Clause 16.—(Increase of relief for dependent relative of female claimant and for widows and others in respect of children.)
Mrs. Margaret Thatcher (Finchley)
I beg to move Amendment No. 86, in page 18, line 33, to leave out ‘ten’ and to insert ‘twenty’.
The Temporary Chairman (Mr. Jennings)
It will be for the convenience of the Committee if we consider at the same time Amendment No. 87, in page 18, line [column 1110]37, leave out ‘twenty’ and insert ‘seventy’, and Amendment No. 88 in page 18, line 37, after ‘pounds’, insert: ‘and for the reference in that subsection to two hundred and ten pounds there shall be substituted a reference to two hundred and fifty pounds’.
We now come to the Clause which gives special tax relief to single women who are maintaining dependent relatives, and we have a number of Amendments on the Notice Paper, the first of which is to increase the relief given to £120. This relief at the moment is £75, and the Bill increases it to £110. [column 1111]It is a rather curious figure to have selected, and we have chosen the figure of £120 for a very good reason.
An example may make it clear to Niall Macdermotthe Financial Secretary. There might often be cases of an elderly couple where the husband dies leaving the mother a widow. Her support is then carried on by her daughter. Daughters frequently take over the task of supporting their mother or other relatives. The irony of the Financial Secretary's suggestion would be that the mother, during her lifetime as the wife of her husband, would be ranked for an allowance of £120, but when her support is taken over by her daughter that tax allowance would be reduced to £110 on this suggestion.
So, while husband is maintaining wife he gets in respect of her a tax allowance of £120; when daughter maintains that same woman, her mother, the tax allowance is reduced. This seems to make neither rhyme nor reason. It seems to be very much better, if the Financial Secretary is to give this extra help, and we welcome what he is doing, that he gives it in some reasonable amount, and we would suggest that the sum of £120 would be very much better than £110, not merely because it is £10 more, but because it is related to the other personal relief.
One has to note in this Clause that relief is given only if the relative is incapacitated by old age or infirmity from maintaining himself or herself, or is an elderly person. In either case, one would expect that the elderly or infirm person can often do less than an ordinary hale and hearty man or woman. So that is another reason why the relief should at any rate be equal to that for a wife and it would be a reason why it should probably be put up even further. That is not an argument which I am advancing at the moment, but there are good arguments for making it at least £120.
The other Amendments, to which I will refer briefly, concern the limits up to which a person is regarded as a dependent relative. These are changed quite frequently, but it is noticeable, if one goes back in history, that they have hitherto always been moved in years when there has been an increase in retirement pension, so that as there has [column 1112]been an increase in retirement pension the income limits which enable a person to claim relief have been put up. That is obviously in order that the increase in pension should not be clawed back in tax.
There has never been an increase given without an increase in pension. The point is that if the Financial Secretary and the Government are really setting out to give preferential relief to the single woman, who often bears many burdens, and supports her ageing parents, frequently with precious little help, it would be as well to raise these particular limits. At the moment, as the Financial Secretary know, on his proposals full relief of £110 would be given in respect of a relative who had an income of £210 a year—which is just over £4 a week—or less. Over that income of £4 a week, the relief would taper off until it was extinguished at £320 a year. It would dwindle and dwindle, until it was totally extinguished after the dependent relative had an income of just over about £6 10s. a week.
What we are proposing is that the full relief should be given up to an income of £250, and thereafter it should taper off. If our £120 suggestion was accepted, the relief would not be extinguished until a dependent relative had an income of £370 a year. This would be the first real advance on that relief which we have had for a long time.
There are some very good reasons for giving that increased relief. At the moment, the single scale rate is £4 10s. for an old person—that is, £234 a year. That is the minimum, without any allowance for rent. Therefore, we should put on only a very modest amount—a few shillings—for rent. An income of £250 is by no means large.
We put forward these Amendments in the hope that the Financial Secretary will be able to accept one, or preferably both, of them. I had hoped that now that we are no longer on the Surtax Clauses the benches behind the Financial Secretary would have filled. For the Labour Party, justice usually ceases where Surtax begins. But justice usually begins from nought up to Surtax. Perhaps I have been mistaken in that view. I hope that the two hon. Members on the benches opposite will be in favour of our proposal.[column 1113]
Mr. Paul Dean (Somerset, North)
I support the very strong case which my hon. Friend the Member for Finchley (Mrs. Thatcher) put forward for this modest Amendment.
There is only one solitary Member on the Government back benches. Here we have one of the few opportunities which will arise during our discussion of the Bill to discuss what one might call the social service Clauses. It is an extra-ordinary commentary on the interest of the Labour Party in these matters that it is able to muster no more than one honourable and hearty soul for the debate. I hope that he will not only listen to the debate, but will take part in it. [Laughter]
Sir Douglas Glover (Ormskirk)
It is not a laughing matter.
It is not a laughing matter, but I will give the hon. Member for Heywood and Royton (Mr. Barnett) the benefit of the doubt and say that he is laughing in embarrassment caused by the absence of his colleagues.
I should not mind betting that I have spent a little more time in the Committee during the Bill's proceedings than the hon. Gentleman.
I concede that willingly to the hon. Gentleman. The point which I am making is that when Surtax was being discussed there was a quite respectable gathering on the benches opposite, but now that we are discussing the social service Clauses and people who are bearing burdens through looking after elderly relatives——
The Temporary Chairman
Order. We have dealt at length with this point about the attendance, or lack of it, in the Chamber. Let us now get on with the Amendment.
I am sorry that I was provoked into a diversion. I will return to the Amendment.
Sir D. Glover
Perhaps hon. Members opposite are looking after dependent relatives.
That is an interesting thought, but I had better not develop it, otherwise I should incur the displeasure of the Chair. [column 1114]
We are dealing with people, many of them single women, who are bearing a very considerable burden. In many cases, they have sacrificed jobs and prospects to look after elderly and infirm relatives. We hear constantly from Ministers who administer the social services the plea that this cash allowance and other cash allowances cannot be increased at present because the resources are not available. Here we have a chance in these Amendments to give a little more assistance and encouragement to those who, because they are bearing family responsibilities, are saving what would otherwise be a very much bigger burden on the cash and care services of the State.
I hope that that economic argument will appeal to the Financial Secretary. On 20th March he said that the tax forgone on the dependent relative allowance now amounts to about £34 million a year. That is a comparatively modest sum of taxation to forgo when one considers the work and family responsibilities which these women are bearing. The cost to the State would be very much greater if they were not able and encouraged to bear it.
It is interesting to note that most of the dependent relative tax relief is going to those on comparatively modest incomes. We are sometimes told that the more we extend the tax relief system, the more we pile on additional benefits for the rich. But the figures which the Financial Secretary gave show quite clearly that the bulk of the tax forgone goes to those who have incomes under £2,000 a year. The figure for those whose income is over £2,000 is given by the Financial Secretary as negligible.
Bearing in mind the very strong arguments put forward by my hon. Friend the Member for Finchley and the relationship between this tax relief and the cash benefits within the social services, I hope that the Financial Secretary will accept the Amendment.
I am tempted to speak as hon. Members opposite have chided us because there are fewer Members on this side of the Committee than there have been heretofore. Having sat here for some time, I would remark that there are fewer Members opposite than there have been heretofore, and I am tempted to wonder whether that is [column 1115]because a certain race is being run at Epsom—[Hon. Members: “It has been run.” ] That shows how ignorant I am in these matters. Hon. Members opposite are much better informed on them. Last night, one of them made a great plea for the rich but non-industrious Surtax payers, as they were described. He thought it a terrible shame that there are so few British racehorse owners left. For hon. Members opposite to chide us and to say that we do not care about the poorer sections of the community who are affected by the relief which we are discussing is a little rich.
I am always tempted to support what the hon. Lady the Member for Finchley (Mrs. Thatcher) says. She presents her case in a very charming manner, although today the charming dress which she is wearing clashes a bit with the colour of the bench on which she sits. However, that would not prevent me from supporting her case if I thought that it was a strong case.
I would very much encourage the idea of helping people to look after their old relatives, having seen something of it in my family, and having seen something of the situation of old people, no matter how well they are looked after in the best of old people's homes. There are old people's homes which are very well run by wonderful wardens. For instance, there are really dedicated people in the Salvation Army. Nevertheless, the ideal situation is for old people to live in the happiness of their own family. If there is anything that we can do to encourage that, then certainly I should support it.
However, any figure which is fixed for dependent relative relief is arbitrary. The Government have chosen this year to increase it to £110. I wonder, as the hon. Lady did, how on earth we get the £110. She has a very ingenious method of arriving at the figure of £120. That is precisely the difference between what the person would have for a widowed mother and what he would have for a wife.
We can find all sorts of anomalies of this kind in family allowances, whatever formula we adopt. It is arguable whether it is more expensive to keep a wife than a widowed mother. It would be an interesting argument to pursue. I doubt whether many husbands in this House would not agree that it is much more [column 1116]expensive to keep a wife than a widowed mother. It is an arguable point. Some hon. Members may disagree, but I would have thought that, generally speaking—depending upon the wife—it is more expensive to keep a wife.
I cannot allow this to pass. On the whole, bearing in mind the number of duties that they perform, wives are very badly paid by their husbands.
I am sure that the hon. Lady deserves every penny she is paid. I have no doubt that many wives deserve more, but I am making the simple point that it is likely that most husbands would agree that it is more expensive to keep a wife than a widowed mother.
Mr. Bernard Braine (Essex, South-East)
One can argue along those lines, but surely the hon. Member is aware that in many instances in his own constituency—it is certainly so in mine—a woman has a dependent relative who does not enjoy the best of health, when the strain of care and the need for extra nourishment can impose a frightful burden. The hon. Member must not make light of the situation.
I was not for a moment making light of it. The hon. Member will be able to make his own speech in his own time. He should not impute to me that I was making light of the burden of maintaining old people. I agree that it is a great burden, and not only in financial terms. It is a burden in terms which cannot be measured—in terms of love and affection. But it is a minor point that we are debating, namely, the question of which arbitrary figure we should use as a dependent relative allowance. That is the point at issue.
The only argument put forward by the hon. Lady was that it would be better to have £120 than £110. She equated this with the relationship between maintaining a widowed mother and a wife. That was her only real argument. We could choose £150. I should be delighted to give £200 in respect of a dependent relative allowance. We want to increase these allowances. But if—as we must—we have to choose an arbitrary figure, it is stretching the debate to make a great deal of the question whether it should be £120 or £110. [column 1117]
The hon. Member for Somerset, North (Mr. Dean) said that this increase was going to those on the most modest of incomes. Very often the most modest incomes of all are those of people who are not paying tax—certainly those who are not paying tax at the standard rate. If those people are maintaining a dependent relative they get no allowance. So, although we want to give some dependent allowance in respect of the person who is paying tax at the standard rate or at a reduced rate, we also have to bear in mind, when playing about with the total national income, the fact that anything we give away here, or any reduction we make in tax revenue, means that less is available in benefits for those whom we need to help but who are not paying tax at all.
I support the Amendments, the case for which was argued so cogently by my hon. Friend the Member for Finchley (Mrs. Thatcher) that there is no need for anyone to speak at length in their support. The Bill provides increased relief to a single woman with a dependent relative, and in that sense the provision can be welcomed. But I find it exceedingly odd that while the Bill alters the top income limit it leaves the bottom limit unchanged. As I understand, the Amendments raise the top limit further, but also increase the bottom limit. I am sure that that is only right and fair, and I hope that the Financial Secretary will be able to say that the Government are prepared to accept these modest suggestions.
Our proposals are right, because our aim should be to encourage people to shoulder family responsibilities. I have always argued that the system of family allowances should not have been limited to dependent children. It should have been extended to those who have dependent relatives.
This is not the time and place to argue what the structure, philosophy or purpose of the Welfare State should be, but it is clear than an increasing number of our old people will have to be cared for. They are living longer. It is better that, as far as possible, we preserve their independence in their own homes. It is better that they should remain in the bosoms of their families, rather than drift into institutions. There is no argument about [column 1118]that. It is clear that old people need their independence, and that they also need a degree of privacy in the home. What they and their relatives were prepared to put up with years ago has undergone a considerable change.
I enjoyed the speech of the hon. Member for Heywood and Royton (Mr. Barnett). When I intervened I merely wanted to say that it is impossible to equate the position of a dependent relative with that of a wife. In some cases a wife is a very costly member of the family; in others, thank heavens, she is the means by which the family is held together and its income is properly spent. We cannot generalise about this. Similarly, many a girl who may have forfeited her chance of marriage in order to look after a widowed mother finds it a very great strain. She may find it a far greater burden than her father did when he was alive.
The hon. Member said that we cannot put an arithmetical figure on this; it is a purely arbitrary decision. The Government have decided upon a certain figure and the Opposition suggests a higher figure. Perhaps all these figures are arbitrary, but it seems to me that it would be arbitrary indeed to say that we should not extend in respect of a dependent relative the same treatment as we extend in respect of a dependent wife. For those reasons I strongly support the Amendments.
A tax allowance should be the minimum amount necessary to maintain a dependent relative, and it is impossible for us to decide that the mother of a working woman, maintained by that working woman and provided with a home by her, is less costly to maintain than the wife of a man, working in the same employment. What we are asking for here is that justice should be done. We should not, therefore, discriminate as between the cost of maintaining a dependent mother or other dependent relative, on the one hand, and the cost of maintaining a wife, on the other.
After all, a daughter who goes out to work and maintains her widowed mother has precisely the same expenses. The House has to be maintained. I have constituents who say to me, “Why should I be treated differently? I have had mortgage repayments to make since my [column 1119]father died. I have rates to pay. My mother costs as much to feed now as she did as my father's wife.” It is illogical for the hon. Gentleman to argue as he did. It seems to me that the Amendments make good, sound, social sense. They also make economic sense, because they encourage a feeling of responsibility among a large number of people who do not merely consider it a duty to maintain their relatives but enjoy going on doing their work. It gives them a raison d'être. It seems to me that there is a case for behaving generously here.
The Chancellor admitted at the end of an extremely dull and unedifying Budget statement that here was a class of person who needed our help and sympathy. He has moved a little in that direction. All that we ask the hon. and learned Gentleman to do is move a little further and recognise the principle of equity which lies behind these Amendments.
The Financial Secretary to the Treasury (Mr. Niall MacDermot)
If the case was as clear as hon. Members opposite appear to suggest for equating the amount of this allowance with the difference between the single person's and the married person's personal allowance, it is astonishing to me that it did not dawn on them when they were in office.
What has happened is that, in this Clause, the Chancellor has proposed a very substantial increase in the dependent relative's allowance. The present allowance is £75 to a taxpayer maintaining a dependent relative who is incapacitated by old age or infirmity. The Chancellor proposes to increase that to £110 where the taxpayer supporting the relative single-handed is a single woman, including in that term a widow, a divorced person, or a separated wife.
Out of the generosity of our hearts, we should all like to be able to increase all tax allowances. However, knowing that he had very little room for manoeuvre this year, my right hon. Friend was moved by the representations which were made, particularly following the campaign by the National Council for the Single Woman and her Dependents, on behalf of this specially deserving class, as it appeared to him, of single women who have to maintain elderly relatives. [column 1120]
There is a special reason for helping this class. Not unnaturally, there have been objections and protests from some single men who maintain elderly relatives and who may, in the particular circumstances of the complainant, not have a greater income than some single women who will benefit from the Clause. Naturally, there have been protests of that kind. I think that the right answer to give is that, taking the generality of the class, single women earn lower incomes than men in comparable positions, and the fact that the Chancellor is not able to help everyone in this position is not a reason for not trying to help a clearly definable class who appear to be more deserving.
The first Amendment is the proposal that the increase should be to £120 instead of to £110. This calls for an explanation of why my right hon. Friend chose the £110 figure. The argument for the Amendment is based on the extra amount of the personal allowance of a married man, compared with a single man. It is said that this is comparable to the position of a man who maintains his wife and, therefore, that the personal allowance should be comparable.
The point is that the two situations are not alike. It is for that reason that it has been thought right to choose the £110 figure. In trying to pitch the allowance at the right figure, one has to try to do justice between taxpayers with differing personal circumstances. If we did what is being asked and equated it to the extra allowance which a married man receives in respect of his wife, we should be ignoring the fact and the distinction that the married man's allowance is not an allowance for one person but for two persons. Indeed, it is often an allowance for two incomes. The dependent relative's allowance is an allowance for one person, for the dependent relative. The relative who is being supported also has a personal allowance, and his or her income is not aggregated with that of the supporting relative.
The hon. Member for Finchley (Mrs. Thatcher) quoted as an example the case of a married woman who is widowed, and, instead of being supported by her husband, is supported by her daughter. However, when the father dies and the [column 1121]daughter takes over responsibility for the care of her mother, it is not true that the allowance in respect of her mother drops from £120 as a wife to £110 as a dependant, because the mother now gets a £220 personal allowance for herself in addition to the £110 allowance to which the daughter is to be entitled.
It is for that reason and to keep some proportion between the two cases which we were asked to compare—the daughter supporting her mother and the husband supporting his wife—that my right hon. Friend thought that a generous figure was £110, still leaving some distinction between that and the £120 for the married person.
With this Amendment we are discussing Amendments Nos. 86 and 87, and they deal with the taper to avoid a sudden cut-off. If the income limit of the dependant is about £210, there is a provision for tapering the allowance. The Amendments propose to raise the income limit of the dependant, up to which the full dependent relative's allowance would be given, from £210 to £250. The tapered allowance for a dependent relative with an income in excess of the limit for the full allowance would begin at £250. With an allowance of £120 as proposed in the other Amendment, no allowance would be due where the dependant's income was £370 or more. These more favourable income limits would apply only to dependent relatives maintained by single women.
Of itself, the increase in the allowance to £110 which my right hon. Friend is proposing carries with it an increase in the limit of the tapered allowance from £284 to £319. It is our view that a further special increase in the dependant's [column 1122]income limit in these cases would not be justified.
I accept what the hon. Lady implied, that there is no reason to be tied blindly in this respect to the National Insurance pension level, but I think that the short answer to the proposal in these further Amendments to raise the dependant's income limit for full dependent relative allowance is that there is no reason to have a bigger income limit for the test of dependency on a single woman than for a test of dependency on other people. The basis for the increase in the basic allowance falls when we come to consider what should be the income limits of the dependent relative in this connection.
As I have said, the reasons for taking account of the additional difficulties of the single woman are that she often cannot work full-time because of the need to look after the dependant, and that in any case her rate of earning is lower than that of a man. Neither of these points argues in favour of raising the relative's own income limit up to which the full allowance is given. For these reasons, we propose increasing the dependent relative allowance in the way that is suggested, but not making any addition to the limits of the dependant's own income for these purposes.
I am a little disappointed with the Financial Secretary's reply, but I shall not detain the Committee. Perhaps it would be better if we should what we felt about this in the Division Lobbies.
Question put, that ‘ten’ stand part of the Clause:—
The Committee divided: Ayes 216, Noes 147.