HL Deb 21 December 1982 vol 437 cc922-4

2.46 p.m.

Lord Hatch of Lusby

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

The Question was as follows:

To ask Her Majesty's Government whether they are aware that the retention of the 5 per cent. cut in unemployment benefit since that benefit has been subject to taxation represents double taxation on the unemployed, and when they intend to bring it to an end.

Lord Trefgarne

My Lords, as I told the noble Lord on 24th November in the debate on the welfare state, we accept the case for making good this abatement, and will do so as soon as the necessary resources can be made available.

Lord Hatch of Lusby

My Lords, is the noble Lord the Minister aware that the unemployed are not concerned about whether the Government accept the principle? They are concerned about when they will get their money. How is the noble Lord's Answer consistent with the statement of his right honourable friend the then Secretary of State, who, on 30th April 1980, said that the rationale for the 5 per cent. abatement would cease at the time that unemployment benefit came under tax? Has it not been under tax since July of this year?

Lord Trefgarne

My Lords, obviously the noble Lord read only one paragraph of the debate to which he referred, because my right honourable friend also said that one of the other reasons for making the abatement was as a necessary economy in public expenditure. The rationale for that move still exists.

Lord Blyton

My Lords, is the Minister aware that the Government's attitude to the unemployed and the working class generally is the worst that I have seen since Baldwin and Ramsay MacDonald were in government, in 1926 and 1931? Is it not time that the Government stopped looking after their own class, and gave a little back to the working class?

Lord Trefgarne

My Lords, if I may say so, the noble Lord seems to have a very short memory. We have treated the working classes, as he calls them, a good deal better than did the Government who preceded us.

Lord Cledwyn of Penrhos

My Lords, while totally rejecting that assertion, may I put to the noble Lord a question of fact? Can he confirm whether the cost of the reinstatement would be in the region of £60 million, whereas the revenue gained from bringing the benefit into the taxable income bracket would be in the order of £650 million? Therefore, would not the noble Lord agree that, if those figures are correct, the failure of the Government to review the 5 per cent. reduction is financially totally unjustifiable?

Lord Trefgarne

My Lords, the noble Lord is right in that the cost of restoring the abatement would be of the order of £50 million or £60 million, as he said. But the question of the revenue from taxation is irrelevant because it has never been the case that tax from a particular source is hypothecated for any purpose.

Lord Molloy

My Lords, would not the noble Lord agree that involved here is a question of the morale of our country? Many people are greatly concerned; they have seen all of this before. As my noble friend Lord Blyton said, the Government first of all created the unemployed, and now they are whipping them.

Lord Trefgarne

My Lords, that may be the noble Lord's view, but it is not mine.

Lord Monson

My Lords, is the noble Lord aware that to my certain knowledge there are unemployed people, responsible family men, who have applied for jobs at less than two-thirds of their previous wage on salary without success? Is it not unfair that such people should be deprived of 5 per cent. of the benefit which would otherwise accrue to them?

Lord Trefgarne

My Lords, the Government have to determine the order of priorities in these matters and, as we said at the time, the priorities meant that we had to make this modest abatement to unemployment benefit. I might perhaps add to those who complain about unemployment benefit coming into tax, that the fact is that most married people, for example, living on unemployment benefit, or essentially so, do not pay tax at all.

Lord Paget of Northampton

My Lords, are not the Government, in defence, really saying, as a pickpocket might say in the dock, "I am very sorry that I misappropriated this money. I shall seriously consider returning it in due course; but I must consider other priorities first"?

Lord Trefgarne

No, my Lords. We had to establish, as I have said to the noble Lord, Lord Monson, the order of priorities in this matter and we had to decide that there were other things on which we needed to spend the scarce resources that we have for these purposes at the time, and, as I say, we will make good this abatement as soon as we can.

Lord Paget of Northampton

My Lords, surely the priority is that it was not your money.

Lord Trefgarne

My Lords, I suppose that that applies to every penny that the Government dispose of.

Lord Hatch of Lusby

My Lords, will the noble Lord answer the Question on the Order Paper? Is this not a form of double taxation? Is he really telling the House that the Government, after its 3½ years of professedly successful economic pruning, cannot afford the £60 million which they have virtually promised to return from July this year?

Lord Trefgarne

My Lords, we did not promise to return this money from July this year, as the noble Lord suggests. As I said in answer to the noble Lord a moment ago, the rationale lay in two parts in this matter. First of all, there was the question of the benefit coming into tax and, secondly, the question of containing public expenditure. The question of containing public expenditure continues to be of the greatest importance, but we shall make good this abatement just as soon as we can.