HC Deb 09 July 1985 vol 82 cc1008-11

'Insert a new section in the Taxes Act 1970, No. 192 (A): (1) Subject to the following provisions of this section, payments made in any year of assessment by an individual out of the emoluments of an office or employment may be deducted in assessing those emoluments for that year if made for the purposes of subsection (2) below. The payments must be made in exchange for technical education which is related to any services offered by members of any body of persons approved for the purposes of section 192. (3) The technical education is related to the employer's trade, profession or vocation if it is either

  1. (i) in the case of a student, of a type whose content will enable the student to take examinations leading to technical qualifications, or
  2. (ii) in the case of a member, or a type qualifying towards the annual continuing professional development requirement of the body concerned.
(4) The technical education must:
  1. (i) be of assistance in performing the duties of all employment with that trade, profession or vocation, and
  2. (ii) if it had been incurred by the employer, have been allowable in computing the profits of his trade, profession or vocation under section 133 of the Taxes Act 1970".'.—[Sir W. Clark.]

Brought up, and read the First time.

Sir William Clark

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

New clause 25 concerns technical education. There is great emphasis on training these days and many people take correspondence courses. It is essential, if at a polytechnic or university, to attend classes, but it is not always possible to attend classes when working. The flexibility afforded by being able to study at home is therefore a great thing.

11.45 pm

My suggestion is that if a person pays tuition fees for a course related to his trade or industry, such expenditure should be allowed for tax purposes, just as it would be if it were paid by the employer. The employee would pay 70 per cent. of the fees and the Exchequer would pay 30 per cent. I estimate that the total cost of fees would be £2 million. Not everyone would claim relief as many people who attend such courses are not in work and would therefore not be covered. I therefore suggest that the scheme would cost no more than £600,000.

It is essential that there be as much training and retraining as possible. The Government ought to do everything to assist, and my proposed concession would be cheaper than setting up colleges or a state scheme which means that the taxpayer has to foot 100 per cent. of the bill. It is essential to expand technical education and I trust that my right hon. Friend will consider the new clause sympathetically.

Dr. Marek

I favour the aims of new clause 25, but I am a little worried, as some courses or conferences are not all that they seem to be. Exorbitant fees are charged and yet the conferences do not really benefit those who attend them, at least not in terms of education.

I hope that the hon. Member for Croydon, South (Sir W. Clark) can assure me that such courses will be excluded. If they are, and the new clause concerns courses that people work hard on, I welcome it. There might be difficulty with the Treasury finding the money to give relief, and pressure for relief in other areas. I hope that there will not be a loophole.

Sir William Clark

The course must comply with section 192 of the Taxes Act 1970. The expenditure must be of a type which, if incurred by the employer, would be allowed for tax purposes. The hon. Gentleman's reservation is misplaced. We do not want any loopholes. It must be genuine technical education. It is not beyond the wit of the Treasury to rephrase the new clause if it is defective.

Dr. Marek

That was not a reservation on my part. I was simply asking a question because I did not know the answer. I accept the assurances from the hon. Member for Croydon, South and I await the Minister's comments.

Mr. Maxton

I had some sympathy with the new clause when I first looked at it, but I quickly lost that feeling of sympathy when the hon. Member for Croydon, South (Sir W. Clark) said that the proposals would be a cheaper way to provide further qualifications than state-funded courses.

The hon. Gentleman suggested that those who were better off and who could afford to pay fees of £600 would be able to do these courses and gain tax relief on the expenditure. Many other people would like to improve their qualifications, their lifestyles and their skills, but they do not have adequate income to allow them to pay those fees. The state ought to provide free courses for those people.

Open university courses are divided between those deemed to be technical and those which are not. Some courses are funded by employers, but these are not always the technical courses. What is the tax position of the non-technical courses?

Teachers take part in such non-technical courses and represent a large group within the Open university. Many teachers with diploma qualifications to teach in primary or secondary schools in England or Wales — primary schools only in Scotland—wish to obtain a degree from the Open university. Their local authorities agree that it would be right, good and proper that they should be graduate teachers rather than diploma teachers and are prepared to pay their fees to allow them to obtain that qualification. They even pay for the teachers to go on the summer courses and provide a daily allowance.

Can the employer claim assistance against tax if the employer is a local authority? If the local authority will not pay the fees, will a teacher who tries to upgrade his qualifications from his own resources be able to reclaim tax on the fees? Does the new clause cover that? As the Minister is not responding, I presume that he does not know the answers to my questions.

My main objection to the new clause is that technical training and people's ability to change their skills should not have to be paid for by the individual. In a society that is changing as dramatically as ours, we need people to change and to acquire new skills.

Dr. Marek

I agree entirely that the state should provide an education covering all aspects of life in the community, but there are certain types of specialist education from which employers would like their employees to benefit. Would there not be some advantage in encouraging employers to allow their employees to acquire that specialist education? I can imagine circumstances in which that might be useful, but I have not studied the new clause in depth and am certainly open to persuasion by my hon. Friend.

Mr. Maxton

The answer is simple. The new clause does not cover that point because, as the hon. Member for Croydon, South has said, it is already covered in law. If an employer pays the fees for an employee's training, that expenditure can already be set against tax. My hon. Friend the Member for Wrexham (Dr. Marek) is quite right. If an employer wishes to have an employee trained in a specific skill which will benefit the employer that training should probably be paid for by the employer, but if people wish to improve their own skills and if society in general rather than an individual employer requires people to change their skills possibly two or three times in a lifetime, society and the state should provide that opportunity and the individual should not be forced to find the fees out of his own pocket. I hope, therefore, that the Minister will not accept the new clause.

Mr. Hayhoe

My hon. Friend the Member for Croydon, South (Sir W. Clark) will acknowledge that this is really a re-run of a debate which took place on the 1982 Finance Bill. My right hon. Friend the present Secretary of State for Transport responded to that debate and it would not be useful for me to take up the time of the House in repeating the arguments.

The purpose of the new clause is to give tax relief to employees who incur expenses in obtaining technical qualifications to further their careers. The whole House recognises the importance of technical education. The question is whether the proposed tax relief is the best way to encourage it. In the Government's judgment, directing resources towards improving and extending the youth training scheme, supporting the Open tech in a variety of other ways is a better targeting of resources towards the improvement of technical education.

As my hon. Friend the Member for Croydon, South acknowledged both in moving the new clause and in responding to an intervention, the new clause is technically defective. Having participated in Finance Bill debates for some time from different parts of the House, I have noticed that the person responding from the Dispatch Box nearly always says that he has been advised that the proposal is technically defective, especially when it is a complicated new clause.

There is a great deal of sympathy with my hon. Friend's intention of seeking to achieve more technical education. As he will know from previous debates and from his correspondence with my right hon. Friend the Chancellor, such dissent as there may be relates to the technique whereby that aim can best be achieved. I certainly undertake to give careful consideration to the points that my hon. Friend has raised and I hope that he will not press the new clause at this stage.

Dr. McDonald

The Opposition sympathise with the aims expressed by the hon. Member for Croydon, South (Sir W. Clark). The new clause relates to a narrow range of people who are in work and wish to bring their technical skills up to date or to acquire new technical skills and we sympathise with the hon. Gentleman's view that every effort should be made to ensure that that happens.

The Minister replied that in the Government's view tax relief was not the right way to achieve that aim but that the Government wished to make more opportunities available for such education. I shall not transgress into a debate on the education system as that would take us too far from the new clause, but the Government need to do a great deal more to make technical education available. Unfortunately — I think that this is what the hon. Member for Croydon, South has in mind — the Government have made it much more expensive for an employee to improve his or her skills or to acquire new skills in this area. Open University fees have risen sharply since 1979, as have fees for all kinds of courses, including adult education courses at local polytechnics and colleges of further education. In all those areas the cost has risen substantially. The individual might be seeking such education while remaining in work.

That is why we understand some of the reasons why the hon. Member for Croydon, South brought forward the new clause. We sympathise with his aims. The proper method should be to widen the availability of technical education at all stages of life and make it much more cheaply available, so that individuals who are, for example, seeking such training through the Open University, do not find the costs the crippling burden that they now find them.

12 midnight

Sir William Clark

I am grateful to my right hon. Friend the Minister of State for what he said. In view of the fact that he said that he would give the matter sympathetic consideration in future, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

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