§ Further considered on Report.
§ Schedule 3 [Social Security Advisory Committee]:
Lord WELLS-PESTELL moved Amendment No. 24:
Page 71, line 34, leave out lines 34 to 36.
§ The nole Lord said: My Lords, your Lordships will he aware that this amendment was tabled at the Committee stage, when it was numbered 82. I have tabled it again for two reasons. I said at the time that I wanted to read very carefully what the noble Lords, Lord Cullen and Lord Sandys, had said, and I am rather glad that I did because I think that the noble Lord, Lord Cullen, was wrong in his comments and observations. I may be wrong, but I think that as a result, quite unintentionally, he misinformed the Committee as to the effect of my amendment. That is my main justification for burdening your Lordships again with this matter.
Secondly, I do so because of the importance of the issues involved, and I think it is worth while explaining in more
detail precisely why the amendment is necessary. At the Committee stage, the noble Lord, Lord Cullen, said in col. 700 of Hansard for 22nd April:
The intention of this amendment is to require the Government to refer regulations which specify the rates of child benefit to the Social Security Advisory Committee".
§ He went on to explain why it would be wrong to do that.
§ Let me make it absolutely clear that that is not at all the intention behind the amendment. The paragraph of Schedule 3 which states that regulations about the rates of child benefit need not be referred to the advisory committee is paragraph 14(1). The purpose of this amendment is to delete paragraph 14(2), but not to delete paragraph 14(1). Paragraph 14(2) provides that regulations reducing the children's allowance payable with national insurance benefits, following an increase of child benefit need not be referred to the advisory committee.
In point of fact, we see at the bottom of page 70:
PART II REGULATIONS NOT REQUIRING PRIOR SUBMISSION TO COMMITTEE
§ On the face of it, it is reasonable that they should not he referred to the advisory committee. The adjustments of National Insurance benefits to take account of an increase of child benefit ought to be a matter of simple arithmetic, and therefore, I submit, entirely non-controversial. If that were so, it would be pointless to refer them to the advisory committee.
§ This year, however, the Government are using this regulation-making power in a way that my noble friend Lord Wallace, in moving the Committee stage amendment, described as "a blatant swindle"—his words, not mine, but I do not necessarily disagree with him. Like many swindles, it is somewhat complicated and what I want to do, if I can, is to explain it simply.
§ There is a principle that Governments of both parties have followed ever since 1948 in considering how much should be paid as an addition to national insurance benefits. For a dependant child, one has to look at the total amount payable for the child, including child benefit or family allowance, as it was called until 1977, as well as at the actual national insurance 1607 addition. That is what this Government did when calculating the present children's rate in last year's uprating.
§ I ask your Lordships to take, for example the amount paid for each of his children to a man who is unemployed or sick. Before the November 1979 up-rating, it was 85p per child. With the child benefit of £4 payable to the wife, that made a total of £4.85 a week for each child. When the Government came to up-rate the 85p National Insurance addition, they took the total amount of £4.85, not just the 85p, and increased it by 17½ per cent., which was the expected rate of inflation. That gave them a new total of £5.70 per child, to be provided partly by child benefit and partly by an addition to the national insurance benefits.
§ As child benefit was not being increased on that occasion, the National Insurance addition for a child had to be raised to £1.70; that is, £5.70 less the £4 child benefit. In other words, to produce a 17½ per cent. increase in the total amount allowed for a child, the Government had to double the national insurance addition from 85p to £1.70, which is precisely what they did. They deserve no special credit for doing it, because they were merely following the established convention. But the fact remains that they did. This year, the calculation is a little more complicated, because child benefit is also going up in November by 75p per child.
§ The last time an increase in child benefit coincided with an up-rating of National Insurance benefit was in November 1978, and it was worth looking back to see what was done by the Labour Government on that occasion. I hope that the noble Baroness the Minister is listening, because I now want to tell her what the Labour government did, as she has treated us on more than one occasion to an account of what the Conservatives did.
§ Before the November 1978 up-rating, the addition to sickness or unemployment benefit for a child was £2.20 a week. Child benefit was £2.30, so that the total amount payable for each child when the father was sick or unemployed was £4.50 a week. That year, prices were expected to rise by 7 per cent.—that was in the halcyon days, when prices did not rise very much—so the figure of £4.50 per 1608 child was increased by just over 7 per cent. bringing it up to £4.85 from November 1978—an increase of 35p. But child benefit was increased that November by 70p per child, which meant that the national insurance addition for a child could be reduced by 35p, from £2.20 to £1.85. Nobody complained about that because the net effect for national insurance beneficiaries was that they got the full 7 per cent. increase which they needed to restore the total value of their benefits. In fact, the reduction in the national insurance additions for children was generally welcomed as a step towards the goal of raising child benefit to a level at which there would no longer be any need to make extra payments for the children of people receiving short term national insurance benefits.
§ So much for the past. I turn now to what the Government are doing this year. The total amount payable for the child of a sick or unemployed person since last November is £5.70, made up of £4 child benefit and £1.70 national insurance addition. The estimated inflation rate this year is 16.5 per cent. Following the principles established in previous years, the total amount of £5.70 per child should be increased this November by 16.5 per cent., or 95p, making a new total of £6.65. Child benefit must be deducted from that total to arrive at the new rate of national insurance addition.
§ The new rate of child benefit from November will be £4.75. By deducting £4.75 from £6.65, one is left with £1.90 per week. To put it another way, the total increase needed to restore the real value of the payments for the child of a sick or unemployed person this November is 95p. Of that total, 75p is being given as an increase in child benefit, and the other 20p ought to be given as an increase in the national insurance addition for a child, raising it from £1.70 to £1.90. But instead of doing that the Government are reducing it from £1.70 to £1.25.
§ The result is very odd indeed. First, the up-rating percentage of 16.5 per cent. was applied to the £1.70 national insurance addition instead of the full amount of £5.70 per child. That produced an increase of 30p. If the calculation had stopped at that point, I should not have complained. In fact, that was how the Labour Government did it in 1977. But 1609 having left the child benefit element out of the calculation up to that point, the Government then went on to deduct the 75p increase in child benefit from the national insurance addition.
§ There is no predecent for this—none whatever. Nor is there any logical justification for it. The net result is that the real value of the payments for the child of a sick or unemployed person, taking child benefit and the national insurance additions together, will be a cut of 65p this November—a cut of 9.8 per cent.
Precisely the same thing is happening with the child's addition to long-term benefits, including invalidity pensions, except that here the loss for each child is not 65p but 70p. Unfortunately, it seems that what the Government are doing, while totally—and I make no excuse or apology for saying this—unprincipled, is, I have to confess, not actually illegal. Section 17(1) of the Child Benefit Act 1975 gives to the Secretary of State the power to make regulations reducing the national insurance additions for children
to such extent as he thinks appropriate
whenever child benefit is increased. Clearly, when the Child Benefit Act was passed, nobody imagined that the Secretary of State would use that power as an underhand way of reducing public expenditure at the expense of the families of the unemployed and the sick. And it is an underhanded way of doing things. That, however, is what he is doing.
§ That brings me to the purpose of the amendment. Paragraph 14(2) of Schedule 3 excludes from the classes of regulations that must be referred to the advisory committee those made under Section 17 of the Child Benefit Act, the very section under which the cuts which I have explained are being made. As I said earlier, if regulations under that section were being used to make a simple arithmetical adjustment of a non-controversial nature, then there would be no point in referring them to the advisory committee. But that is clearly not the case.
§ The adjustments which the Government are proposing to make this year are, as I think I have demonstrated, by no means simple. It has taken me some time to understand them. Nor can they possibly be regarded as non-controversial. That 1610 is why we regard it as essential that in future years regulations made under Section 17 of the Child Benefit Act should be referred to the advisory committee, whose report upon them would then be laid before Parliament. If future Secretaries of State—and I say "if future Secretaries of State"—use their regulation-making power in an honest and straightforward way, they will have nothing to lose by submitting their proposals to the scrutiny of the advisory committee. Parliament will gain from the knowledge that the regulations have been considered in draft by an independent advisory body which can be relied upon to draw attention to any misuse of the Secretary of State's powers.
§ Having regard to what has happened—I have used, I acknowledge, fairly strong language because I thought it was right and proper that I should do so—I think that proposals should be submitted to the advisory committee. Parliament will gain from the knowledge that the regulations have been considered in draft by an independent advisory body. If the Secretary of State has nothing to fear, this is precisely what he ought to do. I hope—although it is a forlorn one, I acknowledge—that the Government, if they will not accept this amendment, will at least say that they will read carefully what I have said and consider not only the implications but the advisability of doing something along the lines which this amendment indicates. My Lords, I beg to move.
§ 8.19 p.m.
§ Lord BANKS
My Lords, I have listened with very great care to what the noble Lord, Lord Wells-Pestell, has said. It certainly seems, on the face of it, that something rather extraordinary has happened this year with regard to the way in which social security benefits may be varied following an increase in the rate of child benefit. This seems to suggest that he is perfectly right to call for any variation of this kind to be referred, as the amendment would have it, to the advisory committee, and I hope the Government will give very careful consideration to what he said.
§ Lord CULLEN of ASHBOURNE
My Lords, although we have already considered this amendment during the Committee stage, I am grateful to the noble 1611 Lord for raising this matter again. This enables me to clarify what I said then in reply to the noble Lord, Lord Wallace of Coslany. In my reply I referred to the "regulations which specify the rates of child benefit". This was possibly somewhat misleading since what is actually at issue is whether regulations which provide for changes in the rates of other social security benefits following an increase in child benefit rates should be referred to the Social Security Advisory Committee, and I think that was what the noble Lord, Lord Wells-Pestell, was referring to.
That being said, I must make it clear that we are no more favourably disposed to this amendment than we were when it was moved in Committee. The Government do not consider it appropriate for the Social Security Advisory Committee to comment on any regulations which specify rates of benefit. I must repeat what I said when we last discussed this amendment:Benefit rates must remain the clear and final responsibility of Parliament acting on the decisions of the Government of the day. There is no case or need for an intermediary in this matter."—[Official Report, 22/4/80; col. 700.]The noble Lord, Lord Wells-Pestell, went into a wealth of detail about the calculations that have been made this year and I would remind him that he said that the same method was adopted in 1977 by the Labour Government, at which time there was not an increase in the child benefit to be deducted. However, what he has said—which was very detailed and I think was not easy for anybody to take in at the time—will be studied with great care by the Government and I hope that the noble Lord will withdraw his amendment.
§ Lord WELLS-PESTELL
My Lords, there is very little left for me to do, seeing that the Government have set their face against accepting a single amendment from either these Benches or the Benches of my noble friends on the Liberal side. The Government have erected the thickest and highest and widest wall that I have ever encountered since I have been a Member of your Lordships' House: one can get neither over it nor under it, nor round it.
The whole consideration of this Bill has been a useless exercise. It has meant a 1612 great deal of hard work, certainly so far as the Opposition is concerned, and I am sure that I speak for my friends on the Liberal Benches. There has not been a gleam of hope shining out from the Government side. The only time that the Government took an amendment back to look at it was when one of their own supporters said I was right and another said the matter ought to be looked at. The Government took it back because they were pressed by two Members on their own side, but they shut their ears so far as I was concerned.
I do not quarrel with that, but what I am saying is that the whole of the Government's view when we discussed this matter in Committee was based on (shall I say?) deleting paragraph 14(1) of Schedule 3 and not paragraph 14(2). The noble Lord has given no explanation at all about that; that has not come into his calculations. It has not come into the comments and observations he has made tonight. I should have thought that the approach tonight must have been made on much the same supposition, that we were talking about paragraph 14(1) and not 14(2).
I do not know whether the noble Lord is saying that the Government will look at this. I should be happy to leave it there if the Government are prepared to say that they will look at it in order to see whether there is some validity in what I have said. If the Government have nothing to be afraid of, why not refer this kind of matter to the advisory committee? What is the use of having an all-powerful, competent committee of able people if they are not going to be used in these rather delicate matters? After all, the Secretary of State lays down policy; I do not quarrel with that. It is the function of the Secretary of State to lay down policy, but it surely should go to an independent body to see whether the implementation of that policy does justice to the recipients.
I will ask leave of the House to withdraw this amendment. I do so on the understanding—no, not on the understanding because I cannot lay down conditions, but in the hope that the Government will look at this and perhaps will be able to write to me in some detail as to what their thinking is in the light of the amendment that I have moved tonight and what I have had to say.
§ Lord SANDYS
My Lords, before the noble Lord withdraws his amendment, he has made some very extravagant and, I think, unnecessary charges against Her Majesty's Government tonight. He has even suggested using explosive upon us on these Benches, but I think he should reflect on his remarks on Second Reading in which he welcomed the Bill to a limited extent. Further, I think he was incorrect in two respects. First, he suggested that the Government had refused to take back all amendments except one. In fact, there were two, to my knowledge, and there may have been others, which we would reflect upon. One was Amendment No. 26 in Committee, which he will recollect that he moved himself, and the other was Amendment No. 76A which he will remember was moved by my noble friend Lady Faithfull.
§ Lord WELLS-PESTELL
My Lords, I am fully aware of that and I do not join issue with the noble Lord on this. What I am saying is that any amendment which I moved was not taken back by the Government at my request; it was taken hack by the Government at the request of others, not on this side of the House. I take the noble Lord's point, that this is a Report stage and we ought not to turn it into a Committee stage, and therefore if the noble Lord is not going to say anything more perhaps I ought to follow suit and say nothing more myself. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ 8.29 p.m.
Lord WELLS-PESTELL moved Amendment No. 25:
Page 72, line 19, leave out paragraph 17.
§ The noble Lord said: My Lords, again I want to say that this amendment was tabled at the Committee stage, when it was Amendment No. 83, and its object is to ensure that the main body of supplementary benefit regulations which will form the basis of the reformed supplementary benefits scheme are referred to the advisory committee, and that a report on them by the advisory committee is laid before Parliament in due course. At the Committee stage the noble Lord, Lord Sandys, opposed the amendment on two grounds. The noble Lord first of all argued that, because the advisory committee 1614 would not start to operate until November, the amendment would apply only to regulations made after that time in what the noble Lord called the "fag end".
In fact in Hansard of 22nd April last, col. 701, the noble Lord, Lord Sandys, said:
In practice, therefore, paragraph 17 can be effective for only a relatively short time, that is, for the fag end of six months after Royal Assent".
§ The effect of the amendment would be that all regulations made within the first six months after Royal Assent would have to be referred to the advisory committee unless either they were excluded by other provisions of Clauses 10 and 11 or the committee itself agreed that they should not be so referred. In the case of regulations made before the advisory committee was set up, there is provision under Clause 10(7) for referring them to the committee as soon as is practicable after they are made unless the committee agrees that they should not be referred.
§ So there would be no risk of the committee being overloaded with a mass of inconsequential regulations. It would be up to them to decide which were the important ones which should be referred to them. Nor would there be any question of the regulations having to be held up while the advisory committee considered and reported on them. The whole point of Clause 10(7), which was inserted in the Bill by an amendment moved by a Conservative Member in another place, is to enable urgent regulations to go forward without first being referred to the advisory committee. Once the regulations have been made they can be referred to the committee which will thus have an opportunity to convey its views to Parliament when it has had time to study the regulations in detail.
§ If I may say so, this disposes of the second ground on which the noble Lord, Lord Sandys, opposed the amendment at Committee stage. He argued that because the revised supplementary scheme must be fully operational from November there would be no time to consult the committee. The answer is quite simply that the advisory committee would be consulted after the regulations had come into force. If the advisory committee proves to be an effective body—and that will depend on who its members are, how much time 1615 they devote to it, whether it is adequately staffed and how much support it gets from Ministers and officials in the department—one of the most important jobs it could do in its first few months would be to give detailed scrutiny to the new supplementary benefits regulations, which will from November affect the living standards of millions of people in this country. The fact that the committee would be doing this when the regulations are already in force is in some ways a positive advantage, because they will be able to see how the regulations will be working. It does seem to me that this would make a very valuable contribution. I can see no reason at all why it should not be used in this way.
§ I think I have—I would naturally think so—satisfactorily dealt with Lord Sandy's objections. I would hate to feel that it is just intransigence on the part of the Government. I know they want to get this Bill through as quickly as possible, and obviously one of the best ways of getting a Bill through this House is to get it through without it being amended. I know they want to go on to an even more disagreeable Bill, the No. 2 Bill. But it really is no justification for knocking things down for the sake of expediency. Once this Bill is on the statute book, albeit considerably amended in due course by the No. 2 Bill, there will nevertheless be things which will be there for years and years to come. If we are going to introduce a new Bill, let us introduce it in such a way that it will give the best possible service to the community. My Lords, I beg to move.
§ 8.36 p.m.
§ Lord SANDYS
My Lords, the noble Lord, Lord Wells-Pestell, is in a mood this evening of some extravagance, and he has charged us with intransigence among many things. I think the Government cannot be charged with that particular fault because there are many aspects which I think one should draw to your Lordships' attention which arise out of the Renton Report on the drafting of legislation. If I may say so to the noble Lord, I think one of the chief difficulties the noble Lord, Lord Wells-Pestell, suffers from is that he wishes to write too much into an Act of Parliament. Your Lordships will see—and I hope the noble Lord, Lord Wells-Pestell, will care to refresh 1616 his memory on the Renton Committee—that it does commend a restriction when it comes to the over-elaboration of terms which might lead to greater complication.
The Government recognise that there may be problems, and I speak in general terms. A new body is to be set up; that is, the Social Security Advisory Committee. The noble Lord, Lord Wells-Pestell, wishes that piece of machinery, as the Government themselves wish it, to work as rapidly as possible and in the most efficient manner. But the noble Lord makes a number of suggestions. First, the noble Lord is quite right to suggest that Clause 10(7) could operate on the supplementary benefit regulations; that is, they could be referred to the committee after they have been made. But this would still mean overloading the committee with what would amount to a study of virtually the entire supplementary benefit scheme.
I was surprised that the noble Lord should have again moved this amendment, which we discussed during Committee stage. I should like to expand a little on the remarks that I made at that time. I will not weary your Lordships by repeating the case for rejecting the amendment since this has already been fully explained in Committee. The reference is at cols. 701–2 of the Official Report. However, I think it would be of interest to your Lordships if I remind you that it was argued in another place that the supplementary benefit regulations made in the six months after Royal Assent should be referred to the Social Security Advisory Committee after they have come into operation. This is an important point.
The Government's view was that this would put an unreasonable burden on the committee. But a promise was made that the proposal would be reconsidered, and this has been done. I understand that my right honourable friend Mr. Prentice, the Minister for Social Security, has written to the Opposition in another place confirming the Government's view as previously stated. The Minister said that it would be very unwise to load the committee, in its early days, with what would amount to a study of the whole supplementary benefits scheme. The committee would be left with very little, if any, time to undertake studies on its own initiative. It might also have difficulty in completing its other statutory tasks in a reasonable time.
1617 The Minister also pointed out that the committee would not be excluded from looking later at any regulations made in the six-month period if it wanted to do so. Equally, the Government would welcome the flexibility to allow the reference of particular regulations to it if, for example, their implementation proved difficult or controversial. Throughout the debates on the new committee, Ministers have emphasised their desire to give it freedom of manoeuvre and to have such freedom themselves in making use of it. The proposal in the amendment to refer the regulations to the committee after they had come into operation, could prevent both objectives being achieved at a crucial stage in the committee's development. We believe that the noble Lord, Lord Wells-Pestell, is misguided in his view about this. He accuses the Government of intransigence: may we accuse him of over-elaboration of the task before the Social Security Advisory Committee.
§ Lord WELLS-PESTELL
My Lords, I am familiar with the Renton Report. Obviously it is unwise to write too much into a Bill. However, I have been in your Lordships' House a good many years and I have been in the political field a good many years. I know from experience—as most noble Lords in your Lordships' House know only too well—the gaps that are found in almost every peice of legislation. I can remember amendment Bills being put before Parliament one after another to fill up those gaps. I am not convinced that sufficient time and thought has been given to the function of the advisory committee. It is very easy to say that this is a new Bill and that they have this and that to do and that they will not have time to do all this. It may be that I have missed it, but I never remember anyone saying how often the advisory committee will meet; whether it will he a full-time occupation or a part-time occupation and, if so, I do not recall anyone defining what the part-time will be.
Social security, and any legislation relating to it, is always most involved. I do not know of anything as complex as social security. And it is because of its complexity that I think that it is necessary that we should have no loose ends. I do not know whether the noble Lord can tell me—I am sure that the House would give him leave to speak if he can tell me— 1618 how often the advisory committee is expected to meet. That is perhaps a question which some of us should have asked sooner. However, it is not a question of overloading the committee. There has been no evidence before us that the function of the advisory committee will be so impossible that it cannot carry out the task already assigned to it in the Bill. I do not want to put too much work on it, but 'here are certain matters which I have dealt with this evening which I think ought to go to the advisory committee, rather than be left exclusively to the Secretary of State.
§ Lord ROSS of MARNOCK
My Lords, can the noble Lord give us some idea as to how many such regulations are likely to be decided on in the first six months? It is a tremendous power. We build up a new scheme, a new advisory committee, but then we say that for the first six months we shall not pay any attention to it—the first six months of the life of this particular Bill. It is asking a great deal to take on trust that this shall be done. If that is the case, it undermines the position of the advisory committee right from the start.
§ Lord SANDYS
My Lords, the noble Lord, Lord Ross of Marnock, knows very well that, when in another place he was Secretary of State for Scotland, he had responsibilities as regards the new legislature intended by his Government for Scotland, and he accused the Opposition in those days of drafting too many schemes as regards the legislature in its early days. It is very difficult when a new committee is established to prejudge what the chairman and the body of committee members will do.
I suggest to the noble Lord, Lord Ross, that, in exactly the same way as he proposed that the legislature in Scotland should make its own rules of procedure for its internal administration, this committee should not look for its internal administration to an Act of Parliament, but it should have freedom of manoeuvre. The noble Lord, Lord Wells-Pestell, seeks to deny it that freedom of manoeuvre. He wants to know at this stage, long before the chairman is appointed or the members are appointed, how many days a week they will meet. If we seek to make these instructions at this stage we are denying the freedom of manoeuvre both of the committee 1619 and of the chairman. That is highly undesirable for a new body.
§ Lord ROSS of MARNOCK
My Lords, will the noble Lord answer one simple question: if the amendment is passed does it give the advisory committee more freedom or less freedom?
§ On Question, amendment negatived.
§ Schedule 4 [Consequential and minor amendments of enactments]:
§ 8.48 p.m.
Lord BANKS moved Amendment No. 26:
Page 74, line 12, at end insert—
("The Housing Subsidies Act 1967
15.—(1) The provisions of section 24(1)(B) of the Housing Subsidies Act 1967 shall have effect where a person borrows, or two or more persons borrow jointly, from a qualifying lender on the security of a freehold or leasehold estate of the borrower, or of one or more of the borrowers (including an estate held jointly or in common by the borrower, or one or more of the borrowers and one or more other persons) in land in Great Britain, and the following conditions are satisfied:—
(2) The borrower or borrowers may by notice in writing to the lender in such form as the Ministry may direct (in this section referred to as an "Option Mortgage") elect that the loan shall be subsidised in accordance with the provisions of Part II of the Housing Subsidies Act 1967 and the Option Noice shall be treated for all purposes as if it were art Option Notice made under the provisions of section 24 of the said Act.")
§ The noble Lord said: My Lords, I beg to move Amendment No. 26 in the 1620 name of the noble Baroness, Lady Vickers, and myself. I should begin by declaring an interest as I did when we first discussed this matter in this House; and as I have done on many other occasions in this House, and as I forgot to do when we discussed the matter in Committee, for which I apologise to the House. I am an insurance broker, being a director of a subsidiary company of a firm of Lloyd's Brokers.
§ When at the Committee stage I moved this amendment the noble Lord, Lord Cullen of Ashbourne, agreed to take the matter back and consider it again. I withdrew the amendment, with the leave of the House, and promised to bring it back at the next stage of the Bill which I now do, again with the support of the noble Baroness, Lady Vickers. During the Committee stage the amendment received support from all parts of the House: Government Back Benches, Opposition Benches, Liberal Benches and Cross-Benches. I think that it was seen by all who spoke as an elementary act of justice,
§ Elderly taxpayers raising a mortage on their house to purchase an annuity had been rightly or wrongly—and I believe rightly—made recipients of Government assistance through being granted tax relief on the interest on the mortgage. Elderly non-taxpayers—those too poor to pay tax and most in need of the additional income—had been left out, with the result that these arrangements were often of no advantage to them. The amendment proposes that help should also be given to the elderly non-taxpayers by extending to them the option mortgage scheme which would allow them to pay a reduced, Government-subsidised rate of interest on the mortgage, thus making the scheme helpful to them and enabling them to increase their income. The point is very simple. If it was considered right—and a specific decision to that effect was made by Parliament in 1974—to help elderly taxpayers seeking to increase their income in this way, surely it is even more important to help the elderly non-taxpayers whose need is clearly greater.
§ The noble Lord, Lord Cullen of Ashbourne, has been good enough to send me and those who spoke in the Committee stage discussion a letter setting out his views after further consideration. I am grateful to him for that. I do not think 1621 that I should attempt to express an opinion about those views until after he, or one of his colleagues, has had an opportunity of outlining them to the House. For the moment I shall content myself with inviting the House to perform the elementary act of justice to which I have referred. I beg to move.
My Lords, I, too, should like to thank the noble Lord, Lord Cullen of Ashbourne, who kindly agreed to look again at this amendment. I hope that he will look on it favourably. I should like to mention the fact that in the House of Commons the Prime Minister answered a Question about the extension of option mortgage schemes to elderly home-owners in the following way:My right hon. Friend the Secretary of State for the Environment has the lead responsibility for the option mortgage scheme, and my right hon. Friend the Secretary of State for Social Services is responsible for social security policy; but any question of extending the option mortgage scheme in the way my hon. Friend suggests would involve the interests of a number of different departments and would be for consideration jointly by the Ministers concerned".—[Official Report, Commons, 30/4/80; cols. 542–3]In these debates we should very much like to know who are the Ministers concerned, because as I understand it, the matter has been passed from the Department of the Environment to the Department of Social Security, and both departments have acknowledged it. Tonight it is essential that we get some answer from the Government as to who will be responsible for this very important amendment. Is it to be a legislative mongrel all its life? Are we never to have the point settled? It has been going on since about 1974. I believe that we should get it sorted out tonight. I believe my noble friend Lady Young is going to be kind enough to answer on behalf of the Government tonight. We must have some definite proposition put before us. If my noble friend can tell us the various Ministers who might now be involved, it would be very helpful.
This amendment would help public authorities and voluntary bodies, because, if the people who will have these mortgages were not enabled, by an increase in their income, to go on living in their homes, they would need housing either by local authorities or by voluntary bodies concerned with providing old people's housing.
1622 We know that that is already in short supply and this amendment would perform a public service and be of personal benefit to the individual.
The other point is what will happen to those who have already taken up these schemes. Surely it will be very hard to remove people of that age group from the benefits of the scheme which they entered into with no knowledge or reason to expect changes. That is the minimum we must do in justice; we must get this matter cleared up. But we must do more than that, which is what the amendment seeks to do. I believe that we must make it possible for these schemes to continue in the future. In my opinion and in the opinion of many people who were in the Committee when we last discussed this, these schemes are very helpful to the public in general.
If I may, I should like to mention one other matter. There are six million owner-occupiers who are not pensioners who receive the vast majority of the £1,643 million given in tax relief and option mortgage subsidy. Very little of this amount goes to the 4½ million pensioner-households who have normally paid off their mortgages. As for expenditure from the DHSS, the retirement pension is available to all, and only 300,000 elderly owner-occupiers collect a supplementary pension, either because they are welt enough off not to need it or because they have a few savings, and so, although they may he struggling, do not need the actual relief.
When we discussed this before I mentioned that most of these people are in the age range that has been through two world wars. They had planned for their retirement, and were mostly very thrifty people. All that has been upset by two world wars and the tremendous inflation which we have at present. Therefore, I should like real consideration to be given to this. If my noble friend Lady Young cannot accept this amendment, perhaps she can set us on the way to finding a solution to this very real problem.
§ Lord GISBOROUGH
My Lords, the main problem lies particularly with those people who have been locked into this scheme, and who, as my noble friend Lady Vickers has explained, started it when they were paying tax and are no 1623 longer paying tax. The interesting thing is that it appears that if such a person were to sell his own house and move next door or to another house, he would be able to receive the benefits of the scheme. Furthermore, it seems that if he was simply to sell his own house and buy it back, he would also have the benefit of the scheme. Therefore, the scheme is available to these people through the back door, but is not available through the front door. It seems right to regularise this position. The other point is that if the Bill is not the correct Bill in which to include this matter, can we please be told which Bill is the correct Bill?
§ Lord GARDINER
My Lords, I was unfortunately precluded by another engagement from attending the Committee stage of the Bill when this amendment was discussed before. As President of Help the Aged, I have some knowledge of the conditions of the old people about whom we are talking. I have, of course, read the whole of the debate on the Committee stage of the Bill and I suppose that its most striking and unusual feature was that there were actually more supporters for the amendment speaking from the Government side of the Committee than from the Opposition side of the Committee.
Perhaps I may add one more Conservative voice—that of Mr. Robert Carr, as he then was, in the other place on 20th June 1974. He said:This plan has many advantages. First, it has the obvious advantage for the people concerned who may wish to go on living in the house which has become their home, among their friends, or, if they might not mind moving, are unable to move because it is difficult for them to buy a new house and the pressure on publicly or voluntarily provided homes for old people is in short supply and the demand is greater than the supply.Secondly, it helps public authorities and voluntary bodies because if these people were not enabled, by an increase in their income, to go on living in their own homes, they would need housing either by local authorities or voluntary bodies concerned with providing old people's housing. So it is a public service as well as a personal benefit".The two questions which I should like to ask the Minister are as follows. First, in assessing the cost, have or have not the Government taken into account the additional cost of providing either for old people's homes or in other ways for the 1624 housing of the people concerned who can no longer afford to go on living in their own homes? Whether this comes out of Government funds or local authority funds, it all comes out of public funds. Secondly, have they taken into account the point which was raised by the noble Baroness, Lady Vickers, that under Clause 21(5) it is for the Minister to decide when to bring such an amendment, if carried, into effect?
We all know and have been assured that there will be halcyon times under this Government—whether shortly to arrive or perhaps not quite so shortly. Would it not be much better to accept the amendment with the proviso that it will not come into effect unless and until the appropriate Minister decides that the time has come when it should come into effect?
Lord CAMPBELL of CROY
My Lords, like the noble and learned Lord, Lord Gardiner, I also was unable to be here when this matter was discussed in Committee; over the years I, too, have followed proposals of this kind. But I am going to introduce a note of dissent into the debate because I am hoping that the Government will be able to take action in due course, but in a much broader field. I believe that to tack on this as a schedule to a Social Security Bill is the wrong way of proceeding.
I am actuated to speak in this debate because I was involved in the original Housing Subsidies Bill 1967, to which this schedule refers in this amendment. Indeed, I was on the Opposition Front Bench dealing with that Bill, and Part II of it introduced the option mortgage scheme. It introduced the option mortgage into legislation and the scheme into this country. I spent many hours on that Bill in the Commons Standing Committee upstairs, dealing with all the complications.
It was not in principle a matter which was dividing the two main parties. The Labour Government were bringing it in with the encouragement of the Conservative Opposition. But we spent a great deal of time involved in all the complications and getting that Bill changed and amended. Even then, when it emerged as an Act, it was still the subject of a great deal of discussion and interpretation later on questions such as when the option could be used, and how many times people 1625 could change their minds, and whether they could foresee in the future what their income was going to be and what the threshold of taxation was going to be. It was very complicated, and I can certainly tell the noble Lord who inquired about it that a number of departments were involved, and the Treasury was certainly very much involved, because it was a new concept in exemption from taxation.
I am not only speaking because I was concerned with the original option mortgage scheme, but I am also the chairman of a building society board and also the chairman of a small insurance company which, among other things, handles mortgages, and to the extent that I am affected by this amendment I declare an interest. I would encourage the Government to consider broader changes of the kind which have been suggested. I do not think that the way to do this is piecemeal, by dealing with a single category of elderly people. Were the schedule to be added to the Bill it would create as many anomalies as it seeks to remove. For example, the elderly who were paying rent and not owning their own homes. Because of the interest which I have had in this subject over the years, I can see the appeal of trying to help the elderly to make the best possible use of the capital which is locked up in the dwellings that they occupy. To produce a new form of subsidy in this Bill, however, in the way suggested is not the right way to proceed.
I do not think that we can wait for a major overhaul. I have in the past spoken in favour of the tax credit scheme, to which I know a great many of my noble friends subscribe. But we are told, in contrast to what the noble and learned Lord, Lord Gardiner, said just now about halcyon days, that the Government are in fact facing a period of economic difficulties before we reach the halcyon days further ahead. Unfortunately, those economic difficulties have postponed the tax credit scheme, which would deal with this kind of situation because it is intended to rationalise and simplify the whole system of subsidies, tax allowances, and benefits.
I hope that the Government will commission a full examination of housing subsidies and mortgage tax exemptions in 1626 order to produce a wider and fairer scheme, but I could not support this amendment. I hope that the Government will, in thinking out a scheme, also consider all the repercussions and associated effects so that they can be foreseen and provided for.
§ 9.4 p.m.
§ Baroness YOUNG
My Lords, I and my colleagues have listened with great interest to the speeches that have been made. We very much respect the views that have been put forward and the sincerity with which they are held. I make no apology at all for the fact that many of those who sit on this side of the House support this Amendment—a point that was made as though somehow this was a rather improper use of the House's time. But this is not a narrow party political point; it is a matter which affects Members of the House wherever they may sit.
I very much appreciated what the noble Lord, Lord Banks, said in moving this amendment. He explained that he had received the letter from my noble friend Lord Cullen setting out the arguments about this, and that he still felt unable to withdraw his amendment and felt that he should bring it back at this stage of the Bill.
There are two general points that I should like to make before turning to deal in detail with the amendment itself. The House is of course master of its own procedure and, unlike another place, is not subject to rulings on points of order. I think that none of us would want to alter this. But it is made clear in the Companion to Standing Orders, on page 114, that the test to be applied to the admissibility of an amendment is whether or not it is relevant to the subject matter of the Bill. But the decision upon this matter, and the action to be taken on that decision, can only be made by your Lordships' House. It is only right to draw attention to the fact that the amendment in the names of the noble Lord, Lord Banks, and the noble Baroness, Lady Vickers, seeks to amend the Housing Subsidies Act 1967 and to introduce a major change in a scheme providing for housing expenditure by extending it to pay subsidies for income maintenance for a limited category of house owners who do not pay tax.
1627 Noble Lords will have noted that this Bill has as its Long Titleto amend the law relating to social security and the Pensions Appeal Tribunals Act 1943".Those of us who have been through all the provisions of the Bill know that it is concerned with amendments to the statutory provisions relating to the up-rating of retirement pensions and other long-term benefits under the social security scheme. It introduces a package of reforms of the supplementary benefit scheme. It sets up a Social Security Advisory Committee, and provides for the extension of equal treatment for men and women in social security, and makes a number of other minor and technical amendments.
It is difficult to see a connection between the intentions of the Bill and the subject matter of this particular amendment. I really must draw this to the attention of the House, and I am glad to have heard what my noble friend Lord Campbell of Croy said on this matter because it is relevant. There is moreover a constitutional aspect. The amendment involves additional expenditure which was not envisaged in another place when they passed the Money Resolution. If the House agrees to the amendment it is likely that the Speaker would consider the amendment to infringe the financial privilege of another place.
He would then draw the attention of the other place to this amendment and the other place would be perfectly entitled to agree to the amendment and waive their privilege. If another place were to disagree to the amendment, such a disagreement would be made the ground of privilege alone, and that would be made clear in the Message to your Lordships' House communicating the reasons for the Commons disagreement; so we are dealing with something that is outside the terms of this Bill and is relevant to the Housing Subsidies Act 1967.
I was asked a specific question about which Ministers are actually concerned with it. Clearly the option mortgage scheme is the responsibility of the Secretary of State for the Environment, who is responsible for housing policy; it is also relevant to the Chancellor of the Exchequer, who has responsibility for taxation policy and tax reliefs; to the Secretary of State for Industry for the 1628 oversight of the insurance industry; and the Secretary of State for Social Services for social security and income maintenance. That said, the amendment is not strictly relevant to this Bill, and I must make that point.
The noble and learned Lord, Lord Gardiner, asked why we did not accept the amendment and say we would bring it in when circumstances permitted. I think he will recognise from what I have said that it would not be right to accept the amendment in relation to this Bill for the reasons I have given, although I now come to the more detailed reasons because it is an important point and it is right that we should not just argue it on particular constitutional points, important though I believe them to be. What I think has appealed to all parts of the House is in a sense the simplicity of the argument about option mortgage, which goes as follows: mortgages for house purchase and improvement qualify for tax relief on mortgage interest; so do mortgages taken out to purchase a life annuity; the option mortgage scheme exists to give mortgagors who pay no tax a benefit equivalent to that which tax-payers get from tax relief; and therefore the option mortgage scheme should cover life annuity mortgages as well as house purchase mortgages. This conclusion, while understandable at first, is far from self-evident when one goes into the matter more deeply.
First, there is no general principle that tax reliefs should have matching subsidies. Indeed, the subsidy for house purchase and improvement through the option mortgage scheme is almost unique in this regard. It may be helpful to remind the House of the circumstances in which the option mortgage scheme was introduced. At that time, in 1967, all interest payments on any kind of loan were eligible for tax relief, including the loans for the purchase of annuities covered by this amendment. Yet the option mortgage scheme was introduced for only one specific category of loan; that is, mortgages taken out to buy or improve a home. This was a deliberate act of policy designed to encourage home ownership. Tax relief on mortgage interest has long been regarded as a means of encouraging home ownership and many people argued that it was essentially a subsidy analogous to housing subsidies or 1629 rent rebates in the public sector. Looked at in this way, it was felt to be unfair that the person who was below the tax threshold did not enjoy the subsidy which was available through tax to the great majority of home-buyers.
By contrast, tax relief on loans to purchase life annuities has never been regarded as an instrument of public policy. Indeed, tax relief on loans generally, was withdrawn for a period—from 1969 to 1972—while tax relief, including the option mortgage subsidy for house purchase and improvement, continued. In 1972, tax relief on loan interest generally was restored. But in 1974 the Labour Government again sought to withdraw tax relief generally with the main exception of mortgages taken out to buy or purchase a home. During the passage of the 1974 Finance Bill through the House of Commons, an amendment was passed to retain relief on mortgages taken out to buy an annuity.
The point made by the noble and learned Lord, Lord Gardiner—and I speak in the absence of my noble friend Lord Carr of Hadley—was not quite correct because on that occasion my noble friend was not speaking about the option mortgage scheme; he was opposing the Labour Government's proposals to withdraw tax relief on mortgage interest for annuity purchase. As he said, it would have caused hardship to withdraw the facility from those already benefiting and who had already entered into commitments, so that is not really an element in the present situation.
Indeed, the reasons for the House of Commons decision was based on two arguments. First, it was said that it was unfair to change the rules of the game in midstream and, secondly, it was argued that changes in the 1974 Budget operated with particular harshness on this group of people. The exceptional hardship imposed on this group of people arose in very large measure from the fact that the income element in an annuity is chargeable to tax. When, therefore, a person bought one of these annuities, the first effect was to increase his tax bill; but this was then more than offset by tax relief on the interest on the mortgage. But when in 1974 the Labour Government proposed cancelling the tax relief, the income element in the annuity remained 1630 chargeable to tax. As a result there was a big increase in the tax bill, reducing the validity of the extra income purchased. This was an undeniable hardship and the decision by the House of Commons that the mortgage interest should continue was designed to meet this hardship.
But none of this provides an argument for extending the option mortgage scheme to such mortgages. On the contrary, there is, first, the general point of principle that the option mortgage scheme was designed to encourage home ownership. This is not the position here at all. In the present case the purpose is to increase the income of elderly people who already own their homes outright. I do not argue that that is a less worthy objective; but simply that it is an objective well outside the purpose of the option mortgage scheme. The fact that it would be technically possible to use the option mortgage scheme to pay subsidies for income maintenance should not blind us to the fact that what is being proposed is a completely new departure.
May I comment on the point made by my noble friend Lord Gisborough, who asked whether or not an elderly owner-occupier could obtain an option mortgage subsidy by selling his house to an insurance company, and then repurchasing, and taking out an option mortgage? Such a device would be quite contrary to the intentions of the legislation, which are to enable people on low incomes to purchase, or improve, their houses. Successive Governments have relied upon the co-operation of the leading institutions for the successful operation of the option mortgage scheme, and I am sure that these institutions would not seek to bend the rules in the way that is described.
Let us look at the merits of the case for introducing a subsidy to match the tax relief which is available for these mortgages. As I said earlier, this particular tax relief is not regarded as an instrument of public policy. Comparatively little use is made of it. It cannot therefore be argued—as it could in the case of mortgages for house purchase—that the tax relief constitutes a widely-used benefit which could be extended to non-taxpayers without greatly widening the scope of the benefit. If the amendment were passed, it is likely—and I do not think that this would be disputed by those companies 1631 which offer these annuities—that the companies' schemes would be more attractive to non-taxpayers than to taxpayers.
We believe that the issue comes down to this: should we use taxpayers' money to provide extra income for a particular group of old people—those who own their own homes outright—provided that they mortgage their homes with an insurance company to obtain a life annuity? Let us assume that the target group for such assistance would be old people whose income is too high to qualify for a supplementary pension, but not high enough to pay tax. Would one choose to single out from that group those who already have the benefit of owning their homes and who thus pay no rent? It is true that tenants in these circumstances can claim a rent rebate or a rent allowance, but that does not meet the whole of their rent by any means. The reason why outright home owners receive no equivalent rebate is because they bear no equivalent cost.
There is the point that, in the case of annuity purchase by a taxpayer, the annuity itself, except for the capital element in it, is liable to tax. To this extent the allowance of mortgage interest relief offsets the additional tax liability on the annuity. Looking at the scheme as a whole therefore, there is an additional tax relief on the interest on the one hand, but there is additional tax liability on the annuity on the other.
If we take the case of the person who is below the tax threshold and who remains below it when the annuity is paid, the position is that there is no tax relief on the mortgage interest, but equally there is no tax liability on the annuity. The one is the counterpart of the other.
We believe that it would not be right to give relief on the mortgage interest by way of a subsidy under the Option Mortgage Scheme while at the same time continuing to exempt the annuity from tax because the annuitant's total income was below the tax threshold. To do this would result in a non-taxpayer getting a better overall return from the transaction than if he were a taxpayer. And all of this of course must ultimately be paid by taxpayers in another capacity.
1632 I have gone into this question in very considerable detail. I hope that the House will recognise that we have taken a great deal of trouble to consider this matter very thoroughly. I do not feel that it would be right for the House to dismiss it without giving it very full consideration and, as I have indicated, a great many different departments of the Government are involved, and my colleagues and I have been fortunate in having advice from all those different departments.
I was asked about the question of costs. It is difficult to estimate with accuracy the likely cost of the amendment because of the unknown factor of how many people would actually take advantage of its provisions. We estimate that the current cost would be of the order of £10 million a year, but of course if the take-up were greater—as the noble Baroness, Lady Vickers, suggested it might be—then the cost would be considerably higher than that.
Finally, it is very difficult to make cost comparisons between the subsidy that would be given, were the amendment to be carried, and the costs if elderly people had to give up their houses and live in old people's homes. If such people are in difficulties, then someone who is an owner-occupier in fact has the lowest outgoings of all householders, and if his income is low he will be eligible for rate rebates. If he is eligible for supplementary benefit, not only will he have help with his rates but he will also have help under an extra heating allowance.
Finally, these people would of course have the opportunity to sell their homes and go either into some kind of private accommodation or into local authority accommodation, if that was the alternative. It is very difficult to say what the costs of either of these two schemes might be, but what we are talking about, in fact, is either one subsidy or another. I believe that on these matters it would be quite wrong to introduce a new form of subsidy in this Bill, where, for the reasons which I gave at the outset of my remarks, the amendment is outside the terms of the Bill, outside the Long Title of the Bill and is really an amendment to a Housing Act, not to a Social Security Act at all.
I hope that the House will feel that the Government have considered this matter 1633 very carefully. They feel unable to accept the amendment for the reasons I have given. They are technical reasons as well as constitutional reasons, but they are important, and I hope very much that with this explanation the noble Lord, Lord Banks, and the noble Baroness, Lady Vickers, will feel able to withdraw this amendment.
§ 9.22 p.m.
§ Lord BANKS
My Lords, I should like first of all to thank those noble Lords who have supported this amendment—the noble Baroness, Lady Vickers; the noble Lord, Lord Gisborough; and the noble and learned Lord, Lord Gardiner. The noble Lord, Lord Campbell of Croy, while not altogether unsympathetic to the purpose of the amendment, wanted something which would go rather further, and he mentioned the problems which had been encountered in setting up the framework for this particular provision. I have no doubt there were problems, but we now have the framework and, so far as I am aware, the framework is not proving difficult to operate, and I see no reason why that established framework should not be extended to this particular group.
The noble Lord, Lord Campbell of Croy, also mentioned those paying rent; but, of course, as the noble Baroness, Lady Young, pointed out, they can, if the circumstances are appropriate, enjoy a rent rebate. Already help has been provided for the taxpayers. It has been decided to do that as a specific decision. If that had never happened, then one might say, "There are innumerable reasons why we should not embark upon this particular course". But since that has already been done, it seems only right that help should also be given to the non-taxpayer. The noble Lord, Lord Campbell of Croy, wanted a further examination. He wanted to go much further—a tax credit scheme. I agree with him 100 per cent. on that—that is what I should like to see—but it may be some time before we see that. This is a simple adjustment which could be done so quickly and so speedily that it seems wrong to hold it up until some large, wider scheme is introduced, which we hope to see one day.
I am extremely grateful to the noble Baroness, Lady Young, for the very 1634 thorough explanation of the Government's case which she has given. I appreciate that they have given it a good deal of thought. She began by dealing with what she described as the constitutional issue; and in the letter which he wrote to me the noble Lord, Lord Cullen, said:The amendment amends the Housing Subsidies Act 1967, which is the responsibility of the Secretary of State for the Environment".He added:I am advised that the amendment does not appear relevant to the Social Security Bill".This is the point which the noble Baroness made; but, as the noble Baroness, Lady Vickers, said, where would it appear relevant? On 13th July 1977, Mr. Joel Bartlett, then in office at the Treasury, said this in a letter to my colleague Mr. John Pardoe:It would not he in order to meet Miss Turkam's point"—and she raised this very point which is contained in the amendment before us tonight—in the course of the Finance Bill. What she is seeking is not a tax relief but an equivalent subsidy, and this cannot be provided in a Finance Bill".So we learnt this was not to be solved by looking to a Finance Bill.
The noble Lord, Lord Cullen, said that the amendment amends the Housing Subsidies Act 1967, which is the responsibility of the Secretary of State for the Environment. On the 5th October 1977, Mr. L. B. Hicks of the Department of the Environment, writing to Mr. J. M. Selwyn, who had also raised the same point as is contained in the amendment, said:I have consulted our legal advisers [the legal advisers to the Department of the Environment] on the point you raised. As you appear to be proposing a subsidy on life annuities taken out by persons over the age of 65 years on the security of their only or main residence, I presume your objective is to augment the general income of the elderly. The departmental responsibility for this area of public policy rests with the Department of Health and Social Security".If the legal advisers to the Department of the Environment took the view that this was a matter for the Department of Health and Social Security, they must have regarded it as coming under the heading of either health or social security. It is clearly not health; so it must be social security; and the Long Title of the Bill (as the noble Baroness reminded us) is 1635An Act to amend the law relating to social security and the Pensions Appeal Tribunals Act 1943".The noble Baroness, Lady Vickers, quoted the answer given by the Prime Minister to a Question put to her on 30th April in another place, when she was asked which department is responsible for policy on the extension of option mortgage schemes to elderly home owners on low income who wish to purchase home income plan life annuity. She replied.My right honourable friend the Secretary of State for the Environment has the … responsibility for the option mortgage scheme"—Not surprisingly; since at the moment it applies to those purchasing their house—and my right honourable friend the Secretary of State for Social Services is responsible for social security policy"—a clear implication that this is a matter for social security policy, whatever else it may be.Any question of extending the option mortgage scheme in the way my honourable friend suggests would involve the interests of a number of different departments and would be for consideration jointly by the Minister concerned".It seems to me that the Ministers concerned have had a long time to consider the matter jointly. This is a matter relating to social security, and it falls within the Long Title of the Bill. I also suggest that this buck-passing has gone on long enough and that it should now cease.
The amendment involves, we were told, additional expenditure not envisaged by the Commons when they passed the Money Resolution. If that is meant to imply that the amendment is outside the scope of this Bill, then I have just dealt with that point. If it is meant to imply that this is an amendment which asks for further money to be spent, it is not unique. Many of the amendments moved in connection with this Bill and other Bills before this House would involve additional expenditure. The noble Lord, Lord Cullen, as I reminded the House at Committee stage, moved an amendment to the Social Security Bill 1979 which would have involved additional expenditure; and he pressed it to a Division.
We are told that we should not use this scheme for helping elderly non-taxpayers because it was originally designed to help house purchase. I do not see why we should not use the scheme for another 1636 purpose if we find that it will be useful for that purpose. It is a bureaucratic nonsense to suggest otherwise. While I accept that there is no general principle that tax reliefs for taxpayers have to be matched by subsidies for non-taxpayers, nevertheless I believe that the argument in favour of this in this instance is overwhelming.
It has been applied in the case of those purchasing their houses. Recognition of the need to help non-taxpayers has led to the replacement of child income tax allowances by child benefit. In both these cases, the arguments in favour of helping non-taxpayers as well as taxpayers were so strong as to carry the day. I believe that they are just as strong in the case that we are now considering. I believe that there are no arguments against the case that we are now considering except that it would cost more money.
The Government now say that it would cost £10 million. I believe that that may be ark exaggeration. The subsidy being worth 2.05 per cent. and the average loan expected to be about £13,000, the subsidy would be worth an average of £266 per annum. If the take-up were 10,000 people, the cost would be £2.66 million in a full year, excluding any savings on supplementary benefit. There is the point made by the noble and learned Lord, Lord Gardiner, that there are other expenses which are likely to arise if people are unable to continue to live in the houses which they own because of the paucity of their income.
Even if the cost were £10 million, the option mortgage scheme now costs £193 million. I do not believe that it would be the end of the world if it cost £203 million. Tax relief—if we want to get some kind of comparison—for purchase or improvement of properties is £1,450 million; rent and rebate allowances are £560 million.
In conclusion, I come back to the point where I began in moving the amendment: it is an elementary act of justice if one is helping elderly taxpayers to increase their income in this way to help also the elderly non-taxpayers whose need is greater. My Lords, I appeal for support for this amendment in the Division Lobby.
§ Baroness YOUNG
My Lords, by leave of the House, may I make one point about the expense, because the noble Lord said that I had not fully answered this matter, and I did not go into it in great detail. It is said that if 10,000 people took advantage of the scheme, the cost would be between £2 million and £3 million. What we do not know and what the proposers do not know is how many people might take an advantage of it. The difficulty is that it is an open-ended commitment; it is another open-ended commitment that the House is looking at. The Government's estimate is based on an assumption that perhaps 10 per cent. of the people eligible might take it up. This is where we think that it would be a minimum of £10 million.
§ Lord BANKS
My Lords, by the leave of the House, may I say in reply to that point that we know the number of those who have taken up the option which is now available to those who are taxpayers. I believe that is something like 3,000. It is unlikely that those who are non-taxpayers would be so out of balance with that particular number as the noble Baroness suggests.
§ 9.34 p.m.
§ On Question, Whether the said Amendment (No. 26) shall be agreed to?
§ Their Lordships divided: Contents, 49; Not-Contents, 61.1637
|Airedale, L.||Ellenborough, L.||Robson of Kiddington, B.|
|Amherst, E.||Gardiner, L.||Rochester, L.|
|Ampthill, L.||Gladwyn, L.||Seear, B.|
|Ardwick, L.||Gregson, L.||Sharples, B.|
|Balogh, L.||Hale, L.||Stamp. L.|
|Banks, L.||Hampton, L. [Teller.]||Stone, L.|
|Barrington, V.||Hatch of Lusby, L.||Strabolgi, L.|
|Blease, L.||Ingleby, V.||Swinfen, L.|
|Boston of Faversham, L.||Irving of Dartford, L.||Underhill, L.|
|Brockway, L.||Janner, L.||Wedderburn of Charlton, L.|
|Chitnis, L.||Kaldor, L.||Wells-Pestell, L.|
|Collison, L.||Kilmarnock, L.||Whaddon, L.|
|Cork and Orrery, E.||Lloyd of Kilgerran, L.||White, B.|
|Craigavon, V.||McNair, L.||Wigoder, L. [Teller.]|
|David, B.||Pitt of Hampstead, L.||Winstanley, L.|
|Davies of Leek, L.||Ponsonby of Shulbrede, L.||Yarborough, E.|
|de Clifford, L.|
|Airey of Abingdon, B.||Elton, L.||Massereene and Ferrard, V.|
|Alexander of Tunis, E.||Exeter, M.||Monk Bretton, L.|
|Amherst of Hackney, L.||Ferrers, E.||Mottistone, L.|
|Balerno, L.||Fortescue, E.||Mowbray and Stourton, L.|
|Bellwin, L.||Galloway, E.||Nugent of Guildford, L.|
|Belstead, L.||Glenarthur, L.||Onslow, E.|
|Bessborough, E.||Glenkinglas, L.||Orkney, E.|
|Brougham and Vaux, L.||Godber of Willington, L.||Renton, L.|
|Caithness, E.||Gowrie, E.||Rochdale, V.|
|Campbell of Croy, L.||Gridley, L.||St. Aldwyn, E.|
|Cockfield, L.||Grimston of Westbury, L.||St. Davids, V.|
|Colville of Culross, V.||Hill of Luton, L.||Sandys, L. [Teller.]|
|Colwyn, L.||Holderness, L.||Strathcarron, L.|
|Crathorne, L.||Hood, V.||Strathcona and Mount Royal, L.|
|Cullen of Ashbourne, L.||Killearn, L.||Swansea, L.|
|De La Warr, E.||Lindsey and Abingdon, E.||Trefgarne, L.|
|Denham, L. [Teller.]||Long, V.||Trenchard, V.|
|Drumalbyn, L.||Lyell, L.||Vaux of Harrowden, L.|
|Dundee, E.||Macleod of Borve, B.||Vivian, L.|
|Eccles, V.||Mansfield, E.||Young, B.|
|Elliot of Harwood, B.|
|Resolved in the negative, and amendment disagreed to accordingly.|