an echo of the late lain Macleod. Sadly, the sort of Conservative Member who holds that kind of view is now an extinct sort of Conservative. The country and political debate would be more civilised if the sort of Conservative that the hon. Member for Kemptown is and that the late lain Macleod was could return to public life and be prominent on the Government Benches.
The refusal by the Government to index the age allowance, as my hon. Friend the Member for Perry Barr has said, will save £130 million—
§ Mr. Fisher
Yes, and we are asking for it to be indexed at the same rate as is applied to other allowances. The hon. Gentleman is correct to pick me up on the words that I used, but I think that the Committee understood what I said. It has been indexed in line with other allowances, and it ensures that a further 200,000 old-age pensioners will pay tax. That makes a mockery of the debate in Committee yesterday on the insurance investment surcharge when one considers that 150,000 pensioners who have more than £80,000 of investment, and the income that comes from that, are doing very well.
It is interesting to compare the cost of that measure, which was £360 million, with the so-called saving of £130 million that not fully indexing in line with other allowances has brought to the Government. That is just over £200 million extra. One sees the figure of £200 million in a different light when one considers what the Government have done to housing benefit for old-age pensioners. Recent decisions on housing benefit have resulted in a so-called saving to the Government of £200 million. A total of 1.3 million pensioners with incomes just above the level of the state pension are now losing out because of changes in housing benefit. If one adds the saving of £200 million and the so-called saving of £130 million, one realises that the gift of £360 million is almost equally balanced by the disadvantage to less well-off pensioners in the form of housing benefit and the failure to index the allowances under discussion in line with those of other members of society. We should not ignore housing benefit. The two measures taken together illustrate precisely the Government's stance in relation to pensioners.
The Government do not have a sense of justice or of fairness. They should be ashamed of the measure now proposed.
§ Mr. Forman
I am pleased to take part in the Committee debate on this important set of amendments 239 which were clearly and ably moved by the hon. Member for Birmingham, Perry Barr (Mr. Rooker). I listened carefully to his arguments in which he said that, in line with the considerable improvements in personal allowances on which the Chancellor decided in the Budget, it would have been possible to provide a substantial improvement in the age allowance. With the advantage of hindsight, I am bound to say that his argument was powerful and attractive.
None the less, it must be recognised that every Budget is necessarily a matter of priorities. Every Budget is a matter not only of the political and economic priorities of the Government of the day, but of the priorities in one year against another in the period of office of a given Chancellor. I confidently hope that the present Chancellor will remain in office at least for this Parliament, and perhaps in the next Parliament. Taking the long view, as I am sure the Chancellor was tempted to do, the Committee should respect the fact that the Chancellor made it clear in his Budget statement on 13 March that, in the measures that he was taking to improve and to raise tax allowances, he was deliberately choosing to concentrate this year's available help — some 1£1.7 billion or £1.8 billion worth of help—upon raising the allowance of married people and the personal tax allowance. That was a political and economic judgment which I am sure will be appreciated by those who benefit from it. I understand that it is worth approximately £2 per week to the average married man, if there be such a person, and a little over £1 per week to the average single basic rate taxpayer. That must surely be welcomed.
In line with what I said earlier about the Budget giving top priority to a specific task in one year, I should like to see the Chancellor do more in next year's Budget deliberately to give the interests of the elderly and those over 65 a higher priority in his Budget strategy. I say this not just for reasons of natural justice, or because in my constituency, and, I suspect, even more so in the constituency of my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden), there is a high proportion of people over the age of 65 whose claims must be respected and recognised. If the country is to benefit from increased economic growth through the Government's economic strategy, which I hope and expect that it will, it is only right in a fair society that the retired, who have made their contribution over many years, should share the benefits of that economic growth. It is therefore right and proper that in next year's Budget the Chancellor should concentrate very much on the interests of the elderly and raise the age allowance.
Just a few days ago I received an especially powerful and persuasive letter from a constituent whose name I shall not divulge. He described his and his wife's position as senior citizens, and said that they had voted Conservative in the last election and on many previous occasions but now felt regret that the Government were not doing as much for the elderly as they would wish. I mention just two points for the record.
First, my constituent writes:Thanks to Mr. Lawson, we shall have slightly less income tax to pay from the end of May this year— we all approve of that— 240but the increases in rent and rates together with the reduction in housing benefit entitlement has completely cancelled that out, leaving us less to manage on than before.My hon. Friend the Member for Kemptown has already dealt in detail with this and it is clear that the interaction of benefit with taxation requires attention.
Secondly, and especially germane to this provision, my constituent writes:My wife and I are not exactly poverty stricken, due to the fact that having served in the RAF for 34 years, I am in receipt of quite a good pension. However, for this privilege I am taxed at almost £80 a month.Like so many others, my constituent has made his contribution to society and his efforts have been appreciated by society. Now that those people are retired it is the duty of society to look after them properly. The organisation of the tax system has a major part to play, especially for those like my constituent who have been prudent, have sought to provide for their retirement and hope that the provision that they have made will not be excessively taxed.
Clearly, a generous increase in the age allowance next year will help to redress the inevitable imbalance which—rightly I believe—has been incorporated in this year's Budget. I therefore put down a strong marker in the hope that next year the justified claim of this large section of the community will receive the attention that it deserves.
§ Mr. D. N. Campbell-Savours (Workington)
I join my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Fisher) in congratulating the hon. Member for Brighton, Kemptown (Mr. Bowden) on a very moving speech. Over the past months I have read many newspaper articles in which reference is constantly made to the hon. Gentleman's contribution to these debates. We well appreciate that contribution, as it is difficult for Opposition Members to influence the Government in the same way as a Conservative Back Bencher as determined to be heard as the hon. Gentleman. To some extent, his voice must be heard by the Government if only as an embarrassment to them.
My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) mentioned the Chancellor's reference to this part of the Budget as the jewel in the crown. I should qualify that by saying that it is more like a zircon dressed up as a diamond. It fools only those who do not know the difference. Those who know the difference will, of course, recognise the clear deficiency of this part of the Bill. The Government are saving money on the backs of elderly people in a thoroughly divisive way. With regard to what constitutes social division, I quote a short extract from an article in Financial Weekly in 1980. It states:Conservatives are not deeply devoted to equality, but neither—unless they have entirely forgotten the principles of Disraeli—are they deeply devoted to widening social divisions. Conservative Members' constituents and indeed Conservative voters undoubtedly include many more of the unemployed and the low paid than of those who pay capital taxes.This measure widens social divisions to procure the necessary funds to reduce capital taxation. The elderly are being used to fund tax cuts for the better off. It was hard enough for them in 1980 when the Government decided to break the historic link with earnings. The Minister must now answer a series of questions clearly and without conditions so that the elderly will know exactly where they stand.
The elderly need to know why the gap between the age allowance and personal allowances has been widened.
241 Why have they been picked out to be penalised by these provisions? How can the Government cut investment income surcharge for the tiny minority of pensioners with capital or annuities to the value of £80,000 or more and a weekly income of more than £140, who will thus gain from the Budget, when the £200 million involved could have been spread among all elderly people? Is it true that 200,000 more of the elderly would not pay tax if the age allowance were raised by 12.5 per cent. in line with the increases in personal allowances? Is it true that a married couple will be £81 per annum worse off and a single person £51 per annum worse off because the Government have failed to index that allowance fully in line with the personal allowances? Is it fair to treat the elderly in this way? Surely they deserve equal treatment with all other people in society.
As my hon. Friend the Member for Stoke-on-Trent, Central has said, when one compares the position of the elderly with that of others in society, these provisions clearly constitute cuts, to be considered in conjunction with housing benefit penalties, of almost £180 million, introduced by the Government late last year. Successive years under the Government have meant additional penalties for the elderly in every area when the Government should treat them responsibly and with respect.
The elderly cannot afford Conservative government. The Opposition believe—and will be expressing it in the Division later—that the elderly should remember that at the end of the day they should place their faith solely in those who are consistent in supporting and resolving their difficulties.
§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
I have listened carefully to the arguments and was impressed, as I usually am, with the contribution of the hon. Member for Brighton, Kemptown (Mr. Bowden). During my short time in the House I have come to respect everything that the hon. Gentleman does in regard to the work that he carries out on behalf of the all-party pensions group.
My greatest difficulty with the Budget is understanding the way in which the Government have treated the elderly generally. It is obviously true that the Government got a majority at the last election and that as a consequence they are entitled to take a view on how to direct the economy. We may agree or disagree about broad strategic decisions, but underneath that broad umbrella strategy there is room for manoeuvre so that shifts in direction can be made that are not of significant strategic importance.
If that analysis is right, and if the Chancellor did have latitude lower down the ladder in terms of the amount of money devoted to various interest groups and parts of the economy, the way in which the Government have treated the elderly in the Budget is indefensible.
I have great difficulty explaining to the elderly who come to my constituency surgeries week in and week out what their position is under this Government. Indeed, if my random sample of surgery cases is anything to go by, some of them voted for the Conservative Government for the last time at the election.
The elderly see the vicious way in which housing benefit cuts have affected them and, quite reasonably, contrast that with the changes in investment income surcharge. They cannot understand why the poorly-paid elderly, perhaps with a small occupational pension, are 242 getting clobbered because of their thrift. I understood that the Conservative party was in favour of encouraging thrift, but the way in which the Government are going about things belies that.
The Chancellor's action on age allowances, in contradistinction to the indexation of personal allowances, is reprehensible and indefensible—
§ Mr. Forman
No doubt inadvertently, the hon. Gentleman has just made the same mistake as the hon. Member for Stoke-on-Trent., Central (Mr. Fisher). It is important to place on record the fact that the main basic tax thresholds were indexed by 7.5 per cent. ahead of inflation and that the age allowance was kept in line with inflation.
§ Mr. Kirkwood
The hon. Member for Carshalton and Wallington (Mr. Forman) is right to draw my attention to that point, and I apologise for making the same mistake as the hon. Member for Stoke-on-Trent, Central (Mr. Fisher). However, the difference in the increase between general personal relief and the age allowance is what we are discussing, and the discrepancy is indefensible.
The amendments are laudable as far as they go. To demonstrate the strength of feeling that I have expressed, Liberal Members will support amendment No. 29. Although we subscribe to the views expressed by the hon. Member for Birmingham, Perry Barr (Mr. Rooker), left to our own devices and given £130 million, we would move in the direction of child benefit. Based on arithmetic that I have done in the last few minutes, it occurs to me that the Government could have increased child benefit.
I accept that we do not yet know what the increase in child benefit will be—that will not be announced until the retail price index figures for May and June are known—but, given existing rates, it would be possible to increase child benefit by a further 15p a week. In the context of the most cost-efficient way of giving help to those who need it most, that is the way in which we would spend the money that will be required if the amendment is carried.
Although we Liberals support the Labour party's attempt to introduce these changes, we shall reiterate at every conceivable opportunity that the Treasury Bench should accept the argument that child benefit—
§ The Temporary Chairman (Mr. John Hunt)
Order. At this stage we cannot have a debate on child benefit.
§ Mr. Kirkwood
I stand corrected, Mr. Hunt. I simply conclude by saying that we will support the Opposition amendment, but I hope that the Treasury Bench will in the following weeks and months accept the points that I have raised in the context of the amendment.
§ Mr. Stuart Bell (Middlesbrough)
I am grateful for the opportunity to follow the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood). Like the hon. Gentleman, I listened with interest to the contribution of the hon. Member for Brighton, Kemptown (Mr. Bowden) whose eloquence on behalf of our senior citizens I cannot match.
On Friday I attended a rally of senior citizens in Middlesbrough, and the following day attended another in Stockton in Cleveland. I can testify that there is great resentment among our senior citizens who, as the hon.
243 Member for Kemptown pointed out, served their country during the war and are now under pressure in their later years.
The Finance Bill has come too late for our senior citizens, which is why the amendment seeks to help them. Those people are concerned about the pressure under which they have been put by the Government. In his notable contribution, my hon. Friend the Member for Workington (Mr. Campbell-Savours) referred to the fact that in 1980 the link between pension increases and inflation or earnings was severed. Now there is a discrimination against the senior citizen in the context of age allowance.
The age allowance is the tax-free allowance for pensioners and other income for the over-65s. It is the same for men and women and is included in the indexation formulae for tax thresholds. Not surprisingly, the Budget deals with finance rather than people. Had it dealt with people, I believe that the age allowance would have been increased by about 12.5 per cent. in line with the increase in personal allowances. In fact, the Treasury saves £130 million by not increasing the age allowance by 12.5 per cent., and an extra 200,000 men and women over 65 will pay income tax in 1984–85 compared with the number who would have done so had the age allowance been increased by that amount. That is another example of the way in which the Government are raising money but not giving it away.
About 40 per cent. of elderly households pay income tax. The poorest of those, with just a small slice of occupational pensions, are the hardest hit by the Chancellor's policy, just as they are by the housing benefit cuts. However, I shall not make the same deviation as the hon. Member for Roxburgh and Berwickshire and get involved in that argument now.
The rich over-65s, with £80,000 or more capital and with an unearned income of more than £7,100 a year—£140 a week — have received a tax handout in the Budget through the abolition of the investment income surcharge. It is a giveaway of £360 million to 270,000 people, some 150,000 of whom are rich and over 65.
Debates in Committee are intended not to score political points, but to persuade the Minister. I hope that the speeches that he has heard tonight will persuade him to accept the amendment.
§ Mr. Austin Mitchell (Great Grimsby)
It is appropriate to draw attention to what the Government are not doing for the elderly. However, I shall do so briefly to expedite the debate. The Budget cheats the over-65s, and that should be publicly condemned.
A Finance Bill does two things: it is a touch of the tiller on economic management and it is a statement of the Government's social priorities. The Bill is inadequate on both counts. It is inadequate as a touch of the tiller on economic management because it does so little about the economic problems. It is inadequate as a statement of the Government's social priorities because of the way in which it cheats the elderly. I admit that it does not cheat every elderly person because 150,000 over-65s will benefit substantially from the Budget. They will feel the benefit of the changes in the unearned income rules.
Anyone with an unearned income of more than £7,100 a year—£140 a week—will benefit from the changes.
244 However, the remaining over-65s will be cheated because the age allowance, which is designed to help them to help themselves—and also as a statement of Government priority accorded to those who have worked all their lives to build up our community—is increased by only 5.3 per cent. Admittedly, that is the rate of inflation, but it is wholly inadequate when compared with the increase of 12.5 per cent. in allowances for other groups.
The amendment would increase the age allowance by the same rate as other allowances. It would make the allowance for a married couple £4,225 rather than the proposed £3,955, and the allowance for a single person £2,660 rather than the proposed £2,490. We owe our elderly citizens no less than that. The Government's treatment of them has been inadequate. The pension increases have been niggardly. At a time of high inflation triggered by the Conservative Government between 1979 and 1981, the Government failed to update the pension increases more than once a year, even though it was possible to update them every six months.
The Government have shifted the basis of assessment for inflation from a prediction basis to that of past inflation, pegging it to a low rate. The Prime Minister has tried to appeal to the elderly by stressing Victorian values, and using that as a facade to filch money from pensioners through a failure adequately to increase the pension and age allowances to the same extent as increases in other allowances. It is essential that the elderly are treated in the same fashion as others and not left with a lingering sense of resentment because they have been short-changed.
An increase of 12.5 per cent. would take many elderly people out of the tax net. Some 40 per cent. of elderly households pay income tax, which is a sad reflection on our society. The poorest of them, with only a small occupational pension, find that, even with the age allowance, it is sufficient to take them into the Chancellor's net.
We have all come across pensioners in our constituency surgeries who cannot understand why, with a small occupational pension, they must pay tax. Why, after all the Government have said about their intentions for the elderly, are they still paying tax? The Government have shown that they have the money available in what they have done for unearned income—a giveaway of £360 million to a small, select section of our society of 270,000 people. Our amendment would cost less than half of that sum. The Treasury saves £130 million by not increasing the age allowance by the same amount as other allowances. We believe that more of the elderly should be taken out of the tax net. The Government should show the same sense of social policies felt so strongly by the Labour party, which never forgets the elderly. That cannot be said about the Conservative party. We should show our priorities by agreeing to the amendment.
§ The Minister of State, Treasury (Mr. Barney Hayhoe)
I shall follow the example of every other hon. Member by referring to my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden). He is chairman of the all-party pensions group in the House, and I know that his work is widely respected in all parts of the House and outside.
I agree not with everything that he said, but certainly with one important point. He was the only speaker to refer to inflation. He rightly pointed out the corrosive damage done by inflation, which is especially evil and damaging 245 to the pensioners — those with small occupational pensions or savings. They suffer most through high inflation. It was right for my hon. Friend to mention that point and to make it clear that he wholly approved of the Government's actions that have led to such a significant reduction in the rate of inflation—which in turn brings benefit to the pensioner and retired people.
Amendments Nos. 29 and 33 would increase the age allowance for the over-65s by £270 for a married couple and £170 for a single person. As has been said many times in the debate, the full-year cost of the two amendments would be £115 million. If the same indexation is applied to the income limit associated with the age allowance, that would bring the cost of the whole grouping to £130 million. Amendments Nos. 30 and 32 would cost £55 million, with an additional £5 million for the income limit.
The hon. Member for Birmingham, Perry Barr (Mr. Rooker) said that the Government had discriminated against the pensioner. That is a strange way to describe the action of the Government in indexing all the allowances by the amount required to meet the inflation and legislative conditions with which the hon. Gentleman's name is always linked.
All allowances were indexed and there was positive discrimination in favour of the basic allowance, which was topped up by 7 per cent. That was not discrimination against pensioners; it was discrimination in favour of the basic taxpayer.
§ 7 pm
§ Mr. Hayhoe
It is not. That intervention demonstrates the attitude of Opposition Members. I reject any suggestion that elderly taxpayers have been badly treated by the Chancellor in the Budget. The age allowance has been fully indexed, so there is no question of penalties. The age allowance remains significantly higher than the basic allowances. It is £800 higher for married couples and £485 higher for single people. Translating that into tax, it is a little under £5 a week for married couples and something under £3 for single people. That is the benefit for those who can take full advantage of the age allowance.
Since the 1979 general election, there have been record increases in the age allowance, plus £1,880 for married couples and £1,190 for single people. It is standing logic on its head, therefore, to say that those increases having been made—when the individuals concerned are paying less tax because their allowances have been increased to take full account of inflation — people have been penalised. As my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) acknowledged, the Chancellor in his Budget clearly decided to give priority this year to increasing the basic allowances for taxpayers of working age.
As I say, the age allowance was fully indexed and protected against increased prices. Most elderly taxpayers will be looking at how much tax they will be paying this year compared with last year, rather than trying to see how much less they may be paying than their younger neighbours or relations. While I appreciate that Opposition Members have been making political points in favour of the amendment, their case does not accord with the way in which most pensioners will view the present situation.
It is a perverted argument to suggest that elderly taxpayers have been penalised, as the hon. Member for 246 Workington (Mr. Campbell-Savours) said, or cheated, as the hon. Member for Great Grimsby (Mr. Mitchell) said, because the basic tax allowance has been increased by more than indexation. It is nonsense to describe what the Chancellor has done as an attack on pensioners. Indeed, about 60 per cent. of elderly households do not pay tax, so they are unaffected by these changes. The majority of elderly households would not be affected by the amendment. What Opposition Members suggest is typical of their general approach of arguing the whole time for lower taxes and higher public expenditure. The senior citizen will not be taken in by their duplicity.
The Chancellor deliberately decided that, after indexing all the allowances, he would give priority to increasing the basic allowances for working taxpayers. It is right that we should raise the basic tax thresholds. The long-term objective of getting the thresholds back to sensible levels is highly desirable and will be widely supported by the Committee. I therefore ask my hon. Friends to support this Budget strategy by voting against the amendment.
§ Mr. Rooker
At the outset of the Minister's remarks I thought that, unlike his colleagues yesterday, he was taking the trouble to reply adequately to our arguments. At least I thought that he had costed our proposal, but then I realised that he had not listened to a word I had said. lie and his advisers know that we cannot be charged with duplicity. If one positively discriminates in favour of A against B, one has negatively discriminated against B.
§ Mr. Forman
Does the hon. Gentleman not appreciate the important distinction in these matters between a positive and a zero sum choice? Clearly what he is arguing would apply to a zero sum choice, whereas the Government have gone for a positive sum choice, by which some people are better off and others are just better off.
§ Mr. Rooker
That sounded clever, but I do not accept it. People over 65, given that their income is the same from year to year, will pay, if their allowances are indexed at 5.3 per cent., precisely the same in income tax this year as they paid last year. It cannot be argued, therefore, that they have enjoyed a tax cut of £2 for a married couple and £1 for a single person. They have not received a tax cut, because raising the allowance in line with inflation does not produce a tax cut, and nobody in advocating indexation has ever made that point.
A tax cut is achieved only when the allowances are raised above the rate of inflation—in other words, when they are over-indexed. Therefore, it is only the seven percentage points above inflation that constitute a tax cut. It means that the over-65s have suffered from the Prime Minister's promise to keep pensions in line with inflation. That was a promise not to increase pensions in real terms, and that is precisely what has happened with the age allowance. There has been no increase in real terms, and that has meant no tax cut.
As I said in my opening remarks, each year since 1977 the increases in the personal and age allowances have been within one percentage point of each other. No case has previously been made for having a wide divergence. Under the Conservative Government in recent times, in one year both were frozen. 1 am taking the starting point of indexation lest anyone suggests that I am making a spurious argument. In 1976–77 there was a different rate 247 because of what happened in the Finance Bill of that year. On that occasion the allowances proposed by the present Parliamentary Under-Secretary of State for Health and Social Security got on to the statute book. The hon. Gentleman did not get the credit for that, but that is another story. From that starting point—from the time when the House accepted indexation—those two allowances have always been the same, and the only occasion when there was a minor difference occurred because of a rounding-up exercise to enable the Inland Revenue to do its job.
I pay tribute, as others have done, to the hon. Member for Brighton, Kemptown (Mr. Bowden), but I shall not elaborate on that because to do so might damage his prospects in the Conservative party. But in all our debates—VAT on food and buildings and on changes that will affect 2.5 million pensioners who are being short-changed—not one member of the Social Democratic party has been in the Chamber. I shall not refer to the alliance generally in that context, because I wish to exclude the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), who contributed to the debate. I single out the Social Democratic party for not being interested in this important issue.
Three Conservative Members have contributed to the debate, but the only Member who has spoken in favour of the Government's proposals has been the Minister. Irrespective of the nuances in the speech of the hon. Member for Carshalton and Wallington (Mr. Forman), he was advancing the same argument as I was but in somewhat more polite language to the Government Front Bench. The Minister is the only Member who has supported the Government's view.
The Opposition believe that the Government are being unfair and unjust to pensioners. I have made clear how the Government could have found the money to implement the Opposition's policy. This is not a public expenditure argument. The Chancellor of the Exchequer could have doubled personal allowances for 20 million taxpayers, and the other 1.5 per cent. could have been used to assist the 2.4 million pensioners who have been short-changed. Only 1.5p in the pound would be required from the allowances of others.
The fact that allowances are to be doubled is commendable, but I do not understand why the Government fail to recognise our argument. During the assembly of the Budget, it seems unlikely that Treasury Ministers ever considered with their advisers—they are all well heeled — the consequences of the proposal before us. I do not believe that they were considered, and I regret deeply that the Government have not taken the opportunity of second thought that the amendment has given them to eradicate the injustice to which we have drawn attention. Accordingly, I ask my right hon. and hon. Friends and other hon. Members to support the amendment in a Division.
§ Question put, That the amendment be made:—
§ The Committee divided: Ayes 130, Noes 217.249
|Division No. 263]||[7.10 pm|
|Adams, Allen (Paisley N)||Banks, Tony (Newham NW)|
|Anderson, Donald||Barnett, Guy|
|Archer, Rt Hon Peter||Barron, Kevin|
|Ashley, Rt Hon Jack||Beckett, Mrs Margaret|
|Atkinson, N. (Tottenham)||Bell, Stuart|
|Bennett, A. (Dent'n & Red'sh)||Kinnock, Rt Hon Neil|
|Bidwell, Sydney||Kirkwood, Archibald|
|Blair, Anthony||Lamond, James|
|Bowden, A. (Brighton K'to'n)||Leadbitter, Ted|
|Boyes, Roland||Leighton, Ronald|
|Bray, Dr Jeremy||Lewis, Ron (Carlisle)|
|Bruce, Malcolm||Litherland, Robert|
|Caborn, Richard||Lofthouse, Geoffrey|
|Callaghan, Rt Hon J.||Loyden, Edward|
|Callaghan, Jim (Heyw'd & M)||McCartney, Hugh|
|Campbell-Savours, Dale||McDonald, Dr Oonagh|
|Carter-Jones, Lewis||McGuire, Michael|
|Clark, Dr David (S Shields)||McWilliam, John|
|Cocks, Rt Hon M. (Bristol S.)||Madden, Max|
|Cohen, Harry||Marshall, David (Shettleston)|
|Coleman, Donald||Meadowcroft, Michael|
|Cook, Frank (Stockton North)||Michie, William|
|Corbett, Robin||Mikardo, Ian|
|Cowans, Harry||Milian, Rt Hon Bruce|
|Cox, Thomas (Tooting)||Miller, Dr M. S. (E Kilbride)|
|Craigen, J. M.||Mitchell, Austin (G't Grimsby)|
|Crowther, Stan||Morris, Rt Hon A. (W'shawe)|
|Cunliffe, Lawrence||Morris, Rt Hon J. (Aberavon)|
|Dalyell, Tam||Oakes, Rt Hon Gordon|
|Davies, Ronald (Caerphilly)||O'Brien, William|
|Davis, Terry (B'ham, H'ge H'l)||Park, George|
|Dixon, Donald||Patchett, Terry|
|Dobson, Frank||Penhaligon, David|
|Dormand, Jack||Pike, Peter|
|Dubs, Alfred||Radice, Giles|
|Duffy, A. E. P.||Randall, Stuart|
|Dunwoody, Hon Mrs G.||Redmond, M.|
|Eadie, Alex||Rees, Rt Hon M. (Leeds S)|
|Evans, John (St. Helens N)||Richardson, Ms Jo|
|Ewing, Harry||Robertson, George|
|Fatchett, Derek||Robinson, G. (Coventry NW)|
|Faulds, Andrew||Rooker, J. W.|
|Field, Frank (Birkenhead)||Sedgemore, Brian|
|Fisher, Mark||Sheldon, Rt Hon R.|
|Flannery, Martin||Short, Mrs R.(W'hampt'n NE)|
|Foster, Derek||Silkin, Rt Hon J.|
|Fraser, J. (Norwood)||Skinner, Dennis|
|Freeson, Rt Hon Reginald||Smith, C.(lsl'ton S & F'bury)|
|Garrett, W. E.||Snape, Peter|
|George, Bruce||Steel, Rt Hon David|
|Gould, Bryan||Stewart, Rt Hon D. (W Isles)|
|Gourlay, Harry||Stott, Roger|
|Hamilton, W. W. (Central Fife)||Thomas, Dr R. (Carmarthen)|
|Hardy, Peter||Tinn, James|
|Hart, Rt Hon Dame Judith||Wainwright, R.|
|Hattersley, Rt Hon Roy||Wardell, Gareth (Gower)|
|Haynes, Frank||Weetch, Ken|
|Hogg, N. (C'nauld & Kilsyth)||Welsh, Michael|
|Holland, Stuart (Vauxhall)||Wigley, Dafydd|
|Howells, Geraint||Wilson, Gordon|
|Hughes, Dr. Mark (Durham)||Woodall, Alec|
|Hughes, Robert (Aberdeen N)||Wrigglesworth, Ian|
|Hughes, Roy (Newport East)||Young, David (Bolton SE)|
|Hughes, Sean (Knowsley S)|
|Janner, Hon Greville||Tellers for the Ayes:|
|Kaufman, Rt Hon Gerald||Mr. James Hamilton and|
|Kilroy-Silk, Robert||Mr. Allen McKay.|
|Adley, Robert||Boscawen, Hon Robert|
|Aitken, Jonathan||Bowden, Gerald (Dulwich)|
|Alexander, Richard||Braine, Sir Bernard|
|Alison, Rt Hon Michael||Brandon-Bravo, Martin|
|Ancram, Michael||Browne, John|
|Arnold, Tom||Buchanan-Smith, Rt Hon A.|
|Ashby, David||Budgen, Nick|
|Atkins, Robert (South Ribble)||Butterfill, John|
|Baldry, Anthony||Chapman, Sydney|
|Batiste, Spencer||Clark, Sir W. (Croydon S)|
|Beaumont-Dark, Anthony||Clarke, Rt Hon K. (Rushcliffe)|
|Bellingham, Henry||Clegg, Sir Walter|
|Bennett, Sir Frederic (T'bay)||Cockeram, Eric|
|Benyon, William||Colvin, Michael|
|Berry, Sir Anthony||Conway, Derek|
|Biffen, Rt Hon John||Coombs, Simon|
|Cranborne, Viscount||McCrindle, Robert|
|Crouch, David||McCurley, Mrs Anna|
|Dorrell, Stephen||MacKay, Andrew (Berkshire)|
|du Cann, Rt Hon Edward||MacKay, John (Argyll & Bute)|
|Dykes, Hugh||Maclean, David John|
|Emery, Sir Peter||McNair-Wilson, P. (New F'st)|
|Evennett, David||Major, John|
|Fallon, Michael||Maples, John|
|Favell, Anthony||Marland, Paul|
|Fenner, Mrs Peggy||Mather, Carol|
|Finsberg, Sir Geoffrey||Maude, Hon Francis|
|Fletcher, Alexander||Mawhinney, Dr Brian|
|Forman, Nigel||Maxwell-Hyslop, Robin|
|Forth, Eric||Mellor, David|
|Fox, Marcus||Merchant, Piers|
|Franks, Cecil||Miller, Hal (B'grove)|
|Fraser, Peter (Angus East)||Mills, lain (Meriden)|
|Freeman, Roger||Mills, Sir Peter (West Devon)|
|Fry, Peter||Mitchell, David (NW Hants)|
|Galley, Roy||Moate, Roger|
|Gardiner, George (Reigate)||Moore, John|
|Goodhart, Sir Philip||Morris, M. (N'hampton, S)|
|Goodlad, Alastair||Morrison, Hon C. (Devizes)|
|Gorst, John||Morrison, Hon P. (Chester)|
|Gow, Ian||Moynihan, Hon C.|
|Grant, Sir Anthony||Mudd, David|
|Greenway, Harry||Murphy, Christopher|
|Griffiths, Peter (Portsm'th N)||Neale, Gerrard|
|Ground, Patrick||Needham, Richard|
|Grylls, Michael||Nicholls, Patrick|
|Hamilton, Neil (Tatton)||Normanton, Tom|
|Hanley, Jeremy||Norris, Steven|
|Hargreaves, Kenneth||Onslow, Cranley|
|Harris, David||Oppenheim, Rt Hon Mrs S.|
|Havers, Rt Hon Sir Michael||Osborn, Sir John|
|Hawkins, C. (High Peak)||Ottaway, Richard|
|Hawkins, Sir Paul (SW N'folk)||Page, Richard (Herts SW)|
|Hawksley, Warren||Parris, Matthew|
|Hayhoe, Barney||Peacock, Mrs Elizabeth|
|Heathcoat-Amory, David||Pollock, Alexander|
|Henderson, Barry||Powell, William (Corby)|
|Hill, James||Powley, John|
|Hirst, Michael||Prentice, Rt Hon Reg|
|Holland, Sir Philip (Gedling)||Price, Sir David|
|Holt, Richard||Proctor, K. Harvey|
|Hooson, Tom||Pym, Rt Hon Francis|
|Howard, Michael||Rees, Rt Hon Peter (Dover)|
|Howarth, Alan (Stratf'd-on-A)||Renton, Tim|
|Howarth, Gerald (Cannock)||Rhodes James, Robert|
|Howell, Ralph (N Norfolk)||Ridsdale, Sir Julian|
|Hubbard-Miles, Peter||Roberts, Wyn (Conwy)|
|Hunt, David (Wirral)||Roe, Mrs Marion|
|Hunter, Andrew||Rowe, Andrew|
|Hurd, Rt Hon Douglas||Ryder, Richard|
|Jackson, Robert||Sainsbury, Hon Timothy|
|Jessel, Toby||Shaw, Giles (Pudsey)|
|Johnson-Smith, Sir Geoffrey||Shelton, William (Streatham)|
|Jones, Gwilym (Cardiff N)||Shepherd, Colin (Hereford)|
|Jones, Robert (W Herts)||Shepherd, Richard (Aldridge)|
|Joseph, Rt Hon Sir Keith||Shersby, Michael|
|Kellett-Bowman, Mrs Elaine||Silvester, Fred|
|Kershaw, Sir Anthony||Sims, Roger|
|Key, Robert||Skeet, T. H. H.|
|King, Roger (B'ham N'field)||Smith, Sir Dudley (Warwick)|
|King, Rt Hon Tom||Smith, Tim (Beaconsfield)|
|Knight, Gregory (Derby N)||Soames, Hon Nicholas|
|Knight, Mrs Jill (Edgbaston)||Spencer, Derek|
|Lamont, Norman||Squire, Robin|
|Lawler, Geoffrey||Stanbrook, Ivor|
|Lawrence, Ivan||Steen, Anthony|
|Lee, John (Pendle)||Stern, Michael|
|Leigh, Edward (Gainsbor'gh)||Stevens, Lewis (Nuneaton)|
|Lennox-Boyd, Hon Mark||Stewart, Allan (Eastwood)|
|Lester, Jim||Stewart, Andrew (Sherwood)|
|Lewis, Sir Kenneth (Stamf'd)||Stewart, Ian (N Hertf'dshire)|
|Lightbown, David||Stokes, John|
|Lilley, Peter||Stradling Thomas, J.|
|Lloyd, Ian (Havant)||Sumberg, David|
|Lord, Michael||Tapsell, Peter|
|Lyell, Nicholas||Taylor, John (Solihull)|
|Taylor, Teddy (S'end E)||Wardle, C. (Bexhill)|
|Temple-Morris, Peter||Wells, John (Maidstone)|
|Terlezki, Stefan||Wheeler, John|
|Thomas, Rt Hon Peter||Wiggin, Jerry|
|Thompson, J. (Wansbeck)||Winterton, Mrs Ann|
|Thurnham, Peter||Winterton, Nicholas|
|Townend, John (Bridlington)||Wolfson, Mark|
|Trotter, Neville||Wood, Timothy|
|van Straubenzee, Sir W.||Woodcock, Michael|
|Viggers, Peter||Young, Sir George (Acton)|
|Wakeham, Rt Hon John|
|Waldegrave, Hon William||Tellers for the Noes:|
|Walden, George||Mr. Archie Hamilton and|
|Waller, Gary||Mr. Ian Lang.|
§ Question accordingly negatived.
§ Mr. Rooker
I beg to move amendment No. 34, in page 12, line 30, at end add—'(3) In subsection (1A) of section 8 of the Taxes Act (personal reliefs: age allowance) for the words "of the age of sixty-five or upwards" wherever they appear there shall be substituted the words "of pensionable age"; and at the end of that subsection there shall be added the words 'and the expression 'pensionable age' shall bear the same meaning as in Schedule 20 to the Social Security Act 1975".'.The thrust of the amendment is that women should receive the benefit of the age allowance at 60 rather than wait until they are 65. In the past few years, this matter has been raised several times in the House. We did not discuss this matter last year because of the curtailment of the debate on the Finance Bill before and after the general election. A debate on this subject occurred in 1981, when the Government froze personal allowances, and in 1982. I remember participating in the 1981 debate.
We are referring to women aged between 60 and 64 who receive the state retirement pension, a graduated pension, a state earnings-related scheme pension or a small occupational pension. If such women receive an income this year of just over £3 a week on top of the basic state retirement pension, they are included in the tax net. A man retiring at 65 after a lifetime of service can receive £12 a week in tax-free income or in a pension in addition to the state retirement pension before he is caught in the tax net. That comes about because of the differing retirement ages for men and women. There is, therefore, no justification for having a common age at which both sexes can obtain the benefits of the age allowance.
In 1977, during a lengthy debate on the Finance Bill, one of my right hon. Friends, a Treasury Minister, admitted after a considerable argument from Labour and Conservative Members that the age allowance was a retirement allowance. The Minister could not explain why the age limit should be 65 for men and women. No case could be made, because of the unfairness and sexual discrimination involved. He admitted in the end that he was dealing with a retirement allowance. We concluded from his remarks that the allowance should be made available at the time the retirement pension is given. It is about time that this anomaly was corrected.
The single person state retirement pension is £34.05 a week. I assume that the amount will increase in November by 5 per cent., although the figure may differ slightly. The Government will rig the May RPI, because building societies have delayed their reductions for a month. In November, the retirement pension will increase to £37.75 a week. We must consider two different pension rates, because the tax year ends in April and the social security year ends in November. The state retirement pension 251 between April 1984 and April 1985 for a single pensioner will be £1,852. After the passage of the Finance Bill, a woman aged between 60 and 64 will have a tax-free personal allowance of £2,005. Her spare allowance will, therefore, be £153. If she earns £3 a week in addition to receiving the state retirement pension, she will be caught in the tax net.
It is easy to see how £3 a week can be made up with graduated pension, and state earnings-related pension and, for many retired professional women, an occupational pension. Those women will receive well over £3 a week extra and will fall straight into the tax net. A retired man of 65 has the same state retirement pension of £1,852. His personal allowance is not £2,005; it is £2,490. He has a spare £638. Therefore, a man can have an occupational pension or other income—it could even be for a part-time job — of £12 a week free of tax. That discrimination in retirement is unfair. When the woman is 65 she benefits from the age allowance. We want the matter put right.
No Labour Member has been able to say until this debate that this point was mentioned in our manifesto last summer. One assumes that the Government may make some changes to the tax structure to iron out some anomalies and make it fairer for many people, but if it remains the same the Labour party is pledged to ensure that the age allowance operates at retirement age. It was a clear and unequivocal manifesto commitment, and because we are in opposition it does not mean that we renege on that commitment—as the Prime Minister did on rates, when she promised to abolish them, lost the 1974 election and then said that the promise did not matter any more.
We want the Minister to tell us how much the change would cost this year and where he will get the money, and then say to all women, "Yes, the Government believe in fairness in the tax system and equality between the sexes." He should accept our amendment.
§ Ms. Jo Richardson (Barking)
My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) will correct me if I am wrong when I say that this is the first time during the passage of a Finance Bill that we have been able to have this type of debate in Committee on the Floor of the Chamber rather than upstairs. He said that the point had been raised before, but it is important that we should get it across as publicly as possible.
Women pensioners have to pay tax on their occupational pension when it is combined with their state pension, and they have to wait until they are 65 before they benefit from the age allowance. That is a horrible inequality which we must get rid of. I suspect that it is an anomaly or that it may not have been discussed sufficiently when it was introduced, but we must discuss it in a meaningful way and put it right.
I echo what my hon. Friend said. We should like to hear from the Minister what the change would cost. I guess that it would be peanuts in terms of the Finance Bill.
In a previous debate several hon. Members expressed the views of their constituents and others about pension levels. I believe that it was only the Minister who could not understand the sense of outrage that they felt. There is no other word for what pensioners feel about the way in which they have been treated by the Government. Every 252 time I go to a pensioners' meeting, rally or club, people bombard me with questions as to why pensioners are being disadvantaged. More women than ever say to me, "Why am I disadvantaged in terms of my pension in comparison with my male counterparts?" I am sure that members of all parties have had many such cases and have had to try to explain away the matter. They usually say that, when the pension for men and women is at the same level, the anomaly will disappear. However, the Government have made no move towards equalising the pension at age 60. It is something that I suggested last December should be included in the Sex Equality Bill, but it was voted down. We must, therefore, try to handle it in this way.
There is a growing number of women pensioners. One has only to go—as I am sure all hon. Members do frequently — to lunch and leisure centres, old-age pensioners' clubs and afternoon and evening clubs to see the disproportionate number of women of pension age compared with men. The view that we are expressing today on behalf of those women will grow in the future because that body of women will not tolerate the discrimination that has been heaped upon them so far.
I have never understood why the single pensioner is thought to be able to exist on virtually half of what a married couple can. A woman pensioner, whether unmarried and working or married with some occupational pension, is forced to pay tax on the aggregated pension that she receives from her work and the state. It is outrageous that women should be treated in that way.
I have a friend, a constituent, whom I visit regularly. She is in precisely that position. She is not married. Until she retired she was a Post Office employee, and she has a small pension from that job. When her two pensions are aggregated she has to pay tax, yet she has to support a home, albeit lived in only by herself. She has a small, onebedroomed council flat. She has frequently said to me, "Why should it always be assumed that because I am living on my own I can live on much less than a married couple?" Many of the things that single people have to buy for the household must be bought by the married couple or the family—toilet rolls, washing-up liquid, sheets, furniture and so on. I appreciate that that extends beyond the group of people about whom I am talking. It is difficult for women who have worked hard, managed to gain a small occupational pension and reached state pensionable age, to maintain the dignity of their existence, because they are taxed unfairly.
I am sure that the Minister will say, "We cannot do it this time—we will do it another time—but we are bent on creating equal pension conditions for men and women." It is about time that he put his money where his mouth is. This would be a good point for him to start.
As my hon. Friend the Member for Perry Barr said, this was a Labour party manifesto commitment at the general election. It was the first time that we put it in, but we stick by that commitment. We also want to bring down the pension age. I hope that the House will think seriously about removing the age allowance anomaly. It would make a tremendous difference to hundreds of thousands of women who have worked hard for their pension, gained a state pension, and now see most of it flyng out of the window into the Treasury's coffers. They resent that very much. They want to be treated on an equal basis with men. It is monstrous that men in a similar situation have to pay much less tax. I hope that the Government will think seriously about this matter. The Labour party is trying to 253 widen its thinking about equality and discrimination against women. This would be a good way for the Government to show their attitude. I hope that the Minister will accept the amendment.
§ Mr. Hayhoe
The present rule is that the age allowance goes to single people aged 65 or over and to married couples where either spouse is aged 65 or over. The amendment would tie the age allowance to the relevant pensionable age for national insurance retirement pension purposes, that is, 65 for men and 60 for women. The result of the amendment would be that the age allowance would be extended to single women and widows aged 60 to 64, which would cost approximately £30 million, and also to married couples where the wife is aged 60 to 64 and the husband is aged under 65. I am not sure whether that was the intention behind the amendment but that change would cost over £50 million. Therefore, the global cost of the amendment would be £85 million.
The hon. Member for Birmingham, Perry Barr (Mr. Rooker) was calling for the qualifying age for age allowance to be aligned on principle with the retirement age for national insurance retirement pension purposes. This Government, like all previous Governments who have considered the matter, believe that would be unjustified in principle and unfair in practice. In any case, aligning the qualification for age allowance with the national insurance pensionable age would not correspond with the actual age of retirement because many taxpayers of either sex retire well before or well after their respective pensionable ages.
To give two examples, the amendment would extend the age allowance to single women aged 60 to 64 who were still working full time, and to married couples where the wife had reached 60 but the husband was under 65, even though both spouses were still working and even though the wife might have no national insurance retirement pension entitlement on her own contributions. All I am trying to demonstrate is that there are anomalies in the way the amendment would work. The amendment would not extend the age allowance to single men aged 60 to 64 who had retired, as many do, or to widows aged 50 to 59 who might get the same pension as the single woman or widow aged 60 to 64 and who might not be working.
I hope that I am not doing this in a destructive way, but all I am trying to indicate is that an amendment along the lines proposed by the hon. Member would result in many anomalies and unfairnesses. One would need to go over the whole matter with great care but it is arguable that there would be more anomalies than under the present rules. I accept, as the hon. Member made clear, that the present rules have anomalies and unfairnesses. I understand that many women see the rules in that light. Some women may be obliged to retire at 60—this may have happened in the case referred to by the hon. Member for Barking (Ms. Richardson). They may retire unwillingly. This happens in the public service and in industry and commerce. They may feel that it is unfair that they have to wait for their age allowance while men who retire at age 65 get the allowance immediately.
Most people agree that there are anomalies but I think it is accepted that the anomaly here, if there is one, lies in the pension rules which provide different pensionable ages for men and women rather than in the tax rules, which are even-handed in regard to age. The immediate effect of the amendment would be to introduce a new element of 254 sex discrimination into the tax system and to add to the existing discrimination which many men understandably see as operating against them in regard to pensions.
Although I am advised that the words of the amendment are defective, as I find quite often in finance debates a is not on those grounds that the Government cannot accept the propositions contained in the amendment. I hope, therefore, that it will be withdrawn; otherwise I hope the Committee will reject it.
§ Mr. Rooker
Will the Minister tell us what the purpose of the age allowance is? When he does that, I can make other points about his earlier remarks about anomalies.
§ Mr. Hayhoe
I am not sure that it would be wise for me to go into a wide debate at this stage as to the purpose of the age allowance, although the hon. Member tempts me. We seem to be getting into philosophic considerations. What I have tried to indicate to the hon. Member — I recognise that he was putting forward the amendment with a view to increasing the fairness of the system and to eliminating anomalies — is that the amendment, apart from being technically defective, would create anomalies and unfairnesses. This matter requires further consideration. As the hon. Member may know, I am a member of the inquiry into retirement pensions which is being conducted by my right hon. Friend the Secretary of State for Social Services. I am sure that this matter, among many others, will be taken into consideration in our deliberations.
§ Mr. Rooker
When the Minister is considering the evidence given to that inquiry, I hope he will look up the purpose of the age allowance. He clearly does not know. If he did, he would have told us. The Minister could have spelt out the reasons why it is appropriate for both men and women to get the age allowance at 65. The Treasury must have a view. All the expensive advisers in the Treasury should know why women have to wait until 65 to gel the benefit of the age allowance. The Minister has said that it would be unfair to accept the amendment because it would create more anomalies if some women went on working after the age of 60. What about all the Members of Parliament who go on working after 65? They all get the benefit of the age allowance. What is the difference? No one is advocating compulsory retirement. Nobody is advocating a different retirement age because that would be out of order in this debate.
All we are arguing for is equity and justice within the present system which is unfair to women. Some people do not have a free choice about when they retire. Some companies require employees to retire before the statutory retirement age at which they can get the state retirement pension. We are not arguing for changes in regard to that. A man who retires at 62 or 63, either voluntarily or because he is forced by his company to retire, knows that he will not get the age allowance until he is 65. That is not an anomaly that would be created by accepting the amendment. No anomaly would be created if a woman finished full-time work at 58 or 59. The anomaly lies in the unfairness of having two different qualifying ages for retirement pension and one qualifying age for the age allowance. That happens coincidentally to be the age that suits men and not women. That is the anomaly. The Chamber has been full of men over the years, as has the 255 Treasury. Until there are changes in that position the anomalies will continue. I may add that I am not offering my seat to any woman. Nobody thinks about that in the Treasury. Nobody applies his mind to sex discrimination. If he did someone in the Department would have given the Minister a short paragraph explaining the purpose of the age allowance. Nobody thought about that. The Minister has drawn the short straw again today. I am sorry about that because he is a nice person, but he is a Tory Minister and we shall vote for the amendment.
§ Question put, That the amendment be made:—
§ The Committee divided: Ayes 131, Noes 204.257
|Division No. 263]||[7.50 pm|
|Adams, Allen (Paisley N)||Hart, Rt Hon Dame Judith|
|Anderson, Donald||Hattersley, Rt Hon Roy|
|Archer, Rt Hon Peter||Haynes, Frank|
|Ashley, Rt Hon Jack||Hogg, N. (C'nauld & Kilsyth)|
|Atkinson, N. (Tottenham)||Holland, Stuart (Vauxhall)|
|Bagier, Gordon A. T.||Howells, Geraint|
|Banks, Tony (Newham NW)||Hughes, Dr. Mark (Durham)|
|Barron, Kevin||Hughes, Robert (Aberdeen N)|
|Beckett, Mrs Margaret||Hughes, Roy (Newport East)|
|Bell, Stuart||Hughes, Sean (Knowsley S)|
|Benn, Tony||Janner, Hon Greville|
|Bennett, A. (Dent'n & Red'sh)||Kaufman, Rt Hon Gerald|
|Bidwell, Sydney||Kilroy-Silk, Robert|
|Blair, Anthony||Kirkwood, Archibald|
|Boyes, Roland||Lamond, James|
|Bray, Dr Jeremy||Leadbitter, Ted|
|Brown, R. (N'c'tle-u-Tyne N)||Leighton, Ronald|
|Bruce, Malcolm||Lewis, Ron (Carlisle)|
|Caborn, Richard||Litherland, Robert|
|Callaghan, Jim (Heyw'd & M)||Lofthouse, Geoffrey|
|Campbell-Savours, Dale||Loyden, Edward|
|Carter-Jones, Lewis||McCartney, Hugh|
|Clark, Dr David (S Shields)||McCusker, Harold|
|Cocks, Rt Hon M. (Bristol S.)||McDonald, Dr Oonagh|
|Cohen, Harry||McGuire, Michael|
|Coleman, Donald||McKay, Allen (Penistone)|
|Conlan, Bernard||McNamara, Kevin|
|Cook, Frank (Stockton North)||McWilliam, John|
|Corbett, Robin||Madden, Max|
|Cowans, Harry||Maginnis, Ken|
|Cox, Thomas (Tooting)||Marshall, David (Shettleston)|
|Craigen, J. M.||Meadowcroft, Michael|
|Crowther, Stan||Michie, William|
|Dalyell, Tam||Mikardo, Ian|
|Davies, Ronald (Caerphilly)||Milian, Rt Hon Bruce|
|Davis, Terry (B'ham, H'ge H'I)||Miller, Dr M. S. (E Kilbride)|
|Dixon, Donald||Morris, Rt Hon A. (W'shawe)|
|Dobson, Frank||Morris, Rt Hon J. (Aberavon)|
|Dormand, Jack||Nicholson, J.|
|Duffy, A. E. P.||O'Brien, William|
|Dunwoody, Hon Mrs G.||Park, George|
|Eadie, Alex||Patchett, Terry|
|Evans, John (St. Helens N)||Penhaligon, David|
|Ewing, Harry||Pike, Peter|
|Fatchett, Derek||Radice, Giles|
|Faulds, Andrew||Randall, Stuart|
|Field, Frank (Birkenhead)||Redmond, M.|
|Fisher, Mark||Rees, Rt Hon M. (Leeds S)|
|Flannery, Martin||Richardson, Ms Jo|
|Forsythe, Clifford (S Antrim)||Roberts, Ernest (Hackney N)|
|Foster, Derek||Robinson, G. (Coventry NW)|
|Fraser, J. (Norwood)||Rooker, J. W.|
|Freeson, Rt Hon Reginald||Sheldon, Rt Hon R.|
|Garrett, W. E.||Short, Mrs R.(W'hampt'n NE)|
|George, Bruce||Silkin, Rt Hon J.|
|Godman, Dr Norman||Skinner, Dennis|
|Gould, Bryan||Smith, C.(Isl'ton S & F'bury)|
|Hamilton, James (M'well N)||Stewart, Rt Hon D. (W Isles)|
|Hamilton, W. W. (Central Fife)||Stott, Roger|
|Hardy, Peter||Strang, Gavin|
|Thomas, Dr R. (Carmarthen)||Woodall, Alec|
|Tinn, James||Wrigglesworth, Ian|
|Wainwright, R.||Young, David (Bolton SE)|
|Wardell, Gareth (Gower)|
|Weetch, Ken||Tellers for the Ayes:|
|Welsh, Michael||Mr. Lawrence Cunliffe and|
|Wigley, Dafydd||Mr. Austin Mitchell.|
|Aitken, Jonathan||Holland, Sir Philip (Gedling)|
|Ancram, Michael||Holt, Richard|
|Arnold, Tom||Hooson, Tom|
|Ashby, David||Howard, Michael|
|Atkins, Robert (South Ribble)||Howarth, Alan (Stratf'd-on-A)|
|Baldry, Anthony||Howarth, Gerald (Cannock)|
|Batiste, Spencer||Howell, Ralph (N Norfolk)|
|Beaumont-Dark, Anthony||Hubbard-Miles, Peter|
|Bellingham, Henry||Hunt, David (Wirral)|
|Benyon, William||Hunter, Andrew|
|Berry, Sir Anthony||Jessel, Toby|
|Biffen, Rt Hon John||Jones, Gwilym (Cardiff N)|
|Boscawen, Hon Robert||Jones, Robert (W Herts)|
|Bowden, Gerald (Dulwich)||Joseph, Rt Hon Sir Keith|
|Braine, Sir Bernard||Kellett-Bowman, Mrs Elaine|
|Brandon-Bravo, Martin||Kershaw, Sir Anthony|
|Browne, John||Key, Robert|
|Budgen, Nick||King, Roger (B'ham N'field)|
|Butterfill, John||King, Rt Hon Tom|
|Chapman, Sydney||Knight, Gregory (Derby N)|
|Clark, Dr Michael (Rochford)||Lamont, Norman|
|Clark, Sir W. (Croydon S)||Lang, Ian|
|Clegg, Sir Walter||Lawler, Geoffrey|
|Cockeram, Eric||Lee, John (Pendle)|
|Colvin, Michael||Leigh, Edward (Gainsbor'gh)|
|Conway, Derek||Lennox-Boyd, Hon Mark|
|Coombs, Simon||Lester, Jim|
|Cranborne, Viscount||Lewis, Sir Kenneth (Stamf'd)|
|Crouch, David||Lightbown, David|
|Dorrell, Stephen||Lilley, Peter|
|du Cann, Rt Hon Edward||Lloyd, Ian (Havant)|
|Dykes, Hugh||Lord, Michael|
|Emery, Sir Peter||McCrindle, Robert|
|Evennett, David||McCurley, Mrs Anna|
|Favell, Anthony||MacKay, Andrew (Berkshire)|
|Fenner, Mrs Peggy||MacKay, John (Argyll & Bute)|
|Finsberg, Sir Geoffrey||Maclean, David John|
|Fletcher, Alexander||McNair-Wilson, P. (New F'st)|
|Forman, Nigel||Major, John|
|Forth, Eric||Maples, John|
|Fox, Marcus||Marland, Paul|
|Franks, Cecil||Mather, Carol|
|Fraser, Peter (Angus East)||Maude, Hon Francis|
|Freeman, Roger||Mawhinney, Dr Brian|
|Fry, Peter||Maxwell-Hyslop, Robin|
|Galley, Roy||Merchant, Piers|
|Gardiner, George (Reigate)||Mills, lain (Meriden)|
|Goodhart, Sir Philip||Mills, Sir Peter (West Devon)|
|Goodlad, Alastair||Miscampbell, Norman|
|Gorst, John||Moate, Roger|
|Grant, Sir Anthony||Moore, John|
|Greenway, Harry||Morris, M. (N'hampton, S)|
|Gregory, Conal||Morrison, Hon C. (Devizes)|
|Griffiths, E. (By St Edm'ds)||Morrison, Hon P. (Chester)|
|Griffiths, Peter (Portsm'th N)||Moynihan, Hon C.|
|Ground, Patrick||Mudd, David|
|Grylls, Michael||Murphy, Christopher|
|Hamilton, Neil (Tatton)||Neale, Gerrard|
|Hanley, Jeremy||Needham, Richard|
|Hargreaves, Kenneth||Nicholls, Patrick|
|Harris, David||Normanton, Tom|
|Havers, Rt Hon Sir Michael||Norris, Steven|
|Hawkins, C. (High Peak)||Oppenheim, Rt Hon Mrs S.|
|Hawksley, Warren||Osborn, Sir John|
|Hayes, J.||Ottaway, Richard|
|Hayhoe, Barney||Page, Richard (Herts SW)|
|Heathcoat-Amory, David||Parris, Matthew|
|Henderson, Barry||Pawsey, James|
|Hill, James||Peacock, Mrs Elizabeth|
|Hirst, Michael||Percival, Rt Hon Sir Ian|
|Pollock, Alexander||Stewart, Ian (N Hertf'dshire)|
|Prentice, Rt Hon Reg||Stokes, John|
|Price, Sir David||Stradling Thomas, J.|
|Proctor, K. Harvey||Sumberg, David|
|Pym, Rt Hon Francis||Tapsell, Peter|
|Rees, Rt Hon Peter (Dover)||Taylor, John (Solihull)|
|Rhodes James, Robert||Taylor, Teddy (S'end E)|
|Rhys Williams, Sir Brandon||Temple-Morris, Peter|
|Ridsdale, Sir Julian||Terlezki, Stefan|
|Roberts, Wyn (Conwy)||Thomas, Rt Hon Peter|
|Roe, Mrs Marion||Thompson, Donald (Calder V)|
|Rowe, Andrew||Thurnham, Peter|
|Ryder, Richard||Townend, John (Bridlington)|
|Sackville, Hon Thomas||Trotter, Neville|
|Sainsbury, Hon Timothy||van Straubenzee, Sir W.|
|Shaw. Giles (Pudsey)||Vaughan, Sir Gerard|
|Shelton, William (Streatham)||Viggers, Peter|
|Shepherd, Colin (Hereford)||Wakeham, Rt Hon John|
|Shepherd, Richard (Aldridge)||Waldegrave, Hon William|
|Silvester, Fred||Waller, Gary|
|Sims, Roger||Ward, John|
|Skeet, T. H. H.||Wardle, C. (Bexhill)|
|Smith, Sir Dudley (Warwick)||Wells, John (Maidstone)|
|Smith, Tim (Beaconsfield)||Wheeler, John|
|Soames, Hon Nicholas||Winterton, Mrs Ann|
|Spencer, Derek||Winterton, Nicholas|
|Squire, Robin||Wolfson, Mark|
|Stanbrook, Ivor||Wood, Timothy|
|Steen, Anthony||Woodcock, Michael|
|Stern. Michael||Young, Sir George (Acton)|
|Stevens, Lewis (Nuneaton)|
|Stevens, Martin (Fulham)||Tellers for the Noes:|
|Stewart, Allan (Eastwood)||Mr. Archie Hamilton and|
|Stewart, Andrew (Sherwood)||Mr. Douglas Hogg.|
§ Question accordingly negatived.