§ 2.46 p.m.
§ Order of the Day for the Second Reading read.
§ THE MINISTER WITHOUT PORT-FOLIO (THE EARL OF DUNDEE)My Lords, I beg to move that this Bill be now read a second time. As our programme of Business this afternoon compels me to inflict three Second Reading speeches upon your Lordships, I shall try to be as short as I possibly can. This Bill gives effect to the Chancellor of the 1056 Exchequer's Budget statement concerning the repayment of post-war credits which, as your Lordships know, consist of the extra revenue collected during the war due to the reduction of certain income tax allowances, and which the Government undertook to repay after the war. Since the end of the war repayment has been exceedingly slow because of our troubles in preventing inflation. In the Budget of 1947 it was provided that post-war credits should be repaid to men on reaching the age of 65 and to women on reaching the age of 60; and in the Budget of 1954 that if any person holding a post-war credit died the credit should be repaid at the time when that deceased person would have reached the age of 65 or 60 had he or she lived.
Under these provisions, £310 milion of post-war credits have so far been repaid, while another £25 million have, by agreement, been set off against tax liabilities. As the post-war credits originally amounted to £765 million, that leaves a total of £430 million still to be repaid. So your Lordships will see that in fourteen years since the war we have not yet repaid half of the post-war credits. But now my right honourable friend the Chancellor of the Exchequer and his economic advisers think that the monetary position enables us, although not to go quite as fast as we should like, to make very substantial increases in the speed with which we are refunding post-war credits. This Bill, in order to avoid the need of continual new legislation, gives general power to the Chancellor of the Exchequer to prescribe qualifications for repayments by Treasury regulation.
My right honourable friend has already stated the immediate regulations which he proposes to make if this Bill is passed. First, the age for repayment will be reduced in the case of men from 65 to 63, and in the case of women from 60 to 58. The cost of that change to the Exchequer in this financial year will be about £35 million. Next, my right honourable friend proposes that when a person who is owed a post-war credit dies, the credit shall immediately be repaid to his heirs instead of being postponed until such time as that person would have reached the age of 65 or 60. That change will cost a further £34 million in the present year.
Next, the Chancellor of the Exchequer proposes to provide for the immediate 1057 repayment of post-war credits in the case of certain hardships. That is much the most difficult regulation to make, because it is not possible to make any kind of definition of "hardships", which will avoid anomalies and which will be entirely fair to everybody. Whatever rules are made, there is always someone who can quite reasonably come and say, "This man has been repaid his post-war credit while I, whose hardship is even greater, have not been repaid mine." It may be impossible to dispute the justice of that. But the Chancellor considers that it is better to meet some cases of hardship and to repay some post-war credits to people who have special need of them than riot to meet any cases of hardship at all.
The regulations he proposes to make are as follows. The persons who will be repaid are, first, those who for a continuous period of twelve weeks ending after April 7, 1959, have been receiving National Assistance; second, those who after April 7, 1959, are persons named in a register of blind persons required under Statute to be kept by a local authority. This will not include persons registered as partially blind. The third category of persons to be repaid is those who after April 7, 1959, are receiving constant attendance allowance or unemployability supplement under the war pensions Instruments, the Industrial Injuries Acts or the Industrial Diseases (Benefits) Acts, or who would have been in receipt of unemployability supplement if they had not claimed an alternative benefit instead, or who would have been in receipt of constant attendance allowance but for being a hospital in-patient. The Bill also provides for crediting holders of post-war credits who are not paid with annual interest at the rate of 2½ per cent. That interest will not be subject to income tax, and as it will accumulate until the credit is finally repaid it may possibly be an inducement to the Treasury to repay credit a little more quickly, because they will thereby save the accumulating interest which they will otherwise have to pay in the long run.
The total cost of all these changes for the present financial year amounts to £71 million, and as the amount of credits which would in any case have been repaid during this year would have been about £18 million, your Lordships will see that for this year repayment will be stepped 1058 up to very nearly £90 million, which will be a very great advance. Whether or not this acceleration can be increased, as we should all like it to be increased, will, of course, depend on the monetary situation and the view taken of it by the present Chancellor of the Exchequer or by his successors in future years. In the meantime I would suggest to your Lordships that the regulations which my right honourable friend intends to make under this Bill represent a very substantial improvement and that we ought to make the best of it now. I beg to move.
§ Moved, That the Bill be now read 2a.—(The Earl of Dundee.)
§ 2.52 p.m.
§ LORD PETHICK-LAWRENCEMy Lords, we on these Benches—and in this matter I speak for my Party—fully give our support to this Bill. I have no desire in any way to hinder its rapid passage into law. As the noble Earl has already stated, this Bill does not of itself. as I understand it, give any additional money or reduce the age at which money will be paid. What it does do is to empower regulations to be made for this purpose.
I should like to say just two or three words about the origin of these postwar credits. Sir Kingsley Wood, when he was Chancellor of the Exchequer, had the wisdom and good sense to give a considerable amount of latitude to Mr. Maynard Keynes (afterwards Lord Keynes) to assist him in various ways and to make certain new proposals with regard to the finance of this country. Personally I was a great admirer of Lord Keynes, and I had a great admiration for nearly all the things he did. I am bound to say, in candour, that these postwar credits were never one of the things of which I was particularly enamoured. I did not think that people would pay their tax with any greater willingness because they thought some might come back, and I also foresaw that they would not necessarily get the money as soon as they expected. Both those things have occurred. Very few people realised for a moment that the delay in paying back post-war credits would be anything like as great as it was. Nor do I think people anticipated that the fall in the value of the pound, in terms of goods to be purchased, would be so great that, when they did come to be repaid, they would get, in effect, only a fraction of the money 1059 which they had overpaid during the years of the war. However, there it is. For better or worse all these delays have taken place, and we are grateful to the present Chancellor of the Exchequer for coming a long way in improving the position.
The Bill itself, as I have already said, is wide in its scope and merely empowers regulations. but we are faced, as the noble Earl has pointed out, with definite regulations, and the question is whether they go too far, or just right, or whether they might not go still further. We should all like to see them going further. The fact is that this is a particularly suitable occasion to extend the operation of these post-war credits and enable people to get them earlier, because it is a period when the Chancellor of the Exchequer wants to encourage the expenditure in the country. Lord Keynes anticipated, very naturally I think, that at the end of the Second World War there would be something like the position there was at the end of the First World War. Your Lordships will remember that at the end of the First World War, owing largely to the action of the Bank of England, supported by the Government of the day, there was a tremendous deflation, and Lord Keynes thought that if something like that was going to happen at the end of the Second World War it would be a very good thing to have this large amount of money which could be poured out from the Treasury to the post-war credit holders. That would enable the Government to check any deflation and start to raise the country by the reflation of the money which these post-war credits would provide.
As it has turned out, partly owing to the different policy pursued by the immediate post-war Government, the situation was entirely different after the Second World War from what it was after the first. The difficulty was not to prevent a slump; it was to get on with the new building and new work that the new situation after the destruction of a large part of the country made necessary. Therefore the situation has been entirely different. Up till now the Chancellors of the Exchequer of both Parties have refrained from paying out these post-war credits except in limited cases of people reaching a certain age. I am glad to see that the 1060 Chancellor of the Exchequer has recognised that, and we on these Benches support the proposal that he has been making.
I cannot sit down without making a reference to one further point, and that is the interest that is to be paid in future to those whose credits are not entirely paid off. That seems to me only fair. It is one thing to go to a person and say, "I will pay you back the money", but it is rather like the case of Peter and Paul, I think in Alice through the Looking Glass, where he was going to pay the money but the time never came when he would pay it. If the Chancellor of the Exchequer pays interest on the amount owing from now onwards, that is at any rate some recompense for the long delay that there may still be in the future before these promises are redeemed. Therefore, without more ado, I should like to express our support for this particular Bill, which at any rate empowers the useful step to be taken to which the noble Earl has made reference.
§ 3.0 p.m.
LORD SALTOUNMy Lords, I should like to associate myself with what the noble Lord, Lord Pethick-Lawrence, has just said, and to offer two further remarks. When this tax was first imposed I have not the smallest doubt that the people of this country would have accepted it as a totally non-repayable tax. I think the powers-that-be rather miscalculated the financial patriotism of the country. But what has aroused the public indignation is the delay in repayment after the promises that were made. Naturally I welcome this Bill as at any rate a step forward. But I would impress upon the Government that to repay a debt by instalments is not a very satisfactory method of repayment, and will not satisfy the public in the way total repayment would have done.
I should like to ask the noble Earl two questions. Many years ago in your Lordships' House I put forward the case of a man who, at the outbreak of war, lived in South Africa. He abandoned everything he had there and came to enlist in our Forces. Consequently, he suffered the deduction of this tax. After the war he wrote to me and said that had he waited and not joined our Forces, but gone out with his own South African 1061 forces, he would have received a[...] rate of pay and would not have suffered this deduction; and he asked whether he could have repayment of his post-war credits now. The answer that His Majesty's Government gave at that time was: No; on no account; that he must first reach 65 years of age. I should like now to ask whether this man has any chance of repayment at the present time under the plans that Her Majesty's Government are making. Another question that I would ask is this: when these post-war credits are repaid on a death, are they put in with the estate and assessed for estate duty? If the credits are repaid merely in order to get the money back with the other hand, I think it is a very poor method of repayment. I should be most grateful if the noble Earl could answer those two questions.
THE EARL OF WOOLTONMy Lords, while welcoming the speech of the noble Earl, I should like to ask whether the interest, which I understand is being with-held and is to accumulate will be compound interest?
LORD HAWKEMy Lords, I heartily welcome this Bill, particularly as it provides for repayment at death. If your Lordships remember, some noble Lords on this side of the House some years ago regularly put down Questions to try to elicit a reason from the Government of the day, the Labour Government, as to why a post-war credit should not be paid out at death. Non-payment, of course. led to enormous inconvenience to executors and others. The noble Lord, Lord Pakenham, used to "stone-wall" to us from opposite, and we never got a reply out of him at all. I suppose there was no reason.
I, too, should like to ask a question—namely, whether, in order to claim, it is necessary for the individual to know the amount of his post-war credit? There are remarkably few people who have a complete set of post-war credit papers in their possession. Will it be sufficient for a person to write to the tax inspector and say "I wish to claim my post-war credits"? If that could be arranged. I think it would make for great convenience and would save an enormous exchange of correspondence. I am very glad that the Government have started to tackle this problem, though I recognise that, except in regard to death, it could not be done 1062 un[...]cept that. I, too, was an admirer of Maynard Keynes, because I lived in the room beneath him at Cambridge. But I think we must all agree that this was one of his more unfortunate prognostications.
§ LORD LATHAMMy Lords, may I ask the noble Earl a further question? I understood him to say that the recipient of National Assistance will be among those who are entitled to repayment under this Bill. If that be the case—indeed, if it is not the case—will the recipient of National Assistance have his post-war credits taken into account by way of reduction of what he would otherwise get from the National Assistance authorities?
§ THE EARL OF DUNDEEI think the reply to the noble Lord, Lord Latham, is that it would not be a deduction; but will make sure of that and will let the noble Lord know.
§ LORD LATHAMThat is to say, it would be regarded as a disregard?
§ THE EARL OF DUNDEEI think so, but I should like to verify that, if the noble Lord will allow me.
The noble Lord, Lord Hawke, asked whether it is necessary to know how much one is owed before one is paid out. I think it is the intention of the Government to start paying these post-war credits on June 1. That is one reason why Parliament is being asked to pass this Bill so quickly. It is necessary that all the forms should be issued, ready in the Post Office, by May 4, so that people who know that they have some post-war credits, and who under the regulations will become entitled to repayment, will be able to send them in. I am sure that it would be a great convenience and help to the Revenue officials if people were able to say how much they were owed; it would probably save a great deal of trouble. I am equally sure that, if they have forgotten, if they make appropriate enquiries they will find that the Inland Revenue will have a record of how much they are owed and that they will be paid the right sum. I have just received an additional note on this matter, to the effect that the loss of post-war credits certificates is not fatal to a claim—I am sure your Lordships will be glad to hear that. Applicants who have lost their certificates should write to the inspector of taxes. I think that is 1063 more or less in accordance with what I have already tried to say. I am glad to say that I also have confirmation of my answer to Lord Latham's question. The Minister of Pensions stated recently that National Assistance post-war credits would be disregarded.
My noble friend Lord Saltoun asked two questions. The first concerned a South African. He asked whether that person had any chance of getting his postwar credits repaid. I am afraid that the answer is: Not unless he is approaching the age of 63. I am afraid that the fact of his being a South African will not make any difference to the date on which they will be repaid. On the question of estate duty, the answer is that it will not be payable on credits released on decease. It is regarded as a tax which has been already paid and is now being refunded, and it will not be assessed for the purpose of estate duty. My noble friend Lord Woolton asked whether the interest would be compound interest or simple interest. I do not know. The Chancellor has not yet made the regulations under this Act.
§ VISCOUNT ALEXANDER OF HILLSBOROUGHIt is in the Bill, at Clause 2.
§ THE EARL OF DUNDEEI beg your Lordships' pardon.
§ THE EARL OF DUNDEEOf course it is; it is in Clause 2. It is compound interest, free of income tax. I thought that it would be compound interest, but I was not sure. When the noble Earl asked his question I had forgotten chat it was specifically stated in the Bill that it would be compound and not simple interest. I beg your Lordships' pardon.
THE EARL OF WOOLTONMy Lords, I am sorry to have troubled the noble Earl with the point. I ought to have read the Bill.
§ THE EARL OF DUNDEEMy Lords, I had read the Bill but the point had slipped my memory. I think I have dealt with all the questions which were asked of me and I hope your Lordships will agree to give the Bill a Second Reading.
§ VISCOUNT ALEXANDER OF HILLSBOROUGHMy Lords, before the Bill 1064 [...]ts Third Reading, I would say that I am glad that the noble Lord, Lord Hawke, after his opening remarks, accepts the fact that this could not have been done before.
LORD HAWKEMy Lords, I do not accept that in the case of those who perished. They should have been paid out.
VISCOUNT ALEXANDER OF HILLS-BOROUGHMy Lords, had the noble Lord had to try to deal with them and with all the other arrangements after the war, he would not have done as much as was done. May I ask the noble Earl, Lord Dundee, in connection with his suggestion when he first spoke, that where a man's widow would be of the proper age—sixty—the heirs will now be paid out, whether we can now get this information before we go into Committee on Clause 6: Where a man has died intestate, leaving a widow and children, and the authorities, in dealing with that estate in the normal way, have allocated a given number of certificates to the widow and a given number to one, two or three children, will the children be paid out under the provision in regard to heirs, referred to by the noble Earl, at the same time as the mother will now be paid out?
LORD SALTOUNMy Lords, may I ask the noble Viscount, Lord Alexander of Hillsborough, in the case of the poor old man who was buried at public cost because he could not get his post-war credits, how the public benefited?
§ VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, in the reconstruction of the whole good at the time, without which we could not have got on at all.
§ THE EARL OF DUNDEEMy Lords, post-war credits owing to deceased persons will now be repaid whatever age would have been reached by deceased persons had they not died. Irrespective of how young a person is when he dies, the credit will be repaid to his heirs immediately, presumably according to the law of inheritance, whatever that may be, and whether he has assigned the credit by will or has made no will. Presumably in the latter case the sum will be divided according to the law of intestacy between his widow and children. I am not 1065 entitled to answer on a legal question, but I believe that is probably the right answer.
§ On Question, Bill read 2a; Committee negatived.
§ Then, Standing Order No. 41 having been dispensed with (pursuant to the Resolution of April 23, 1959), Bill read 33, and passed.