As amended (in the Standing Committee), considered.
—(Right of charity to pay certain rates on dwellings by instalments.)
(1) This section applies to any hereditament such as is mentioned in section 1(1) or section 2(1) of this Act in the case of which——
(a) the persons who reside or are usually resident therein consist wholly or mainly of persons who are beneficiaries of a charity; and
(b) the rates thereon are paid by that charity either as occupier of the hereditament or in pursuance of arrangements made between the charity and the persons who reside or are usually resident in the hereditament;
and in this section the expression “charity” means any body of persons or trust which appears to the Minister or, as the case may be, to the Secretary of State to be established wholly or mainly for charitable purposes.
(2) The Minister or, as the case may be, the Secretary of State may direct that any hereditament to which this section applies which is specified in the direction shall be treated for the purposes of section 1 or, as the case may be, section 2 of this Act as if the charity were both the occupier of, and residing in, that hereditament.—[Mr. MacColl.]
Brought up, and read the First time.
The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James MacColl)
I beg to move, That the Clause be read a Second time.
This Clause arises out of a discussion in Committee about the right of charities to pay their rates by instalments. We had quite a hot debate about it. We took the line that we had no evidence that any hardship was caused by charities having no right to pay by instalments. The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), and the hon. Lady the Member for Finchley (Mrs. Thatcher) rather strongly took the opposite view, that hardship might be caused in particular cases, such as old people's homes, homes for the disabled, and so on.
I promised that my right hon. Friend would look at this carefully. We have [column 636]no evidence of any cases where trouble has been caused by this; indeed, in the cases which we have found where hardship might arise we have found no evidence that the managers of these institutions have ever asked to pay by instalments.
The nearest thing to evidence on the matter came up in the Solicitors' Journal this week—and I expect the hon. Lady read it—in a case about the derating of a S.S.A.F.A. home. This was a case which went to the Chancery Court, where the charity was held to be the occupier of a home of this kind, and Mr. Justice Buckley said:
“The question whether the flats ought to be regarded as occupied by the plaintiffs” ——
that is, the charity—
“was a question of fact which should be answered, keeping all the circumstances in view.”
Mr. Justice Buckley held that the plaintiffs were a charity providing residence for needy ladies, but were controlling their activities so carefully and stringently that it amounted to the charity being the occupier, and not the people who were living in the flatlets. That is the evidence of a case where hardship might arise, though I have no evidence that in any case, either in the case to which the right hon. Gentleman referred or the case to which the hon. Lady referred, any application was made.
I say that because I think it would be a bit hard on local authorities and their financial advisers to imply that they have been churlish about this and that that is why we have put down this Clause. However, we have suggested this Clause. However, we have suggested this Clause so that there may be no doubt. It is clear in the Bill that charities of this kind can be given the right to pay by instalments.
What we are proposing is that if a charity applies for the right to pay by instalments, and it is refused the right, it will have power to complain to the Minister who, if he thinks fit, will be able to issue a direction requiring the instalment provision to be applied. I think that this is a better way of doing it than trying to produce an extremely clear definition which would cover particular cases where hardship might arise.
Mr. C. M. Woodhouse (Oxford)
I gather that the Amendment which I have tabled to the new Clause is not selected, [column 637]so I shall confine what have to say to a question.
In this Clause the Minister is taking power to decide for him if wint is, or is not, to be deemed to be a charity for the purposes of the Bill. In deciding what is or is not to be deemed a charity, will he be guided by previous legislation defining charities? I am sure that the Minister will see the point of my question if I refer him to the First Schedule of the 1961 Rating and Valuation Act which describes certain institutions as charities, namely, universities, and university institutions in this country, with the exception of the Oxford and Cambridge Colleges. I assure the Minister that I am not about to parade King Charles 's head this afternoon. I am aware that this is not the proper occasion to seek to rectify that anomaly.
The institutions listed in the First Schedule of the 1961 Act all enjoy the benefit of having either the whole or part of their rate liability met by the Exchequer. I have not been able to establish—though I have tried to do so by a number of Questions, including one this afternoon—whether the Exchequer meets the entirety of the rate liability of these institutions, or only their increased rate liability arising from the 1961 Act, but it is in any case a fact, as was revealed in figures given this afternoon by the Minister of State, Department of Education and Science, that at least some of their rate liability is met by the Exchequer.
It is common ground that the effect of providing for the payment of rates by instalments is to give some relief to the ratepayers who take advantage of it. It also adds a marginal burden to the local authority and the rest of the ratepayers. In that case it seems inequitable that the Exchequer should be relieved at the expense of the ratepayers. The amounts involved may be small, but the principle seems to be entirely wrong. I should, therefore, like to know whether, in interpreting the definition of a charity as referred to in the new Clause, the Minister intends to be guided by previous legislation, and to count as charities for this purpose the institutions listed in the First Schedule to the 1961 Act.
Mrs. Margaret Thatcher (Finchley)
I thank the right hon. Gentleman and James McColl[column 638]the Parliamentary Secretary for tabling the new Clause, which meets some of the points that we made in Committee. Many of us feel that charities should not have to prove hardship in order to gain the benefit of Clause 1 any more than the domestic ratepayer has to prove hardship in order to do so. We feel that it will be greatly for the convenience of many charities if, instead of their having to find lump sums twice a year to meet a specific rate commitment, they are able to pay by way of a number of smaller instalments, which they can find at regular intervals.
A large commitment is often quite an embarrassment to a charity and may preclude it from being able to spend money on a contingent liability which may arise. I remember that on one occasion, when the weather was rather cold, a charity in my constituency experienced great difficulty in finding money to meet the cost of repairing a boiler which had broken down. The rate bill came in at the same time, and added to the charity's difficulties. If such a charity can now pay its rates by instalments—subject to the Minister's consent, if necessary—it may well be that money which it had formerly earmarked for rates can be used for some other purpose, while it continues to raise money for the next instalment of rates.
I am grateful for the new Clause, which we shall support. I hope that the Minister will also consider the points raised by my hon. Friend the Member for Oxford (Mr. Woodhouse).
If I may speak again, with the leave of the House, I should like to deal with the points raised by the hon. Member for Oxford (Mr. Wood-house). On the merits of the case, my right hon. Friend would not want to give power to an Oxford college to pay its rates by instalments. As for the legal position, I am advised—and this may surprise the hon. Gentleman—that a college is an educational charity and the beneficiaries of an educational charity are the public and not the individual students, and certainly not the dons. I think that that meets the hon. Member's point.
I was referring to the institutions which are listed in the First Schedule to the 1961 Act. They do not [column 639]include the colleges of Oxford or Cambridge, although they include all the other university institutions. It was about those that I was talking.
They are educational charities, and the same point arises.
I thank the hon. Member for Finchley (Mrs. Thatcher) for what she said. She also expressed the view that it would be a comfort to these bodies to know that they can now pay by instalments. I have tried to underline the fact that they have always been able to pay by instalments, with the good will of their local authorities. I have no evidence that local authorities have not acted sympathetically in this matter. Therefore, my advice—which I hope will be passed on—is not to wait until the Minister has made an order, but to ring up the borough treasurer and get his sympathy and advice as to how best to deal with the problem. I suspect that, if not in all cases certainly in the great majority, local authorities will be happy to help charities. The Clause provides a reserve power in the event of a breakdown.
Question put and agreed to.
Clause read a Second time, and added to the Bill.
—(Discount in respect of rates on dwelling-House.)
(1) The rating authority may, if they think fit, by resolution direct that an allowance by way of discount of such amount not exceeding two-and-a-half per cent. as may be specified in the resolution shall be granted to any person entitled to give a notice under section 1(1) of this Act in respect of a hereditament which is a dwelling-house, whether or not he has in fact given such a notice, who pays the net amount due by way of rates on that hereditament either——
(a) otherwise than by instalments; or
(b) by instalments required in pursuance of section 15 of the Poor Rate Assessment and Collection Act 1869.
before such date or respective dates as the rating authority may specify.
[column 640](2) If an allowance under this section is made in respect of a hereditament in respect of which a notice under subsection (1) of section 1 of this Act is for the time being in force, that notice shall thereupon cease to be in force and, notwithstanding anything in the said subsection (1), rates on that hereditament shall cease to be payable in accordance with that section, without prejudice, however, to the right to give a fresh notice under the said subsection (1) in accordance with subsection (2)(a), of that section.
(3) The rating authority may at any time revoke or vary a resolution under this section.
(4) While any resolution under this section is in force, a statement of the effect thereof shall be included in or sent with every demand note on which rates are levied in respect of any hereditament which is a dwelling-house, being a demand note in respect of a rate period beginning on or after 1st October 1966.
(5) Nothing in this section shall prejudice the powers with respect to allowances by way of discount conferred by section 8 of the Rating and Valuation Act 1925 or any provision for like purposes contained in any local Act, but a person who is for the time being entitled to an allowance under this section in respect of any hereditament shall not be entitled to an allowance in respect of that hereditament under the said section 8 or any such provision of a local Act as aforesaid.
(6) In section 9(4)(a) of the Rating and Valuation Act 1925 (which enables rules made for the purposes of certain precepts to provide in what manner and to what extent any allowances made under section 8 of that Act are to be treated as deductions in estimating and ascertaining the amount produced by a rate) the reference to such allowances shall be construed as including a reference to allowances made under this section.
(7) In the application of this section to Scotland——
(a) in subsection (1), for the reference to section 1(1) of this Act there shall be substituted a reference to section 2(1) thereof, and the words from “either” to the end of paragraph (b) and the words “or respective dates” shall be omitted;
(b) in subsection (2), for any reference to section 1 of this Act there shall be substituted a reference to section 2 thereof, and the words from “in accordance” onwards shall be omitted;
(c) in subsection (4) the words from “being” onwards shall be omitted;
(d) in subsection (5), for the reference to section 8 of the Rating and Valuation Act 1925 there shall be substituted references to section 12 of the Local Government (Development and Finance) (Scotland) Act 1964; and
(e) subsection (6) shall be omitted.
Brought up, and read the First time.
I beg to move, That the Clause be read a Second time.
This Clause also deals with a matter that was discussed in Committee. Two arguments were propounded in relation to it—one that the power to enable discount for prompt payment should be mandatory on local authorities, and the other that it should be discretionary. Before the Bill there was power for a local authority to allow discount, but it had to apply to commercial as well as to domestic ratepayers. [column 641]
The view expressed by hon. Members on both sides of the Committee was that this was unreasonable, and that as we were introducing a power to allow payment by instalments it would be reasonable that the same group of people who had this new right of paying by instalments ought to be given an incentive to pay promptly, that incentive taking the form of a discount comparable to the discount which can be given under previous legislation.
As a result of our debate in Committee we have brought in this new Clause, based on the discretionary principle. We take the view that it would not be right to inflict this as a duty on local authorities. Those authorities which feel that such an incentive would be worth while are given the power to provide it. The new Clause follows closely the old legislation in the form of the 1925 Act. It provides that local authorities may decide whether or not to offer a discount, and may specify the date by which the rates must be paid.
I draw attention to subsection (2), which provides that although a ratepayer can opt to pay by instalments but finally decide to settle in full, he cannot opt to settle in full and then decide to pay by instalments; he will, instead, have to wait until the next financial year, when he can start from scratch and then claim the right to pay by instalments.
Mr. James Allason (Hemel Hempstead)
I greet this Clause with modified rapture. The Parliamentary Secretary has pointed out that two points of view were expressed on this matter—one; that there should be a mandatory requirement to grant 2½ per cent. discount to those people covered by Clause 1, and the other, which was expressed in the terms of the Amendment in my name, that there should be discretionary power for local authorities to grant discount in respect of persons to whom they wished to grant it.
In the Clause the Parliamentary Secretary has steered a very narrow course between the two points of view, in that he grants discretionary powers to local authorities, but only in respect of those persons defined in Clause 1(1). The Clause will be of great benefit to local authorities in encouraging people to pay promptly and to receive 2½ per cent. discount. On the other hand, it leaves [column 642]out various other classes which the local authorities might have wished to include. Their difficulty, of course, has been that, under Section 8 of the Rating and Valuation Act, 1925, the local authorities could give a discount only to all ratepayers.
There is now, under the Bill, a power for certain ratepayers to pay by instalments, so, clearly, there ought also to be some power for local authorities to be able to grant to certain classes of ratepayers the 2½ per cent. discount in lieu. That will mean, therefore, that every charity will find it a financial advantage to pay by instalments. Even though they could afford to pay on the dot, they will take the more complicated course. This means more work and more expense for local authorities and it is a pity that charities are not included.
Secondly, landlords who, voluntarily—not under any arrangement under the 1925 Act—pay the rates on behalf of their tenants in bulk will in turn be penalised. If they pass it on to their tenants and make them pay the rates, the tenants will, of course, be entitled to pay by instalments. But the landlord will not be entitled either to pay by instalments or to receive the discount, so his best financial arrangement will be to pass the liability to pay rates on to his tenants.
The Parliamentary Secretary said in Standing Committee that this was a great advantage. He thought that it was a good thing that tenants should pay their own rates. I do not believe that this is so in the case of local authorities. It seems a disadvantage that a greater number of ratepayers should be entitled to this than there is at the moment.
Finally, there are the other classes of ratepayer whom a local authority might wish to try to help. An example is the small shopkeeper in a small way of business. The local authority might consider that, because substantial and wealthy householders are entitled to receive the 2½ per cent. discount, it is unfair that the small shopkeeper should not receive it as well. The authority might [column 643]wish to be able to give this discount, but under the Clause it will not be allowed to do so.
I am sorry that the Parliamentary Secretary did not accept my Amendment, which was simple and brief, and that, instead, no less than 35 lines must be added to the Bill for England alone, plus further lines for Scotland. However, this is a very prolix Bill and I am not surprised to find this great extension to it. I welcome the Clause, but with modified rapture.
I believe that my hon. Friend the Member for Hemel Hempstead (Mr. Allason) has already made the main points, so I will not detain the House for long. I wish only to make three points.
First, I think that it is probably right to give this relief by way of discretion to local authorities rather than by way of a mandate. Clearly, the effect of giving the discount for prompt payment would vary very much between local authorities, so it is right that they should have this discretion. We are a little disappointed, however, that the area of discretion is so narrow.
Secondly, I hope that this discretion will be used in future rather more widely than it has been in the past. Local authorities have been very loath to give a discount for prompt payment of rates, but I understand from many municipal treasurers that, until now, this was because they would have had to give it to all classes of ratepayers. If they could give it to domestic ratepayers only, they would be encouraged to use it a good deal more widely.
Thirdly, as my hon. Friend said, we are somewhat disappointed that charities still have something of a poor deal under the new Clause. I would ask the Parliamentary Secretary perhaps to reconsider this point so that it might be rectified in another place. I understand that the time is short, but, naturally, if he wants the Bill to go through in another place, he will have to make arrangements fairly quickly. I ask him to consider extending the discretion which local authorities can give so that they could give it in favour of the charities with which we were dealing in the last new Clause.
If I may, by leave of the House——[column 644]
Order. The hon. Gentleman does not need the leave of the House.
Some day, I will get this right. I have been wrong every time so far, Mr. Speaker.
The hon. Member for Hemel Hempstead (Mr. Allason) says that this provision is confined to all domestic ratepayers. We felt that selective discounts represented treacherous ground for local authorities. It would be difficult for them to have a standard of selection in what they would allow, particularly in the commercial ranges which the hon. Member mentioned, where the problem of competition might arise. There might be difficulties about saying that one person was entitled to a discount although another was not. If——
With respect, I do not think that this is what my hon. Friend meant. He was concerned with discretion to classes of ratepayers rather than to individual ratepayers.
That probably makes the position more complicated, as to how one defines the classes. It would be difficult to pick a particular definition and ascertain that it covered all the people whom one wanted to cover and was not just a straightforward test of whether each person was a domestic ratepayer—which, clearly, would be simple to establish. I can understand what the hon. Member feels about the small shopkeeper. It is a difficult position for them, but it would be difficult to find a definition of small shopkeepers which did not also include other people who might not need this advantage.
I thought that it was a little hard of the hon. Gentleman to refer to the length of the Clause. Neither Parliamentary counsel nor Parliamentary Secretaries are paid by the line and we have no incentive to make a Clause too long. When we resisted some Amendments in this vein in the Standing Committee, on the ground that they would complicate the Bill, we were scolded for not facing up to our responsibilities. Some of these matters are complicated and I think that parliamentary counsel has worked extremely hard and with great skill and imagination to launch these provisions into the Bill. [column 645]
Therefore, I hope that the Clause will present itself favourably to the House.
Question put and agreed to.
Clause read a Second time and added to the Bill.
—(Disregard of service disablement pensions, &C.)
There shall be left out of account for the purposes of subsections (1) and (2) of section 5 of this Act all pensions, gratuities and allowances awarded under any Warrant or Order in Council for the time being in force payable to an officer or man in respect of disablement or injury attributable to service with Her Majesty's forces or to the widow or dependant of an officer or man who died through a cause arising out of his service as aforesaid.—[Mr. Boyd-Carpenter.]
Brought up, and read the First Time.
Mr. John Boyd-Carpenter (Kingston-upon-Thames)
I beg to move, That the Clause be read a Second time.
I think that it will be for the convenience of the House to discuss with this Clause, new Clause 4 (Charitable payments)
For the purposes of subsections (1) and (2) of section 5 of this Act, there shall be left out of account payments from any charitable, benevolent or trust fund not exceeding in total £1 a week,
new Clause 5 (Income disregards for those over 65):
For the purposes of subsections (1) and (2) of section 5 of this Act, there shall be left out of account the first thirty shillings a week of the income of a single person aged 65 or over, and the first fifty shillings a week of the income of a married couple one of whom is aged 65 years or over,
and new Clause 6 (National Insurance disregards):
For the purposes of subsections (1) and (2) of section 5 of this Act, there shall be left out of account payments made out of the National Insurance Funds by way of sickness, industrial injury and disablement benefits,
All four are concerned with the subject of disregards.
I respectfully agree, Mr. Speaker. They are all on disregards. I do not know whether the indication which you have given is also an indication that, in the event of the Clauses being resisted, you might call them separately for a Division.
Perhaps the right hon. Gentleman would leave that for the [column 646]moment and make the request to me later.
I am obliged, Mr. Speaker. Perhaps some of these Clauses will commend themselves to the Government.
The two previous new Clauses were produced by the right hon. Gentleman in response, at any rate in part, to proposals made in Committee. As one of my hon. Friends said, we are grateful for modest mercies. It is, however, a matter for regret that the right hon. Gentleman has not tabled Amendments to meet the points made in this batch of new Clauses. As the Minister will recall, some related issues—and, to some extent, the precise issues—were discussed upstairs, when strong feeling was expressed that there should be some advance made in this direction.
As you remarked, Mr. Speaker, each of these four new Clauses provides for what, if one adopts National Assistance Board nomenclature, one can describe as disregards. It is proposed that in assessing the levels of income which will entitle an applicant to rebates under the Bill, one should leave out of account in the calculation certain forms of income. This is a procedure which is familiar in other activities. As I suggested, the word is very familiar in the National Assistance context and equally in the sphere of Inland Revenue, where various forms of what otherwise would be income are not taken into account in assessing a person's tax liability.
In all those cases the House has provided for those disregards because it has thought that there are circumstances attached to those payments which make it right and proper that they should not count against a person, either from the point of view of assessing his income on a National Assistance application, or from the point of view of the imposition of taxation. In other words, there is something about the nature of these payments which is of a special character demanding, in those contexts, special treatment.
New Clause 3 seeks to exclude from the calculations of income payments made by way of war pensions either to men disabled in the service of this country or to their widows and dependants. These proposals can be of [column 647]substantial importance in the context of the Bill. As hon. Members may recall, the figures of income which the right hon. Gentleman has laid down as providing the test for full eligibility for rebate are £8 for a single person and £10 for a married couple. As the result of the efforts of many Governments, the levels of war pension payments in this country have been successively raised over the years and, for many of the poorer war pensioners, their eligibility for help under the Bill will be determined by the new Clause.
In other words, the amount that they are now receiving—and this applies above all to those for whom we have the greatest sympathy; the most seriously disabled of all—by way of war pension, on top of whatever other income they have, may be in many cases such as to take those people out of the benefits of the Bill unless the Clause is adopted. This is, therefore, of practical importance in this connection.
War disability pensions are disregarded—not war widows' pensions, to which I shall refer—for the purposes of Income Tax. They are non-taxable. That is a very important precedent. The House will know that the concession of allowing a form of what would otherwise be taxable income to be treated as tax free is not lightly given by whoever may be responsible at any time for Her Majesty's Treasury, but it has been the consistent policy of Governments of all political colours to maintain that immunity.
The reasons are obvious. It is felt that injury and disability suffered in the Armed Forces entitle the sufferer to very special recognition and gratitude from the country and that, therefore, it is right that that income should not be treated as taxable. It seems a plain anomaly that while, in the sphere of Income Tax, exemption is given—a complete disregard is given—this income should, on the other hand, under the Bill, be counted against a man for the purposes of determining whether his income is small enough to qualify under the Bill. This is an anomaly which, at this stage of the Measure, we should put right.
The position of war widows is, as we discussed upstairs, somewhat different in the sense that their war pensions are [column 648]taxable. This is not a view that has appealed to the ex-Service organisations, but it has been sustained by successive Governments and there is a factor in respect of their taxation which distinguishes these payments from the question which arises here, which is their reckonability for the purposes of rent rebate. A concession for war widows' pensions, to make them tax free, though agreeable and attractive in many ways, would, of course, give the greatest benefit to the widow with the most other means because of the way in which such a concession would have a greater value the higher the income. It would, therefore, not be concentrated on those most in need.
That objection does not apply in this respect because unless the incomes are quite modest there can be no question of eligibility for these rent rebates and, therefore, the difficulty which in the Income Tax sphere has affected war widows does not arise. We are, therefore, suggesting in new Clause 3 that both the already tax free war disability payments and the present taxable war widows' allowances should not be taken account of by local authorities in assessing a person's income on an application for a rebate.
New Clause 4 deals with a different point—payments from any charitable, benevolent or trust fund not exceeding £1 a week. The House will recall that there are precedents in the area of National Assistance for this. I speak subject to correction, but I think that the present figure for National Assistance disregard for charitable payments is 15s. a week. We need not quarrel as between the 15s. or the £1 in this Clause since the disregard will be reviewed before long and no doubt increased to £1 in the National Assistance scheme.
In considering this Clause it is important to judge why the National Assistance scheme has that disregard in respect of charitable payments. The reason is obvious. Charitable bodies will be less likely to make payment from their funds to people in need if they know that the indirect consequence of their doing so will merely be to relieve some public authority of an obligation which would otherwise fall on it. In the context of National Assistance, if a charitable payment were taken into [column 649]account from the National Assistance point of view, and the Board paid a man less because of such a payment, that would be an obvious discouragement to any charitable organisation to make such payments.
The same argument applies in this context. It was pointed out in Committee by the Joint Parliamentary Secretary that, in respect of these rebates, the whole of these amounts would not necessarily be taken into account but only a part of them. However, the principle is identical. If one wants to encourage charitable bodies to make payments to people who are in need, one wants so to arrange matters that they know that the whole of those charitable payments will improve the position of the person in need. Otherwise, in fairness to those who subscribe to the charity, the funds of which, in many cases, very hard worked for, there might be real objection to making a payment which does not give full additional relief to the person in need to whom it is directed.
New Clause 5 raises a different issue. It proposes a higher level of income in respect of people aged 65 or over before they can be disqualified from receiving the rebates in full. It proposes that the figure in respect of single people when they become 65 should be raised from £8 to £9 10s. a week and in respect of married people from £10 to £12 10s. a week. Here, public policy has already expressed itself in the Income Tax sphere.
The Committee of Ways and Means will recall that we have spent many hours in this Chamber discussing the age exemption and the age relief for Income Tax purposes, and all parties have agreed that it is right to give a higher point of entry into Income Tax for those over 65; and also to give them some relief in respect of what otherwise would be treated as unearned income when beyond that age. Here, again, the reasons are obvious. It is felt that people at a certain age find their physical needs increasing and their physical capacity for meeting them diminishing, and their needs, as a result of that age, the greater.
Where the traditionally tough-hearted Revenue and Treasury have accepted a social proposition of this kind, it would [column 650]seem a great pity if this Measure which, as the right hon. Gentleman has so eloquently informed us, is designed for the relief of hardship, should not make similar analogous provision. We therefore propose a clear-cut age exemption in the rebate system proposed in the Bill. We propose it with straightforward simple figures. We suggest that there can be no administrative difficulty. The fact that they are persons of this age can easily be demonstrated, and requires to be demonstrated only once. There can be no difficulty in operating this proposal to the benefit of the older people concerned. Hon. Members know from their own constituencies how very severe the problem of the rate is for the older person on the fixed or diminishing income.
New Clause 6 would disregard for this purpose payments for sickness and industrial injury, and disablement benefits. These payments, again, are disregarded for Income Tax purposes, and their nature, the cause for which they are made, excites our sympathy. If people are ill or have suffered industrial injury, not only are they proper objects for sympathy and a desire to help but they also have to incur, in material terms in most cases, additional expenditure which those not so suffering do not have to incur. It therefore seems right that these payments, made out of a public fund created for the very purpose of giving relief, should not be allowed to operate to diminish the help given to someone under the provisions of this Bill.
The House may well feel that opinions could legitimately differ as to whether we have picked out exactly the right forms of payment for exactly the right kind of disregards. That is a matter on which opinions could obviously and with complete honesty and sincerity differ: but it seems to us that it is important that disregards of this kind should be inserted in the Bill.
During our earlier debates, the right hon. Gentleman and the Joint Parliamentary Secretary have resisted these proposals on broadly, two grounds. First, they have said that the proposals are contrary to the main pattern of the Bill and, secondly, that they would be administratively too heavy a burden for the local authorities to handle. I should like to deal with both of those objections. [column 651]
The first point is that, as the Bill is framed, broadly—though with a significant exception—disregards are not included, but simple, straightforward figures of income are included; and the right hon. Gentleman has told us that in defining “income” he has adopted the judgment of the late Mr. Justice Bronson some years ago, that income is what comes in. That was a comparatively simple if, perhaps, virtually platitudinous definition, if I may say so with respect to the late learned judge. But it is extremely simple.
On the other hand, simplicity in these matters can sometimes be purchased at the price of inequity, and I think that to disregard entirely the strong social reasons which have caused these various matters to be excluded from Income Tax and not taken into account in National Assistance is paying too high a price for simplicity.
But that argument would be stronger if there were no disregards at all in the Bill. That is not the case. The House will be aware that Clause 5(3) contains the following very substantial disregard:
“There shall be left out of account for the purposes of subsections (1) and (2) of this section——
(a) any income by way of payments in respect of living accommodation or board made by any person residing or usually resident in the relevant premises within the meaning of section 4(4) of this Act except, in the case of a rebate application by such a person as is mentioned in section 3(3)(c) of this Act, payments to that person by way of rent by a sub-tenant of part of the relevant premises …”
That is to say, payments by way of board or lodging by a lodger in a house are disregarded for the purpose of assessing the applicant's income.
I will anticipate the point that the right hon. Gentleman or the Parliamentary Secretary will make—because they made it in the Standing Committee and, as far as it goes, it has validity. They said that while this is admittedly disregarded, account is taken of those people in the calculation made where account is taken of the number of adults other than dependants living in the house. It is perfectly true that the account taken of the number of adults other than dependants living in the house reduces, in some measure, the entitlement to rebate—I give the right hon. Gentleman that point, for what it is worth—but the fact remains that [column 652]the existence in the house of someone else who is making perhaps a very substantial payment for board and lodging cannot exclude some payment by way of rebate. It can reduce the amount of rebate, because this enters into the calculation of the fraction, but some rebate will remain however much that person is contributing.
I am not at this moment criticising this provision—I would be ruled out of order if I did so at this point. I merely call it in aid as showing that it is not right to say that by seeking to introduce these disregards we are going against the whole pattern of the Bill. There is, in substance, therefore, an important disregard—a disregard of these payments by a lodger or lodgers, however large the payments, and although, as I say, the presence of those lodgers may diminish the amount of rebate, they cannot extinguish it under the scheme in the Bill. There is, therefore, this very important disregard.
If there is to be a disregard to this quite substantial extent in respect of payments made by a lodger, I ask the House to look at the merits of the matter. If we are to disregard for partial effect payments made by a lodger, ought we not the more to disregard payments made for disability suffered in the war or in the mines, or made in respect of sickness, or take account also of the financial circumstances of old age? If one has to weigh these payments by a lodger on their social merits against the payments referred to under these Clauses, I am sure most hon. Members would come down in favour of the payments proposed in the Clauses as having the greater merit.
The last thing which one wants to do is to put more burden on municipal treasurers. The House recognises, and must respect, their ability and the willingness they have shown to assume additional burdens, but would these provisions cause much difficulty? The war pensions disregards would be simplicity itself. A certificate from the Ministry of Pensions and National Insurance as to the amount of war disability or war widow's pension could be given. Those pensions do not change very frequently. All that is needed is a certificate and an elementary calculation.
In respect of charitable payments, the charity concerned could be asked to give [column 653]a certificate of the payments it is making. In giving such a certificate it could help the person the charity has aided. There is no sensible reason why the charity should not give such a certificate, which could be made a condition of the exemption. The calculation in respect of old people for the purposes of new Clause 5 would be perfectly easy. A local authority can calculate on the basis of £8 a week. It would have no difficulty in calculating on the basis of £9 10s. a week for a person who has produced his pension book of any other piece of evidence. Again, it would be a once-and-for-all operation.
The same goes for the provisions in new Clause 6. An officer of the Ministry of Pensions and National Insurance would have no difficulty in giving a certificate for the amount of these payments if it were necessary. The administrative task placed on local authorities would, in fact be more difficult as the Bill stands than if these provisions were put into it. The recipients of these payments are used to not disclosing them for Income Tax purposes or for social security purposes because they know that they are not bound to do so. There may well be some confusion and misunderstanding if people who are used to regarding them as payments which they do not have to disclose find that they ought to disclose them and may be subject to criminal penalties if they apply for a rebate and do not disclose them.
On administrative grounds the arguments cut the other way. Local authorities may well find it easier to administer the scheme with these disregards than without them. Be that as it may, I ask the House to recollect that these disregards or provisions for tax-free payment—there are both in this list—have been endorsed by the House for good social reasons, either in recognition of hardship or of the debt the country owes to a certain class of people, or to the need not to discourage the making of charitable payments. These are all good social reasons which the House has accepted in these contexts. Therefore, there does no seem much need to argue their merits at undue length. I think that they speak for themselves.
This seems to be the right stage of the Bill to make a conspicuous improvement in it, an improvement which would enable [column 654]special and additional help to be given under this Measure to members of our society whom hon. Members on both sides of the House, I am sure, would like to see benefited and helped.
I wish to address my remarks to new Clause 5. Here, I think, the taxation position of the applicant for a rebate is very relevant. We would expect to find that the maximum rebate on rates, the level at which it can be received, should be rather higher than the point at which there is complete tax exemption.
For example, for a single person the maximum rebate is granted if the income does not exceed £416 a year. At that stage of his income he gets maximum rebate, whereas he starts to pay tax if his income is about £283 a year. When his income is one-third more than that at which he starts to pay tax, he gets the maximum rebate and thereafter it starts to fall off. The married person who pays tax when his income is £437 a year can receive maximum rebate if his income is £520 a year. This is a perfectly understandable position. We ought to be logical about this position.
When we look at the position of old age pensioners we find a very different situation. A single man of 65 does not have to pay tax if his income is not over £395 a year, but he does not get maximum rebate unless his income is £416 a year or under, the same limit as for a single man. For an older person the situation is very much worse. A married person of 65 pays no tax on an income up to £625 a year, whereas the maximum rebate is paid on an income up to £520 a year. We could well have the position of a married pensioner who, although he is exempt from tax is also receiving no rebate at all under the Bill.
Under new Clause 5 a single pensioner would get exemption up to £494 a year and a married couple over 65 years of age would get exemption up to £650 a year, slightly above the level at which they pay no tax. I am astonished at our modernation in this proposal, but we want to be co-operative. At the least there seems a very good case for the sums suggested by new Clause 5. In normal terms the level starts to bite on an income of about £13 a week for a married couple and £11 a week for a single person. Up to that level, there [column 655]will be some rate rebate, but virtually nothing at that level, and above it there will be an increase in the rate to be paid to the tune of what the Minister called something like ld. rate.
On Second Reading, the Minister said:
“this will mean that to an average extent of a ld. rate, the better-off ratepayers will be mulcted in order to pay a quarter of the relief. Hence the cries of agony from Tory spokesmen over the weekend” .
The right hon. Gentleman went on to say:
“Hon. Members have complained bitterly about a ld. rate being put on the wealthier ratepayers in order to pay for the rebates.” —[Official Report, 6th December, 1965; Vol. 722. c. 42.]
Those wealthier ratepayers are, in the case of old-age pensioners, those who are exempt from paying Income Tax because it would be unreasonable to tax them. I remind the Minister of what he said yesterday, as reported in the Official Report at column 539:
“It is worth remembering that 14 per cent. of male wage earners earn less than £13 a week gross. I find it difficult to regard them as members of the affluent society.” —[Official Report. 23rd February, 1966; Vol. 725, c. 539.]
That seems a very great change of heart when we remember that the Minister described them in December as the better-off, suitable to be mulcted, and wealthier—those very same people receiving £13 a week and less. Old-age pensioners have been the worst hit by the rate rises which have taken place over the past few years, and, in particular, by the very heavy rate rises last and this year.
The Minister of Housing and Local Government (Mr. Richard Crossman)
And the year before.
That increase was nothing like the appalling increases which took place last year and the year before. Never before was the increase as great as 14 per cent.
The average rate increase since 1957 has been 10 per cent.
Would the right hon. Gentleman mind taking the period of the 13 years of Tory rule, when it would be 5.5 per cent.?[column 656]
I think that we have to start after revaluation. We have taken the figure since revaluation.
The right hon. Gentleman always conveniently forgets revaluation. He always asserts that in their 13 years the Tories never did anything. He forgets that they re-rated industry from 25 per cent. to 50 per cent. and that this brought down the burden on domestic ratepayers by about 30 per cent. in 1956.
That is a useful and purgative reminder. I shall in future never forget to say that in 13 years the Tories did at least one thing, which was the revaluation of industry. That is something which I shall always remember to add to my indictment of Tory neglect.
Perhaps the Minister would recall that at a later stage the Tories did a second thing, which was to re-rate industry from 50 per cent. to 100 per cent., again with the object of helping domestic ratepayers. They also introduced the general grant, which gave the opportunity of varying the proportion borne by the Exchequer and that borne by ratepayers. This is another step which the right hon. Gentleman always forgets, but which the Tories took during those 13 years. It was for these reasons that over the 13 years of Tory rule the average rate increase was 5.5 per cent., which is very different from the average under Labour rule of 14 per cent.
Pensioners' incomes do rise, but there are many who receive no pensions and who are on fixed small incomes. The incomes of those people do not rise. They merit the most generous treatment of all. I sincerely hope that the Minister will accept new Clause 5.
Dame Irene Ward (Tynemouth)
I do not need to speak for very long after the excellent and comprehensive speech made by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). While sitting on these benches I have been contemplating. I know full well how the Minister contemplates. He is always contemplating how he can “have a dig” at the 13 years of Tory rule. I am always contemplating [column 657]the sanctimonious support that always comes from the right hon. Gentleman for those who are really hard hit, but who, when the opportunity comes to do something for them, just sits and jeers and jeers. Therefore, we can both contemplate.
I am astounded that my right hon. and hon. Friends have had to table these new Clauses and apparently reargue the whole case which was made in Committee. Of course, one can always hope, and I was also hoping in my deep contemplation that, as soon as my right hon. Friend resumed his seat after his excellent speech, the Minister would rise and accept all these new Clauses. [Laughter.] It is no good laughing. It is nothing to laugh about. My division has an above average proportion of retired people and I can assure right hon. and hon. Members opposite that they will not be laughing. Look at the empty benches opposite. It is all right to have that jeering mass sitting opposite.
The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish)
What did the hon. Lady do for them?
Dame Irene Ward
Quite a lot, a great deal more than the hon. Gentleman did.
I was very surprised that the right hon. Gentleman did not rise straight away and accept all the new Clauses. I was very interested when my right hon. Friend put forward the two reasons why apparently the principles embodied in the new Clauses were rejected in Committee. I have tried to take some guidance on these matters. I understand that there are many anomalies which the Institute of Municipal Treasurers and Accountants has questioned. The Institute must have been watching the new Clauses proposed in Committee. Perhaps we shall hear from the right hon. Gentleman whether he has received any representations from the Institute on the difficulties of administration of these new Clauses, because I doubt very much, after hearing the very clear description given by my right hon. Friend, whether the Institute would make any representations in respect of the suggestions.
As I said in Committee, our advisers from among the municipal [column 658]treasurers advised us against having any disregards.
Dame Irene Ward
Now we know. If that is the fact, I shall immediately resign as a vice-president of the Association of Municipal Corporations. I would question whether this matter was among the difficulties which the Institute of Municipal Treasurers and Accountants put forward to the Minister, but I should be out of order if I were to pursue that subject.
There could be no greater simplicity than what would be involved in the administration of these proposals. If right hon. and hon. Members opposite have so little regard for those living on small fixed incomes, I am delighted to think that the country will take this into account, because it shows them up as shams. I have never been able to persuade my party to adopt all the things that I want to adopt, but that is another story.
I have listened to many speeches made from public platforms, over the radio and on television. I am certain that none of those living on small fixed incomes such as are envisaged in the Clauses would ever have contemplated the reaction of right hon. and hon. Members opposite to these Clauses. I only hope that the right hon. Gentleman has the most unpleasant dreams from now for the rest of his life, unless he accepts these Clauses in toto.
May I apologise to the House for the fact that I shall not be here later. [Laughter.] I do not want to listen to the right hon. Gentleman, because I gather from the laughter that he is not sympathetic. I do not see why I should have to listen to him and I have no intention of doing so. I can go and listen to somebody very much better than he is, although I apologise to the House for the fact that I shall not be here.
Mr. Arthur Blenkinsop (South Shields)
Dame Irene Ward
No; I do not want to listen to anybody. I shall not listen to anybody on the other side of the House. I only apologise to you. Mr. Deputy Speaker, and to my own side of the House, for the fact that I cannot wait until the end of the debate. But I [column 659]hope to be in the Division Lobby against right hon. and hon. Members opposite.
Mr. Norman Cole (Bedfordshire, South)
I wish to relate our discussion of all these new Clauses to the atmosphere in which the House debated the social services yesterday. I am sure that any outside observer watching the House at work yesterday would have said—I pay tribute to both sides here, and I am sure that this is probably inherent in the attitude of both sides—that the House as a whole was seeking to improve the social conditions and benefits available to the people of this country.
The great argument was about which method would in the long run prove the most effective in this modern age, not looking back towards the past. About our general desire to do something by the use of State funds there would probably not have been much argument between the two sides. The argument was about method, which, of course, is all-important.
Turning from that debate, I come to the principles embodied in these new Clauses, which, goodness knows, we have had the deuce of the fight about both in Standing Committee and in the House in order to get them considered at all by the Government. As my hon. Friend the Member for Tynemouth (Dame Irene Ward) said, it is astonishing, both because of the Government's stated intentions and of the atmosphere in which our debate took place yesterday, that we should have to press these simple matters upon the Government now.
Right hon. and hon. Gentlemen opposite may talk about adding to administrative difficulties, not to mention finance and all the rest, but I cannot believe that those are their true reasons for rejecting these proposals. I believe that there is one simple reason which, though I understand it, I cannot sympathies with at all.
The Government are frightened of opening the door at all lest they may be lost in a morass of bewilderment, not knowing what to do. They think that it is much simpler to say that there shall be no disregards at all save the important one in respect of lodgers in the house embodied in the Bill already. Presumably, that disregard, because it relates to the occupation of the property, can be con[column 660]fined to that aspect of the matter, but, as soon as the Government start to think about the social service disregards, they find themselves in difficulty. To put it bluntly, they have taken the line of least resistance and refused them all. This may be simple, but it is not just.
What are the principles embodied in these four new Clauses? In each case they are related to a reward from society—or, in the case of new Clause 4, “Charitable payments” , from a society—to compensate someone who is less fortunate and less privileged than the average member of society today.
The first deals with Service disablement pensioners. The principle embodied in this Clause must, surely, be accepted in the heart of every person in this country irrespective of politics or anything else. Disablement pensions, as those of us who have fought before the tribunals know, are not given easily, but they are given as some sort of compensation to a person who has suffered disablement, who is, in other words, not fully capable of carrying on his ordinary job or earning the income which his abilities might otherwise bring in.
New Clause 4 is related to charitable contributions from a society. Charitable societies do not give assistance unless they are satisfied of the need of the person concerned, and they keep these matters under fairly regular review. I do not mean that they keep them under constant review month by month, but the scrutiny is regularly maintained.
One must accept that a charity registered under the Charities Act will know what the need is of a person receiving its contributions, and, as my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) pointed out, the funds from which such charitable contributions are made have been hard won by collection and by other means and they are passed out carefully to the recipients. This Clause also, therefore, is founded upon matters peculiar to the individual which are very much in the same category as other disregards.
New Clause 5 is related to the needs of the elderly. As my hon. Friend the Member for Hemel Hempstead (Mr. Allason) said, not only our taxation rules but many other parts of our social administration recognise the fact of life [column 661]which all of us in the House, even the Minister himself in due course, will come to understand, namely, that advancing age makes a person's needs greater and his ability to earn less. This has been recognised as a principle of life probably ever since we have had our modern civilisation in Britain.
Why cannot we act upon that principle in this Bill, which is, after all, a social service gesture? I cannot understand it, unless, of course, I am right in the idea which I keep in mind all the time, that the Government are choosing the line of least resistance, keeping the door closed to everyone so that nothing can pass through. I repeat that I find this a thoroughly unsatisfactory and unjust approach.
New Clause 6 is related to needs which are equally as deserving. The whole panoply of our social service arrangements is designed to help those who have been lair aside from the normal run of life and work because of industrial injury. I had always thought that this was a subject dear to the hearts of the Government. At least, they are always saying that it is more dear to them than it is to us. This Clause would introduce disregards in respect of disablement benefits, disablement grants, industrial injuries and sickness generally. But, apparently, it excites no kind of sympathetic reaction on the benches opposite and the Government refuse a relaxation even in this case.
I am not likely to have this idea either confirmed or denied, but I cannot help feeling that some members of the Government and some of their supporters would like to give these latter disregards and, perhaps, some of the others. But, of course, their reaction must remain the same: give nothing here either. Close out this one and close out them all. This is no way to administer a social service Bill. It has already been pointed out from this side of the House that these things have always been disregarded in other walks of life and in other sectors of our social finance and they should be disregarded here.
Although it is said that what we propose would increase the difficulties of those who have to administer the Bill, and would cause a lot of complication in the work of local treasurers, there is [column 662]this further point to be made. Leaving aside for the moment the question whether the Bill will do what it is supposed to do at all, which I doubt because of the injustice built into it, what about all the bitterness and resentment which will be felt by people who have been into the question of all these potential disregards and who know also about the actual disregards which must be brought into account in the general picture?
If people left out see others, perhaps in the same street, receiving a disregard of income from keeping lodgers, the Government will attract much more obloquy. The situation will lead to all sorts of heartaches because a ratepayer, especially one over 65, may find himself unentitled to disregards while a younger person with an income from lodgers is entitled to have it disregarded.
I am sure that, in any other Bill dealing with the social services and intended to carry out the much vaunted plans and ideas of the Government, all these disregards, together with others, would be included. But for some reason the Government have decided that they will not go into the question of disregards because this would make the Bill—which is a gesture to which I pay all tribute—too complicated to work out. They decided that we must have a simple Bill.
I prophesy that a future Government—I trust that it will be Conservative—will open up the principle a little more, making the provisions more just and reasonable for those it is intended to help. At the moment, it is no more than an empty shell and will lead in many cases to benefits for some and injustices for others. It certainly will not do everything that we wish of it.
Sir Anthony Meyer (Eton and Slough)
The Minister of Housing and Local Government has said on more than one occasion that in the Bill he is not trying to create a new social service. Last night, I listened, as I always do, with great interest and a good deal of admiration to his speech in reply to the debate on the Welfare State. I did not think it one of his best speeches, but they are always worth listening to.
The one thing which emerged was the interdependence of the various provisions made for social security, not merely what [column 663]are avowedly social security measures but housing and Bills like this one. At the beginning of yesterday's debate, the Chancellor of the Duchy of Lancaster made it painfully apparent that the comprehensive review of the social services which both sides admit to be necessary would have to be put off with the Greek Kalends. There would be tinkering about, but we would have to wait until 1970, he told us, before we could hope to see a really comprehensive system to meet distress everywhere. At least, we shall have to wait until 1970 if the party opposite, by some terrible misfortune, is still responsible for our affairs.
The Bill, despite the disclaimer by the Minister, could be used to plug a great many holes and bring help to people who, for one reason or another, fall outside or fail to receive the succour they need from the comprehensive, allembracing State welfare schemes. It could be used to bring relief in particular to people who are reluctant to apply or are not aware that they should apply or for some other reason do not apply for the help to which they would be entitled.
In new Clause 3, we make an attempt, which I freely admit is not a complete answer, to try and identify some of the categories of people for whom the Bill's provisions could be used in order to plug the gaps left by the national comprehensive schemes. It deals with Servicemen and their widows and would be particularly valuable, as I said in Committee, because it would make provision for the sort of people who are least likely to apply for relief for which they could apply. Their refusal is rooted in pride, background and the feeling that they have done the State some service and that it is not for them to apply humbly for something which the State should give them as of right. The general feeling amongst the whole population that rates are a monstrous injustice anyway removes from people the feeling that, in applying for relief from rates, they are in any way seeking charity.
Our new Clause 4 concerns charitable payments. My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) said that charities would tend to make less help available to people if this help were merely to [column 664]reduce what they would get from the statutory authorities. If charities find themselves paying out less they will also, surely, find themselves collecting less because people will subscribe less to a charity if they feel that the money is merely to be used in order to fill a gap which would otherwise be filled by the statutory authorities.
I am sure that no one in this House would like to see the drying up of the wells of charity in this country. Even the most thorough-going Marxist on the benches opposite surely admits that there should be a part, and an expanding part, for private charity even in the most tightly organised centralised State.
New Clause 5—income disregards for those over 65—has been fully covered already. It is, perhaps, the best-drafted of the four new Clauses under consideration. It points to just about the right level in assessing want. I came across a constituency case the other day. The couple are just about at the £10 level. They are in accommodation rented from the local council and are paying a rather high rent. They are just about not making ends meet.
I asked the National Assistance Board's officers to see the couple and it did so, but said that they just did not qualify for National Assistance. It will be touch and go whether they will qualify, under the Bill as drafted, for relief of rates. The man is over 65 and he is doing a part-time job which brings in a certain income. These are precisely the sort of people who would be covered by new Clause 5. Without it, they will slip through the net.
New Clause 6—National Insurance disregards—concerns people who are in want and are suddenly hit by unforeseeable misfortune—in other words, misfortune and want strike them at the same time. This is a category of people who especially need the kind of help which only a provision of this kind can give.
On Second Reading, the right hon. Gentleman said that the Bill was a rough and ready measure of justice, a blunt instrument. In these four new Clauses my right hon. and hon. Friends have attempted to sharpen the instrument and I very much hope that the Minister will agree to let the instrument at least be given a cutting edge.[column 665]
Mr. Oscar Murton (Poole)
I want to confine my remarks to reinforcing what has already been said about new Clause 5. If ever a Clause was suitably drafted or tailor-made for a town on the south coast of England, this is it. For my constituency, which has about 12 per cent. above the national average of persons over the age of 65, this is a vital matter. Over the past few weeks, I have had many pathetic letters from old-age pensioners who say that by virtue of what they have in the way of personal investments, plus their pensions, they are just outside the datum line for the operation of this scheme. They are fully aware that, by being just outside, they themselves will indirectly subsidise those who are very little worse off. In all equity, new Clause 5 would meet the case of such elderly people.
There are many towns, particularly on the south coast, where people go to retire, many living in bungalows. It is a peculiarity of the rating system that bungalows and flats are rated proportionately higher than two-storey houses. Those who go to live in them often do not realise their predicament until they have bought or rented the bungalow or flat. I have quoted a typical example which is repeated in many towns in England.
There is an added problem in my constituency because of the lack of balance between domestic rateable value and the commercial and industrial rateable value. The average ratepayer in Poole pays more rates than people in comparable accommodation in other parts of England. The Minister has heard all this before and he may feel that he need not listen to it again on this occasion, but I ask him to consider the Clause with sympathy. It would not cost much to operate, but it would bring relief to many very deserving persons.
Mr. A. G. F. Hall-Davis (Morecambe and Lonsdale)
I want to address myself to new Clauses 4 and 5. When we came to the end of our Committee discussions of disregards, I did not feel encouraged that we would meet with any success if we pressed the Minister in this direction again, but after yesterday's debate, which the right hon. Gentleman sat through and [column 666]to which he replied, I have a genuine feeling of modest hope.
The right hon. Gentleman possesses some good qualities and I am sure that we would all pay tribute to them. No one would suggest that he had a heart of flint; but some of us suspect that consistency is not his most notable quality. If he has a reversible cloak and comes into the House one day in the guise of an advocate and the next day in the guise of an administrator and denies everything by action for which he has pleaded by words the day before, that is not very encouraging.
Everything which was said yesterday afternoon lends support to the basic attitude underlying these new Clauses. It was said to be the wish of the House to encourage voluntary provision. New Clause 4 would counteract what will be one of the anomalies of the administration of the Bill.
In the circular which the right hon. Gentleman sent to local authorities on 2nd February, 1966, he said that income would be defined as that which comes in— “excluding benefits in kind” . If the right hon. Gentleman intends to exclude benefits in kind, he must accept a Clause similar to new Clause 4. The consequences otherwise will be that if one goes round to a needy person's back door and tips 1 cwt. or 1 ton of coal into his backyard, that will not affect his right to relief, but if one goes to the front door and puts a postal order for a similar value through it, his rent rebate will immediately be reduced.
If there is a charity which has a local Little Red Riding Hood, the local Little Red Riding Hood can go with her basket of goodies and put it on grandma's kitchen table without any harmful effect on grandma's rate relief, but if the charity is more remotely situated from the town and tries to do its good work through the post, as the postman approaches the door, there will be the right hon. Gentleman in the guise of the wolf waiting, admittedly not to snatch the whole of the contents of the envelope, but, in effect, to counteract 25 per cent. of the charitable payment going to that person. This is so illogical and will cause so much trouble and so much rearrangement by at least the conscientious charities, that something should be done on the lines suggested in Clause 4. [column 667]
As it happens, new Clause 5 is closely connected with the content of yesterday's debate. My hon. Friend the Member for Eton and Slough (Sir A. Meyer) said that it was particularly well drawn. In one respect it certainly is. One of the subjects of probing discussion yesterday was occupational pension schemes. The right hon. Gentleman was not flattering about the prospects for a widespread expansion of occupational pension schemes, but as I listened to him I did not get the impression that he wanted actually to discourage them. Unless he accepts some such Clause as new Clause 5, that must be the inevitable consequence.
The right hon. Gentleman the Chancellor of the Duchy of Lancaster, for whom I should have particular regard, said that the number now drawing occupational pensions was about 2 million, and he went on to say:
“The amounts of pension payable range from less than 10s. a week to over £20 a week.”
There then came the significant sentence:
“About half of all those on occupational pensions today receive less than £2 a week …” —[Official Report, 23rd February, 1966; Vol. 725, c. 423.]
That means that 1 million occupational pension beneficiaries receive less than £2 a week and probably one quarter of the total, or 500,000, receive £1 a week or less. If the Minister does not accept something on the lines of new Clause 5, he will be depriving certainly the 500,000 of one-quarter of the benefit of their occupational schemes.
I see that the right hon. Gentleman is looking worried. I know that he is giving something to people which they have not previously had. I accept that these people are going to be better off, not worse off. But they are going to see the effects of their savings and of their employers' ex-gratia payments to some extent counteracted because of the provisions of this Bill. This is a bad thing, for the most fundamental reasons that it discourages two tendencies which are of the greatest basic benefit to the economy of this country which we ought to be encouraging, not discouraging.
I am grateful to hon. and right hon. Members that the repetition of this debate has been neither tedious nor too long, but has been extremely interesting. I will try to answer [column 668]the questions of all those who have spoken and who spoke as though they had no great expectation of a positive response. I am sorry that the hon. Lady the Member for Tynemouth (Dame Irene Ward) left so soon after she had spoken. I would have liked to have replied to her, but no doubt she wished to deny me that pleasure. She has enabled me to point out that we have discussed this with the representatives of the treasurers and there was no doubt that the last thing that they wanted was a rebate of any kind, whether it be straight away or not. This was not, and should not have been, a decisive factor in weighing up the Measure. If I had done what they wanted I would have left everything unchanged. We are discussing something more important than the convenience of the municipal treasurers.
Both the hon. Gentleman the Member for Morecambe and Lonsdale (Mr. Hall-Davis) and the hon. Member for Eton and Slough (Sir A. Meyer) referred to yesterday's debate. This is a very apposite comment, because we now find ourselves on opposite sides of the House for exactly the same reason in practice, on one rather narrow issue, we were yesterday evening in theory, on the general issue. This is an almost perfect example of how the two sides work out their different attitudes to a problem. Yesterday we were discussing whether we should see the big advance, as the Leader of the Opposition said, in our social security system and, in working out specially planned studies of groups in special need and the application of special assistance to them. I was interested when the hon. Gentleman the Member for Eton and Slough took his Clauses and showed rather ingeniously and convincingly how they hung together as a network of studies of special needs.
It would have been difficult to adopt this Measure to that end, but that is I assume what he was trying to do. I have said in Committee that if that had been our aim we would not have asked the municipal treasurers to administer it; we would simply have asked the National Assistance Board to deal with it. The right hon. Gentleman quite rightly pointed out that legal aid is administered by the National Assistance Board, although it is not part of National Assistance. This was a serious and practical [column 669]proposal and I think that a number of treasurers wanted us to hand this over to the National Assistance Board. It is something which the Board would have been horrified to do because it is not the same kind of thing. The Board is not there to administer tax concessions. It is there to assess special needs, and organise the spending of money for that purpose.
Our reform of National Assistance, announced by my right hon. Friend, the Chancellor of the Duchy of Lancaster, will deal with ways of looking after the hardest hit and meeting their needs, and on a much bigger scale than was suggested by the Leader of the Opposition. Yesterday, on my recollection, he said that some 7 million people should be brought within the scope of National Assistance. I gave reasons then why I thought that this was the wrong approach. I should have thought that some hon. and right hon. Gentlemen might have had doubts about whether this was the right way to administer rate rebates or to attempt to develop a special need technique. The hon. Gentleman the Member for Bedfordshire, South (Mr. Cole), who I see has also departed, said that this was the wrong way to administer a social service. From the beginning of Second Reading and throughout the Committee stage I and my hon. Friends have made it clear that this is not an extension of the social services.
It is not an attempt to assess poverty and to help. It is simply a tax concession designed to make the impact of rates less harsh on the ratepayer. It is concerned exclusively with the ratepayer and with trying to make rates a less unjust tax, just as all previous rate rebate schemes introduced voluntarily by local authorities have had that objective. It seems that, even without the incentive of 75 per cent., in some ways the treasurers should have had the foresight to have introduced this scheme years ago. It is most urgent to introduce a scheme of this kind to remove some of the grossest injustices at the bottom end of the scale and help these 2 million families by remitting some two-thirds of the rates, and lesser fractions for others. In doing so, we shall substantially reduce part of the regressive character of the rating system. [column 670]
This is totally different from the improvement of a social service. We do not want to conduct our affairs like someone controlling a means-tested and carefully discriminating social service. I do not want to be misunderstood, but in a way this is a deliberately undiscriminating method. Every tax concession must be so. We must not discriminate, we must lay down a simple rule and apply it, irrespective of hard cases. I do not see any other way of making a tax concession. The real issue between us is, should this have been initially designed as an extension of National Assistance? It is a conceivable possibility, but the Board would have rejected it. If it was not designed in such a way, was it the duty of the Opposition to mould it a little more in that direction by introducing more of this notion of selective discrimination and of trying to meet as many hard cases as possible?
The hon. Member for Eton and Slough, speaking of the Service pension dealt with in new Clause 3, said that this was something which would enable us to stop up a chink in the existing arrangements for disabled Service people. I can think of no conceivably worse method of stopping up a chink in war pensions than a rate rebate. War pensions are very well and skilfully designed so that where there are difficulties and hard cases there is a most complicated system to study each case. This is a highly worked out social service, and to plump down an extra two-thirds of rates is not the way to help. One would not stop up any chink in the war pension system by applying rate rebates in this way.
I do not think that one could seriously suggest that these would improve the discriminating nature of the war pension system, or of industrial injury or disablement benefit. All of these are social services carefully studying the particular needs of those who are disabled and meeting those needs by highly discriminating payments based on an understanding of the need. On the other hand, to give a rate rebate is to give a tax concession which must be given to somebody as a ratepayer and not as somebody in need of help with their disablement. We might say that we would like to give it to these people, but it cannot be argued that it would improve the war pensions system to add this. [column 671]
I did not want a social service; I wanted a tax concession. I have made it clear to my right hon. Friend the Minister of Pensions and National Insurance that I realised how deeply it would upset and disturb all her work of transforming National Assistance in preparation for the creation of the new Social Security which is going on precisely along the lines which the hon. Gentleman wants. Rate rebate must develop on its own and has to be kept firmly, even doctrinally, separate from it if it is to be administered correctly.
The argument has been adduced that I have been inconsistent because I have allowed one disregard. It has been argued that the disregard for the lodger or for the extra occupant in the house proves that since we have one disregard we might as well have a lot more. These so-called disregards are in existence only because they are cuts in the rate of tax concession. If this were not the case, relief would be given twice over. The extra person in the house is disregarded in the case of a married couple, because the rates on which the rate rebate is reckoned are reduced by one-third owing to the presence of the extra person in the house. If there are two extra people in the house, it is reduced by three fifths. Therefore, in each case, there is a sharp reduction.
There were two ways in which we could have dealt with this matter. We could have imposed a family means test and then assessed the rebate in terms of family means. Having turned down the idea that we should assess in terms of the means of the family because we wanted the minimum investigation before the rebate was paid, and recognising that the rebate must be given to the married couple, we said, “Since there is not to be a family means test we will have this crude, rough and ready reduction in the amount of the rates to be reckoned for the rebate owing to the presence of one, two and three lodgers” . It is not true to say that these are disregards in the same sense as we talk about disregarding capital or income.
I do not want to go on too long, but I thought that since this was a very well argued debate it would be a pity if I did not deal with certain points. There [column 672]are two further points in the arguments of the Opposition which I want to answer. First, I cannot help observing in this list what has happened as a warning. When we started this debate in Standing Committee on 10th February, there was relative agreement between the two sides. The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), when asked by my hon. Friend the Parliamentary Secretary—this appears at column 296 of the Official Report of the Standing Committee proceedings of that date—said that he appreciated that the new Clause which he had moved dealt with National Assistance disregards as a whole. We were under a misunderstanding.
It was pointed out at the next sitting of the Committee that what was meant was not National Assistance disregards but only income disregards and that capital disregards were left out. I thought that we had agreed that if we were to introduce disregards at all they would have to be National Assistance disregards as a whole or Income Tax disregards as a whole. They would have to be, in the case of National Assistance, capital as well as income disregards. I still maintain that view.
I am confirmed in that view when I begin to see what would happen if these four new Clauses became law. We would then have a third complex and confused system of new disregards—one for us, one for National Assistance and one for Income Tax. New Clause 3 proposes a complete disregard of the whole Service pension, whereas National Assistance disregards only up to 30s. and Income Tax the whole of it. So we would have an agreement with Income Tax but disagreement with National Assistance. In the case of charitable and benevolent funds, it would be on the first £1 on the rate rebate, and on 15s. on National Assistance, with no disregard on Income Tax. On new Clause 5, these are on the first 30s. or 50s. This would agree with National Assistance as regards earnings but would differ as regards unearned income. In the case of Income Tax, it is difficult to make a comparison because there are special allowances and exemptions.
When we come to sickness benefits, industrial injuries and disablement benefit, we would find ourselves in the same [column 673]boat as Income Tax with regard to sickness benefit, but differing with National Assistance; and in the same boat as Income Tax with regard to industrial injury but differing with National Assistance. Disablement benefit is the sole case where we would perhaps have achieved complete harmony of disregard systems between the three.
This is what I warned the House of on Second Reading and in Committee. We had the choice of accepting the National Assistance system intact or of starting on the perilous journey of setting up a new and equally irreconcilable and conflicting system of disregards with all the difficulty that once we started there was no stopping. Listening patiently to the debate, I felt that there was no reason why six hon. Members should not have said, “If you disregard that we have six other admirable disregards” . We would have merely added to the chaos.
I conclude by saying something which should not be forgotten. It refers back, once again, to yesterday's debate. I did not manage to get through all my speech yesterday, and there was one bit of it which I should like to put on record this afternoon. I had promised to reply to the hon. Member for Abingdon (Mr. Neave), who I am sorry is not here. He asked me, very indignantly, about the people about whom he is most concerned—those who do not receive National Insurance pensions. He was particularly concerned, rightly, not with the half who receive National Assistance but with those who do not. This is the group of people who are outside National Assistance, who do not fit in, very often an awkward group psychologically. These are people who will not go near National Assistance, people who kick against any form of means test or question. Often they are people with not so much income but a bit of capital, who would like some help and whom it is terribly difficult to fit in to a carefully discriminating meanstested assessment of genuine social need.
I should like to help these people also. On a careful consideration, I should say that more of this group of people will be assisted by rate rebates irrespective of capital, with no disregards. This will help these people because they can get assistance without any questions being asked. We must not underestimate the [column 674]advantage of this. A person would be simply asked to fill in what he has as income and no further question would be asked.
The important thing is the advantage in keeping it simple. I wanted to get it as different as possible from National Assistance, because I wanted to attract to it the 500,000 people who, the Allen Committee tells us, could have received National Assistance, who would not take it but who, we think, will get a taxpayer's right from the Treasury. This group needs to be cultivated.
The cultivation which those people require is less social service attention. They do not want to be treated as recipients of a discriminating social service. They resent the whole idea. They want to be treated as taxpayers who have a right. In the Bill, they are given a clearly defined right with no questions asked about their capital.
I know that some hon. Members on this side may regard that as a strange argument to make from this side, but these people, about whom I have been concerned as much as the hon. Member for Abingdon, have a very raw deal because they do not fit into the social service State. They are not the people who are included when one tries to operate the carefully tested social service needs which National Assistance conscientiously performs. All that these people have to do is to fill in the form to the treasurer and, if it is right, they will draw the benefit without question.
The hon. Member did not bother to come in earlier, and I shall now finish my speech.
Those people are not to be under-rated. I again repeat that this is not for National Assistance. Not one person on National Assistance will be affected by the Bill. All the 2 million families affected will be those either who have refused to take National Assistance or who are too well off to receive it. They are precisely either these proud people, the excluded people, the better off or those who have a little money or a house and who are excluded by the National Assistance test of means. All these people are being helped. There are 2 million of them and the cost will be £29 million. [column 675]
It is a fairly wide net that we have cast in helping these people. It may be that we have not cast it wide enough. It may be that the income level should be raised to £9 and £11 10s. One thing of which I am absolutely certain, however, is that we should not try to write into the Bill a complex system of disregards which requires a complex test and a complex inquiry and investigation. The kind of people with whom we are trying to deal are precisely those who resent that most of all, who have often refused the advantages of social security because they resent it and who, therefore, are more likely to be assisted by this rough and ready tax concession than by even the most well-intentioned and socially directed advance of National Assistance or, indeed, of any form of social security.
We have gone a little bit wide of the point. I would not say that we have got entirely off it, but we have got a rather long way from it. May I, however, take some of Richard Crossmanthe Minister's starting points and give him my approach to them.
The right hon. Gentleman has separated three systems: the Income Tax system, the rating system and National Assistance. National Assistance is quite different from the other two systems, because in National Assistance a person is asking for money. In Income Tax and rating, one is giving money, or, to put it more accurately, money is being taken away, with or without one's consent. They are, therefore, quite different. In National Assistance, a person is asking for money, whereas in the other two one has to yield up the money.
I accept, therefore, that there are more analogies between the Income Tax system and the rating system than between National Assistance and rating. Let me pursue these analogies. Any tax should be equitable. In considering whether it is equitable, one has to consider what reliefs to give in respect of the liability. We are, therefore, considering rating as a system of taxation.
In the past, there have been only two sorts of reliefs in the rating system, one on the ground of strict poverty, which has scarcely been operated, and the other on the ground of derating, which virtually is no longer existent. We are, therefore, [column 676]considering—and the Minister is asking us to consider—for the first time a suitable system of reliefs for rating. That is what we are trying to do in this set of new Clause.
It is not exactly right to say that this is the first time that we are dealing with the matter. Did not the Conservative Government have their own rating relief Measure which they pushed through? This is, therefore, the second Measure. It would be interesting to compare the two and to see what the hon. Lady's side put forward as a rating relief Measure and whether it included elaborate disregards.
That was a system of relief which arose particularly from revaluation. It steemed directly from that. It did not set out to be a complete system of rating reliefs. I hope that in the end, this present proposal will be. What I am trying to say in essence is that unless we incorporate some of these new Clauses now, within two or three years some of the Minister's hon. Friends behind him will be persuading him to try to include them, just as we are trying to persuade him to put them in now.
In considering a system of rating reliefs, one can do it in two ways. One way is to use a quite new system, which is what we are trying to do, but we are trying to do it that way because Richard Crossmanthe Minister has rejected the other way. We started to try to take the reliefs applicable to Income Tax because that would have been simpler. The Minister rejected that. We took an analogy with National Assistance, and the Minister rejected that system of reliefs. He therefore drove us to the only other method to consider: a special system of rating reliefs. In doing that, one must consider the practical effects of these new Clauses and the practical effects of rejecting them. In considering the new Clauses, one must recognise that the need for them proceeds along humanitarian lines.
The right hon. Gentleman mentioned the municipal treasurers and said that they did not want any particular system of disregards. I think that the people who will have to deal directly with the public will want a system of disregards, because it is they who will have the distasteful job of refusing rebates to people who have helped themselves or who have [column 677]compensation from the Government either for sickness, for war disability or for industrial injury disability.
New Clause 3 is designed to secure that payments made through the war pensions system to people as compensation for the injury and disablement which they suffer daily so that we may enjoy our present freedom shall be fully enjoyed by them and shall not be decreased by this rate rebate system. Compensation which is given for a particular purpose should be compensation and should not rank as income. That is all we are saying. We are not trying to fill in a chink in the war pensions system. We are saying that what people receive for a certain purpose should remain in its entirety for that purpose. That is New Clause 3.
New Clause 4, which concerns charitable payments, has been well argued. Most of us have connections with a large number of charities. We know quite well that if a person wants to give some payment to someone less fortunate than himself, he wants to ensure that, if he gives £1 a week that person will benefit by £1 and will not have 5s. of it knocked off by the local authority. Charities have great difficulty in raising the money that they do by the time-honoured methods of flag days and bazaars. If one held a bazaar in order to relieve the Exchequer of a liability, one would not raise very much money. If one held a bazaar to pay sums to the deaf, the blind, the mentally handicapped and the old, one would get money because people would think that it was going to that particular purpose. What new Clause 4 is designed to do is to say that payments made because of people's charitable qualities should go to the purpose intended, and not to relieving the Exchequer or the town hall of a liability which it has assumed under the Bill.
New Clause 5 has been described as “well drawn” and has received the greatest amount of support. Again, it has a very particular and equitable purpose. I can best describe it by saying that I well remember as long back as the election in 1945—I hasten to add, well before I was old enough to vote—going to a meeting and hearing someone talking about public assistance. He complained that, because he had saved some of his money, he could not get anything, whereas a man down the road had [column 678]spent all he had and could get everything from the State. The new Clause is designed to secure that there should still be some incentive to thrift, but that people should not be deprived of a rate rebate.
There are many ways in which people can help themselves and, in doing so, they should not deprive themselves of help by the State. There are two basic ways of helping oneself. One is by continuing to earn after one retires. As the right hon. Gentleman knows, many people do small jobs. It would be a great help if the amount which comes in from that occupation could be disregarded, otherwise anyone in that position will say to the person who is giving them the rate rebate, “If I help myself, you cease to help me.” That is wrong. The other way is to make a small provision for payments after retirement, and the Clause covers both those ways in which people can help themselves. The feeling is that by helping themselves, they should still be entitled to a rate rebate.
New Clause 6 has not received a great deal of attention from hon. Members who have spoken so far. It arises in this way. Most of us have now had a good deal of correspondence from people who are the long-term sick, because they will not benefit in any way from the present proposals for increased sickness benefit made by the present Government. One feels that it might be appropriate to help them by saying that the payments which they get in respect of long-term sickness or long-term industrial disablement, which are all exempt from Income Tax, should not preclude them from getting help as ratepayers under the Bill.
Obviously the right hon. Gentleman would then say to me that they are people who would have disregards under several of these Clauses. I have considered whether we should have an overriding disregard, because, if the Minister was going to accept all these, he would be capable of drafting an overriding disregard to be put into the Bill in the other place.
May I now take the particular point mentioned by my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis)? There are disregards in the Bill. The disregards are for benefits in kind, but there is not much point in [column 679]taking two sacks of coal per week to a retired pensioner who can only heat his room by electricity. It is much simpler to give him £1 a week and let him do exactly what he likes with it. In his Circular, the Minister has defined “income” as that which comes in. I should have thought that some of that which came in could quite well be defined as “gift” or “capital” .
Instead of giving £1 a week, supposing that a charity were to give £52 at Christmas. Is that income? I should have thought that it was a gift. Supposing the charity were to give a voucher for the grocer. Is that a benefit in kind, or income which comes in? The right hon. Gentleman already has disregards under his own circular. He must attempt to make them equitable.
He went on to say that all people have to do is fill in a form, and that they would resent these inquiries. What people resent is inquiries into their incomes, not inquiries into disregards where they are income disregards. My right hon. Friend and I have some experience of that.
Under his circular, one does not just have to fill in a form to get a rate rebate. It is a form consisting of 14 questions, and I would say that the declaration made at the end of it would not be understood by the person who signed it unless he had sat on the Committee considering the rate relief Bill. Just listen to it:
“I declare that the information given on this application is accurate, to the best of my [column 680]knowledge and belief, and that during the income assessment period ended three months before the start of the rebate period, no other income was received by me (or my wife/husband) apart from that declared.”
I cannot think that the average person will understand
“… the income assessment period ended three months before the start of the rebate period.”
I know what it means but only because I sat on the Committee for a considerable time. In addition, some of the other questions on income are much more complicated than any question which says that if a person has £1 a week from a charity, it can be disregarded and he does not need to declare it. That would be very much simpler than what the right hon. Gentleman is proposing.
Let me throw out a challenge to him. I am quite willing to put up a stake of £20 if he will put up a contrary stake of £20, and I will bet him £20 that in the next Parliament his Bill will need amending with regard to charities and income disregards. Either he must do it, or my right hon. Friend or I will have to do it, and it would be very much simpler to do it now.
If the right hon. Gentleman will not agree to put in what we would call an equitable system of tax reliefs, including some of these disregards, I very much hope that my right hon. and hon. Friends will think fit to divide the House.
Question put, That the Clause be read a Second time:—
The House divided: Ayes 115, Noes 127.