§ 3.42 p.m.
§ Debate resumed.
§ BARONESS PHILLIPS
My Lords, may we now return to the Green Paper on the Tax-Credit System. We have already heard some excellent speeches on the Motion, which the noble Baroness has introduced with her usual clarity. I am delighted that she used her opportunity in the ballot to bring this particular subject before us to-day. I would say also that I endorse everything that the noble Baroness, Lady Elles, has said, and probably would have made note of it had I not confined myself to the very narrow terms of the Motion to-day.
We have heard what the Green Paper seeks to do: it is to consult the general population on a change in the taxation system. No one would deny—certainly not I—that a simplification and reform of the collection of tax is a good idea. Obviously later on there will be many debates on the general scheme, but on this particular occasion we are confining our comments to the issue which the noble Baroness, Lady Elliot of Harwood, has raised. It is always a very attractive proposition that something will be administratively more convenient, but I should very much like to endorse what the noble Baroness, Lady Elles, has said, that it may be administratively more convenient but it may not be for the benefit of the individual to whom it is being administered.
Quite recently, I visited a school that I wanted to use for a meeting of some highly respectable housewives—they might well have been going to discuss such an issue as this—whose behaviour nobody could question. The caretaker said to me, "If they come in here they will damage all the paint and scratch the 178 floor". I was not quite sure on what he based this idea, but I pointed out that of course it would be much easier administratively, and for him, if no one used the building at all. But, curiously enough, buildings are put up in order that people may use them. One finds examples of this in the hospital system, where administratively it is more convenient if you all work on a kind of conveyor belt system, and whether it is more comfortable for the patients seems to be a much more minor matter. I hope that the noble Earl who is to reply appreciates that some of us are getting a little concerned about whether this great thing which I call "the Administration" is going to overtake us, rather like Quatermass.
No one would deny that you cannot always equate simplification with equity, and I think that here we have a very clear example. Any mother will tell you that, as we have heard already, the cost of supporting a child rises steeply with age, and there is already some recognition of this in family allowances. I think that there are several points to be debated here: whether in fact we should have a level for one child and different levels for other children; whether we should have a fixed level, or whether in fact it should operate decreasingly. I will leave these points for further consideration, for undoubtedly they will crop up again.
I am particularly concerned—and I speak as general secretary of a women's organisation, mainly of young working-class housewives who are concerned about this new suggestion—that the women should themselves be allowed to retain the family allowances which they now receive through a Post Office. As has already been said, mothers in low income families depend very heavily on family allowances. Let there be no illusion about that! I was speaking in Liverpool a couple of weeks ago, and I was told by a school helper that it is becoming quite customary for school meals to be paid for on Wednesday because the mother has to collect the family allowance on Tuesday in order to meet this payment. What my noble friend Lady Summerskill has said so many times—and we must again repeat it to-day—is that the housekeeping allowance is not something over which a woman has any 179 control at all. There is no legal definition of a housekeeping allowance. The husband can hold it back, he can reduce it, or, if he feels in a particular mood, he does not need to pay it at all. Family allowances are completely different in that the woman will collect it each week, and she knows that she has that small sum for herself.
I sit in the domestic court, as do many of your Lordships, where there are revealed all too clearly the facts that have been given to-day, one among them being that many women do not know what their husbands earn. Indeed, many of them do not even know what their husband does when he is at his place of work. I have even met women who do not know where he works! In fact, one wonders what they talk about when he returns home in the evening. It is clear that we are not talking about an ideal state of circumstances. The noble Baroness, Lady Elles, referred to "antediluvian ideas", and I am sorry to say that I find that many husbands, even young husbands, have ideas which are steeped in another century. They say that the wife is "let out"—that is their phrase—one night a week; but if she asks for two nights she is rather conflicting with some code of behaviour which they seem to have inherited. What we say to-day may seem strange to your Lordships who, I am quite sure, have always been beneficient and generous husbands, and therefore may not have been up against these particular circumstances that we describe.
There are several groups who will need some other support if there is a change in the method of payment: mothers with self-employed husbands; unsupported mothers who are receiving maintenance payments; the married woman who is unable to trace her husband (I understand that she might, in law, be treated as a single woman, but I should like some clarification on that point); the wife of a husband who is on strike; and the single woman, or widowed mother, who is earning £8 a week.
Luckily, this debate coincides with the publication of a splendid piece of research, already referred to, which has been undertaken by the Child Poverty Action Group, and I understand that the findings are to be submitted to the Select Committee on tax credits, who I hope 180 will take notice. We have already heard some of the fascinating facts which have emerged from this survey, when 77 per cent. of the men interviewed, as well as 86 per cent. of the women, felt that the child tax-credit should be paid to the mother rather than to the father.
Another extraordinarily relevant fact which has come out of this survey is that 34 per cent. of the married women with children who were interviewed had not received any increase in their housekeeping allowance during the past year, despite the fact that, as we know, there have been a number of increases in pay. This applied particularly to the women who were on the smallest incomes. As we have said so many times in this House, almost anything that we discuss hits hardest those who are on the lowest income level. But this survey was conducted among various groups, and it was very significant that some middle-class women also used the family allowance and would not like to see any change in payment. I have known young mothers with two or three small children who have saved this money and have spent it on clothing. It is a form of saving which they can easily take out when they want it.
Another group who have sent me a splendid paper, of which I should greatly have liked to give more details to your Lordships, is called the Women's Equal Rights Group. I do not mind what they call themselves, but they seem to have been doing their job very well. They raised one very significant question and I hope that the noble Earl will be able to reply to it. This Green Paper states at the beginning that the Government have an open mind and would like to have opinions on the proposals. The Women's Equal Rights Group has received a letter in which one woman states:Not one woman we interviewed was aware of the proposals. Parliamentary language often acts as a barrier to the less articulate and they never seem to receive the relevant information.I should like to ask the Government why they have not consulted the women's organisations on this point. My own organisation, the Women's Clubs, has been consulted by various Departments of Government and we are delighted about that. We are being asked for 181 comments on the metric sizing of food packs, we are being asked to give opinions on a number of matters, and we are conscientiously trying to get opinions which we shall send off to the Departments concerned. I believe that if the women's organisations were alerted to the aspects of the Green Paper which concern women—the noble Baroness, Lady Elles, has drawn attention to some other aspects which we are not discussing to-day—they will get honest answers and some help in this matter. But, for the moment, I beg the noble Earl who will reply for the Government to take back the view of many women that this is a matter about which they are deeply concerned and that the present payment, whatever it is called, should remain in the hands of mothers.
My Lords, I am not about to reply prematurely to the noble Baroness, but I think it is incumbent upon me now just to say how much time we have. We originally had until 5.17 p.m., on our 2½ hour basis. We had a memorable Statement on Vietnam which took eight minutes, and therefore we have until 5.25 p.m. to run.
§ 3.54 p.m.
§ BARONESS EMMET OF AMBERLEY
My Lords, in spite of the intervention of the noble Earl the Leader of the House, I shall be very brief indeed and will not take an extra eight minutes. I think that this is a very opportune moment to discuss this matter, and we are grateful to the noble Baroness, Lady Elliot of Harwood, for having raised it. We have been told repeatedly—and therefore I feel that it must be true—that the Government have an open mind on this subject. I hope that the debate here and the reports to the Government from the women's societies will persuade them not just to remain with an open mind, but to come down on the side of the views which we hold so very strongly.
This is really a Treasury problem, as I think the noble Baroness, Lady Elles, said. She also said that we expect our permanent officials to solve these problems for us. I have always understood that the Treasury recruits the brightest brains in the Civil Service, and this problem must be a challenge to them which I have no doubt they would be able to solve if they put their minds to it. I wonder whether they even have a statutory 182 woman in the Treasury. If they do not have one, it might be a good idea to get one. The problem which the Treasury will have to face is as nothing to the problem which will arise in the homes if this alteration is made. We have heard a good deal about split families, deserting husbands and so on. Just to lighten the subject a little, I shall read your Lordships an extract from a letter written by a husband from whom payment was expected. He said:I wish to submit an application for a longer time, as it is impossible to pay in such a short time. I am in a flat which costs me £9 weekly. I have an H.P. debt and my girl friend is about to have twins any moment. My wage at present is £20 a week. I have no bank account so you see I cannot pay.That is perhaps a rather humorous example, but one continually gets letters such as that, and if a mother is no longer certain of obtaining her child's allowance she will be put in an impossible position.
I am quite certain that the heart of our Minister for Social Services is in the right place, and I am also sure that the Minister who is to reply will be very sympathetic. I do not want to bludgeon noble Lords who are present, and I would appeal to their sympathy. I should especially like to thank the noble Lord, Lord Hylton, for standing up and being counted. I am certain that in this House there is a great sense of fairness, that the points which have been put so very ably by the noble Baronesses who have spoken before me have sunk in and will be taken into account, and that from this House there will go a message to the Government that they really must consider this matter very seriously and retain family allowance for the mother.
§ 3.57 p.m.
§ BARONESS BROOKE of YSTRADFELLTE
My Lords, my noble friend Lady Elliot of Harwood has most ably introduced this short debate on the Government's proposals for a tax credit system, with particular reference to the payment of child credits to father or mother. The debate has been interesting, amusing and forcibly supported on all sides of the House. I make no apology for repeating anything that has been said already, because it is only by slow dropping that we shall wear away the stone. I understand that, as yet, no firm decision has been taken on any of the proposals 183 in the Green Paper, and that a Select Committee of the House of Commons is examining all the proposals. I hope very much that the Select Committee's attention will be drawn to the terms of this afternoon's debate. I am interested in the question of the payment of child credits, and it is clear from the list of speakers that other noble Lords are interested, too. When I was bringing up a family of four children we enjoyed family allowances—at least, I enjoyed the allowances and my noble relative paid the tax. As we have just added to our grandchildren by twins who arrived at 11 o'clock last night, I shall be highly unpopular if, by any means at all, the mother of those twins, who already has two other children, is prevented from drawing her family allowance, whatever her husband has to pay.
This payment, which has been received by millions and millions of mothers of children, has always been regarded by them as their money, to spend, if they were conscientious mothers, on the children's basic needs and on extras such as outings, presents, football boots, sports gear et cetera; or, if they were not conscientious, which I am convinced is a very small minority, on cigarettes for themselves, on hair-do's, on cosmetics and the like, which may have had the effect of sedating their personalities and, therefore, of helping their children in another way. In whichever way the money is spent, it is often the only money the mother can collect for herself without having to make a case to her husband for an extra amount in her housekeeping money.
This question of housekeeping money paid to the wife on a regular basis is decided by the husband and the wife, after taking account of which of the two is responsible for rent, rates, light, heat, food, clothes, holidays, entertainment et cetera. Once the decision has been taken, usually very early in married life and based on the existing salary or wage packet of the husband, often no change is made thereafter, in spite of the increased costs which have to be met by the wife. Twenty or more years ago it was frequently the habit of men to sell their empty wage packet envelopes to men earning more than they were, so that the exact amount written on the outside could 184 be put in and the packet handed over to the wife, who had no means of knowing that what she was getting in the envelope was not a true amount of what her husband was earning. The majority of women never know what their husband really earns: they know only what he tells them. I like to hope that that particular practice is no longer current.
My Lords, family allowances are an emotional issue. The mother has learned to regard them as hers, and I hope that the Select Committee will come down on the side of the mother, disregarding administrative convenience or economic considerations which may stand in the way.
§ 4.1 p.m.
§ BARONESS NORTHCHURCH
My Lords, may I first apologise for not having put my name on the list of speakers, but I was doubtful about being here this afternoon. Before I say my few words, may I be the first person to congratulate my noble friend Lady Brooke on the arrival of the twins early this morning? I am fortunate enough to be the grandmother of two lots of twins, but, alas! we went in only for girls, whereas I understand that my noble friend's son and daughter-in-law have brilliantly managed a boy and a girl. We all welcome this opportunity to congratulate them warmly.
I want to add only a few words in support of what has been said this afternoon. In 1945 I had the privilege to be in another place with Miss Rathbone. I knew her well, and worked with her; and I should like to add to what has already been said about how much we owe to her for the magnificent work that she did. From a certain amount of experience I can confirm what has been said by everybody, but I, too, want to add to it; that is, that countless wives never know what their husbands earn. Again and again you find that these wives have no idea what has been put into the pay packet: they are given something, and they believe that that is all there is. Therefore it is of enormous importance to make sure that the allowance is paid into the wife's hands. Although, again, to many of your Lordships it may appear a foolish thing to say—it has been said several times this afternoon, and it is utterly true—wives want to feel that money in their 185 own hands. Even if they had the opportunity to receive a cheque, they would prefer the cash in their hands; and with that cash in their hands they go away with a feeling of security which they would not otherwise have. That is all I want to add to strengthen the arguments which have been so well put forward in your Lordships' House this afternoon. I think we owe a deep debt of gratitude to my noble friend Lady Elliot for having given us the opportunity to discuss this vital matter.
§ 4.3 p.m.
§ VISCOUNT AMORY
My Lords, I too should like to thank my noble friend Lady Elliot of Harwood for introducing this subject to us this afternoon—at a very timely moment, I think. When my noble friend asked me whether I would speak I, with my usual timidity, vacillated. What does an immature young bachelor like myself know about such things? Would I be drummed out of the Chamber by the outraged cries of noble Baronesses? Then, stung by the taunts of the noble Baroness, Lady Summerskill, and encouraged by the intrepidity of my noble friend Lord Hylton, who seemed to get away with his life, I decided to intervene, with your Lordships' permission, but only for a moment.
I remember that nearly twenty years ago in another place, when I was, I think, Minister of Food, I used to put up with the most formidable chastisement from the noble Baroness, Lady Summerskill, who used to ask me almost impossibly difficult questions. She wanted a straight answer to a straight question: did I purchase twenty loaves of bread a week; and when had I last shopped around for baby food. But she invited your Lordships this afternoon to tell your wives how much you earn. It is a great relief when you are a septuagenarian and have retired. I have not a wife to tell, but I will tell your Lordships this afternoon that I earn nothing whatever—and if I had a wife that is what I would tell her now.
I want to say only one thing. I have always been a supporter of family allowances, and I have always been a supporter of their being paid to the mother. As every speaker has said this afternoon, it is the most direct way of ensuring that they get to the children. There are no doubt occasional abuses, but I believe that there 186 would be more abuses if the allowances were paid to the father. Certainly from my experience of young people in various youth organisations I have never had any doubt that, on the whole, the influence for good of mum was greater even than that of dad; and I think that we really must back mums in a matter like this.
My Lords, I am not an expert on the new tax credits, and though, as an old Treasury man, I am conscious of the appalling responsibilities that lie on one in such a position, and the remorse one feels on every subject like this (though I think I managed to keep my hands off family allowances when I was after economies), I should regard it as a tragedy if some way were not found for paying the equivalent of family allowances to the mother. It also seems to me that there may be a case for considering the grading of the amount, as suggested by my noble friend Lady Elles. I cannot hope, I suppose, to joint the two "pinup" Earls of the noble Baroness, Lady Summerskill, but I hope that perhaps my noble friend Lord Hylton and I may be put on the waiting list.
§ 4.7 p.m.
§ BARONESS WOOTTON OF ABINGER
My Lords, I too should like to add just a word of support to the cause which the noble Baroness, Lady Elliot, is so eloquently advocating. I do not think there is anything at all to be added to the substantial arguments which have been made by noble Lords and noble Baronesses, on both sides of the House, but sometimes I think one gets a new light on a subject if one looks at it under a slightly different presentation. For instance, I often wonder what the reaction would be if, instead of the present practice of adding a statutory woman to most public bodies, the practice were to add a statutory man. It would not be any more unreasonable; in fact, it would be less unreasonable than the present custom, because we are, as it happens, the majority sex. So I ask myself: if it had been customary, since these allowances were introduced, for them to be paid to the father, what ingenious administrative arguments would have been devised in order to show that it would not be right to pay them to the 187 mother? I think we must estimate the ingenious administrative arguments against this proposal in the light of that kind of presentation.
§ 4.8 p.m.
§ BARONESS SEEAR
My Lords, with the permission of your Lordships I, too, should like to add support to this Motion. It would be quite inappropriate if nobody were to speak from the Liberal Benches. After all, I think I am right in saying that it was the Women's Liberal Federation which originally pioneered family allowances in support of Eleanor Rathbone; and we should find it disastrous if the payment were transferred to the father. I am sure that in many cases the money coming into the household is shared equally, but it is of course a fact that there are a great many cases, as the noble Baroness, Lady Elles, has said, in which the wife has no idea how much money is in fact coming into the house; the contents of the pay packet is a jealously guarded secret—though in fairness one must add that there are one or two places in the country where the husband still takes home the unopened pay packet, hands it to his wife and has his spending money presented to him by her. I am not saying that that is a desirable practice; certainly it is an unusual one. But there are cases—I know of some of them personally and so, no doubt, do others—in which the money paid to the man does not reach the wife at all, and the minimum security the woman has to be able to feed and care for her children at the minimum level depends on her having control of that small amount, that all too small amount, of family allowance. I very much hope that the House will press and continue to press that the payment should go to the wife.
§ 4.10 p.m.
§ LORD JACQUES
My Lords, radicals of all Parties have for at least a generation advocated and searched for a method of simplifying personal taxation and fusing our personal taxation system with our social security system. That is what the scheme laid out in the Green Paper does. I must admit to being an enthusiast for this kind of simplification. I am an enthusiast for three reasons. First, we have in our community a large number of 188 families, particularly of pensioners, whose income is less than their income tax allowances. In any just society, their income would be made up to their tax allowances. That will happen if we have a tax-credit scheme. It does not happen under the present scheme of income tax and a separate social security system. Secondly, we have many families who have entitlements to social security but who do not take up their entitlements. We regret their apathy; we regret their lack of know-how; indeed, we often admire their pride. But that is not enough. We need a system which would give them their entitlements automatically. A tax-credit system would do that. That is the second reason why I favour a tax-credit system. Thirdly, our personal taxation system and our social security system have been built up piecemeal; consequently, they are unnecessarily complicated. Particularly so is P.A.Y.E., which is on a cumulative basis.
The systems of taxation and of social security overlap and at the point where they overlap they do not apply the same standards. In so far as they do overlap, they are obviously wasteful. We spend money employing people to collect and we spend money employing other people to distribute—sometimes back to the same people from whom we have collected. Consequently, I admire any attempt made to get a fusion of our personal income tax and our social security systems because I believe that it would not only simplify matters, in the interest of the taxpayer so that he would understand it, but that it would also produce a substantial saving in the administration of income tax and social security. If we have a system of income tax credits, then income tax allowances, as we have known them, will go. There will be no allowances against income tax. Instead, tax will be assessed on salaries and wages and on social security; and against that tax there will be tax credits. Where the tax exceeds the credits, the taxpayer will pay; but where the credits exceed the tax, the individual will get an automatic and immediate addition to salary, wage or social security. That, I believe, is the common sense system which we should all welcome as an ideal.
I am not concerned at this stage of public discussion with the amount of the 189 credits, how much they should be or what we should get credits for; because by the time we come to apply them, any figures that we use now will be out of date. But I am concerned with one or two conclusions at which the Green Paper has arrived. For example, it has come to the conclusion that it is impracticable to bring within the scheme married women who are working. I would hope that that would receive further consideration. We are living in an era when it is accepted that when a man and a woman come together and get married, their income tax allowances should at least remain where they were before. Therefore, I believe that the married couple should have double the single allowance. I believe also that when a married woman is working, her part of the allowances should go to her credit and she should come within the tax-credit scheme. I should have thought that the practical difficulties of incorporating married women into the scheme had already been overcome by the wage bar of £8. Nobody with a wage of less than £8 a week would come within the scheme. I should have thought that that would have been sufficient protection against the married woman who is working part-time coming within the scheme to the advantage of the family but against that of the Treasury.
On the question of family allowances or child allowance my mind is clear in three respects. First, I believe it is absolutely essential that we should always do everything we can to get any child allowances direct to the child—and, if possible, without going through the medium of either parent. Therefore, I believe that substantial school meals, milk and the subsidies on children's clothing are the last things that ought to be cut in any economy drive. They should be sacrosanct. Secondly, in so far as there are cash allowances, certainly if one only of the parents has the custody of the child that parent should receive the cash allowances. Thirdly, I am quite clear in my own mind that no matter what anybody would like to do, it is not practical politics to take away anything from the women who are at present receiving family allowances. But I would ask the ladies to take a more balanced view of the whole subject.
§ LORD JACQUES
Yes, my Lords, balanced—not biased. There is a logical argument for paying the father. I believe that it is overcome by the psychological argument but there is a logical argument. In the first place, at the present time the father receives income tax allowances. Even if you were to amalgamate and to consider together income tax allowances and family allowances, the present position is that where there is only one child in the family, the father receives all the allowances. When there are two children, he receives at the present time three quarters. It is only when the family is very large that he receives less than half. So what we are saying is that if we are to have a tax-credit system in which the child allowance and the income tax allowance are to be amalgamated into one tax credit, the father ought to give it up and the mother should receive it all.
§ BARONESS SUMMERSKILL
My Lords, may I ask my noble friend a question? Has he forgotten—he is trying to equate the two—that the father has £20 or £30 in wages to spend on himself? Will he explain the "balanced" approach to that?
§ LORD JACQUES
My Lords, I should have thought that whether the father has £20 or £30 in wages depends on which father you are thinking about.
§ BARONESS SUMMERSKILL
He has all the money! Tell us what the woman gets to equate all the money that the man has. Then that would be "balanced".
§ LORD JACQUES
My Lords, he would also have to bear in mind that at the present time with National Insurance benefit and supplementary benefit, it is the father who receives the allowances for the children.
§ BARONESS WOOTTON OF ABINGER
My Lords, is my noble friend arguing 191 that because a wrong principle is followed in a number of cases it ought therefore to be adopted universally?
§ LORD JACQUES
No, my Lords. What I am saying is that if you have a system of tax credits and decide that this credit shall be paid to the wife, you have also to look at all the other cases where the husband is receiving them, otherwise you will be remarkably inconsistent.
§ BARONESS SUMMERSKILL
Certainly; he is receiving £20 or £30, and now we want to know the other side.
My Lords, would the noble Lord, Lord Jacques, give way? I would remind the noble Baroness, Lady Summerskill, with all respect, that it is not usual in our House to interrupt from a sitting position.
§ BARONESS SUMMERSKILL
Is it not usual in these circumstances—when it is suggested that the Government should do something which might encourage women to riot?
My Lords, I hesitate to come between the noble Baroness and her noble friend. I am concerned only with the Rules of your Lordships' House.
§ LORD JACQUES
My Lords, let us be clear. I am not advocating that the Government should or should not do something—
§ LORD JACQUES
That is a gross exaggeration. All I am doing is reminding your Lordships that there is a case for and against. We have heard one side of the case from my noble friend and surely she will allow me the privilege of stating the other side of the case.
§ LORD JACQUES
It must be accepted, too, whether we like it or not, that so far as collection and payment is concerned it is far more economical to do it by an adjustment of wages than by payment through the Post Office. That must be accepted as a fact. But against all these economic arguments, and arguments 192 about what is happening at the present time, there is, I think, an overwhelming psychological argument against the father receiving the whole of the allowances. In an age in which, in many sections of our society, we are moving towards a far greater measure of equality between the sexes, it would be regarded as an inexcuseable rebuff to withdraw family allowances from the women who are receiving them. It would encourage disapproval of the whole idea of tax credits which are not wholly dependent on child allowances and, furthermore, obviously it would give rise to agitation—and I am quite sure we have enough of that without encouraging it.
§ LORD JACQUES
My Lords, one can state a case both for and against payment to the mother. It is true that she receives family allowances at present. It is also true that the mother is in charge of the housekeeping and has the right to be protected against a husband who does not bring his wages home to maintain his family and who has other priorities. But I would remind the ladies that all the villains in this world are not men. There are women who mismanage the money they receive and who spend far too much time in bingo halls. There are "villains" on both sides.
§ LORD JACQUES
My Lords, I believe that there is a strong case to be argued as to why women should not receive the whole of the tax credits. First, it would mean that there would be a substantial reduction in the take-home pay of the men. Most men would have their take-home pay reduced because there would be no child allowance which exists in respect of income tax at the moment. Secondly, it would greatly increase the cost of administration. At present there are Post Office books for family allowances only in the case of those families with two children or more. But to pay all the tax credits to the wife would mean issuing books for families which have only one child. It would greatly increase the pressure of work on the Post Office and also increase the cost of administration. But I believe that there is a fundamental, psychological argument why the 193 tax credits should not be paid wholly to the wives. I believe that we should encourage a system of society in which the fiancial responsibility for the children would be shifted from the father to the State. We should encourage a system in which the father paid his tax and then expected the State to take over the financial responsibility for his children. I do not want to see that kind of society and therefore I hope that tax credits will never be paid wholly to the mother.
I think that there is a strong case for a compromise. For example, if the father received the tax credit allowance for the first child and the mother received all the other allowances, no woman would he worse off. The wife with one child would be in the same position as she is now. On the figures given in the Green Paper the wife with two or more children would receive twice as much as she is receiving now; and while the cost of administration would not be reduced, it would not be increased because there would not be additional books to be made available for wives who had only one child. I suggest, therefore, that there is a very strong case for reconciliation on the basis of paying the father the credit for the first child, which would be an enormous administrative saving, and for the mother to be paid the credits in respect of all the other children.
I should now like to say a word about interest received. If those who receive wages and salaries and those who are on social security absorb the whole of their tax credits at the point where they are paid, it means that any other income they have is liable to tax at the standard rate. They will have absorbed the whole of their credits in their wages, salaries or social security receipts. That means that many people who are not paying tax at source at the present time would do so if we had a tax-credit scheme. There are three great repositories of working-class saving. The first is National Savings and the Trustee Savings Bank. The second is the building societies, and the third is the Co-operative Societies. In none of these cases is there any built-in hedge against inflation, and very often because of inflation the working-class investor loses money over the period of a year in the sense that at the end of the year the value of his investment, plus interest, is less than it was 194 at the beginning. These three institutions are pillars of the society that we know. They all have a social pattern.
The Trustee Savings Bank encourages national savings. That is what it is there for. The building societies are the agency between those who can lend and those who want to borrow for the purposes of house purchase. They are the principal basis of house ownership within our society. Our Co-operative Societies frequently make deliveries of milk, fuel and bread, and provide shops in places where the company shop could not be provided because it would be too costly: there would be no profit in it. So that each of these three organisations in which the working class people invest their money has a valuable social purpose.
§ LORD ROBBINS
My Lord, is the noble Lord prepared to admit that these valuable social institutions would be made more valuable still if the interest on them were index-number linked?
§ LORD JACQUES
My Lords, I would wholly agree. If the interest were index-number linked it would be their hedge against inflation. The Green Paper admits that in the future in all these three cases there will be taxation at source. So far as the concessions to these three organisations are concerned, it makes only one comment. It says that the concession of the first £21 which in the case of the Trustee Savings Bank is interest-free will stay. It says nothing of the arrangements which the building societies have whereby they pay an estimated amount of tax and are able to pay their interest tax paid. It says nothing of the arrangements which the Co-operative Societies have, that their interest will be paid without the deduction of tax and the societies will merely inform the Inspectors of the larger amounts that are paid. I would suggest that it would be much more equitable if we had a system of tax credits by which all these three organisations, which, as I say, have a social purpose, are treated alike: that the members of all three organisations should have an amount which is not subject to tax, and this should not apply only to the Trustee Savings Bank.
Finally, I should like to deal with the question of who is going to pay for the tax-credit scheme. A tax-credit scheme is inevitably costly. All our circumstances 195 are different, and if we had a strictly equitable system of taxation we should each have different allowances to fit our circumstances. Consequently, the system would be both complicated and costly to administer. When you simplify, as a tax-credit scheme does, then it is necessary to guard against anyone getting hurt. You have to be generous to prevent people from getting hurt in any process of simplification. Consequently, simplification is costly. It is estimated that the scheme set out in the Green Paper would cost £1,300 million a year. It goes on to say that it is manageable, and that this could be met out of the growth of national income. If so, well and good. But I fear that it may not be possible to meet it all that way. I would say that if we are to have a tax-credit scheme at the cost of an enormous increase in indirect taxation, and more particularly V.A.T., then the Government can expect some very strong criticism from this side of the House.
§ 4.35 p.m.
My Lords, I should like to echo what other noble Lords and noble Baronesses have said, in that I believe—and I say this sincerely—that my noble friend Lady Elliot of Harwood has placed us very much in her debt in giving us an opportunity this afternoon to debate at a formative stage in the Government's thinking the proposals embodied in the Green Paper.
It is generally acknowledged, I think, that these proposals, taken together with my right honourable friend's proposals for a unified tax system, represent possibly the most drastic overhaul of our fiscal system which this country will have seen this century. That being so, I trust your Lordships will agree that the Government have been right to proceed in this matter down the Green Paper path. I think that all too often in the past Governments of the day, irrespective of their political complexion, have tended to mull over big changes in our fiscal system in the recesses of Whitehall and of Somerset House, and then to dump them, perhaps rather unceremoniously, in the lap of another place. I am sure that unnecessary mistakes have been made and unnecessary burdens have been thrown both upon the taxpayer and the tax collector because major proposals have not 196 received a public ventilation, have not been exposed to informed comment before they have been submitted for Parliamentary approval. However, as your Lordships know, not only have these proposals for a tax credit system been laid on the national table, as it were, in the Green Paper, but, the Government have now asked a Select Committee of another place to look at the scheme, and the Committee have already begun to take evidence from the sponsoring Departments.
In answer to a point made by the noble Baroness, Lady Phillips, I might mention that the Government have asked for views from the general public, and that includes the women's organisations. I think one important women's organisation has already submitted its evidence to the Select Committee. I very much hope, and the Government expect, that others will follow suit. As part of this exercise in what I think tends to be termed open government, I should like to say straight away that the Government welcome this short debate in your Lordships' House which my noble friend has introduced. I am quite certain of one thing, and that is that the Select Committee will take careful note of the views that have been expressed this afternoon. I shall certainly see that those views are drawn to their attention.
I must confess that I have not been entirely surprised, seeing that the majority sex (as we have learned it is) has been in the majority in this debate, that so much of our discussion has turned on a single but very important issue; that is, the question of the direction of the payment of the child credit. I shall come back to that subject quite shortly. But first of all I hope your Lordships will allow me to sketch in quite briefly some of the background to the scheme and to deal with some of the other specific points which have come up in the debate. In view of the fact that this is a mini debate I do not think it would be right for me to deal with every single point that has been raised, but I will certainly see that noble Lords and noble Ladies receive answers to any specific points which I do not cover in my reply.
My Lords, two strands of thinking and of motivation, as I see it, run through the proposals in the Green Paper. One strand is technical and practical. From that standpoint, this is a measure of 197 practical, if radical, reform, designed to replace the present cumulative P.A.Y.E. system by something which is much easier to operate and much easier to understand, be it by the man or woman in the street or be it by the practitioners of the Inland Revenue or of the Department of Health and Social Security. I have seen something of those offices up and down the country, and I have been appalled at the complexities of the present system which comparatively young, well-trained, conscientious people have to operate. It is bewildering in its complexity at the present time. I think it is generally recognised that as and when these proposals are put into effective action, the present jungle of family allowances and income tax provisions will be vastly simplified, as the noble Lord, Lord Jacques, and my noble friend Lady Elliot have indicated. An enormous amount of complicated and perplexing underbrush will be cleared away, and from this wholly admirable process of simplification, as I see it, considerable economics in manpower should ensue by the way. This is not the purpose, but it will be a desirable by-product and will result, as the Green Paper points out, in a saving of some 15,000 civil servants. I should like to add, parenthetically, here, bearing in mind my Civil Service responsibility, that any significant reductions in manpower involved in this scheme, as and when effect is given to it, will be carried out only after the fullest possible consultation with the staff interests concerned.
In addition to bringing about this major simplification of our tax system over a very wide area, the scheme also involves, as my noble friend Lord Hylton has pointed out and as I think has been implicit in this whole debate to-day, a major social reform. This is in fact just as important a part of these proposals as is the practical administration. The replacement of tax allowances by tax credits which can be paid out in the form of tax benefit when they exceed the tax bill, has very valuable social implications. It will offer a way of channelling help to poorer people—those on retirement pensions or those who are receiving other benefits under the National Insurance Scheme just as much as low earners—by enabling them to make full use of their income tax allowances. In fact it will do something (though I do not wish 198 to exaggerate this) to alleviate that famous "poverty trap".
For these reasons I very much hope that the scheme as a whole will receive the general endorsement both of the Select Committee and of Parliament. I believe that in this discussion, though speeches have tended to concentrate upon one particular area, it has received a pretty general blessing from your Lordships. If the scheme is later proceeded with, as I sincerely hope it will be, it will make it possible for low earners to receive help automatically within the scheme instead of having to apply for a means-tested family income supplement and it will boost the income of pensioners as well as those of widows and other National Insurance pensioners by such an amount that on the Green Paper calculations, which are of course purely illustrative, something like one million fewer of them will need to have recourse to the supplementary benefits scheme. The help given here will more than compensate for the withdrawal of the dependent relative allowance, and it will go not only to the old and the widowed but to the chronic sick who draw invalidity pensions. Irrespective of to whom the new child credit is paid, it will offer a considerably more generous measure of child support than is now available from the present exceedingly complicated mix.
From all these standpoints, I think there is a pretty general recognition of the social benefits which should flow from this scheme for our society as a whole and for the family units which are vital to its health. That being so, I have not been surprised, by and large, to read comment in the country as a whole that the broad scheme has received a general welcome. In this context, I have been particularly glad to note the support given to it by bodies such as the Child Poverty Action Group. I think that the architects of this scheme—and not least that distinguished outsider, Sir Arthur Cock-field, who has played such a large personal part in its inception—can be justly proud of the plans which they have produced so far.
Some of your Lordships have drawn attention to the fact that the scheme does not cover the whole population. Our estimate—and this has been referred to 199 in the discussion—is that as at present drawn it should cover some 90 per cent. of the population, including wives and children. However, as the Green Paper makes clear, the new arrangements are not intended to extend to people of working age who are right outside the field of employment or who have only very low earnings. The Government have noted the criticisms that have been voiced on this score. Some of the criticism seems to have stemmed from a misunderstanding. For example, it has been suggested that the Government regard tax credits as a complete solution to the problems of poverty. I do not think that has been suggested here this afternoon, but I have heard it voiced elsewhere. The Government have made no such claim. Indeed, my right honourable friends the Chancellor of the Exchequer and the Secretary of State for Social Services, in the foreword to the Green Paper, emphasise that the scheme is not designed to cover all circumstances of need. They stress the need for continual development of our social services and the high priority which any Government must continue to accord to them. Perhaps I might here, parenthetically again, deal with a point put by the noble Lord, Lord Jacques, in a very thoughtful and courageous speech, if I may say so without being accused of any undue male chauvinism. He asked me about benefits in kind, such as free school meals. In this context, of course, they will certainly continue for those families who need them, but we would expect the improvements brought about by tax credits to mean that rather fewer people will need to claim exemption from the standard charge. However, I take the point which the noble Lord made.
Perhaps I might stress again that tax credits are not meant to replace the supplementary benefits scheme. Universal benefits large enough to do that would be quite inordinately and prohibitively expensive and would be an extravagant and inefficient way of meeting all individual needs. For those in need of assistance, help has to be related to individual circumstances and provided in a way that is sensitive to changing family needs. This kind of help cannot be just "dished out" on a universal basis. The real argument, as I see it, is not whether supplementary benefits should provide a safety net at 200 all—this has been common ground ever since Beveridge—but whether so many people in our society should need to rely on it. By this standard, it is my belief that the new tax-credit system could secure a very great advance indeed.
One particular group to which a number of speakers have referred—my noble friend Baroness Elles among them—was that of the unsupported mother whose family responsibilities prevent her going out to work. May I say here that these are people who naturally command our sympathy. They represent an all too numerous group in our society. The circumstances of the unsupported mother and her family are at present being studied (as my noble friend Lord Hylton remarked) by the Finer Committee. The Finer Committee is expected to report later this year, and it seems right to us to leave open the position of this group in relation to tax credits until the Committee has reported. But I can assure your Lordships that this is a matter which is very much in our minds; and I can assure my noble friend Lord Hylton, in reply to his specific question, that this Committee will be given all the help it needs in order to ensure that its Report is available—as it must be—as soon as possible.
The noble Baroness, Lady Phillips, in this general context asked a question as to whether deserted wives would be treated as single. The answer is that once it is established that a wife is permanently separated from her husband she will be treated as a single woman and eligible to be in the scheme. That is my understanding of the position. There has also been some criticism, criticism again which I have heard in your Lordships' House this afternoon, of the proposal to leave out the self employed. Naturally we should have liked to include them in this scheme from the outset. The Green Paper explained in some detail—I will not run over the arguments here—why this has not been thought possible, at least initially. I should like to add that in the longer term it may be possible to bring in more—and we are certainly open to suggestions in this area—in particular in relation to credits for children, the matter to which certain noble Baronesses and my noble friend Lord Hylton have also quite rightly drawn your Lordships' attention.
201 Nevertheless, while expressing our willingness to be open to suggestions in this area of the self employed, the Government feel—and I hope that I can carry your Lordships with me on this issue—that it would be wrong for us to hold up a scheme which will have very considerable advantages for the great majority of the population and which we know is workable and watertight, until we can see our way to solving the problem of how to deal with the remaining 10 per cent., or so. This is a problem which is very much in our minds.
§ BARONESS PHILLIPS
My Lords, I hope that when talking about the unsupported mother the noble Earl will emphasise that it sounds very simple when she has established that she is deserted; but that can be a very lengthy process. At the moment the woman draws family allowances; if she does not draw them she will not be drawing anything.
My Lords, I take on board the point the noble Baroness has made.
Some noble Lords have voiced the criticism that the scheme discriminates against working wives. Again, I believe that some of this criticism may be based on a misunderstanding. I would draw your attention to the facts as I understand them. On the figures in the Green Paper—which, I stress, are illustrative—the single person's credit is set at £4 a week, and the credit for a married couple at £6. In addition, a working wife would receive, as a quite separate matter, the tax relief at present available against any earnings of her own through the special wife's earned income allowance. So a husband and wife together, who are both at work, would have their tax bill reduced by up to £9.43 a week—consisting of a £6 credit and tax relief of up to £3.43 available to the wife—compared with £6 if the husband only was in employment, or £8 a week if each was simply entitled to the single person's credit. These figures—which I ask your Lordships to contemplate, as it were—do not support any charge of discrimination against working wives.
My Lords, I am conscious that I have been speaking against our new clocks for 19 minutes. Therefore may I turn in conclusion to what has been the burning 202 topic this afternoon; namely, the issue of payment to father or mother in a two-parent family. In so far as my noble friend Lady Brooke confessed an interest as a new grandmother of twins—and I should like to join in congratulations to the noble Lady—as a father of seven I must confess a certain interest in this matter. There is one point I should like above all to emphasise here. I should again like to draw your Lordships' attention to paragraph 91 in the Green Paper in which the Government said quite explicitly that on this vexed but important issue their minds were entirely open. This is essentially one of the issues in which we wish to listen to the national discussion of this matter, and we wish to have an informed opinion from a very highly qualified Select Committee. Another place should be congratulated—and I suppose we should not really do these things—on the quality of that Select Committee. I have been a little shocked to see some of the suggestions that all this profession of an open mind is so much boloney, and that the Government have in their secret conclaves come to a predetermined decision, perhaps out of administrative convenience. I utterly repudiate this view, and I am glad to have the opportunity of so doing.
My Lords, having got that off my chest, I think it would be right for me, whatever my private feelings might be, to maintain a course of perfect neutrality on this issue this evening. In the Green Paper we have set out the various possible courses and the arguments for and against them, and I should like to refer to them. Briefly, we see in favour of payment to father the fact that it allows the settlement of accounts between the State and the family (either through the collection of tax or the payment of benefit) to take place in a single transaction: this is simpler to understand and easier to administer. It matches the practice under the National Insurance and Supplementary Benefit Schemes, which make a payment for the household and pay it to the father—an arrangement which has not given rise to criticism over the years. Having said that, I should like to make it clear that we believe—and I entirely endorse the view which a number of noble Lords and noble Baronesses have expressed this afternoon—that in matters of this sort administration should be the servant of our 203 society and not its master. I do not dissent from that for one moment.
In favour of payment to mother we clearly see the argument that she, rather than her husband, is likely to be responsible for the day-to-day budgeting in the household and expenditure on the children. And if she has difficulty in obtaining regular income—for whatever reason, be it because her husband's employers pay him irregularly or intermittently (and this can happen) or be it that the husband suffers from alcoholism or is mean, moody, or too magnificent or careless, as the case may be—we recognise that direct access to the credits would be of special value to her. We recognise all that has been said—and I accept it—regarding the importance of family allowances in this respect, and I know this from my personal experience.
In favour of splitting the payment in some way—and this was the course to which, with great courage, the noble Lord, Lord Jacques, was inclined—it can be argued that both parents incur extra expenditure because there are children in the family, that the present combination of family allowances and income tax child allowances gives help for the children to each of them, and that it is sensible to continue this pattern in one way or another. There are very many ways in which this could be done. Some of them are mentioned in the Green Paper. There are, of course, arguments against each of the solutions. Payment to the father means in effect withdrawing the mother's present title to her family allowance, with all that that implies. Payment totally to the mother means, as the noble Lord, Lord Jacques, pointed out, cutting the take-home pay of family men, as a man with several children would have to pay as much tax as a man with the same earnings who had none. Dividing the credit means introducing complications, quite considerable complications, into the administration of the new scheme which many people who favour the simpler approach of payment to a particular parent would find quite unnecessary.
My Lords, those are the arguments, pro and con, on the three approaches as we see them. But, in conclusion, what I should like to emphasise once again is this. On this important issue in the Green 204 Paper the Government mind remains open. We wish to listen to the discussion, and one member of the Government has listened very carefully to the dicussion in your Lordships' House this afternoon. Without departing from my stance of perfect neutrality here I must confess that I have been impressed by the weight of the argument in your Lordships' House this afternoon. Of course, I go on the assumption that in this instance what I have been hearing in your Lordships' House was an expression of the "vocal" majority, not of the "silent" majority. I hope that I am right. I should like to undertake one thing, which I do very willingly. I undertake to ensure that very careful consideration is given by the Government to this expression of your Lordships' opinion. This has been a short debate, but I am probably voicing a sentiment shared by many of your Lordships in saying that it has not been an unimportant debate. I should like again to thank very much my noble friend Lady Elliot of Harwood for introducing this topic to us at this timely moment this afternoon.
§ 5.2 p.m.
§ BARONESS ELLIOT OF HARWOOD
My Lords, I should like to thank the noble Earl very much for his speech, and to emphasise once again my hope that, although his views may be entirely impartial, he will take to his colleagues in the Cabinet, and also to those who are on this Committee, the fact that in your Lordships' House there was no doubt at all as to the views held on all sides. There was only a short moment otherwise when the noble Lord, Lord Jacques, threw a slight spanner in the works. I do not know how much that represented his own point of view or the fact that he thought he ought to put the case for men as well as for women. Be that as it may, I am extremely grateful to all noble Lords who have taken part in this debate. I am particularly grateful to the noble Lord, Lord Hylton, and to our ex-Chancellor of the Exchequer, Lord Amory, for coming so bravely into what was a debate in which many of the speakers were noble Baronesses. Nevertheless, I am quite sure we represent the views of millions of people, including men, on this subject and I am most grateful that we have had the opportunity of holding this debate. I hope that the noble Earl. Lord Jellicoe, will tell his colleagues, with no uncertain 205 voice, what all of us here think; and I am sure that the Government, in their wisdom, will see that it is a good idea occasionally to take the advice of your Lordships in this House. I thank noble Lords very much, and beg leave to withdraw my Motion.
§ Motion for Papers, by leave, withdrawn.