HL Deb 22 April 1969 vol 301 cc370-2
LORD GARNSWORTHY

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

[The Question was as follows:

To ask Her Majesty's Government whether they propose to alter the regulations governing the assessment of parental contributions in relation to first degree student and comparable awards having regard to the announced intention to disallow interest on bank overdrafts as a relief on income tax liability.]

BARONESS PHILLIPS

My Lords, it is unnecessary to alter the University and Other Awards Regulations. If interest payments are not allowed for tax purposes, they cannot, under the Awards Regulations, be deducted from gross income in assessing the parental contribu-

LORD GARNSWORTHY

My Lords, while thanking my noble friend for that tion. reply, may I ask whether in regard to first degree and similar awards some consideration can be given to using the money saved as a result of this change in income tax policy to give relief to parents who pay rent?

BARONESS PHILLIPS

My Lords, at this moment no estimate has been made of the saving in education expenditure which this proposed measure will produce. I would remind the noble Lord that it would probably represent only a very small proportion of the increased public expenditure which would be involved if we made allowance for rents in the assessment of parental contributions.

LORD GARNSWORTHY

My Lords, may I ask my noble friend whether the point may be borne in mind, and to see whether it is at all possible to do anything to provide relief along the lines I have suggested?

BARONESS PHILLIPS

My Lords, I can give my noble friend that assurance.

LORD ARWYN

My Lords, will my noble friend agree that the evasion or mitigation of parents' contributions towards the cost of first degree courses has been condoned by allowing substantial sums of bank interest and mortgages to be deducted before assessing net income? Also, is my noble friend aware that parents receiving an income well above the national average can, by bank borrowing and mortgages and the use of covenants, reduce their income to a level where they are entitled to a full grant or a high proportion of the grant?

BARONESS PHILLIPS

My Lords, I thank the noble Lord. I am sorry that he used the word "evasion". I do not think these parents actually evade.

LORD ARWYN

Perhaps I should have said "avoid".

BARONESS PHILLIPS

Yes, my Lords. But as I explained earlier, this system is tied up very closely with the tax structure, and perhaps the comments which the noble Lord makes are more directly addressed to our system of tax allowances. This has simply been transferred, as it were, for use within the parental contribution framework. I am sure the noble Lord will appreciate that the Government try to meet some of the points he makes in relation to covenants and so on.