COMMUNITY CHARGE BENEFIT

HC Deb 28 March 1990 vol 170 cc611-25

'In section 22A of the 1986 Act, (a) at the beginning of subsection (1) there shall be inserted the words "Subject to the provisions of subsection (IA) below,"; (b) after subsection (1) there shall be inserted the following subsection— (1A) For the purpose of determining such entitlement or such amount in any such case, the amounts of capital prescribed under section 22(6) and (7) above shall be doubled.".'.—[Mr. Meacher.]

Brought up, and read the First time.

Mr. Meacher

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

Mr. Speaker

With this it will be convenient to take the following amendments: (b), at the beginning insert— '(1) In section 22 of the 1986 Act, after subsection (6) there shall be inserted the following subsection— (6A) Regulations shall make provision for entitling any person to housing benefit in the form of a community charge rebate for any period in respect of which he would have been so entitled if the amount prescribed under subsection (6) above during that period had been £16,000. (2)'. (a), in new subsection (IA), leave out '22(6) and (7)' and insert '22(7)'.

Mr. Meacher

It speaks for itself that, since 3.30 pm, we have had seven and a half hours under a Government guillotine, yet only now do we reach the first Opposition new clause. The full absurdity of the Government's guillotine is shown by the fact that we have been allocated the next 47 minutes to debate seven Opposition new clauses and amendments.

The first concerns the poll tax, and I have little doubt that it will take the full time until 12 o'clock—indeed, the debate could have gone considerably beyond that time. Everyone realises that the Chancellor's proposed concession in the Budget to alleviate poll tax bills has turned out rather less of a sweetener and more of a confidence trick, for two main reasons. The first is that the proposed formula will mean that most pensioners and others will get little or nothing extra in relief. The other is that the Chancellor simply forgot about Scotland and its right to equivalent relief over the past year. The first objection is fully redressed by new clause 1 and I invite support for it from hon. Members on both sides of the House who agree with the statement yesterday by the right hon. Member for Shropshire, North (Mr. Biffen): It"— referring to the poll tax— needs to be reconsidered in respect of the abatements made and the effectiveness of the transitional arrangements".— [Official Report, 27 March 1990; Vol. 170, c. 243.] On the first point, I submit that we propose precisely the kind of reconsideration for which the right hon. Gentleman asked.

11.15 pm

Under the Government's proposal, most people will find when they come to claim that they will get little or nothing extra. The reason is the rule on tariff income: for every £250 in savings over £3,000, they are deemed, however unrealistically, to receive an income of £1 a week, and that reduces their poll tax rebate by 15p a week. Let me give an example of a pensioner who has just less than £16,000 in savings—presumably, the type of person that this "concession" was designed to assist. The net effect of all the deductions is that his or her poll tax rebate is reduced by £7.65 a week. I am sure that hon. Members will not closely follow these figures, but I assure them that they have been carefully checked and I am certain that they are correct. As benefit is calculated on a maximum 80 per cent. of the poll tax, this equates with a poll tax bill of £497 a year. In other words, that pensioner, who is clearly intended to be a main beneficiary of the great poll tax concession, will not get a penny unless he or she lives in one of four local authority areas in England and Wales —those with a poll tax above £497 a year. So much for the Budget special offer!

Hon. Members will agree that many pensioners will be bitterly disappointed when they realise that the increase in the capital cut-off allows them merely to fill in a form and then have a zero rebate calculated. It is disgraceful for the Government to raise hopes as they did in the Budget and then dash them when people discover that they will get only tiny amounts of aid to offset their massive poll tax bills.

The Government's error has been in raising the upper capital limit but not the lower limit. If the lower threshold at which deductions start had been doubled to £6,000—which is what one might expect—the value of the concession would have been greatly increased. That is precisely why my right hon. and hon. Friends and I have tabled the new clause. It effects exactly that purpose.

Only a few days ago, in Committee, the Minister declared that a limit of £16,000 for couples was on the high side. I am glad that, after a presumably deafening outcry from the Tory heartlands, he has decided to recant. For the Government to raise the upper limit but not the lower one can only reflect one of two things—either it shows incompetence in that they intended pensioners to get a much bigger gain from this concession, but they bungled the operation, or it shows cynicism, in that they knew well that most of the concession would be diminished or even extinguished in practice, but they wanted the political credit of at least the appearance of making a generous offer.

I leave it to the Minister to say which of the two motivations applied. I do not know, but whichever it was, it is now in the interest of equity and reasonableness to change the formula, and on those grounds I seek support for the new clause.

Mr. Christopher Hawkins (High Peak)

The hon. Gentleman is aware that I, too, am keen to sort out the anomalies on this issue. I am not sure why he wants to raise the amount of capital that is disregarded, because that would create further anomalies by making people with those amounts of capital have their benefit assessed on the basis of too low an income for them.

At present, the problem is that people with high amounts of capital up to £16,000 have a notional income for DSS purposes which is way above their actual income because of attributing 20.8 per cent. interest to every extra £1,000 of savings above £3,000. That is the £1 per week per £250—being £52 a year per £250—which is £208 a year per £1,000, and that is 20.8 per cent. interest on every extra £1,000. The problem is—[HoN. MEMBERS: "Too long."] I hope I may be allowed to complete this, and I promise not to intervene later.

The problem is that if one raises the lower limit, one is creating as big an anomaly at the bottom by assessing those people's benefit on an income which is lower than their real income. It would be better if the DSS scrapped the 20.8 per cent. interest on extra savings and stuck in annually, at uplift time, the actual interest available based on the best practice in the high street and by building societies, currently about 11 per cent. Putting it simply, if instead of the level being £1 per week per £250 it was 50p per week per £250, that would be available in every high street in Britain.

Mr. Meacher

The hon. Gentleman makes an extremely valid point. I have always thought that the tariff rate of income which suggests that one has a 20 per cent. yield on one's investments must mean that one is getting some extremely good stockbroker advice, and I doubt whether such advice is available to those on income support.

The rate of 20 per cent. is absurd. I would not care to say what the rate should be, but I would have thought that it should be something less than half that rate, and then there would be the offsetting effect, and the damage in extinguishing the right to benefit would be that much less.

That is a separate point and, while I do not dispute the validity of the hon. Gentleman's argument, I hope he will agree that until the DSS makes that change, it is important to raise the lower threshold. We cannot tonight change the tariff rate of income, but the way to ameliorate the effect would be to raise the lower threshold.

Because of the shortness of time, I will not dwell on amendment (b) in the name of my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar). I understand, from what was said at Scottish Question Time today, that there is shortly to be a full statement on the matter from the Secretary of State for Scotland. My hon. Friends and I will he looking at that statement on three clear and explicit criteria: the adequacy or otherwise of the extra funds that are made available; the ex gratia nature of the scheme; and how it will be ensured that those entitled receive payments retrospectively on a strictly comparable basis to those now made available in England and Wales.

The view that rebates to alleviate the full horrific force of the poll tax should be maximised is shared on both sides of the House. We do not know whether the formula enunciated by the Chancellor in his Budget was by accident or design, but we know that raising the upper capital limit and not the lower one has the counterproductive effect of extinguishing a large proportion of the relief that presumably was intended. On that basis, I hope that new clause 1, which corrects that error, will command approval in all parts of the House.

Mr. Hawkins

I said a moment ago that I would not speak again, because I was conscious of the guillotine, but I had not realised that no one else wanted to speak.

I greatly welcome the fact that the Chancellor responded to representations by raising the capital limit to almost £16,000. It is now important to get the DSS rule on the interest implied in the capital changed. Sympathetic as I am to what the hon. Member for Oldham, West (Mr. Meacher) is trying to achieve, I do not want to support the creation of another anomaly at the bottom end by assuming no interest on the first £3,000 or £6,000. That would be to underrate the income that those people with savings genuinely have. What I should like to see is a system that is neutral as between saving and not saving. The way to make the system neutral is to impute to savings the best-practice interest rate that a normal human being anywhere in Britain can earn on the high street.

By doing that, one would, for benefit purposes, be using a person's actual income from savings, added to his actual income from other sources, and comparing the resulting figure with the benefit tables to see whether he qualified for a rebate. I have drawn to the attention of Ministers the situation of a person with savings who, before the Budget, may have had an income one third lower than that of someone who did not save. A couple could have an income of just £100 a week, made up of retirement pension and interest on savings, and fail to qualify for a rebate. Yet a couple in my area, where the poll tax is £400, could have an income of £150 a week and qualify for the rebate, so long as their income was not derived from savings. A couple with savings living on £100 a week fail to qualify, yet a couple who have not saved but whose income is 50 per cent. higher do qualify. That is a ridiculous anomaly. It is a massive penalty on savings—much too great to put right.

While I support the Opposition's intentions, I have to point out that raising the lower limit would create anomalies similar to those that would arise from playing with the upper limit without changing the interest rate. I should like the Minister to consider a move to a neutral system—a system that would not impose a penalty on savers.

Of course, I do not expect a considered response tonight. The way to achieve what I have in mind is to impute to capital the interest rate that can actually be achieved on the high street. Magically, at the moment, there is the lovely convenience in that, instead of being £1 a week per £250 of savings, which is the current rule, it should be 50p a week per £250 of savings. There is an over-estimate of precisely 100 per cent. What I am suggesting would put the whole matter to rights.

Mr. Peter L. Pike (Burnley)

I shall be very brief. It was strange that the Minister should indicate from a sedentary position his intention to speak at the end of the debate. Many hon. Members, including myself, would have liked to hear an immediate response to the case made by my hon. Friend the Member for Oldham, West (Mr. Meacher) in his opening speech. This is an important debate, and I am surprised at the course that the Minister is adopting.

The case that the hon. Member for High Peak (Mr. Hawkins) has made has considerable merit, and is worthy of consideration. Of course, it is not relevant to this new clause. Many constituents have written to ask me where they might get the rate of interest that is used as the notional figure when the DSS is calculating benefit. The hon. Member's case should be pursued and hopefully it will be supported by hon. Members on both sides of the House.

Having listened to the Chancellor's Budget statement last week, I think it would have benefited more people if he had increased the £3,000 limit to £6,000 rather than doubled the £000 to £16,000. There is considerable merit in the new clause. I hope that the Minister will respond positively and say that the Government are prepared to accept the new clause.

11.30 pm

Mr. David Nicholson (Taunton)

I listened carefully to the points made by my hon. Friend the Member for High Peak (Mr. Hawkins) and by the hon. Member for Burnley (Mr. Pike). On examining the matter, I think that we should proceed on the basis of real figures in the market place.

Shortly after the Chancellor's excellent concession in the Budget of the increase in the savings limit, I tabled a question to my right hon. Friend the Secretary of State for Social Security, asking what action he was taking to vary the tapers in calculating housing benefit and community charge concessions. The reply was that no change would be made in the tapers. That may be all right in regard to the community charge because the tapers are extremely low and one loses benefit slowly in relation to increases in income. But I believe that the tapers for housing benefit are much more fierce.

Obviously the Government cannot deal with the matter in the debate, but in due course we should be given exemplification of the rebates that might be available in relation to various levels of income and capital so that we can pass the information to our constituents. I pay tribute to the Under-Secretary for the written answer last autumn, which set out the income levels on which rebates were available. I found the information extremely useful when replying to queries from constituents. All hon. Members want to help their constituents as much as possible to maximise the rebates that they may get in relation to the community charge, housing benefit and other benefits.

Mr. Timothy Raison (Aylesbury)

I hope my right hon. Friend the Minister will pay serious attention to the point made by my hon. Friend the Member for High Peak (Mr. Hawkins). It would be a strange irony if, after a Budget which not only contained the concession of increasing the permitted amount of capital but which introduced specific savings schemes, we should persist with the notion that for every £ 250 of capital a person has he should lose £1 a week. We have seen the strengthening of the PEP scheme and the proposed introduction of the TESSA scheme. Those schemes are directed entirely towards the type of people whom we are talking about. We are trying to encourage those people to save. It is a cruel irony if people who have saved over the years find themselves taxed at a penal rate on their capital. I hope that my right hon. Friend will think seriously about the point.

Mr. Jim Sillars (Glasgow, Govan)

Those of us from Scotland are labouring under a great difficulty because we have not had any statement from the Secretary of State for Scotland on how he intends to disburse the £4 million ex gratia payment that was announced last week. It was not announced in the House. As I understand it, it was announced at a hastily called press conference. We are not sure whether it was a Lobby meeting or a formal press conference.

In Scotland there has been a great deal of consternation ever since about the method of handling that announcement. But here we are tonight and the Secretary of State for Scotland is "semi-detached" from the rest of us. He is not sitting on the Front Bench, where he could respond to invitations to intervene and to put the record straight. He is developing a rather shy attitude.

The chairman of the Tory party in Scotland, the Under-Secretary of State, the hon. Member for Stirling (Mr. Forsyth), paid a fleeting visit to the Chamber and then beat it as fast as he could. That is not characteristic of him. He is normally up front, arguing vociferously for Government policy. I am now told that he is up the back somewhere, rather than on the Front Bench where he should be.

Our other difficulty is that we do not really know what the Government's attitude is, because each time they touch the poll tax some sort of change or a semi-U turn takes place. They would be well-advised to take on board the message contained in new clause 1, moved by the hon. Member for Oldham, West (Mr. Meacher). The Government are only just beginning to understand many of the problems that are developing with the poll tax south of the border that people north of the border have understood for a considerable time. When the Chancellor made his statement about poll tax rebates in the Budget I thought that it was a very strange thing to do. That statement on the upper limit of savings for rebates had absolutely nothing to do with the Budget. It was not a Finance Bill measure, and it is interesting that the legislation will come as secondary legislation from the Department of Social Security. Therefore, one can only assume that he included the measure in the Budget speech to gain political benefit at a time that looked pretty bad for the Conservative party. The great problem, if one engages in a con trick without thinking it through, is that one has to live with the consequences. I shall tell the Minister for Social Security of some of the consequences.

An old lady constituent of mine visited me at my office in Ibrox in Glasgow. She does not have any money in the bank, but with her pension and the pension that she obtains from her husband's work she is above the limit for any rebate on the poll tax and therefore pays the full amount. After a discussion with her family and her neighbours she came to me and said, "If they are going to give folk with £16,000 in the bank a rebate on the poll tax, then why don't I get a rebate, as I've got no money in the bank?" The logic was that she thought she must get a rebate. She was going to pay another instalment of the poll tax, but did not do so until she had had a chat with me because she was convinced that justice had to be done. She said, "I do not have £16,000. Why should I be paying the full tax? Surely I'm entitled to a rebate." She was astonished, scandalised and angry when I explained to her that it did not matter whether she had money in the bank; her income carried her above the line and there would be no rebate.

Then I met someone else who assumed that because he has more than £8,000 in the bank—but not as much as £16,000 —he was automatically guaranteed the full rebate. When I explained the situation, there was even greater anger. Such folk read the Chancellor as they were meant to read him on that particular day. They understood that a massive concession was coming from the Government and that they should be applauding their television screens. Then the cold light of reality struck some days later and they found that there was not a penny piece of help in it for them.

I am addressing my remarks to Conservative Back Benchers and not to the Government because, from the experience of recent weeks, it seems that the Government will respond only to pressure from them. Conservative Members might think that their crisis on the poll tax is over. I noticed in one Scottish newspaper that the Secretary of State for Scotland is alleged to have told his Cabinet colleagues that the main pressure will be put on them when people learn the level of the poll tax, and that once the bills start dropping through the letter box the anger will start dropping off. That is not true. If he told his Cabinet colleagues that, he has misled them once again. Our experience in Scotland is that it is when the bills rattle through the letter box and people are forced to decide whether to pay and how much to pay that the anger starts.

The major problems for the Conservative party in England are yet to come. The sensible thing would be for Conservative Members to take a small step backwards, to listen carefully to what has been said on new clause 1 and to accept it as the first step towards a major reconstruction of local government finance in England and Scotland. No matter how much we tinker with the poll tax, it remains fundamentally flawed because it does not take account of people's ability to pay. I am sorry that the Prime Minister is not here. The message which was sent from Mid-Staffordshire, and which will be sent from Glasgow on Saturday —

Ms. Short

The alternative is Labour.

Mr. Sillars

If the hon. Lady is telling me that the roof tax is a sensible alternative to the poll tax, she and I will have to differ.

Ms. Short

Surely the lesson of Mid-Staffordshire is that the only alternative to the present Government is a Labour Government.

Mr. Sillars

Believe it or not, if we cannot win independence at the next election, I look forward to the day when we shall have a Labour Government instead of a Tory Government in this place because I shall then have the pleasure of watching the Labour party trying to reconcile the contradictions in its policy —

Mr. Jimmy Hood (Clydesdale)

The hon. Gentleman will not be here to watch it.

Mr. Sillars

Whether I am here or watching it on television is immaterial. I recall a period when we had a Labour Government who were cutting the National Health Service, housing and education. How do Labour Members reconcile the policy of the shadow Chancellor of the Exchequer, who goes around the City of London telling all those in the boardrooms that fundamentally nothing will change under a Labour Government, with Back-Bench Labour Members simultaneously telling people in housing, education and the Health Service that they will be able to allocate the additional resources? I reckon that 12 to 18 months of a Labour Government in power here will advance the cause of Scottish independence by a fair number of years.

I return to the message of Mid-Staffordshire. Of course, I accept that the hon. Member for Birmingham, Ladywood (Ms. Short) interprets it as she has. But I think that there is another important message for the Prime Minister from Mid-Staffordshire and from the great demonstration of non-payers of the poll tax in Glasgow this Saturday. It is quite simple: if the poll tax does not go, she will have to.

Mr. Scott

Perhaps I should explain that it seemed unnecessary for me to intervene twice in the debate. I felt that it was better to listen to the bulk of the arguments and then to respond, perhaps leaving the Opposition Front-Bench spokesmen the last word in the debate. That seemed to be the most effective way in which to deal with the matter.

I think that we can all agree on one thing—we welcome the announcement by my right hon. Friend the Chancellor of the Exchequer in his Budget statement that he intended to raise the upper capital limit for income support and family credit from £6,000 to £8,000 and the upper limits for community charge and housing benefit from £8,000 to £ 16,000 from April. It is worth reminding the House that the change means that 250,000 people will be helped at a cost, in all benefits, of £120 million. That cannot be regarded by anyone who takes a fair view of matters as anything other than a significant change.

In essence, the change was introduced to ensure that many people who save conscientiously throughout their lives should not be prevented from claiming help with community charge or with their rents, particularly in retirement. In fact, about two thirds of those who will be helped by this very welcome change announced by my right hon. Friend the Chancellor will be pensioners.

It was suggested that people having capital in excess of £10,000 will not benefit from those changes, but nothing could be further from the truth. We estimate that 70,000 extra benefit cases, affecting 100,000 individuals, will involve capital in excess of £10,000 and that the vast majority of them will concern pensioners. There are still gainers even among those having capital of between £14,000 and £16,000. We estimate that 15,000 people in that bracket, again mainly pensioners, will also gain. That should be the starting point for our consideration of new clause 1. 11.45 pm

The Opposition's new clause. which doubles upper and lower limits for couples only, should be rejected. We extended the upper capital limit for all claimants, and right hon. and hon. Members should be aware that the Opposition's new clause contains a serious anomaly. 1 take the example of a couple having capital greater than £8,000 and being entitled to community charge benefit. Under the Opposition's proposals, if one of them were to die, the surviving partner would not be entitled to benefit because the upper capital limit of £ 8,000 would be relevant when her benefit was reassessed_ It follows that new Clause I might deprive people of community charge benefit at a very vulnerable moment in their lives.

The Opposition make general points, but they should think through the practical effects of their proposals. In this case, a serious anomaly would result, with widows, for example, losing entitlement to community charge benefit in the circumstances I described.

Mr. Wilson

Will the Minister give way?

Mr. Scott

No. because I want to allow time for the hon. Member for Oldham, West (Mr. Meacher) to respond.

My hon. Friend the Member for High Peak (Mr. Hawkins) suggested that imputed interest should be taken into account rather than tariff income. That proposal would cause problems, and it would be difficult to administer. However, I am happy to discuss the implications of my hon. Friend's proposal with him to see whether those practical difficulties can be tackled. Obviously we want to monitor the results of different—

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

Will my hon. Friend allow me to intervene?

Mr. Scott

No, because I must—

Mr. Beaumont-Dark

Then we shall vote against the Government.

Mr. Scott

I understand that, but the debate must end in 12 minutes. I said that I am perfectly prepared to discuss with my hon. Friend the Member for High Peak his proposals, but I assure him that they would present serious practical difficulties. If we can overcome them, I shall take his suggestions into account when we reconsider these matters in due course

The hon. Member for Oldham, West suggested that pensioners having capital of £16,000 will not benefit unless the community charge is greater than £9.75 per week.

Mr. Meacher

indicated dissent.

Mr. Scott

The effect of tariff income depends on other income of which the claimant is in receipt.

Mr. Meacher

The Minister could not have been listening. I did not cite a figure of £9.75 but one of .7.65.

Mr. Scott

I am sorry if I misheard the hon. Gentleman. The fact remains that a pensioner aged over 75 with capital of £16,000 or other income of less than about £20 per week will still receive the maximum rebate. I repeat that about 15,000 pensioners having capital of between £14,000 and £16,.000 will still gain from the announcement made by my right hon. Friend the Chancellor of the Exchequer.

My hon. Friend the Member for Taunton (Mr. Nicholson) asked for examples of benefit entitlement. I am only too willing to provide that information. If my hon. Friend will table a suitable question, I shall ensure that he receives examples of exemptions at different levels.

There is still widespread misunderstanding about the precise way in which tariff income operates. It is not true that the tariff income rule reduces benefit entitlement by the same, equal amount. Where a person's income is greater than the set applicable amount only 15p per week is deducted from maximum benefit for every £1 of weekly excess income over the applicable amount.

Hon Members have expressed concern about the interest applied by the tariff income. As I have said the benefit system has to be considered in totality. I shall give an example to the House. A person with tariff income of £25a week would not see benefit reduced by £25 a week_ The benefit would be reduced by 15 per cent. of £25 a which would be only £3.75 a week. That should be understood. It is being spread around the system that once a certain amount is exceeded there is a pound for pound reduction in benefit. That is not true. Only 15 per cent. is taken into account. I leave it to those on the Opposition Front Bench or Back Benches to speak.

Mr. Jeff Rooker (Birmingham, Perry Barr)

I am appalled by the Minister of State's approach. The debate is limited to 47 minutes and it is dear that as many Conservative Members as Opposition Members wish to question him. It would have been suitable and appropriate for him to respond immediately after my hon. Friend the Member for Oldham, West (Mr. Meacher) resumed his place. The Minister would then have had the time to allow his hon. Friends to intervene. I do not understand why he is so shy about being accountable to the House. He chose to intervene shortly before midnight to promise secret discussions —it seems that they are to take place behind closed doors — in an endeavour to shut up his right hon. and hon. Friends.

Conservative Members have cottoned on to the con of the Chancellor of the Exchequer. Whether the percentages are 20.8, 20 or 15, those outside this place know that last week's Budget statement contained a con. Who are the 15,000 with £16,000 in the bank who will benefit? These people will have an ordinary income of less than £20 a week. Who is sitting on £16,000 with an income of less than £20 a week? We are talking of a total income of about £20 a week, not extra income.

I shall follow with interest the questions that are tabled over the next few months to ascertain what the DSS knows about these people. Did those in the DSS know what the Chancellor of the Exchequer was to say, or the consequences of it? Did they understand the effect of not raising the lower limit, and especially the effect of his statement in Scotland? If they did know, did they tell the Chancellor before he made his speech? The Minister of State must know that his Department is the repository of expertise on these matters. His officials know what is happening. The problem is —this became dear during a sitting of the Public Accounts Committee last year—that they do not tell Ministers unless Ministers ask.

We discovered that the effect of the housing benefit changes was known to all the officials. They said, "We never said anything about this, because the Ministers never asked us." The PAC took a dim view of the official who said that. The problem was that Ministers were not asking, What are the effects and the consequences of this change of policy?" In this instance—let us concentrate on the doubling for poll tax for the moment— did Ministers ask the departmental officials what would be the effects, pitfalls and anomalies that would result from the change in policy? If Ministers do not put that question to their officials, they are not fit to be Ministers. The House knows that officials will not provide information freely unless they are asked to do so. That is a great worry to all hon. Members, and especially to members of Select Committees. I shall give way if the Minister wants to answer those questions. The House should be aware of the views of Ministers.

Mr. Scott

Before my right hon. Friend the Chancellor made his announcement, he discussed it with Ministers at the Department of Social Security. We welcome, as I believe does the whole House, his announcement on the increasing of the limits.

I respond to the hon. Member for Birmingham, Perry Barr (Mr. Rooker) by asking some other questions. Does the Labour party welcome the announcement made by my right hon. Friend the Chancellor to increase the limits? Does it accept that new clause 1 is incompetent and ineffective and contains anomalies? Does it accept that I am prepared to listen to my hon. Friends and to others who want to discuss this, to answer parliamentary questions and to give examples of exemptions? Does it accept that the rather superficial acceptance that 20.8 per cent. is assumed as income on capital is a misapprehension of the true position? When income from £3,000 to nought is averaged out, one gets nowhere near 20.8 per cent. When one takes account of the taper of 15 per cent. instead of 20 per cent., which operated under the rating system, it is even more beneficial. Does the Labour party, particularly the hon. Member for Perry Barr, accept those points?

Mr. Rooker

Before the Government took office, we had a much fairer system of taking account of people's savings than capital cut-off. The Government have sought to squeeze people who have few savings and a bit of extra pension to cut benefits, and that has led to this anomaly. The anomaly will continue with benefit after benefit unless there are major changes to the policy.

The Minister knows that my right hon. Friend the Leader of the Opposition welcomed the doubling of the limit by the Chancellor, but we are entitled to attack the consequences of making that change but not changing the lower limit. The message that that gave to the British people was not the one that the Government intended to give. As the hon. Member for Glasgow, Govan (Mr. Sillars) said, the message was intended to make people think: "I am now entitled to a rebate, whereas previously I was turned down for being over the £8,000 limit. What will my rebate be?" I have had to give the same answer to my constituents as other hon. Members have had to give theirs—"The chances are that you will not get a penny piece. If you do, it will be a few bob rather than a few pounds."

Mr. Hawkins

I know that the hon. Member would not want to mislead the House. He knows that I share his concern, but a couple under 75 with savings of £16,000 —a tariff income of £52 a week—can receive the state pension and still qualify for community charge rebate in any area where the community charge, or poll tax, is more than £300.

Mr. Rooker

The capital limit is exactly the same for a single person as for a couple.

Mr. Hawkins

Not a single person—a couple.

Mr. Rooker

I am talking about an individual. I was asking how people with savings of £16,000 survive on such meagre incomes. The Secretary of State said that 15,000 people with savings of £16,000 would benefit. I want to know where they are, what their incomes are and how they survive on such low incomes.

It is easy for Ministers to say, "We do not like new clause 1; it has a technical defect." What a defence for a Minister who has an army of civil servants and who will have a chance to correct any defect in the new clause in the other place. If he had the good grace of some other Ministers, he would have said, "We shall consider the new clause" and would not have nit-picked. I shall happily vote for new clause 1, because any technical defects can be corrected at a later stage.

Mr. Wilson

When we support the new clause, we shall do so soberly and with good sense. However, when the Chancellor made his announcement—which we have since discovered is worthless—during the Budget statement, Conservative Members waved their Order Papers as though it was Christmas and as though the Chancellor was dispensing millions of pounds to tens of thousands of pensioners. Conservative Members should have been a little more circumspect and found out what it was worth. Will not their embarrassment on the poll tax, as in so many other areas, be heightened when, once again, they return to their constituents and have to tell them that this so-called concession is a con?

Mr. Rooker

Conservative Members thought that they were waving goodbye to us, when what they did not know was that the Government were waving goodbye to the rebate—

It being Twelve o'clock, MR. DEPUTY SPEAKER proceeded, pursuant to the Order this day, to put forthwith the Question already proposed from the Chair.

The House divided; Ayes 204, Noes 307.

Division No. 143]	[12 midnight
AYES
Abbott, Ms Diane	Callaghan, Jim
Allen, Graham	Campbell, Menzies (Fife NE)
Alton, David	Campbell, Ron (Blyth Valley)
Anderson, Donald	Campbell-Savours, D. N.
Archer, Rt Hon Peter	Carlile, Alex (Mont'g)
Armstrong, Hilary	Cartwright, John
Ashley, Rt Hon Jack	Clark, Dr David (S Shields)
Ashton, Joe	Clarke, Tom (Monklands W)
Barnes, Harry (Derbyshire NE)	Clay, Bob
Barnes, Mrs Rosie (Greenwich)	Clelland, David
Barron, Kevin	Clwyd, Mrs Ann
Battle, John	Cohen, Harry
Beckett, Margaret	Cook, Frank (Stockton N)
Beith, A. J.	Cook, Robin (Livingston)
Bell, Stuart	Corbett, Robin
Benn, Rt Hon Tony	Corbyn, Jeremy
Bennett, A. F. (D'nt'n & R'dish)	Cousins, Jim
Bermingham, Gerald	Crowther, Stan
Blair, Tony	Cryer, Bob
Blunkett, David	Cummings, John
Boyes, Roland	Cunliffe, Lawrence
Bradley, Keith	Cunningham, Dr John
Brown, Nicholas (Newcastle E)	Dalyell, Tam
Brown, Ron (Edinburgh Leith)	Darling, Alistair
Buckley, George J.	Davies, Rt Hon Denzil (Llanelli)
Caborn, Richard	Davies, Ron (Caerphilly)

Davis, Terry (B'ham Hodge H'I)	Marek, Dr John
Dewar, Donald	Marshall, Jim (Leicester S)
Dixon, Don	Martin, Michael J. (Springburn)
Dobson, Frank	Martlew, Eric
Doran, Frank	Maxton, John
Duffy, A. E. P.	Meacher, Michael
Dunnachie, Jimmy	Meale, Alan
Dunwoody, Hon Mrs Gwyneth	Michie, Bill (Sheffield Heeley)
Eadie, Alexander	Moonie, Dr Lewis
Eastham, Ken	Morgan, Rhodri
Evans, John (St Helens N)	Morley, Elliot
Ewing, Mrs Margaret (Moray)	Morris, Rt Hon A. (W'Shawe)
Faulds, Andrew	Mowlam, Marjorie
Fearn, Ronald	Mullin, Chris
Field, Frank (Birkenhead)	Murphy, Paul
Fields, Terry (L'pool B G'n)	Nellist, Dave
Fisher, Mark	Oakes, Rt Hon Gordon
Flannery, Martin	O'Brien, William
Flynn, Paul	O'Neill, Martin
Foot, Rt Hon Michael	Orme, Rt Hon Stanley
Foster, Derek	Owen, Rt Hon Dr David
Fraser, John	Patchett, Terry
Fyfe, Maria	Pendry, Tom
Galloway, George	Pike, Peter L.
Garrett, John (Norwich South)	Prescott, John
George, Bruce	Primarolo, Dawn
Godman, Dr Norman A.	Radice, Giles
Gordon, Mildred	Randall, Stuart
Gould, Bryan	Redmond, Martin
Grant, Bernie (Tottenham)	Rees, Rt Hon Merlyn
Griffiths, Nigel (Edinburgh S)	Richardson, Jo
Griffiths, Win (Bridgend)	Robertson, George
Grocott, Bruce	Rooker, Jeff
Harman, Ms Harriet	Ross, Ernie (Dundee W)
Haynes, Frank	Rowlands, Ted
Heal, Mrs Sylvia	Ruddock, Joan
Hinchliffe, David	Salmond, Alex
Hoey, Ms Kate (Vauxhall)	Sedgemore, Brian
Hogg, N. (C'nauld & Kilsyth)	Sheerman, Barry
Home Robertson, John	Sheldon, Rt Hon Robert
Hood, Jimmy	Shore, Rt Hon Peter
Howell, Rt Hon D. (S'heath)	Short, Clare
Hoyle, Doug	Sillars, Jim
Hughes, John (Coventry NE)	Skinner, Dennis
Hughes, Robert (Aberdeen N)	Smith, Andrew (Oxford E)
Hughes, Roy (Newport E)	Smith, C. (Isl'ton & F'bury)
Hughes, Simon (Southwark)	Smith, Rt Hon J. (Monk'ds E)
Hume, John	Smith, J. P. (Vale of Glam)
Illsley, Eric	Snape, Peter
Jones, Barry (Alyn & Deeside)	Soley, Clive
Jones, Martyn (Clwyd S W)	Spearing, Nigel
Kaufman, Rt Hon Gerald	Steel, Rt Hon Sir David
Kennedy, Charles	Steinberg, Gerry
Kilfedder, James	Stott, Roger
Kirkwood, Archy	Straw, Jack
Lamond, James	Taylor, Mrs Ann (Dewsbury)
Leighton, Ron	Taylor, Rt Hon J. D. (S'ford)
Lestor, Joan (Eccles)	Thompson, Jack (Wansbeck)
Lewis, Terry	Turner, Dennis
Litherland, Robert	Vaz, Keith
Livingstone, Ken	Wallace, James
Livsey, Richard	Walley, Joan
Lloyd, Tony (Stretford)	Wardell, Gareth (Gower)
Lofthouse, Geoffrey	Wareing, Robert N.
Loyden, Eddie	Watson, Mike (Glasgow, C)
McAllion, John	Weish, Michael (Doncaster N)
McAvoy, Thomas	Wigley, Dafydd
McCartney, Ian	Williams, Rt Hon Alan
Macdonald, Calum A.	Williams, Alan W. (Carm'then)
McFall, John	Wilson, Brian
McKay, Allen (Barnsley West)	Winnick, David
McKelvey, William	Wise, Mrs Audrey
Maclennan, Robert	Worthington, Tony
McNamara, Kevin	Young, David (Bolton SE)
McWilliam, John
Madden, Max	Tellers for the Ayes:
Maginnis, Ken	Mrs. Llin Golding and
Mahon, Mrs Alice	Mr. Ray Powell.

NOES
Aitken, Jonathan	Evennett, David
Alexander, Richard	Fairbairn, Sir Nicholas
Alison, Rt Hon Michael	Fallon, Michael
Allason, Rupert	Favell, Tony
Amery, Rt Hon Julian	Field, Barry (Isle of wight)
Amess, David	Fishburn, John Dudley
Amos, Alan	Fookes, Dame Janet
Arbuthnot, James	Forman, Nigel
Arnold, Jacques (Gravesham)	Forsyth, Michael (Stirling)
Arnold, Tom (Hazel Grove)	Forth, Eric
Ashby, David	Fowler, Rt Hon Sir Norman
Aspinwall, Jack	Fox, Sir Marcus
Atkins, Robert	Franks, Cecil
Atkinson, David	Freeman, Roger
Baker, Rt Hon K. (Mole Valley)	French, Douglas
Baker, Nicholas (Dorset N)	Fry, Peter
Baldry, Tony	Gale, Roger
Banks, Robert (Harrogate)	Gardiner, George
Batiste, Spencer	Garel-Jones, Tristan
Bellingham, Henry	Gill, Christopher
Bendall, Vivian	Glyn, Dr Sir Alan
Bennett, Nicholas (Pembroke)	Goodson-Wickes, Dr Charles
Bevan, David Gilroy	Gorman, Mrs Teresa
Biffen, Rt Hon John	Gorst, John
Body, Sir Richard	Gow, Ian
Bonsor, Sir Nicholas	Grant, Sir Antony (CambsSW)
Boscawen, Hon Robert	Greenway, Harry (Ealing N)
Boswell, Tim	Greenway, John (Ryedale)
Bottomley, Peter	Gregory, Conal
Bottomley, Mrs Virginia	Griffiths, Peter (Portsmouth N)
Bowden, A (Brighton K'pto'n)	Grist, Ian
Bowden, Gerald (Dulwich)	Ground, Patrick
Bowis, John	Grylls, Michael
Boyson, Rt Hon Dr Sir Rhodes	Hague, William
Braine, Rt Hon Sir Bernard	Hamilton, Hon Archie (Epsom)
Brandon-Bravo, Martin	Hamilton, Neil (Tatton)
Brazier, Julian	Hampson, Dr Keith
Bright, Graham	Hanley, Jeremy
Brooke, Rt Hon Peter	Hannam, John
Brown, Michael (Brigg & Cl't's)	Hargreaves, A. (B'ham H'Ll Gr')
Bruce, Ian (Dorset South)	Hargreaves, Ken (Hyndburn)
Burns, Simon	Harris, David
Burt, Alistair	Haselhurst, Alan
Butcher, John	Hawkins, Christopher
Butler, Chris	Hayes, Jerry
Butterfill, John	Hayward, Robert
Carlisle, John, (Luton N)	Heathcoat-Amory, David
Carlisle, Kenneth (Lincoln)	Hicks, Mrs. Maureen (Wolv' NE)
Carrington, Matthew	Hicks, Robert (Cornwall SE)
Carttiss, Michael	Higgins, Rt Hon Terence L.
Cash, William	Holt, Richard
Chalker, Rt Hon Mrs Lynda	Hordern, Sir Peter
Channon, Rt Hon Paul	Howard, Rt Hon Michael
Chapman, Sydney	Howarth, Alan (Strat'd-on-A)
Chope, Christopher	Howarth, G. (Cannock & B'wd)
Clark, Hon Alan (Plym'th S'n)	Howe, Rt Hon Sir Geoffrey
Clark, Dr Michael (Rochford)	Howell, Rt Hon David (G'dford)
Clark, Sir W. (Croydon S)	Howell, Ralph (North Norfolk)
Clarke, Rt Hon K. (Rushcliffe)	Hughes, Robert G. (Harrow W)
Colvin, Michael	Hunt, David (Wirral W)
Conway, Derek	Hunter, Andrew
Coombs, Anthony (Wyre F'rest)	Hurd, Rt Hon Douglas
Coombs, Simon (Swindon)	Irving, Sir Charles
Cope, Rt Hon John	Jack, Michael
Couchman, James	Jackson, Robert
Cran, James	Janman, Tim
Currie, Mrs Edwina	Jessel, Toby
Davies, Q. (Stamf'd & Spald'g)	Johnson Smith, Sir Geoffrey
Davis, David (Boothferry)	Jones, Gwilym (Cardiff N)
Day, Stephen	Jones, Robert B (Herts W)
Devlin, Tim	Jopling, Rt Hon Michael
Dorrell, Stephen	Key, Robert
Douglas-Hamilton, Lord James	King Roger (B'ham N'thfield)
Dover, Den	King, Rt Hon Tom (Bridgewater)
Dunn, Bob	Kirkhope, Timothy
Dykes, Hugh	Knapman, Roger
Eggar, Tim	Knight, Greg (Derby North)
Emery, Sir Peter	Knight, Dame Jill (Edgbaston)
Evans, David (Welwyn Hatf'd)	Knowles, Michael

Latham, Michael	Rowe, Andrew
Lawrence, Ivan	Rumbold, Mrs Angela
Lee, John (Pendle)	Ryder, Richard
Leigh, Edward (Gainsbor'gh)	Sackville, Hon Tom
Lennox-Boyd, Hon Mark	Sayeed, Jonathan
Lightbown, David	Scott, Rt Hon Nicholas
Lloyd, Peter (Fareham)	Shaw, David (Dover)
Lord, Michael	Shaw, Sir Giles (Pudsey)
Luce, Rt Hon Richard	Shaw, Sir Michael (Scarb')
Lyell, Rt Hon Sir Nicholas	Shelton, Sir William
MacGregor, Rt Hon John	Shephard, Mrs G. (Norfolk SW)
MacKay, Andrew (E Berkshire)	Shepherd, Colin (Hereford)
Maclean, David	Shersby, Michael
McLoughlin, Patrick	Sims, Roger
McNair-Wilson, Sir Michael	Skeet, Sir Trevor
McNair-Wilson, Sir Patrick	Smith, Tim (Beaconsfield)
Madel, David	Soames, Hon Nicholas
Major, Rt Hon John	Speller, Tony
Malins, Humfrey	Spicer, Sir Jim (Dorset W)
Mans, Keith	Spicer, Michael (S Worcs)
Maples, John	Squire, Robin
Marland, Paul	Stanbrook, Ivor
Marlow, Tony	Stanley, Rt Hon Sir John
Marshall, John (Hendon S)	Steen, Anthony
Marshall, Michael (Arundel)	Stern, Michael
Mates, Michael	Stevens, Lewis
Maude, Hon Francis	Stewart, Allan (Eastwood)
Mawhinney, Dr Brian	Stewart, Andy (Sherwood)
Maxwell-Hyslop, Robin	Stewart, Rt Hon Ian (Herts N)
Mayhew, Rt Hon Sir Patrick	Stokes, Sir John
Mellor, David	Stradling Thomas, Sir John
Meyer, Sir Anthony	Sumberg, David
Miller, Sir Hal	Summerson, Hugo
Mills, Iain	Tapsell, Sir Peter
Mitchell, Andrew (Gedling)	Taylor, Ian (Esher)
Mitchell, Sir David	Taylor, John M (Solihull)
Moate, Roger	Taylor, Teddy (S'end E)
Montgomery, Sir Fergus	Tebbit, Rt Hon Norman
Morris, M (N'hampton S)	Temple-Morris, Peter
Morrison, Sir Charles	Thompson, D. (Calder Valley)
Morrison, Rt Hon P (Chester)	Thompson, Patrick (Norwich N)
Moss, Malcolm	Thorne, Neil
Moynihan, Hon Colin	Thurnham, Peter
Mudd, David	Townsend, Cyril D. (B'heath)
Neale, Gerrard	Tracey, Richard
Needham, Richard	Tredinnick, David
Nelson, Anthony	Trippier, David
Neubert, Michael	Trotter, Neville
Newton, Rt Hon Tony	Twinn, Dr Ian
Nicholls, Patrick	Vaughan, Sir Gerard
Nicholson, David (Taunton)	Viggers, Peter
Nicholson, Emma (Devon West)	Waddington, Rt Hon David
Norris, Steve	Walden, George
Onslow, Rt Hon Cranley	Walker, Bill (T'side North)
Oppenheim, Phillip	Waller, Gary
Page, Richard	Ward, John
Patnick, Irvine	Wardle, Charles (Bexhill)
Patten, Rt Hon Chris (Bath)	Warren, Kenneth
Patten, Rt Hon John	Watts, John
Pawsey, James	Wells, Bowen
Peacock, Mrs Elizabeth	Wheeler, Sir John
Porter, Barry (Wirral S)	Whitney, Ray
Porter, David (Waveney)	Widdecombe, Ann
Portillo, Michael	Wiggin, Jerry
Powell, William (Corby)	Wilkinson, John
Price, Sir David	Winterton, Mrs Ann
Raison, Rt Hon Timothy	Winterton, Nicholas
Redwood, John	Wolfson, Mark
Renton, Rt Hon Tim	Wood, Timothy
Rhodes James, Robert	Woodcock, Dr. Mike
Riddick, Graham	Yeo, Tim
Ridley, Rt Hon Nicholas	Young, Sir George (Acton)
Rifkind, Rt Hon Malcolm
Roberts, Wyn (Conwy)	Tellers for the Noes:
Roe, Mrs Marion	Mr. Alastair Goodlad and
Rossi, Sir Hugh	Mr. Tony Durant.
Rost, Peter

Question accordingly negatived.