HL Deb 05 March 1969 vol 300 cc147-8

2.48 p.m.

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 regulations governing student awards for first degree and comparable courses can be amended to ensure that, in assessing the parental contribution, some allowance can be made for the rentals paid by those who live in rented accommodation since the interest portion of mortgage payments is allowed to house purchasers.]

BARONESS PHILLIPS

My Lords, the parental contribution is assessed on the gross income, computed as for income tax purposes. Any departure from this principle would increase public expenditure and cannot be considered now.

LORD GARNSWORTHY

My Lords, in thanking my noble friend for that reply may I ask her this question? Whereas there was a case for differentiating between those who paid rent and owner-occupiers when Schedule A tax was payable, since that tax was abolished in 1963 is there not a very different situation to-day and cannot the position be reviewed in the light of that change?

BARONESS PHILLIPS

My Lords, I should not like to enter into a debate on the relative merits of allowances against tax, although I may have very strong views upon that personally. But in this particular connection these assessments are based on the Anderson Committee recommendations. I think I should remind the noble Lord that the Committee said: We have considered whether rent should also be taken into account but we have concluded that there is not sufficient reason to make an exception in this respect to the general principle". I think perhaps I should also remind your Lordships' House, although not necessarily the noble Lord who put the Question, that no contribution is payable if the net income after all allowances has been made is less than £900.

LORD GARNSWORTHY

My Lords, may I ask my noble friend further whether the present regulations do not tend to penalise those who endeavour to avoid debt as compared to those who borrow? As the latter already enjoyed tax relief on interest payments, is there not a case for reconsideration of this matter?

BARONESS PHILLIPS

My Lords, I will convey the views of my noble friend to my right honourable friend, though I should not think that at this point of time he can gather much hope for a major change.

LORD ARWYN

My Lords, arising out of this Question, may I ask my noble friend whether interest on a bank overdraft is calculated when the parents ask for a grant? This could he substantial and could lead to quite large profit.

BARONESS PHILLIPS

My Lords, I think the safest thing for me to do is to quote the Anderson Committee recommendations on which the system is based. They make reference to expenditure deemed to be socially desirable, such as payment of school fees. In other words, this was what they were considering. They came finally to the point at which they said: At present, mortgage interest is allowed, but not rent; interest on bank overdrafts, and other interest payments, are allowed in England and Wales and may be allowed in Scotland at the discretion of the education authority. We recommend that mortgage interest should continue to be allowed, together with all other interest payments that are allowed for tax purposes". In other words, it is bound up very considerably with the system at present operated within the tax structure.