The first amendment selected is No. 377, in page 3, line 9, after 'garage' insert

'shop, workshop, outhouse, greenhouse, stable or kennel'.

With it we may discuss Amendment No. 300, in page 3, line 11, after 'it', insert

'and to the provision of a building incorporating a dwelling from which the said person intends to conduct his own business'.

Amendment No. 377 is not moved, Mr. Deputy Speaker, under protest.

The next amendment selected is Amendment No. 305, with which we are to take Amendments Nos. 306 and 307.

On a point of order, Mr. Deputy Speaker. It was suggested last night, when we were discussing these matters in a rational manner before the Government began to put the strong arm on, that we should take these amendments together with the succeeding group of amendments, Amendments Nos. 8, 301, 303, 304 and 319, in the names of the right hon. Member for Down, South (Mr. Powell) and his hon. Friends. If it is for the convenience of the House, perhaps we can proceed in that way.

That is agreeable to us.

I beg to move Amendment No. 8, in page 3, line 15, at end insert

'unless one or more new dwellings are provided by such conversion, reconstruction, alteration or enlargement'.

I understand, in view of what has just been said, that it is convenient to discuss with this amendment the following amendments:

No. 305, in page 3, line 13, leave out 'conversion, reconstruction,'.

No. 306, in page 3, line 14, after 'reconstruction', insert 'or'.

No. 307, in page 3, line 14, leave out 'or enlargement'.

No. 301, in page 3, line 15, at end insert

'except where such conversion, reconstruction, alteration or enlargement provides accommodation for a disabled person or persons'.

No. 303, in page 3, line 15, at end insert

'except where it provides additional accommodation either as part of the existing dwelling or as a separate unit attached to or within the said dwelling'.

No. 304, in page 3, line 15, at end insert

'except where it provides additional accommodation as a separate unit attached to or within the said dwelling'.

No. 319, in page 3, line 15, at end insert

'save where such work qualifies for grants under Part II of the Housing Act 1974'.

I move the amendment with some confidence because of the course of the debate on the same point in Committee. The Financial Secretary was good enough to say at the end of that debate that he would be happy to study the clause again and come back on Report. I am inviting him to do just that. The effect of the amendment would be to realise more satisfactorily and without anomalies what is generally agreed to be the Government's object in Clause 3, namely, to ensure that where a new unit of accommodation or dwelling is provided there shall be no inequity between the instance where it is provided by a professional builder and the instance where it is provided by amateurs doing their own work.

As drafted, the clause would exclude from the benefit of the VAT refund new dwellings which were provided by self-build when they were the result of the alteration or conversion of existing buildings. I assure the House that this is a practical and in no way captious point. However it may be in other parts of the country, in Northern Ireland it is quite common for people, with their own labour, to convert something which is not a dwelling into one or more dwellings.

In Committee, my hon. Friend the Member for Londonderry (Mr. Ross) mentioned the possibility of converting a school house into a dwelling. I have such an example clearly in mind in my constituency. In Northern Ireland a large number of small schools have, as a result of reorganisation, become superfluous and are perfectly capable of being converted into acceptable dwelling places for one or more families. Obviously this sort of work can be done, and is done, by people working in their own time.

It cannot possibly be the intention to penalise the providing of a new dwelling in that way. After all, it is an economical method of increasing the amount of accommodation with far fewer materials and much less work than are required in a new dwelling. In Committee the Financial Secretary said:

"The relief that we have devised in the clause is intended to assist people who are actually creating new living space …".—[Official Report, Standing Committee A, 23rd January 1975; c. 65.]

He went on to make the matter a little more precise—to exclude extension, I take it—by referring to "constructing new housing units". It follows necessarily and logically that the hon. Gentleman should accept the principle of the amendment to fulfil his intention.

I hope that the Financial Secretary will not argue that difficulty could arise in policing the scheme or in avoiding misuse of the clause. There can be no difficulty in deciding whether a new dwelling has been created. For rating purposes, it is necessary that the new dwelling should be rated separately. There are several respects in which the existence of a new dwelling is objectively ascertained, so that there is no problem for Customs and Excise to ascertain whether an application for refund falls within the ambit of the clause.

This is by no means an academic point. Substantial numbers of people will benefit from and will be encouraged to provide new dwellings by means of conversion if this logical completion of the clause is accepted by the Minister. It would assist our proceedings and help us to reach other matters in the Bill if he were to signify his intention to accept, at any rate in principle, what is proposed in the amendment.

The right hon. Member for Down, South (Mr. Powell) has addressed his remarks exclusively to Amendment No. 8. I should like to refer to the amendments in the names of my right hon. and hon. Friends.

Amendments Nos. 305, 306 and 307 are grouped and I should like to add for the purpose of my comment Amendments Nos. 303 and 304, whose objective is precisely the same as that of the right hon. Member for Down, South. The intention is to add to the relief given against VAT work done for the reconstruction, alteration and conversion of buildings as well as new construction. The concept of Amendment No. 301 is the same, but it is somewhat limited as it relates only to accommodation for disabled persons. Therefore, inasmuch as those amendments are already covered by the arguments adduced by the right hon. Member for Down, South, I do not propose to detain the House by arguing about them, save to say that my right hon. and hon. Friends are perfectly prepared to support the right hon. Gentleman in his amendment.

I turn to Amendment No. 319, which is somewhat different in concept. There is an error in the print of the amendment. It refers to Part II of the Housing Act 1974. It should refer to Part VII. I took up the matter with the Public Bill Office and I believe that the error has been pointed out to the Government, so that we may proceed without difficulty.

In Committee the Financial Secretary resisted on a number of grounds amendments which proposed relief from VAT in addition to the relief where a new building was being erected. First, he said that the amendments made no distinction between useful additions to buildings and an addition where "an element of discretionary expenditure" arose. He went on in column 65 of the Official Report for 23rd January of the proceedings in Standing Committee to talk about the possibility of billiard rooms and rooms for luxury use being brought within the ambit of the amendment, and he said that for that reason he had to resist it.

The second objection which the Financial Secretary raised was that an amendment extending the relief to reconstruction, alterations and conversions would make it difficult to estimate what the cost to the Exchequer would be. His third objection was that such works, especially repairs and decorations, were difficult to police. Fourthly, he objected to amendments of the kind proposed on the basis that they would give rise to a myriad of small claims which the Customs and Excise would find it difficult to deal with. He was kind enough to say in Committee that he would be happy to study the matter again. He said that he would be particularly anxious to study again the position where the works attracted local government grants. Amendment No. 319 is precisely on that point.

Part VII of the Housing Act 1974 provides for financial assistance to be given by local authorities to those who carry out certain works of improvement, repairs and conversion when it is in the public interest that such work be carried out. Section 56 provides that grants may be made towards the cost of work required for the following matters. First, they may be made for the provision of dwellings by the conversion of houses or other buildings, which is much in line with the argument put by the right hon. Member for Down, South. Secondly, grants may be made for the improvement of dwellings; thirdly, for the repair of dwellings; and, fourthly, for the improvement of houses in multiple occupation by the provision of standard amenities.

There are various grants laid down in the Housing Act 1974 which are all directed to those specific objectives. There is an improvement grant, which is for work required for the provision or improvement of a dwelling for a registered disabled person. That relates to the area covered by Amendment No. 301. There is an intermediate grant for work which is required for the improvement of a dwelling by the provision of standard amenities. Standard amenities are defined in the Sixth Schedule to the Housing Act as the provision of a bath, a hot water supply, a sink and a water closet where those amenities do not exist. That is part of the general strategy of successive Governments to bring the housing stock up to modern standards and to make houses suitable for everyday living. In addition, there is a special grant for works required for the improvement of a house in multiple occupation, and a repairs grant in respect of repair or replacement relating to a dwelling in a housing action area or general improvement area.

There is no need for me to go into the concepts of housing action and general improvement areas. They are areas in cities on which Parliamment has decided that money shall be spent from the public purse to rescue houses and prevent them from becoming slums so that decent conditions may be provided for the people living there.

From my brief outline of the area covered by improvement grants, I am sure that the Financial Secretary will see at once that his prime objection to extending Clause 3 is met. There is no question that public money will be wasted on frivolous or luxurious extensions to houses. We are limiting the amendment precisely to those areas in which Parliament has already determined that public money must be spent in the national interest to obtain the necessary improvement of our housing stock.

The Financial Secretary's second objection was that there would be a cost to the Revenue which would be difficult to estimate. Here again, we are meeting the point by limiting the extension of Clause 3 to areas where these grants apply. Strict criteria are laid down in the Act which must be fulfilled before the grants can be paid by local authorities. Clause 57 of the Housing Act 1974 states that the application to the local authority must contain certain information, in particular details of the work and an estimate of its cost, before a grant will be entertained. The Department of the Environment already has experience of the level and rate at which improvement grants are running. There is no open-ended commitment and no unknown quantity here. The Treasury has merely to look at the rate at which the grants are running in the Department of the Environment to see what will be the cost, and the argument that it is diffisult to estimate in advance cannot apply to this category.

8.15 p.m.

The Financial Secretary's third objection was that these matters are difficult to police. There is no question of there being any difficulty of policing, because there must be a prescribed application to a local authority in a particular form, with details of the work and estimates of the cost being specified in advance, the work being supervised by local authority employees and final certification being required by the borough surveyor or the borough engineer before the grant is paid. There is policing right the way through virtually on schedules of works.

Finally, the objection that there will be a myriad of small claims is not valid. Section 64 of the Housing Act 1974 refers to a grant of up to £2,000 for a single dwelling or, where a house is being converted into a number of separate dwellings, a grant of £2,400 for each dwelling. Following the encouragement which the Financial Secretary gave us in Committee, I entreat him to accept the amendment, which meets all the objections he raised in Committee against extending Clause 3.

I add one further argument to my case. The Government have said that it is right that public money by way of grant should be spent on doing this work. The money is given to the person carrying out the work to enable him to do it. When we give public money in that way it is a little absurd to seek to claw it back by VAT on the material used in doing that work. It is a derogation from the grant for the Government to take part of it back by way of VAT. I urge the Financial Secretary to give sympathetic consideration to the amendment.

Being fortunate, or unfortunate, enough to be a member of the Standing Committee, I have no doubt that the Financial Secretary recognises that we have here a valid point. Many right hon. and hon. Members have complained that the Financial Secretary did not write to them, but he did write to me on this matter. He sent me a most courteous letter, and the only fault with it is that he turned down my application. I do not understand why, because after the manner in which he treated us upstairs I had hoped that he would go some way towards accepting the principle of our argument.

Some of the reasons for not doing so which the hon. Member advanced in his letter I find rather strange. He said that,

"The inclusion in the scheme of relatively minor work would multiply the number of claims out of all proportion."

What on earth has that got to do with the principle? If it is a reasonable point, it is only right that the Government should make some effort to meet it. The hon. Gentleman went on to talk about

"a further relatively marginal fiscal relief for such improvement work".

It is not necessarily marginal to the individual. No doubt the Treasury considers that it is marginal, but it collects hundreds of millions of pounds each year. The Financial Secretary went on to say that

"almost invariably some of this would consist of repair work."

Surely this is an indication of the thinking underlying the hon. Gentleman's attitude. It would appear that the Revenue is treating individuals carrying out conversions as if they were setting out to defraud the Revenue. I do not think that the average person is a criminal, or has criminal intent. These are honest people, trying to do something for themselves. It is extremely unlikely that they would defraud anyone. The Minister went on to say that it is possible that some of the material could even be sold to another individual. The people we are speaking about are unlikely to go to that length. These are people trying to carry out a cheap job and they are extremely unlikely to try to make a business out of collecting 8 per cent. on the material. It is so ridiculous that it does not bear thinking about.

The Government seem to have the impression that they would have to police every building that has been converted. Surely it does not take that much policing to find out, in general terms, the amount of material needed in a conversion. Any master builder could tell. If a master builder is brought in to do the job, he will get a refund. I cannot see any reason why the individual should not have the same treatment. It is nonsense to say that VAT cannot be refunded if a conversion is built by the owner but it can be refunded if it is built by a builder. There is no difference whatever to the Revenue.

It may be that in Committee we went further than giving relief for the conversion of a new housing unit. This amendment does not go as far as we sought to do then. We have made it tighter. There is no reason why the amendment should be turned down.

Often, the man who owns a large house and has retired, and whose family has grown up, finds that he has room to spare. Such a house may lend itself to subdivision into flats. That should be encouraged, especially in towns. If such a person calls in a builder to carry out the conversion work the VAT will be refunded. If he is a handy fellow and does the work himself he will not get the VAT back. This is a gross inequity, which the Government should make every effort to remedy. The amendment will meet the point easily. It should be accepted.

I support these amendments and am grateful to my hon. Friend the Member for Hornsey (Mr. Rossi) for his persuasive replies to the issues which were bothering the Financial Secretary in Committee. I am grateful to the Financial Secretary for keeping an open mind, at any rate until this stage. Not only in Northern Ireland are there people who are anxious that this concession should be made to cover "do-it-yourself" work. It is a matter of some amazement to me that the Government and their advisers did not think that this was important enough to warrant bringing forward a clause embodying these amendments much earlier.

I hope that the Financial Secretary will not be deterred from accepting the amendment by the fact that, traditionally, it is the Conservative Party that has been concerned with legislation that would extend the quality of life in the way that people will be able to extend the quality of their life by extending and improving their homes. I hope that he will not be deterred by the fact that it is normally the Conservatives who have supported self-reliance, which is typified by those who extend their homes in this way. I hope, also, that he will not be deterred by the fact that it is normally the Conservatives who have had respect for the atmosphere of family life engendered among those who carry out "do-it-yourself" work, when young people often leave the television sets to help Dad instead.

Perhaps the Financial Secretary, being a Financial Secretary, will bear in mind that the improvements resulting from such work will probably increase the rateable value of premises and thereby increase the income of local authorities without affecting the Exchequer—something which the Financial Secretary and his right hon. Friends would be happy to see. I hope that the Financial Secretary will sense the strong feeling on the Opposition side of the House and in the country in favour of these concessions. If he fails to grant them it will look very much as though he is being particularly petty to millions of ordinary men and women who take pleasure in "do-it yourself" activities. I am sure that neither meanness nor pettiness is a mark of this Financial Secretary.

I support the amendments. There are in my constituency a considerable number of self-build owners. Many of these schemes have operated for many years. The standards which were originally agreed are out of date and require improvement. I am concerned about those people who have made sacrifices and a determined effort to engage in self-build schemes. That group is determined not to be dependent on the State in any way. Its members wish to own their own homes and in many cases they have given up holidays, luxuries and pleasures to build their own houses and to become owner-occupiers. They are very much concerned with family responsibilities, determined to improve themselves and to give better opportunities and conditions to their children and other members of their family.

I hope that the Financial Secretary will give careful consideration to these amendments. Many of the people concerned have elderly relatives, particularly parents, whom they wish to incorporate into their homes as members of the family. If they are fortunate enough to obtain planning permission, and if they have a little land on which to build an additional room to bring an elderly parent into their home, this is very much to be desired and will mean a considerable saving to the local authority. We should encourage the fact that the family is being kept together and that the responsibility is being taken by the son-in-law or by the son of the family.

Any steps taken by the Government which will actively discourage these activities will turn out to be more expensive in the long run either to central or local authority funds. I hope that the Minister will support this group of people and will give them all the help he possibly can.

I suggest that there will be little scope for anybody to fiddle the situation. Inevitably, there will be some people who will fall into this category. However, an easy check can be carried out, because whatever plans are approved must have local authority permission and details must have been submitted to the local planning committee. It would not be difficult to check the value of materials used and to compare it with the plans submitted to and approved by the planning committee. I hope that the Minister will give the most sympathetic consideration to these amendments, will give genuine help to this section of the community and will do nothing to discourage the desire to improve properties. I hope that the Government will do all they can to help these families and to make them more effective and useful members of the community.

If the Government resist this amendment, they will prevent people who wish to take advantage of self-build schemes to obtain VAT relief. I do not see how the Government can sustain such an attitude. Indeed, I am surprised that the Financial Secretary has not cut short the debate and said that he is prepared to accept the amendment. I hope that I shall encourage him to do so very shortly.

We are dealing in this amendment with a group of people who are, perhaps, among the less wealthy. They do not have the means to bring in a builder to do the work for them, but have enough initiative to undertake the work themselves. They are self-reliant people who have avoided the soft option of sticking mum or dad in a council house or an old person's bungalow. They have taken the initiative in helping their families by creating an additional housing unit. They are the very people that society should seek to encourage.

I have in my constituency a number of people who find themselves in this situation. The Government should go out of their way to help them rather than to adopt a niggling attitude. Since I am on the subject of niggling attitudes, I should like to ask the Financial Secretary to re-examine the question of the date from which the self-build remission of VAT is to count. Is it necessary to run it right through till November? Could not he take it from the beginning of the last financial year—5th April 1974? If he did that, he would be helping a group of people who it is wholly desirable to encourage.

The Government fear abuse. However, the only excuse which can be presented for not accepting the amendments is the niggling one that one citizen might make 8 per cent. profit on the property. It is an example of the tortuous mind of the Treasury that it is more concerned with the possibility of one person abusing a rule than with encouraging 99 self-reliant citizens to get on with helping themselves.

I support the amendment. This is an important matter to Northern Ireland. A recent survey in Northern Ireland, conducted by the Housing Executive, showed that 40 per cent. of all the houses there, were not up to standard. Therefore, there is a great need to give this relief to those people who by their own efforts are prepared to bring their houses up to standard.

It was said that the local authority would have the opportunity of passing the plans. In Northern Ireland the position is centralised. The Planning Commission centralises the drafting of plans for the whole of Northern Ireland. Therefore, the Treasury has no excuse if it says that planning permission will be divided between the various local authorities and that it will be hard for the Treasury to keep in step with those who wish to claim the benefit if this concession is granted. That does not apply to Northern Ireland. This matter is of great importance to Northern Ireland, since it affects the well-being of the majority of people there.

The matter was raised in Committee by my hon. Friend the Member for Londonderry (Mr. Ross). A promise was given that the matter would be considered and we expected a favourable response. It seems to me that since the Government spokesman has not spoken, we shall not convince him. Therefore, is he prepared to listen to all that is said and then to knock down the proposal? I trust that that is not so. However, that is the way I read the position at present.

How interesting it is that once the guillotine has safely fallen the Government benches become deserted. It seems that Government supporters' interest in the Bill is only that it should pass.

I support the amendments. Although I do not wish to repeat the arguments in favour, I wish to demolish the defence put up by the Financial Secretary. He was kind enough to send out advance copies of it, and I am most grateful to him.

The defence appears to be this. The Customs will look at each application on the basis that it knows roughly what materials are incorporated in the average house. Therefore, if the figure is £5,000, it can allow that relief claim to that extent. When it comes to conversions or alterations, the Customs will not know whether the conversion should have cost £1,000 or £10,000, and, therefore, an inspection will have to be made. The implication is that the Customs will not make any inspection of new houses built under the do-it-yourself VAT relief scheme. This is fallacious, because a new house can cost anything between £5,000 and £50,000, depending on its scale, and the Customs will have no idea whether every £1-worth of material which is alleged to have been incorporated in the new house has been so incorporated. If a dishonest do-it-yourself builder wishes to purchase extra materials and flog them off to his friends, VAT included, and pocket the 8 per cent. difference, he will be just as able to do that in the case of new houses as in that of conversions. In effect, we are laying the Customs and Excise open to this risk by passing the clause at all. To extend it to conversions or alterations will in no sense increase that risk.

There is the further point that some of this will be repairs money. However, as has been pointed out, what is so dreadful about repairs? That is a matter in respect of which we ought to be prepared to allow a little money to go through which perhaps was not strictly intended under the clause.

The defence is fallacious. The Customs and Excise will be no more able to police exactly accurately the new house provisions than it will the conversion provisions about which we are talking. It is unlikely that it will be worth while to engage in flogging off VAT-free do-it-yourself materials, because the profit will be 8 per cent. at the most, and we all know that slightly suspect goods of this kind do not fetch the full market price. What is more, most of the materials will be heavy goods like cement, timber, bricks, aggregate and sand, which cost a great deal to move from one place to another. It would seem to be a hazardous business which made its profit out of shifting VAT-relieved building materials from the site of a conversion to the site of a would-be purchaser's establishment. If anyone suggested transferring such a business to his son, I should have thought that he would certainly be exempt from the capital transfer tax.

We had a valuable debate in Committee on this topic, but it was one without a conclusion. The various amendments being discussed in this debate give us an opportunity to reach a constructive and useful conclusion which will benefit many people.

The main point which I wish to bring out was touched upon in Committee, but it was not fully emphasised. The Financial Secretary will remember talking about building billiard rooms or swimming pools and about the difficulty of line-drawing. One of the most important line-drawing positions relates to the situation where someone is wealthy enough to employ a builder to provide a new unit of accommodation for his mother-in-law, to provide an additional room for a child or, for that matter, to provide a billiard room or a swimming pool. He will get VAT relief. Those who do not have sufficient income or capital to enable them to do this with the aid of a builder but have to do it themselves will not get the relief.

That leads on to two other points, especially in relation to the amendment moved by the right hon. Member for Down, South (Mr. Powell) and the amendment about housing grants. The two amendments are limited to new units of accommodation and to housing grant situations. In most cases they will have already been provided by builders. Therefore, by extending relief to the do-it-yourself builder we are assisting the more needy and less well-off. What is more, the costs will be comparatively small, as will the claims. I know that the claims point was bothering the Financial Secretary from the administrative point of view. But it follows that in both situations builders will provide that work. Therefore, we are dealing only with minority situations. But they happen to be the most worthy.

The case for these two amendments is very clear, and I hope that the Financial Secretary will be able to go a little further than he did in Committee. Amendment No. 303 was designed to deal with the situation where someone wanted to provide additional accommodation for a child, or possibly for his mother-in-law, in a house which was becoming too small but did not wish to have a separate unit. Again, this is a situation which is a worthy one and one where normally a builder would be employed. It is a situation which would be clearly identifiable. If the person does it himself, it seems reasonable to give him VAT relief. I have no doubt that the Financial Secretary will say that additional accommodation cannot be clearly defined and that the amendment is therefore defective. However, I hope that he will find some way of dealing with this situation.

8.45 p.m.

I was greatly impressed last weekend by a deputation which came to see me to talk about the difficulties relating to an appeal that had been made for funds for repairs and improvements to a church. The VAT to be paid would make all the difference, in terms of the amount that they had raised on the appeal, to whether they could go ahead because they would need to make a separate appeal to raise the VAT. That situation is relevant to these amendments. It may be that the 8 per cent. VAT will make all the difference to people without much additional income or capital going ahead with repairs or maintenance.

For these various reasons, I believe that we have offered to the Financial Secretary in this batch of alternatives the opportunity to cap what he generously said in Committee on this matter by finding some way to meet the objectives of putting into legislation something that is worth while.

We have had a useful and welcome temperate debate after some of the excitement earlier today. It is almost a relief to get back to the Finance Bill.

It is certainly useful to take these groups of amendments together. Amendments Nos. 303 and 304 are virtually identical with Amendment No. 8 moved by the right hon. Member for Down, South (Mr. Powell). Amendment No. 319, in the name of the hon. Member for Hornsey (Mr. Rossi), merely qualified the relief to make it available for work which qualified for grant under Part VII of the Housing Act 1974. Amendments Nos. 305, 306 and 307 have much the same effect as Amendment No. 8, though without specifying, as that amendment did, that a new dwelling had to be created.

I accept without reservation that the spirit of these amendments is at one with the Government's intention under the clause. I should not attempt to resist that proposition. However, there are difficulties. I must ask the House to accept my assurance that I have looked at the situation again between the Committee stage and Report.

The right hon. Member for Down, South suggested, for example, that there was no difficulty for the Customs and Excise in deciding whether an application for a refund fell within the clause. I could probably agree so far as that goes, but the difficulty arises in deciding whether the amounts are appropriate for relief. I am sure the right hon. Gentleman will accept that the Customs and Excise has to police any scheme of relief carefully and responsibly.

I am certain that in the part of the United Kingdom represented by the right hon. Gentleman and his hon. Friend the Member for Londonderry (Mr. Ross) and the hon. Member for Antrim, North (Rev. Ian Paisley) there are cases where old farm houses, and so on, are constantly being converted to make living accommodation. The problem is that almost invariably in such situations there will be a considerable element of repair and maintenance. I remind the right hon. Gentleman that repair and maintenance are still standard rated whether carried out by a do-it-yourself house builder or by a builder acting on instructions from a house owner. There will have to be checks on the quantities of materials involved to assess the reasonableness of the claims that are being made. The majority of taxpayers in this country are overwhelmingly honest in relation to both direct and indirect taxation but one has to recognise, and to guard against, the fact that there are people who are not quite as forthcoming as they might be in paying their taxes; and it is not impossible that some material might accidentally have been used in a building other than that for which a claim is being made. Again, it is the responsibility of Customs and Excise to police situations to see that such evasion—or, worse than that, a fraudulent claim—does not get past them.

The hon. Member for Hornsey moved an amendment with respect to houses qualifying for local authority grants. I entirely accept that his amendment is within the spirit of Clause 3. I have no difficulty at all in doing so but it is possible that he may be under a slight misapprehension with regard to this particular set of circumstances, because grants from a local authority also cover the VAT element in the proportion of the total cost covered by the grant. The only VAT that remains to be paid by the taxpayer is that which arises on the proportion of the cost of the project which is not covered by the grant. Here again we have the same kind of problem to which I referred in my answer to the right hon. Gentleman.

I do not quite understand the hon. Gentleman, because surely he knows that a local authority, as he rightly said, goes through in great detail a submission from an applicant, chopping off what relates to repairs and maintenance and segregating that from improvement. Local authorities already do that in great detail and ask for full receipts and come back and check when the work is done, so that I do not think that the Financial Secretary's proposition stands up.

I do not think that the hon. Gentleman quite sees my point. It is precisely that part which the local authority has policed that is reimbursed to the taxpayer, and on that part the local authority is also reimbursing VAT. It is the other part that a local authority puts on one side as ineligible for reimbursement that we are discussing, and that is where the proposed relief would apply. A local authority will say "This is improvement, and that is repairs and maintenance." As I have told the right hon. Member for Down, South that is the problem with which we are concerned.

I do not quite follow the hon. Gentleman's arithmetic. Let us assume that the total cost of the work required is £6,000, including VAT, and the grant is a maximum of £2,000, leaving the person doing the work to pay the other £4,000 out of his own pocket. If there were no VAT to be paid it would be £4,000 minus the sum attributable to VAT materials.

We are at one in relation to the element not covered by the local authority grant where there would be an element of VAT. I am not disputing that with the hon. Gentleman. His hon. Friend put lucidly and forcibly that it is the element that the local authority has winnowed out as not eligible for the grant that we are talking about but again we have problems of policing in relation to repair and maintenance costs. The hon. Member for Londonderry (Mr. Ross) has said that there is a great anomaly here. He drew attention to the fact that if work were done by a builder he could get relief from VAT, and I accept that. That is a continuing anomaly in the situation and I would not for a moment attempt to deny the force of what the hon. Gentleman says. But in such policing there is a very difficult borderline between an alteration and repairs and maintenance as far as builders are concerned. I am advised that even with their experience they have very consider-p able difficulty in their daily work. In some circumstances a piece of work may have elements on both sides of the borderline, and, therefore, the treatment of materials may have to vary from situation to situation. It would be all the more difficult for the private individual to determine who was not engaged on that sort of work as part of his everyday trade.

The hon. Member for Burton (Mr. Lawrence) did not make his points in a partisan way but he drew a lot of attention to the Conservative Party and the quality of family life and said that I should be particularly mean and petty if I resisted this group of amendments. It is only fair to remind him and his hon. Friends that it is we who are relieving the do-it-yourself builder from VAT in the first place. I am sure that he does not need reminding who imposed VAT on the do-it-yourself builder a couple of years ago. So let us hear a little less about the care and quality of family life.

We heard much the same from the hon. Member for Brighton, Kemptown (Mr. Bowden). Of course one accepts that it is a valuable social development for people to take elderly relatives into their homes, and we want to encourage it. To suggest, as he did, that the Government are "actively discouraging" that trend when, in fact we are relieving VAT rather than imposing it is stretching the case a little far.

The hon. Member for Cirencester and Tewkesbury (Mr. Ridley), as so often, got to the nub of the matter when he asked "Why not repairs?" The problem there, too, is that if repairs were included it would be impossible to establish a borderline between repairs and decorations. One could often say that decorations and repainting could be considered part of keeping a house in good order and, therefore, would be an appropriate subject for relief.

If relief were extended in that way, the Revenue cost would be about £100 million a year, even at the new standard rate of 8 per cent.

With respect, I did not argue that case. What I asked was: if the Customs and Excise could not distinguish between genuine and ungenuine materials in the case of conversions and alterations, how could it do so in the case of new houses, which would qualify under the clause as drafted?

I was coming to that point as well, but I think that, in an aside, the hon. Gentleman said "Why not repairs?" I am sure that he will be the first to accept that the last Government felt unable to go even a part of the way that we have gone.

The hon. Member seemed to assume that there would be no inspection of new houses. I have to correct him slightly on that. There will be a proportion of visits, spot checks, to new houses, particularly those which are the subject of large claims. As he said, there could be a large claim for relief on a very expensive house. By and large, Customs will go on a standard amount of building materials for a house or a bungalow with a given number of rooms. But in a very large claim for an expensive house of the sort to which the hon. Gentleman referred, there would be from time to time spot visits to judge the reasonableness of the claim.

But when we are talking about small additions and extensions, any scheme of policing would mean a series of ad hoc visits. I must ask hon. Members to accept that it would be undesirable to amend the clause. I make that request with considerable reluctance, but I am sure that they will recognise that a relief scheme must operate efficiently and economically and with propriety. It is not just a question of convenience for the staff of Customs and Excise. It is really a question whether a scheme of relief can be operated at all.

9.0 p.m.

The scheme we are proposing is a new departure. For the first time we are saying to the public "You may make a claim for relief from VAT, send in documents and write to Customs and Excise and get relief if your claim is adjudged to be valid." There will be for many members of the public problems of assembling evidence and producing invoices, which may go back over a considerable period. As hon. Members know, it takes a long time to build one's own house.

Therefore, for the time being I think that we have to confine this scheme to whole houses. It will be extremely diffi-p cult —I make no bones about it—for Customs and Excise even to operate a scheme of this sort. We think that it will be just about practicable. But if it were to be extended to conversions, alterations and repairs, as I say, the scheme would be totally unworkable.

The best course for us is to get the scheme started. It may well be—I hope that it will be—that the difficulties that we anticipate will be much fewer than I fear at present. It may be that before too long we can look at the situation again.

I assure the House that I shall look at the matter very sympathetically. I hope that the House will accept that assurance because, after all, it is we who are introducing this relief. As I say, the problems of VAT on do-it-yourself builders are not of our making. The relief we are introducing under the clause will be of great benefit to many people. It would be irresponsible of me now to agree to changes, however well intentioned, for purposes which I myself would be the first to applaud but which might have the effect of jeopardising the whole scheme.

I think that the Financial Secretary will agree that there really is an element of lunacy in the position that he has now taken up on behalf of the Government by discouraging and turning down the amendments of the right hon. Member for Down, South (Mr. Powell) and my hon. Friends.

Just to make it absolutely clear to the House—because it was not, perhaps, clear from the emollient words of the Financial Secretary—what madness we are about, let us recapitulate the situation as it stands. It is that for those who can afford to hire builders to add extensions to their houses, however large and for whatever purposes, virtually, VAT is allowed. Whether the extension be a billiard room or some luxury expansion of a kind which would be disapproved of and frowned upon by some of the puritan spirits on the Government side, or whether it is a minor extension, as long as builders and contractors can be hired, VAT is allowed. That is the position for those who can afford to hire a building firm. But for the do-it-yourself lot—for those who do not have the money to throw around on bringing in a firm, accepting its estimate, and so on—the provision, as the Bill stands unamended, would be only for whole new houses.

That is a patently absurd position. It is absurd for a number of reasons, one of which is that the whole thrust of housing policy, certainly on the part of my right hon. and hon. Friends, has been to encourage the improvement of terrace houses, of dwellings that in a previous era might have been swept aside by some enthusiastic planner and redeveloper but are now reckoned, with intelligent improvement, as capable of being made adequate and, indeed, in some cases, more than adequate dwellings.

This is obviously a major aim of housing policy. It is perhaps more of an aim now than it was a few years ago. It does not need me to reinforce the experience of the right hon. Member for Down, South and his hon. Friends that in Northern Ireland, and the cities there, in particular, there are many houses and homes where the prime need, and sometimes the only choice, is to recreate the home by reconstruction, by alteration or by some extension of the kind that is ruled out from qualifying under subsection (3)(b).

That is the idiocy of the situation. It makes no sense. I know that the Financial Secretary knows that. It could be detected in the way that he tried to defend the present position. But he comes back to the difficulty of policing, and of how Customs and Excise could be sure that this bit of wood would be used for an extension and that that bit would be used for internal repair and decoration, and how could the problem of size be solved. Those have been the flimsy grounds on which the Financial Secretary has tried to defend the present position.

In Standing Committee his hon. Friend the Member for Llanelli (Mr. Davies) raised the idea of establishing the criterion of planning permission. The Financial Secretary said that he would be prepared to give Clause 3 some frenetic study before Report. Obviously he has done so and has found that his frenetic study has not allowed him to come to any conclusions.

My hon. Friend the Member for Hornsey (Mr. Rossi) has moved a much more powerful case, and one that has gone quite unanswered. My hon. Friend suggested that the basis used should be the same as that which was used for improvement grants under the 1974 Act. That would clearly and specifically limit the relief to areas in which public money should be spent. That is an unequivocal and easily recognisable criterion. Presumably the Minister believes that the ground on which he seeks to defend his case is defensible. If that is so, I would have thought that my hon. Friend advanced a much more defensible situation with great skill.

Another argument that came up in Standing Committee, which is perhaps relevant, is that the Financial Secretary and the drafters of the Bill may have in mind altogether the wrong concept when they talk about "do-it-yourself". It was one of the Financial Secretary's hon. Friends who suggested that Ministers and the Treasury really meant "self-built". Would not that definition solve for them the problem of sitting up at night and worrying about all the small items which would be unpoliceable and which would get through the net and qualify for relief? Surely that would be the position if the Financial Secretary were to yield to the amendment.

When I heard that argument in Committee I thought that it had some validity. I was suspicious in the first place to see the DIY phrase pop up in the Bill. One has a vision of someone in the Treasury, or perhaps one of the Ministers on the Treasury Bench, noticing after some years that do-it-yourself has become fashionable, and at once beginning to rush around saying "This is what we must have in the Bill." It may be a little late in the day to discover the fashion and the techniques relating to do-it-yourself.

I do not know whether Labour Ministers indulge in do-it-yourself. I do not know whether the Financial Secretary is handy with a pot of emulsion paint, or whether he does a little extension work or conversion work to his own house. If there had been more familiarity on the Treasury Bench with the way that these things are done the difficulties might have been realised. I suppose it is too late to correct the definition. That is a pity. The Government could have solved the problem about the do-it-yourself industry being involved in VAT relief by going for the phrase "self-built." I suspect that there was a little misunderstanding.

All in all, the right hon. Member for Down, South made a powerful case for the situation in Northern Ireland. Of course, it is a case that applies everywhere. I would have thought that the amendments were satisfactory, in that where dwellings are provided by conversion, reconstruction, alteration or enlargement they must come within the terms of what the Financial Secretary was proposing in Committee. I do not see how the hon. Gentleman can reject them. I also think that the suggestion of my hon. Friend the Member for Hornsey to use the improvement grant criterion would provide a far better borderline than anything

I beg to move Amendment No. 9 in page 3, line 15, at end insert:

'where the total cost, exclusive of value-added tax, of such conversion, reconstruction, alteration or enlargement does not exceed £400'.

I understand that with this amendment we may take Amendment No. 320, in page 3, line 15, at end insert:

'save in any case where the supply of goods is at a total cost of more than £1,000'.

Amendment No. 9 is designed to meet the principal objections of the Treasury Bench, one of which appeared to be that Ministers objected to small amounts of tax being repaid. [Interruption.]

Order. Will right hon. and hon. Members who do not wish to listen to the moving of the amendment kindly withdraw from the Chamber quietly?

Another principal objection that has been raised concerns the policing that is necessary to ensure that there is no attempt to defraud the Revenue. With the figure of £400, only about £30 VAT is repayable. That is still worth while to the individual and it cuts out the very small amounts. The Treasury and I may have different views of what comprises a small amount, but £32 is still a week's wages, and a sum of money which many people would find extremely useful.

There was a long discussion previously on this general point. All the points that were made in respect of the earlier amendment can equally be made for this. I see no reason why the Minister cannot accept this—to him—lesser evil, which will be a great help to the people attempting to improve their lot.

Reference has been made to the fact that the Conservative Government imposed VAT. I was not a member of the House when VAT was introduced and I should like to ask the Minister whether he raised any objection when VAT was imposed on self-builders. The impression is given that the sin lies all on one side, namely, with the Conservative Government. I wonder what efforts have been made to secure relief for those who have had to pay VAT since then. The Minister said earlier this evening that he could not accept an amendment at this stage, thereby implying that there would come a time when it would be possible to accept an amendment. If that is correct, when will that time come?

The hon. Member for Londonderry (Mr. Ross) has asked what efforts we made with regard to VAT on the 1972 Finance Bill. Mercifully, memory obscures what happened during the Committee proceedings on that Bill. VAT was introduced by the Conservative Government, and the first relief from it for "do-it-yourself" builders is incorporated in Clause 3. The hon. Member for Guildford (Mr. Howell), who waxed indignant because we were not being more generous, and described our dividing line as lunacy, might have acknowledged that the position after the clause has been enacted will be an improvement on the inheritance which his party left us and the British people.

The difficulty which I mentioned in the debate on the last amendment occurs again on this one. It proposes that if the cost incurred is £400 or more there shall be relief, but if it is less there will be no relief. By this method the hon. Member for Londonderry seeks to rule out the more trivial claim. That would create anomalies and incentives for people to spend more than £400 to obtain the benefit of the provision—a minimum of £32. Therefore, the cost to them as a result of the amendment would be less by having more work done.

Most of the arguments which I put forward on the last amendments which we debated apply just as forcefully to this amendment. Since the hon. Member for Londonderry was good enough not to repeat his arguments, I hope that the House will not accuse me of discourtesy if I do not repeat my arguments. There would be problems about deciding whether materials were used for repair rather than for conversion. There would be a borderline with regard to decorations, and so on.

I must therefore advise hon. Members with regret, that this amendment is no more acceptable than the last amendment.

Does the hon. Gentleman have it in mind to introduce amending legislation on this point at a later date?

By the leave of the House, may I say that I make no commitment. I have said that the spirit of the amendment is in harmony with the Clause. We expect considerable difficulty even in operating the clause. The Government thought this a proper relief to make to try to move back the line of anomaly in existing legislation. If it transpires that the difficulties of policing the scheme envisaged in the clause are not as great as we expect, it may be possible to go further, but we need to give the clause time to operate and to see how it works in practice. We can then consider the matter. If it proves to be less difficult to operate than we fear, we shall certainly look again sympathetically at the situation.

The Financial Secretary said, and we all agree, that the clause is an improvement, but it is only a half-way house, and half way is neither here nor there. It is not a satisfactory position to be in.

The hon. Gentleman said that acceptance of the amendment would create anomalies. There are already anomalies which we are trying to get rid of. The Financial Secretary also said that the amendment would encourage people to spend more than £400. On £400 a person would get only £32 back. The most he could spend would be an extra £30, which would not go far.

I realise that the axe is poised and we cannot take up too much time. I beg to ask leave to withdraw the amendment.

I beg to move, Amendment No. 327, in page 3, line 23, after 'provisions', insert

'(but only in respect of such countries as the Secretary of State for Foreign and Commonwealth Affairs shall certify as offering reciprocal alleviation of taxation to British diplomatic and consular staff)'.

With this we are taking Amendment No. 331, in page 3, line 31, at end insert

'but the Commissioners shall not make any payment by virtue of the words so inserted before such date as may be specified by directions of the Treasury embodied in a statutory instrument which shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament'.

This is one of the few amendments which save public money instead of spending it. The Government propose a VAT drawback for diplomatic missions. The amendment seeks to confine that tax drawback to diplomatic missions from countries which make a reciprocal concession to British diplomatic and similar bodies.

The proposal is entirely reasonable on two grounds. First, it gives other countries an incentive to provide reciprocal tax drawbacks for British missions. Secondly, it limits the value of the concession.

At a time when we suffer from a plethora of international bodies, all claiming tax exemption, exemption from rates, and so on, we should discipline our enthusiasm for giving relief by limiting it to countries which the Secretary of State for Foreign and Commonwealth Affairs certifies as offering reciprocal alleviation of taxation to British diplomatic and consular staff.

The matter needs no further elucidation; it is entirely clear. Whether it recommends itself to the Government, which should welcome an amendment which reduces public expenditure, we shall doubtless shortly hear.

As no one has spoken to Amendment No. 331, which stands in the name of the official Opposition, the House will understand if I address my remarks solely to Amendment No. 327.

I assure the hon. Member for Tiverton (Mr. Maxwell-Hyslop) that the principle he puts forward is already well recognised and taken care of. He seeks to secure that relief from VAT shall be limited to countries which afford reciprocal privileges to diplomats in this country. That principle is already recognised in the two main enactments. Section 3(1) of the Diplomatic Privileges Act 1964 provides for restrictions on privileges and immunities by Order in Council in any case where a foreign country affords lesser privileges to members of a United Kingdom mission stationed there than those which are conferred by the United Kingdom on officials of that country stationed here. Section 2 of the Consular Relations Act 1968 provides similarly. On that basis the hon. Gentleman may be assured that what he seeks to provide against is already covered.

Before the hon. Gentleman sits down, can he tell us about subsection 5(b), dealing with the International Organisations Act, because international organisations seem to be multiplying even faster than sovereign States?

I deliberately did not refer to international organisations because it seemed to me that the hon. Gentleman's amendment did not purport to deal with that problem. As drafted, it leaves their position totally unclear. As far as I can understand, the question of reciprocity does not arise with international organisations. They do not extend any relief of this sort to us. If the hon. Gentleman has any specific examples in mind that have escaped my imagination I would be grateful to hear from him.

I beg to ask leave to withdraw the amendment.

The next amendment is Amendment No. 298, in page 3, line 36, leave out from 'say' to 'except' in line 42 and insert:

'(b) in respect of so much of the investment income (other than estate income, income aris-p ing from a purchased annuity within the meaning of section 285 of the Taxes Act 1970 and a share in partnership income) included in an individual's total income as exceeds £1,000 at the additional rate of 10 per cent. for the first £1,000 of the excess and 15 per cent. for the remainder;'.

Not moved, under protest.

The next amendment is Amendment No. 346, in page 3, line 37, at beginning insert:

'where an individual's total income exceeds £3,000,'.

Not moved, under protest.

The next Amendment is Amendment No. 349.

On a point of order, Mr. Speaker. I wonder if, before this amendment is moved, I may ask whether it would be for the convenience of yourself and the House if we were to take with it the remaining amendments to Clause 5 which you have selected? This would enable us, in the limited time we have left, to have a full and proper debate on the important issues that are raised. There are many kinds of people, such as the disabled and widows, who are affected. I would also suggest that, if possible, we have a separate vote on Amendment No. 349 and Amendment No. 16.

If that is agreeable to the House I am willing to have the amendments taken together and to have a separate vote on the two amendments referred to.

Further to that point of order, Mr. Speaker. With respect to your selection, some embarrassment and difficulty is caused to some of us by the absence of Amendment No. 15 from your selection. I hope that you will be indulgent and allow those of us who are worried about certain specific superannuation schemes, particularly FSSU and FSSNU, to deal with these matters in the general discussion on Clause 5.

The general discussion can include that point.

I beg to move Amendment No. 349, in page 3, line 39, leave out '10' and insert '5'.

I understand that with this amendment we are also discussing Amendment No. 16, in page 4, line 1, after 'more', insert:

'or was in receipt of an invalidity pension or unemployed and in receipt of an attendance allowance'.

With Amendment No. 349 there should logically go an amendment which may not have appeared on the Order Paper and which is consequential. It reads:

"page 4, line 2, leave out '10' and insert '5'."

Like the Financial Secretary just before the last Division, I, too, am glad that we have now come back to the relative calm of proceedings of the Finance Bill.

This amendment concerns an old story. Unlike many old stories, it does not improve in the telling. It goes back to the last Finance Bill introduced by the Government in the last Parliament. Then the Chancellor decided to change the point at which the investment income surcharge came into effect, so that instead of coming into effect on investment incomes of £2,000 a year and above it came into effect on investment incomes of £1,000 a year and above for most people, or £15,000 and above for those over 65 years of age. This was an increase in tax upon those people with savings incomes between £1,000 and £2,000 a year.

The purpose of this amendment is to achieve some kind of compromise and put a surcharge not at the 10 per cent. rate which the Chancellor suggested in the Budget but at a rate of 5 per cent. We are talking about the financial year which is now almost over. One reason why the story does not improve in the telling is that the Chancellor of the Exchequer, having made this proposal in the last Parliament, had the experience of its being rejected by the House. That having happened by a majority of 16, he returned in the present Finance Bill and said that he would put back the increase in investment income surcharge for those with small investment incomes to what he had intended the figure to be—in other words, retrospectively for the whole of the year 1974–75. Therefore, in this Bill we are being asked—in the eleventh month of that financial year—retrospectively to put up the investment income surcharge on those with small investment incomes.

This is a disgraceful example of retrospective legislation—and there is no doubt that it is retrospective. The Chief Secretary in trying to defend the provision in Committee attempted to suggest that there was a precedent. That does not make things right, but he said that that was so. He quoted the action of the Conservative Government in December 1973 who announced a surtax surcharge which, had that Government remained in office, would have had a retrospective effect. I hold no brief for that retrospective legislation any more than I do for any other retrospective tax legislation, but the difference is very considerable. The difference is that the previous provision did not reject retrospectively a decision of the House. The present legislation is retrospective for 1974–75, but is intended to continue in future years, whereas the previous legislation was for one year only. Therefore, the precedent which was quoted was not a good one and was certainly not valid in terms of the retrospective legislation that we are being asked to enact tonight.

The Chancellor of the Exchequer and the Chief Secretary have from time to time attempted to justify this vicious attack on those with small investment incomes. Let us remember that we are talking of people with savings which may amount to £20 a week and upwards. That is not a large income. There are many of my constituents who cannot understand why, having saved all their lives out of taxed income, they should now be expected to pay any surcharge at all on an investment which is less than half the national average wage. However, this is what they are being told they must do by the Government.

The Chancellor and the Chief Secretary have advanced various reasons why this should be done. I am glad to see that the Chief Secretary has now come into the Chamber and is about to take part for a little while in our debate. I know how much he enjoyed our debates upstairs, and I hope that, having acquired the taste, he will stay in the House longer tonight and on subsequent evenings. Government spokesmen have said that a large part of the money will go to those with investment incomes of over £3,000 a year. My goodness, what a tremendous income and how dreadful for anybody to earn over £3,000! The fact of the matter, as I established in a Written Answer recently, is that the Chancellor's view is that of those with investment incomes of over £1,000 a year who come into the taxable bracket, 75 per cent. have incomes below £3,000 a year. Indeed, 50 per cent. of the total taxpayers with investment incomes of over £1,000 come into the £1,000 to £2,000 a year bracket. Therefore, the great majority of people whom we are trying to help in the amendment are people with investment incomes—savings—of between £1,000 or £2,000 a year. By any stretch of the imagination, those people are not rich.

9.45 p.m.

A further point was established as a result of the Written Answer given by the Chancellor of the Exchequer. We hear the Labour Party and Government supporters going on about the evils of investment income and savings income. However, 85 per cent. of the taxpayers have such incomes of less than £1,000 a year. Those people have saved because they hoped their incomes would increase beyond £1,000 a year, which is not very much in these times. Those people are being deliberately discriminated against by the Chancellor of the Exchequer, and we seek relief for them by means of this amendment.

A further reason has been given by the Government. However, I interpolate to say that the real reason is pique, because Parliament has undone what the Chancellor of the Exchequer provided in his first Budget this year. The Government are determined to put back that provision, because they cannot stand for Parliament asserting its sovereignty in any context. That is the reason for this rigid guillotine motion, which is curtailing our debates.

I was very interested in the point made by the hon. Gentleman about investment incomes which he estimated at £1,000. Can he say how much capital a person needs to receive that income?

I am happy to answer the hon. Gentleman. I estimate that a capital investment in War Loan of £6,150 is sufficient to produce that income. That is not a large sum of money.

Other reasons have been given for this piece of vicious legislation. We were told that the cost was great and that a large amount of money would have to be borrowed, since the total of the investment income surcharge on these people was £40 million. However, a 50 per cent. charge as a compromise could apply to people receiving between £1,000 and £2,000. That cost would be £20 million, which is not a large sum of money by the standards of national budgeting of the Government. We can find £10 million straight away by not giving the handout to the trade unions, which is provided for under another clause. In addition, £10 million is less than one-third of the annual cost of the tea subsidy, let alone other food subsidies. My constituents are far more concerned about the surcharge they will have to pay on their small savings and small investment incomes than they are about a negligible change in the price of a quarter-pound packet of tea. The Government's priorities are wrong, even if they are concerned to help the people they profess to wish to assist.

When speaking about sums of £20 million, it is monstrous that the borrowing requirement should be flung in our face, since the borrowing requirement is not £20 million, £200 million, or £2,000 million. Officially the borrowing requirement was £6,300 million. It is now running at about £7,500 million. In the coming financial year, if nothing is done, the borrowing requirement will be £9,000 million. The recently published White Paper on public expenditure shows vast expenditures so far beyond what the country can bear that to talk about not being able to afford £20 million is utterly indecent and, to use a word much favoured by Government supporters, obscene.

Finally, the Government have said that it is an essential part of the social contract. Right hon. and hon. Members may well ask "What social contract?" Like Pilate, they will not receive an answer. But many Opposition Members are beginning to believe that the social contract, so far from doing little good, is doing positive harm. If the sort of things that the Government have produced to carry out their side of the contract are things like this, whereas the trade unions on their side do not carry out their side, the existence of the social contract is positively harmful, far from being useful.

We have to say that the social contract, the borrowing requirement and all the other arguments put forward by the Government do not hold water. This is a vindictive and petty piece of spite designed to stoke up the furnaces of envy which lurk in many people's hearts. It is designed, too, like many other measures, to deter saving, to deter independence, to deter self-reliance and self-respect among the people of this country.

I hope that the Government at this late stage will decide to abandon this retrospective piece of legislation or, if they do not feel that they can do that, at least accept the half-measure or compromise—it does not go far enough to satisfy me—which is put forward in the amendment.

After the rather wider discourse by the hon. Member for Blaby (Mr. Lawson) on the impact of the investment income surcharge, I hope that I may be allowed to concentrate the Government's mind on one of its specific impacts. In doing so, I have to declare an interest in the federated superannuation scheme for universities. I wish to draw attention to the impact of the surcharge on members of that scheme and of others like it, including the federated superannuation scheme for nurses.

Both are dying schemes, in that one is to be replaced by a new university salaries scheme and the other has already been replaced. However, there are and will remain beneficiaries for many years to come who will be affected by the surcharge and who would benefit from this amendment being made.

It should be made clear that the schemes in all respects are like any other pension scheme, except that they involve insurance policies which mature in the form of lump sums which are then used to purchase annuities. The member pays ordinary pension contributions in the same way as anyone else, but, at the end, he acquires a lump sum and secures his pension by investing it in an annuity. Such people have not accumulated capital, acquired windfall sums or made additional savings over and above their pensions. We are talking about normal pension provisions. Nor are they in retirement and in receipt of other income. They are in the position of anyone taking part in a superannuation scheme, with the difference that they acquire lump sums which they invest to purchase annuities.

Between the ages of 60 and 65 these people will be affected by investment income of over £1,000. Those over 65 will be affected by the over-£1,500 level. We are dealing with the normal salaries of some of those concerned. If we take the lecturer salary range of between £3,000 and £4,000, someone expecting half pay on that will immediately feel the impact of the investment income surcharge on his retirement income. Alongside him in retirement will be people who for one reason or another have been able to transfer to other pension schemes like the new university superannuation schemes. There will be people who have been superannuated in other ways. The scientist in a research laboratory will find alongside him in retirement people who have been superannuated on a Civil Service basis, and their pensions will not be affected by the surcharge in the way that his is.

When this matter was raised in Committee, it was in the context of an amendment which went very much wider than these specific cases. My right hon. and hon. Friends tabled Amendment No. 15, which was designed specifically to deal with this one. It would have been possible for the Government to act in a number of ways to deal with the problem. They could have accepted the amendment moved by the hon. Member for Kingston-upon-Thames (Mr. Lamont) which went somewhat wider. I could have understood the Government's doing that rather than making concessions over the whole of the investment income surcharge, because we are talking about a specific group and not the whole range of people affected by the surcharge. If the Government were not happy about the wide range covered by the amendment tabled by the hon. Member for Kingston-upon-Thames, they could have taken the narrower version which we suggested and moved it themselves.

It is disturbing to those who have to consider these groups of people that, even in the concluding speech in Committee, when this matter was discussed, there was no specific reference to their problems, except those between the ages of 60 and 65. It seems that throughout our discussions this, I am sure, unintended effect on a particular group of pensioners has been allowed to continue. I suggest that Ministers must look more closely at the situation. I cannot imagine that they intended to create a situation in which groups of pensioners from universities and nursing—there are others—will be disadvantaged because their pensions are nominally from investment income which is not paid to them in the way that conventional superannuation schemes operate.

These schemes were devised to be flexible for the person who changed his employment for a normal superannuation scheme. They were based on insurance policies, so that a man working in a university could readily move into Civil Service employment, a research department or industry, and maintain some pension rights in a situation even less favourable than the present regarding transferability of pensions. It was no part of the understanding of those who joined these schemes that when they retired they would be affected by an investment income surcharge which was designed for different purposes and was never intended to penalise their pensions.

I am sure that hon. Members who have become familiar with the details of these categories of people will realise that the investment income surcharge was not intended to deal with them in the way that it does and will be surprised that the Government have not made greater efforts to exempt them from the provisions of the charge.

I hope that my right hon. and hon. Friends will not be beguiled by the glib superficiality of some of the arguments put forward by the hon. Member for Blaby (Mr. Lawson). We should examine in detail some of the assertions made by the hon. Gentleman in his contribution to the debate on investment income surcharge.

First, when questioned by my hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey) about the amount of capital required to get an investment income of £1,000, the hon. Gentleman glibly trotted out the prepared figure of £6,150. That figure is correct only if we assume that people bought War Loan at the bottom of the market. But such is the confidence which has recently been restored to the market that it would cost over £7,000 today to purchase War Loan to get the equivalent income. It does not serve the argument well to take the bottom of the market when we have already passed it. It is typical of the superficially of the argument that we heard from the hon. Gentleman.

Will the hon. Gentleman give way?

No. The hon. Gentleman can come in later. There is plenty of time up to 12 o'clock.

As somebody who has, on a number of occasions in this House, expressed concern about the increase in the public borrowing requirement—a concern which I know is shared by the hon. Member for Blaby—I do not think that it serves his argument well to suggest that because the public borrowing requirement is already high a further £20 million is nothing to be concerned about. Therefore, to argue that we can afford an extra £20 million is a distortion of the serious argument that lies beneath it.

I am sure that the hon. Gentleman will not forget that I specifically pointed out that this matter could be financed by savings that could be made elsewhere in public expenditure. Therefore, there would be no increase in the borrowing requirement.

One of the arguments put forward by the hon. Member for Blaby on how savings could be made would be in contradiction of the expressed wishes of this House. That is in relation to the £10 million fund, on which this House has already clearly expressed the view that it should be returned to the trade unions. It is not adequate to propose that savings should be found from areas on which this House has already taken a decision. What is really suggested is that we should find fictitious savings that are not clearly available to the Government. To argue that an extra £20 million on top of the existing public borrowing requirement is something that we can afford is an act of irresponsibility in the current economic climate, and I am sure it is an argument which my right hon. and hon. Friends will not be prepared to accept.

The level of argument becomes somewhat worse when Opposition Members say that the social contract is positively harmful. I would have thought that at this time, above all else, if we are to come to grips with the serious problems of inflation we have to make the social contract work. Different people are putting different emphases on what needs to be done to make it work, but to allege that the social contract is positively harmful, without offering a single positive suggestion about what needs to be done to make it work, is an act of gross irresponsibility. At the moment that is the only bulwark this society has against two possible alternatives—mass unemployment and a return to the kind of statutory incomes policy that led the previous Government to the verge of economic chaos. We cannot, therefore, accept that kind of nonsense in a debate on investment income surcharge.

I am sure that you, Mr. Speaker, like the rest of us, will have been somewhat bemused by the hon. Gentleman's comments about the need for us to concede his amendment on investment income surcharge if we are not to lose our self-reliance and self-respect. I am sure that every hon. Member on the Government side of the House goes to his constituency every weekend full of self-respect and particularly pleased, in that self-respect, with the actions taken by the Government in the present Finance Bill. I hope my right hon. Friends will reject the proposals put forward.

I shall not follow the line taken by the hon. Member for Meriden (Mr. Tomlinson) as I wish to speak particularly to Amendment No. 16 in my name and that of other hon. Members on both sides of the House. It deals specifically with the disabled and seeks to rectify what appears, and can only appear, to be an unintentional mistake on the part of the Government in omitting the disabled from the exemptions to this infamous surcharge on investment income. The effects of inflation are harsh enough on all normally fit people but the disabled person suffers even more, because he or she is generally more likely to be unemployed, is certainly facing disproportionately higher living costs than the average person and does not benefit from the abnormally high increases in income accruing to organised workers.

The costs of medicines, heating, travel, special aids and equipment and special clothes place an unfair burden upon our severely disabled people. If this surcharge is allowed to bear down on them, all the improvements which, over the last two years, this House and Government and previous Governments have produced for the disabled, will be undone. As the Chairman of the Child Poverty Action Group said recently:

"Many disabled people are suffering real hardship. What the Government has offered in October amounts to 34p a week for each of Britain's disabled people. Many of them are living on fixed incomes."

From my work, together with hon. Members on both sides of this House on the All-Party Disablement Group, I can verify the serious effects that inflation is having on our disabled people. I had hoped, last night, to introduce amendments seeking to relieve disabled drivers of the VAT charge on fuel, but my amendment was not selected, despite the all-party signatories to it. But in regard to that alone, motoring costs have risen by 80 per cent. since 1972, and the costs of other vital necessities for disabled people have risen even faster, so that there is a crisis situation in the field of disablement.

We all know that the Minister for the Disabled is doing his best to help, but what can he do if he is stabbed in the back by the Treasury bringing forward such measures as this surcharge on low levels of investment income on which so many disabled people depend?

I should like to quote briefly from a letter from a 37-year-old polio victim:

"My wife and I live on investment income which is derived from rents received from 22 lock-up garages and two unfurnished flats. This is the only method I have within my powers to provide my wife and I with an income. We think it is very unfair that disabled people should have their pockets picked by government who refer to our type of income as 'unearned' and therefore we have to pay their tax surcharge on an amount as low as £19.24 a week. There is no need to wonder what the reaction would be from the general public if they were told they had to pay 43 per cent. tax on everything they received over £19.23 per week."

I could give many more examples, but I think that the House understands the problem.

Amendment No. 16, which also has come from the pen of Peter Large of the Disablement Income Group, asks the Government to choose one definition of unemployed disabled people who are forcibly retired because of disability. As it points out, the financial needs of people retired as a result of disability are not less than those of people retired as a result of age. Indeed, the financial needs of retired disabled people are greater in that they incur additional expense because of disability. For this reason, can the Government really condone disabled people being treated less favourably than non-disabled people aged 65 or over, particularly as the latter could still be working?

I hope that the Minister will accept Amendment No. 16, which is supported by hon. Members from both sides. The cost cannot be overwhelming to the Treasury, but if we have to vote and the Government once again, as on the disabled housewife's benefit under the Social Security Benefits Bill, try to fudge the issue, the disabled of this country will judge them accordingly.

The amendment would reduce the surcharge on "unearned", as it is called, income—an odd phrase to use considering the circumstances in which people have built up the money. I have two points to make. The first relates to who is hit by the surcharge as it stands and the second is the question whether it is desirable that it should apply and that people should be discouraged.

The hon. Member for Meridan (Mr. Tomlinson) said that because the House had already passed the provision to give £10 million to certain trade unions—generally the more millitant ones—it was not relevant to this discussion as a means of saving money and making it available for this purpose. I find it a very odd priority to give £10 million to the unions and to refuse this amendment to help the disabled.

Does the hon. Gentleman not realise that that £10 million came from the provident funds of the trade unions and was money intended to be used to help the sick, the unemployed and widows?

If the hon. Member investigates the matter, he will find that there is very little truth in what he has just said.

Is my hon. Friend not also aware that the hon. Member for Meridan (Mr. Tomlinson) is in error, no doubt inadvertently, that this provision has not been passed and will not be passed until this Bill is on the statute book?

I am grateful to my hon. Friend. My point is still valid, that there is a question of priorities. Who has the higher priority—the disabled, whom I intend to talk about, or the trade unions, who are not exactly skint?

This provision clobbers widows. I have had correspondence from a number of widows who have relied on what I suppose is unearned income—money left to them by their husbands to keep themselves and their children. These people are in a parculiarly vulnerable position because at a time of great inflation they have the cost of maintaining a house and raising children without having a wage-earner in the family. I should have thought that they were a group which even the hon. Member for Meridan would regard as being more important than the £10 million for the trade unions.

Then there are the self-employed—people who do not have a superannuation scheme and who have saved throughout their working lives. Because they have saved and been self-reliant, because they have sought to look after their own old age instead of relying upon the State to rescue them, these people, too, are surcharged on their income.

Then there is the small businessman. In many cases he, throughout his working life, has sought to build up a business. Any available cash that he has had has not gone in a pension fund but has gone into the business to make it grow. When he comes to retirement age he may sell that business. It is then his hard work in building up that business which has created the capital which the Government now propose to tax by a surcharge at this additional and unreasonable rate.

The question one asks is this: is it desirable? I suggest that it is undesirable for two principal reasons. It is undesirable because we ought to be seeking to encourage the self-reliant and to encourage people to save, for as you, Mr. Speaker, will recall from your own long experience in the financial field, there is no capital other than from savings. Therefore, we should be seeking to encourage savings so that we can have the wherewithal to re-equip and modernise British industry. The one thing about which all the economists agree is the desperate shortage of capital. Yet here we are being asked to pass legislation which clobbers those who have created capital and dispels any encouragement to others to save and to create capital.

My second point on this subject is this. Hon. Members on the Government side of the House are rightly concerned about the problem of trade unionists who do not have wages as high as they would like them to have, or as high as we should like them to have, or as high as wages in Europe and other advanced industrial areas. One asks what is the difference between us and those other areas. It is not that our workers do not work as hard. The difference lies in the fact that they have more capital behind each worker than we have.

Therefore, from the workers' point of view we should be seeking to encourage the creation of capital. Yet the present Government propose to surcharge those who create capital and to make it not worth while to do so. By discouraging savings and thrift and those who build up businesses and create capital to put behind the workers, the Government are doing a grave disservice to workers, to managements and to the economy as a whole.

I should like to revert to Amendment No. 16, in which we find an attempt to include disabled people in the same group of concessions as is carefully and calculatedly provided for by the Treasury Bench. It seems to me that it is difficult to draw any clear distinction between the needs of old people and the needs of disabled people. What Amendment No. 16 says, in effect, is that if the Government are as aware as they appear to be of the fundamental problems and dilemmas of old people, who are often classed as second-class citizens, the Government should equally be aware of the problems of disabled people, who, unfortunately, are too often classed as third-rate citizens. I find it very difficult to distinguish between the two, and I should have thought that by any standards the Government ought to include the one with the other.

Where, therefore, does the House stand on this crucial issue? I believe that the major problem is to draw this matter to the attention of the House and the public at large. That is the main issue before the House tonight.

10.15 p.m.

I hope that the Opposition will not force this issue to a vote. Equally, I hope that the Government will say to the Opposition, and to many of my hon. Friends who are much disturbed about this matter, that something worth while will be forthcoming. If that is not so my hon. Friends and I will not be able to support the Government. I am assuming, given the profoundly difficult problems that we face, that the Government will be able to meet us half way. We are making a reasonable request. Are the Government able to say that they understand the difficulties of disabled people and that they are not prepared to leave them out in the cold? They are not spies or saboteurs but ordinary people suffering from a disability. It is entirely wrong that a disability should result in an added financial burden.

I shall listen carefully to my hon. Friend's reply. I know that he is anxious to help, and I am anxious to help him. The last thing I want is for this issue to result in party political conflict. As chairman of the all-party group on disablement, I have found no acrimony on the problem of disablement. I enjoy scoring points off the Opposition, as they enjoy doing so off me and my colleagues, on every issue except disablement. If the Government can offer us some concession they will find us supporting them. If they cannot do so, I regret that we shall not be able to support them.

The House will have been moved by the appeal of the hon. Member for Stoke-on-Trent, South (Mr. Ashley) to his own Front Bench, and by the plea of my hon. Friend the Member for Exeter (Mr. Hannam). I am afraid that I must disappoint my hon. Friend. He said that the disabled had been excluded from this clause by accident. I am afraid that it was no accident. I moved an amendment in Committee on the Floor of the House that was designed to give a small concession to the disabled and to the registered blind. Although it was received with sympathy, the Chief Secretary said that the proper way of dealing with such matters was through the social services. I suggest that social service allowances for the disabled, whether they are registered under the Chronically Sick and disabled Persons Act or whether they are registered blind persons, do little more than maintain the living standard of the individual concerned. They do little more than maintain the value of allowances as originally granted.

When we think of the problems which face the disabled, to which the hon. Member for Stoke-on-Trent, South has drawn attention, it seems extraordinary that the Government should introduce legislation which imposes a separate surcharge on people with comparatively limited incomes. How do I explain to my disabled constituents who come to me for advice that, whereas it is possible for a man to earn £4,000 a year as a miner, for example—in fact, dockers and bummarees are getting that as well—they cannot enjoy an annual income of £1,000 or a little more without incurring an additional surcharge?

I put to the House a personal example of a man and his wife who came to see me only last Thursday. The man had met with a serious accident and was almost completely disabled. He was still able to do about half a day's work occasionally during the week. He came to me to see if I could help him get a petrol allowance as without a car he could not go out and do half a day's work. He was not able to get that allowance because he had an income from the compensation that was made payable to him. He received compensation of some £19,000. He and his wife had invested that sum following advice and they had an investment income of a little over £1,000 a year. He is now liable to pay a surcharge. How can I explain to him that an able-bodied man can earn three or four times as much and not have to pay the surcharge? Nevertheless, as a disabled man with a dependent wife, with an income derived from compensation rightly and properly awarded to him, he has to pay a surcharge.

The amendments make several modest suggestions for overcoming the problems. We ask only that disabled persons and the registered blind should be treated on the same basis as people aged 65 and over. The Chief Secretary knows that the cost would be comparatively small and that it is difficult to tell how many disabled persons are involved. The last time we debated this question he agreed that it was not likely that a large number of people would be involved.

I know that the Chief Secretary and, indeed, the whole Front Bench have sympathy with us. I know, too, that they dislike introducing exceptions for any special category. However, surely the disabled must come before anyone else. I am certain that if the Government applied their minds to it they could accept one or other of the amendments, which would give the relief we want.

I am certain that the Government do not want it to be believed in the country that they are prepared to see the incomes of workers of all categories rise year by year and more than keep pace with the cost of living while they impose an extra penalty on those who have no opportunity of increasing their earnings and depend on compensation and on social service allowances which are increased in arrear merely to keep pace with the increased cost of living.

I beg Ministers to give careful consideration to the pleas which have been advanced by my hon. Friends and by the hon. Member for Stoke-on-Trent, South, who speaks from great experience in these matters, who knows precisely what he is talking about, and who has personal experience of the type of cases we seek to help. I therefore hope that the Government will give sympathetic consideration to this matter and will express their intention of finding a way of meeting the amendments.

I do not think that hon. Members care much which one of Amendments Nos. 16, 17 and 18 the Government are prepared to accept. I think the Government should accept Amendment No. 16.

The argument is based on the fact that the Government have identified a target area of need. They have recognised that amongst the elderly there is a group which is in need of special consideration. The Bill recognises the needs of the pensioner and there is a disregard of £500 of the excess above £1,000.

The Government having recognised this need, my hon. Friends and I ask the Government Front Bench to recognise the needs of the disabled. The disabled are at as great a risk as any other group. The cost of making this concession would be small. As my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) said, it may well be that the amendment is not drawn as tightly as the Government would like. Nevertheless, the intention is clear.

A person would qualify for the allowance, first, if he were in receipt of an invalidity pension. To qualify for such a pension it is necessary to go through quite a rigmarole. A person would qualify, secondly, if he were

"unemployed and in receipt of an attendance allowance".

Hon. Members on both sides will be well aware of the difficulties of obtaining the attendance allowance.

Amendment No. 16 would tie the exceptions to those in receipt of invalidity pension or the attendance allowance. This should not present administrative problems and would not involve great cost. It would bring to a group of people in need a very welcome relief. I hope that the Government will accept the amendment.

I should like to echo the sentiments which have been expressed so far by the hon. Member for Stoke on Trent, South (Mr. Ashley), my hon. Friend the Member for Wycombe (Sir J. Hall) and others of my hon. Friends, and to put flesh and blood on to the arguments they advanced. I understand that the principle behind the surcharge on investment income is that those who have such an income have broader backs. The members of the class that we are speaking about tonight have backs that are not broad but are broken. I can illustrate what I mean by three examples which show how unfair is the Government's intransigence on this matter.

The first example is of someone who has been injured in an accident but had the foresight to insure against future loss of earnings. That person, now disabled from earning his living, hopes to be able to live on the proceeds of a lump sum paid by the insurance company. His back is not broad in this case. He is seeking to replace earnings that his disability now prevents him from collecting, and he is now to be charged an extra tax over and above what he would pay if he still went out to work. Where is the justice in that?

The second category covers accidents at work. Anyone suffering such an accident can recover damages if he can show that the accident was wholly or partly the fault of his employer. He will receive a lump sum which he will invest, and he will hope to live upon the proceeds of that investment. Where is the justice in his having to pay more in taxation when he is unable to earn his living like his more fortunate work mates who were not injured? Why should such a man pay more tax? I do not seek to make a party point, still less to make one which cannot be sustained. Governments from both sides of the House have supported the principle of the investment surcharge, making no exemption for those injured at work. I hope the Government will say whether they think it is just that those workmen and their families whose damages are calculated in this way, and who are caught by the low figure at which the surcharge now comes into operation should from now on have to pay more in tax.

Thirdly, is it right that the widow who is living on the proceeds of a successful claim under the fatal accidents legislation should from now on pay a greater sum in tax than had been thought to be the case when her husband's damages were fixed by he courts? Labour Members have asked us to say how we would strengthen the social contract. One way would be by making, for example, Amendment No. 18, so that widows of those killed at work shall not be required to pay the extra tax required by the clause. I would have thought that that was not only a sensible strengthening of the social contract but also common justice.

I hope that the Government will listen to the arguments from both sides of the House in favour at least of this relatively small class of people amongst those living on investment incomes. Their backs are not broad. They need help with the burdens which are already far too great for them.

I support the arguments of my right hon. and hon. Friends on this group of amendments.

I do not want to speak at great length, partly because we have had endless debates on the subject. If it was not apparent by last June or July that the Government would pay little attention to our arguments, it has become apparent from their behaviour now that they have a majority and are in a position to do exactly what they wish.

The arguments which have been deployed time and again about the increased surcharge become more valid, not less, each time they are raised. The more I hear Labour Members arguing that they are attacking the wealthy by attacking people with modest investment incomes of £1,000 or £2,000 a year, many of whom may not have much other income, the less convinced I am, and the less satisfactory I find their position.

I want to say something about the position of retired taxpayers. Regardless of all the arguments about the surcharge as a whole, one of the meanest-minded and nastiest actions of the Government was to increase the taxation of the savings income of retired people. That is a feature of the Bill. There cannot be an hon. Member on either side of the House who does not have coming to him a steady stream of elderly people who do not know how they will make ends meet. Almost every Government announcement, almost every post, brings them a higher bill for electricity, petrol, coal, television licence, telephone, rates, water rates, sewerage rates and postage.

Does the hon. Gentleman agree that a motor car, television and telephone are all the classic symptoms of poverty?

The hon. Member for Meridan (Mr. Tomlinson), for whom in the ordinary course of events I have a good deal of respect, has done himself considerably less than justice throughout today. If he cannot see the fallacy and absurdity of the argument he has just advanced, I doubt whether I shall be able to enlighten him in the few minutes available.

The hon. Gentleman is one of the few Labour Members with any knowledge of, or concern for, the more rural areas. He knows perfectly well that anyone aged 60 or more without a telephone and without a car in parts of the area he represents, and certainly many of the villages I represent, is cut off, isolated, stranded. We rightly hear it said on both sides of the House that more and more elderly people should be able to have a telephone. I agree. It is hypocritical now to argue that because a person has the telephone he or she deserves no consideration under the tax system. It is a patently ridiculous argument. No doubt we shall have an unsympathetic reply from the Govern- ment, as we have had throughout the past year.

I also support the points made by my hon. Friend the Member for Basingstoke (Mr. Mitchell) about the whole attitude of Labour Members to the question of capital and investment or savings income. At Question Time today the Prime Minister tried to make the best he could of the investment intentions figures. Hon. Members on both sides of the House have expressed great concern about the level of investment, the threat to employment and the need for expanded spending on capital equipment. Where is the money supposed to come from if people will not save?

Up to a point and over a period one can do what hon. Members opposite have always tried to do in government—to make up for the drop in private savings by increasing taxation. But sooner or later even those whose interests they claim to care about—for example the average worker in the car industry—will revolt at the taxation increases, the forced savings, required to make up the gap. It is increasingly becoming nonsense to hear hon. Members opposite, from the top of the Cabinet down to everyone on the Government back benches, demanding action against unemployment and action to increase capital investment, with, at the same time, the Government introducing Bill after Bill to clobber those who save and help to provide the capital which can be invested and to clobber profits out of which equipment is provided.

In the light of almost every economic speech made by hon. Members opposite in the past few months, there are large parts of the Bill—this is one of them—which are total and complete nonsense. I was told shortly after Christmas that large department stores could not believe the amount of money being spent at their sales. Somebody said that it was as if money was going out of fashion. Under the impact of the Government's policies, it is going out of fashion. I was recently at an antiques auction sale where people could not believe the prices being realised for quite indifferent pieces of furniture. The reason is partly the problem of inflation and that people want to put their money into articles which they think will retain their value.

I do not lay the whole blame for this situation on hon. Members opposite, but people who come to see me say "What is the point of saving when all that happens is that the Government penalise us for doing so?" That is an argument which hon. Members opposite would accept regarding the so-called—[Interruption.] If the hon. Member for Meriden wishes to interrupt, I wish he would stand up and not simply mutter.

I was observing that the present level of investment in building societies conflicted with the point about savings made by the hon. Gentleman.

A large number of people have decided that there is little point in saving, except on a short-term basis, which is the kind of money which tends to go into building societies. It is much the same argument as we often hear, rightly, about the so-called disregards under the social security schemes. Hon. Members opposite would accept it in that context. People say "What is the point of my saving if my benefits are reduced?"—which is another form of taxation.

These amendments are not extravagant. It could be argued that they are very modest. Compared with the level of relief from the investment income surcharge which existed when the previous Government introduced the £2,000 relief, we should be moving to increase the relief to about £2,500 simply to take account of the past year's inflation. We are proposing far more modest amendments simply to try to rescue something of the loss the Government are imposing on this group of people.

My specific points concern Amendments Nos. 341 and 344, which relate to the treatment of women under the Government's proposals. It will not come as a surprise to Ministers to know that in their proposals the relief from the extra surcharge granted to elderly taxpayers applies where an individual's age, or that of his wife living with him, is 65 or more. Plainly this proposal is designed to help the retired taxpayer. I cannot understand the justice of a proposal which fails to acknowledge that the retirement age for women is 60. The purpose of Amendment No. 344 is to allow a single woman to enjoy the benefit of this relief from the age of 60 and not 65. Amendment No. 341 would allow a married couple to enjoy the benefit of the relief when the wife reached the age of 60.

The point was touched on during Committee proceedings on the Floor of the House. In what was perhaps his weakest reply the Financial Secretary referred to a recommendation of the Royal Commission on Taxation, which, from memory, reported in 1954. Much water has passed under the bridge since then. It is thoroughly unsatisfactory for the hon. Gentleman to rely on a single sentence dismissing the whole problem of treating married women as retired at the age of 60. It cannot be right that we should treat women, particularly single women, in this way. I hope that we shall have a specific and detailed reply on this point.

I wish to refer to Amendments Nos. 16, 17 and 18. The first of this group is probably the most appropriate in terms of the disabled. It is a small concession to ask of the Government, who can hand out money for other things quite liberally. It asks only for an additional disregard for the disabled. I am concerned with people who have a limited amount of investment income and no other income but need increasing amounts of equipment to reach some bearable level of living in their later years.

Today we see many parents trying, hard though it may be, to set aside savings for a mongol child and many other categories of children who will never be able to earn a living and keep themselves in the way that the rest of us wish they could. We know that the Government recognise such problems in a better fashion than before; for example, hypothermia in old people. They are prepared to grant concessions for people aged over 65.

It seems strange that the Government are not prepared to grant this concession for people who have no hope of earning their own living and often have only what is left to them by relatives, or have to fall back on the State. I know of three cases of people suffering from progressive illnesses. At present they can still earn their living. In one case, after perhaps five years, that person will not be able to go out to work. In the other cases it will be about nine years or perhaps 15 years. By hook or by crook they are trying to save every penny they can and invest it so that they will not have to rely on the State in future. They are trying to invest wisely as a hedge against inflation, if that is possible today.

It is surely right to help these people so that they may buy further equipment with the money they do not pay in additional taxation. When we cannot always give them individual funds this is a way of helping them to provide for themselves.

I support Amendments No. 349 and No. 356. I wish first to deal with the crucial matter of retrospective legislation.

On 31st July last the Finance Act 1974 received the Royal Assent. Section 7(1)(b) provided for the rate of tax which would apply to what was therein described as "investment income". It was reasonable and proper for the Queen's subjects to base their liability to tax for the current year on the provisions of Section 7(1)(b) of that Act. The 1974 Act provided that investment income should be subject to a surcharge at the rate of 15 per cent. to the extent that that income exceeded £2,000 in the current financial year. But Clause 5 of the present Bill provides retrospectively—that is to say, from 5th April last—that there shall be a change in the Act passed by Parliament as recently as July last year.

I wish to protest in the most vigorous terms against the whole principle of retrospective legislation. I draw no comfort from the fact that previous Tory Chancellors of the Exchequer have resorted to the same device. It is a practice which is thoroughly discreditable and disreputable—whether the practice comes from this side of the House or from the Labour benches.

Secondly, I wish to refer to the remarks made by the Chief Secretary to the Treasury at the beginning of this afternoon's proceedings. He appeared to defend the provisions of the capital transfer tax on the ground—a ground which I do not accept—that they would not apply to a great many people. That was his case. I do not think he is right. I believe the provisions of that tax will affect not just thousands but millions of our fellow citizens. Precisely the same argument has been advanced in respect of Clause 5 of the present Bill.

We are urged by the Government Front Bench "Don't worry—the investment income surcharge applies to only comparatively few people." But is it not the function of the Government to be fair not just to the majority but also to the minority? Or is it the present Government's view that it is only the big battalions who count. I fear that it is.

I wish also to reject the argument that because only a comparatively few people are affected by the investment income surcharge that is a category of persons who can be disregarded. I wish to assert the opposite proposition. It is true that the number of people who will be affected by the provisions of Clause 5 will be comparatively small. But let us think to which people the clause will apply. It will apply in the main to those who spent their working lives saving, denying themselves that excess of consumption which the present Government are encouraging the rest of us to indulge in. We are talking of a category of people who desire not less consideration but the greatest possible consideration of all.

I say that for the following reason. The big battalions in our society are able, in an inflationary period, to protect themselves by means of their unions and their bargaining capacity. However, those persons to whom we refer are literally defenceless against inflation. Government supporters cannot deny that. The trouble with them is that they seem to be concerned with fairness only for the big battalions and reject the concept of fairness for those people with no one to defend them save the Opposition.

Surtax payers of the world unite.

The doctrine of fairness should apply to all our citizens, and, above all, to those who have saved during their lifetime. I wish to give a concrete example. Suppose that a man reaches the age of 65 after a lifetime of toil. Suppose a miner has saved £20,000 during a lifetime.

What does he earn as a miner?

That is exactly the point I am making. Suppose that, after a lifetime of toil, a man, having denied himself the consumption which is available to people nowadays, has saved £20,000 and invested it at 8 per cent. That would produce £1,600 a year, the purchasing power of which has fallen dramatically over the past four years. Is it fair that that savings income should be hit still further by this mean and petty investment income surcharge? It is right that the Opposition should champion the cause of those who have saved, who have been hit hardest by inflation, and who have no redress against the evils of inflation.

For those reasons I support the amendments.

I associate myself with the excellent comments of my hon Friend the Member for Eastbourne (Mr. Gow).

I should like to refer to the points raised with regard to the disabled. I am glad to see the hon. Member for Stoke-on-Trent, South (Mr. Ashley) in his place. He made a very forceful contribution. I hope that the Treasury Bench will listen to what he said and will act accordingly.

The hon. Gentleman spoke about being chairman of the all-party group for the disabled, in which connection he does a great deal of valuable work. I cannot help but put in some special pleading on my own account. As chairman of the all-party group for widows I come into contact with a vast number of people who are affected by these amendments. There are many widows dependent on investment incomes, but no one would suggest that they are among the rich of the land, as the hon. Member for Holborn and St. Pancras, South (Mrs. Jeger) will agree.

Did the hon. Gentleman vote for televising the House?

I did not vote for televising the proceedings of the House.

The widows are particularly hard hit. I hope that the Chief Secretary to the Treasury will heed my words. The Minister courteously received a deputation from the National Association of Widows who spoke about many of the problems they face. Its representatives did not raise this specific matter. But the National Association—[Interruption.]—

I think that the hon. Gentleman has sufficiently awakened too many hon. Members. I cannot hear what he is saying.

I am delighted with the electric effect of my words. I wish that the shock was universal. But I hope that at least there will be an effect.

Although it is right and proper to talk about the disabled, whose needs are real, and about the widows, whose needs are equally real and who will be affected greatly unless there is a substantial amendment along the lines proposed, it is equally right to talk about the saving classes—the able-bodied, those upon whom the country depends. The country depends for its future on the saving classes more than on any other group of people—

What about the workers?

The workers are the same people.

Speaking as the former Chairman of the Widows' and Single-Parents' Group and the hon. Gentleman's predecessor, I cannot help feeling that he is damaging the case for this amendment and supporting the Government's opposition to disabled people. This is precisely what the Government will say. We have been pleading for disabled people to be allied to old people. The more categories that there are, the weaker our case becomes. I have fought for widows for years—my mother was a widow—just as the hon. Gentleman has. But he is undermining the case made so eloquently by hon. Members on both sides of the House.

Not at all. I do not dissent from the hon. Gentleman's argument. In widening it, I am not destroying the validity of his case. There are many amendments on the Notice Paper specifically concerned with the disabled. If the Government accept one of those and not the others, I shall be pleased. But I am seeking to suggest that there are many other categories and that, by the transference of a very small sum of money, the whole case could be met—disabled, widows, and the others about whom I am talking. If the Government indicate that they will do something for the disabled and for no one else, I shall rejoice in that little, at least. But I hope that they will accept the good sense of our aguments and do a little more. That is a perfectly fair attitude to adopt.

Going back to what I was saying, it is upon the saving classes that the country depends, and I reply to the intervention of the hon. Member for Bassetlaw (Mr. Ashton) by saying that many of them are ordinary workers who have in their working lives put a little away for a rainy day.

Not £20,000.

But we do not need £20,000. We are talking in terms of people who in their working lives have saved perhaps £6,000 or £7,000. After 40 years, £7,000 is not a vast sum. Yet these people will be penalised if the Government's intentions are enacted as they stand in the Bill at the moment.

11 p.m.

We are talking not about the vastly wealthy, the extravagantly rich—we do not find many of them anyhow—but about ordinary people. The self-employed have been mentioned many times. I stress that we are talking about ordinary workers. If the Government in the Coal Industry Bill can make proper provision, with the acclamation of hon. Members on both sides of the House, for those stricken down by pneumoconiosis, that is right and proper. But why do that Government, who have shown proper sensitivity in that regard, clobber those who have saved for their old age? It seems a ridiculously mean and petty attitude.

I hope that the Minister, who I am sure practises thrift even if the Chancellor does not—the hon. Gentleman told us that he spends his money as he gets it, but I am sure that he must practise thrift—realises that there are virtues and values in it. Let both Ministers—[HON. MEMBERS: "Three."] Indeed, three. The Paymaster-General is most appropriately named. Let the Ministers draw upon their experience and do something for those who have worked and saved and upon whom the prosperity of this country depends.

Ministers are trotting up and down the country time and again bemoaning the level of investment. How can they expect to encourage investment—

Travelling first class.

Travelling first class, as the hon. Gentleman, in his helpful intervention, points out. We are delighted that he is in the Chamber. If Ministers are travelling up and down the country bemoaning the level of investment, what nonsense it makes of their protestations if they actively discourage the saving classes. At an earlier stage I referred to the Government as the scourge of the saving classes. They have not yet earned remission from that title. I sincerely hope that they will and that we shall have a sensible reply tonight.

The hon. Member for Staffordshire, South-West (Mr. Cormack) accurately reminded or informed the House that I was privileged to receive a delegation, which he accompanied, from the National Association of Widows. One advantage of such meetings is in being able to remove a number of misconceptions, which I think the hon. Gentleman will agree was achieved on that occasion.

I shall attempt to remove a number of misconceptions, as I see them, arising out of the debate this evening. We are discussing 10 amendments which are being taken together. The House will understand that, although I was happy to accept that these amendments should be taken together, it means that we must cover a fair amount of ground. Therefore, I must beg the indulgence of the House if I deal with each in turn.

First, I should like to reply to the hon. Member for Berwick-upon-Tweed (Mr. Beith) on the Federated Superannuation Scheme for Universities. I should be happy to go into that matter in greater detail, but, as it was mentioned only by the hon. Gentleman, perhaps a shorter version of what I might otherwise have said will be acceptable to the House in present circumstances.

The FSSU is an old style superannuation scheme. The code under which it was approved goes back quite a long time. It is unusual in present circumstances in that the whole benefit can be taken in a lump sum. The hon. Gentleman will know that that is now being phased out. However, the point remains that income from the investment of the lump sum received is still income from investment. If there are any other matters, I shall be happy to have further discussions with the hon. Member or even to go into it further by correspondence.

I appreciate the Minister's desire to be brief, but he has stated the fact without explaining his attitude to it. He said that it is investment income, but the point that I sought to make is that it is someone's pension and is in every way comparable to the pension of someone who invests in a superannuation scheme. Why should it be distinguished for treatment when he receives it on retirement?

This is the misconception that I should like to go into at some length. I am sorry, but it is not possible to deal with this briefly. I shall be happy to explain the full circumstances to the hon. Member, and perhaps he would accept that.

rose—

rose—

I had understood that hon. Members would have preferred to see progress, but, if the House wishes, I will now make the explanation that I had hoped to cut short.

Of course we should like to examine all these matters in full, but the difficulty, to which the Minister alluded, is that the Government have put the strong arm on this debate, and we cannot fully discuss these important amendments.

We understand that and have debated it. What we have before us is one amendment which it seems the House wishes me to examine at greater length than I had intended.

The amendment of the hon. Member for Berwick-upon-Tweed seeks to give the lower thresholds to those who on retirement receive lump sum payments from the superannuation arrangements and the retirement annuity contracts approved by the Board of Inland Revenue or from private pension arrangements of the kind the hon. Member described. The fully approved schemes under the new or the old codes cannot normally begin paying annuities to someone under 60. The hon. Gentleman may be arguing that, since the Government recognise 60 as the proper age for paying retirement benefits in testing the eligibility of a superannuation fund for tax concessions, it is only legitimate to test the eligibility of a person under the schemes that he has in mind in the same way.

But this argument is misconceived. The fact that a company or a scheme—the argument applies to both—can, with full tax benefit, provide its employees with a pension at 60 is no reason why those with large investment incomes should benefit from yet further tax concessions. Indeed, an employee in that position might be rather more fortunate than someone who has to wait until 65 to get a pension. The case is not made any stronger by the fact that he may opt to take part of his pension rights in the form of a lump sum. He gains the additional security of the capital sum. He may or may not choose to invest it in an income-bearing form, but in either case there is no reason why he should benefit from a lower surcharge threshold five years earlier than other people.

I could give some details of how the amendment does not even fulfil the hon. Member's intention, but I should like to move on to the nine other amendments, to which most interest seems to have been directed.

On Amendment No. 349, we believe that the investment income surcharge threshold was fixed far too high at £2,000 in 1973–74. That is the starting point of our criticism of what happened then. The figure of £2,000 for the investment income surcharge in 1973–74 was a very substantial sum of money by comparison with that of a number of people who were faced with very great difficulties because of the economic situation as it then was as well as what it subsequently became. Under the legislation that we have provided, the first £1,000 over the new threshold is to be taxed at 10 per cent. Because of this the extra surcharge cannot be greater than £100 in total.

There is another comparison that the House could make if it so chose. That is the treatment of investment income by comparison with what existed before the present unified system was introduced by the Conservative Government. Before then taxpayers paid the full standard rate and got relief for earned income at the rate of two-ninths. That was very substantially more than the investment income surcharge which replaced it. This was a very big distribution to the better off. Like all these arrangements, whenever they are made, the biggest advantages accrue to the best off, because they pay the highest rate of tax.

In Committee we heard this argument about the comparison in relation to the 1972–73 period before the unified rates. It was pointed out that this is a completely inadequate comparison because of the rate of inflation. Prices have risen by about 35 per cent. since then. Therefore, one cannot compare £1,000 then with £1,000 now. In addressing himself to that matter, perhaps the Minister would also address himself to Amendment No. 362, which takes account of the inflationary element.

The hon. Gentleman is pressing me to make progress, and I am happy to respond to that. The point I was making is that a very considerable advantage was given to those with investment income at the time of the introduction of the unified tax system. This big advantage is something that people have to accept, but, at the same time as they have come to accept it, we must look at it also in the context of the assistance being sought by hon. Members of the Opposition for this kind of taxpayer.

The hon. Member for Blaby (Mr. Lawson) thought that it was a question of pique, and that the Government, having been defeated in a Division last year, sought to restore the position that they had attempted to create. He may bandy those kinds of words about, and I might respond also. The intention of the Government was clear. It was stated so, both in the House and in the Bill. When the Division was lost it was also repeatedly stated. At no time could anyone have been under any misapprehension about what it was the Government's intention to achieve, when they were so able to act. This we have been able to do, and this is the result that we have before us.

This is arrogance.

The hon. Gentleman might call it arrogance. I would say that it is maintaining what we said we would do when we were in a position to do it, and fulfilling our undertakings, which is something he might care to contemplate.

I should like to turn to Amendments Nos. 341 and 344. Amendment No. 341 is an attempt to apply the reduced surcharge threshold of £1,500 for the elderly to a married couple when the wife became 60 years old if that was earlier than when the husband became 65. The effect would be, as can be readily understood, to give a decided advantage to those married men who are younger than their wives or near the age of their wives. As such it discriminates against other married men as well as single men. I find it difficult to understand the basis of such a form of discrimination. We believe that the fairest arrangement in dealing with these matters is to have the same qualifying age for men as for women for the purposes of the investment income surcharge and taxation generally. That is what we have sought to achieve.

As I understand it, the Bill is open to exactly the criticism that the Minister has just made. If a man is 60 and his wife becomes 65 he will receive the benefit. All that I am saying is that women should be treated the same under these provisions as they are under the National Insurance Scheme. The criticism that the Minister has made applies to his own Bill. It applies, as it were, to a different point under my proposal.

No, the arrangements under the amendment as it stands are that when a wife becomes 60—and if that is sooner than when the husband becomes 65—the relief will be given. If the hon. Gentleman cares to table an alternative amendment that seeks to fulfil his aims I shall be pleased to consider it.

When?

Other Finance Bills come to the House from time to time. Amendments may be tabled and new clauses may be suggested for the interest and improvement of our debates.

I now turn to the problems of the disabled and to Amendments Nos. 16, 17 and 18. Under the clause as it stands the first £1,000 of the investment income has a zero surchange, the following £1,000 has a surcharge of 10 per cent. and the remainder has a surcharge of 15 per cent. For married couples, where either partner is older than 65, the sucharge is zero for the first slice of £1,000. The next slice of £500, is again zero, and a further slice of £500 is at 10 per cent. Thereafter the rate is 15 per cent.

I draw the attention of the House to the notable contribution of my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley). What he said is best understood by those Members who have the interests of certain sections of the community at heart. They are represented tonight; I see them in various parts of the Chamber. They understand that the best way of obtaining justice is to act in the manner adopted by my hon. Friend—namely, to bring to the attention of the House the difficulties, the needs and the requirements of various sections of the community. In that way they inform and educate every one of us. I am grateful to my hon. Friend, and I am sure that other hon. Members will express their gratitude to those who inform us on such matters.

The Minister will recall that the Chancellor first introduced the proposals now in the Bill when he made his Budget Statement on 26th March 1974. The Minister will also remember that in the Finance Act that received Royal Assent on 31st July the Chancellor's proposals were reversed. If the figure for the investment income surcharge was right on 26th March 1974, how can it be right in March 1975, bearing in mind that we have had inflation during that time at a rate of over 25 per cent.?

I am sorry that the hon. Gentleman seeks to go back on discussions we have had and comments I have made. I assure him that I shall deal with that before I conclude.

The approach of my hon. Friend the Member for Stoke-on-Trent, South is that which I most admire. He drew attention to these problems, as did my hon. Friend the Member for Eccles (Mr. Carter-Jones). The amendments deal with those who are receiving an invalidity pension, who are unemployed and receiving an attendance allowance, who are unemployed and are registered disabled persons under the Disabled Persons (Employment) Act 1944, and who are unemployed and registered disabled persons under the Chronically Sick and Disabled Persons Act 1970.

I note with great interest the proposals which are put forward from time to time for giving help to the disabled in many ways. I note, too, the way in which this has been put forward as a change in the tax system. Such changes are frequently made and they are frequently debated in the House of Commons. I do not believe that there is any lack of understanding of the problems of the physically handicapped, because of the action of so many of my hon. Friends and hon. Gentlemen generally.

This is a big general problem that frequently arises in our debates on taxation. I suggest that at least one reason why it arises in our debates on taxation is that we tend to have more debates on taxation than on most other matters, so there is a more convenient slot there than in many other areas.

The tax system is not a particularly good way to help the physically handicapped. The Department of Health and Social Security does the job very much better. The whole point about the tax system is that it gives most to those who have most. Those at the higher end of the income scale receive the most. That is not in itself an inescapable way of saying that we can do nothing about it, but it shows that there is a deficiency in the operation of the system.

I greatly appreciate what my hon. Friend is saying. He is obviously leaning over backwards in an effort to oblige both sides of the House. I am disturbed by the narrow party political stance adopted by some hon. Members opposite. Nevertheless, my hon. Friend must answer this question. Can he justify helping old people and not helping the disabled? This is the nub of the problem.

I appreciate the difficulties. I am not trying to score party points. I hope to vote with the Government. I want a concession. I would appreciate it if my hon. Friend could promise me a concession of some kind, because there is no point in saying "I sympathise" unless sympathy is translated into action. Is it possible to make some concession to disabled people? If that can be done, I shall happily vote with the Government? Can my hon. Friend help me?

I am happy to respond. I will deal with the problem of the old in a moment. My hon. Friend rightly compared the problem of the disabled with the concessions given to the old. For that reason, I said that I wished to deal with the problems of the old, to show why, in my view, they can be treated under the tax system more readily than can the problems of the disabled.

rose—

May I give the House a bit of advice? In dealing with the problems of certain groups of people, one can use one instrument to greater effect than another. There is no difference between the aim sought by my hon. Friend the Member for Stoke-on-Trent, South and those who want to assist the disabled and the aim which I seek.

rose—

If I may be allowed to continue, I was about to say that one method is better for treating certain aspects of the problem and another method is better for treating others, and, if I am allowed to proceed, I shall, I hope, make clear what I am trying to establish.

If we use the tax system to give benefits of this kind, what we are doing is applying a sort of inverse means test. What happens when the tax system is used in that way? Whatever is given, most is given to those who have most. [HON. MEMBERS: "Not given."] All right. I had assumed that the House had grown up and was not prepared to entertain arguments about whether one was taking away or giving. The whole argument here depends on the treatment which the Department of Health and Social Security gives, on its side, in making contributions, and what the Inland Revenue does, on its side of the same problem, in not taxing people. I believe that in a wider range of problems the one can be made the equal of the other, and what one is concerned with at the end of the day is how much extra stays in a person's pocket and how much is taken out.

rose—

That applies to both aspects of the matter. I remember what was said by hon. Members opposite who fought hard for the tax credit system. I see the Chairman of that Select Committee here, the hon. Member for Croydon, South (Mr. Clark). He accepted that argument, and he now produces arguments which run counter to the very case which was the basis of that proposed innovation in our tax system.

The hon. Gentleman need not worry about whether the House has grown up. It has. But I wonder whether he has grown up, for he has not appreciated the argument. It is not a question of giving something back or giving something to the disabled. Our case is based on the circumstances of the disabled person. If someone is disabled through his job, he goes to the court for compensation, and the court gives him compensation for his loss of earnings. Whatever he receives is supposed to compensate him for his lack of earning capacity.

That disabled person then enjoys investment income on the compensation awarded by the court. Why should that person be clobbered if his investment income is £20 a week and his earning capacity has been reduced by £30 a week? The Minister must address his mind to that. There is no point in suggesting that the House has not grown up. It certainly has, and it is about time he did.

The hon. Gentleman is now shifting his ground. I do not object to that, but I must remind him that what we were debating a few moments ago, before his rather lengthy intervention, was the equivalence between tax allowances and grants.

Answer the question.

I was pointing out what I believe to be the right relationship between the two, and saying that when we give a tax relief, using the tax system instead of the social security system, we give most to those who have most rather than, as the DHSS system rightly does, give most to those who have least. That is the distinction. The Department of Health and Social Security can operate in that way but the tax system cannot.

11.30 p.m.

I shall now deal with the Government's record of help to the disabled and the least well off. This concerns the task of the social security service as it exists today. There is a fundamental reason why we give relief to the old person but not to the disabled. It is not that the latter group is any less deserving. That must be clearly understood.

Address the Chair.

I am speaking in the direction of my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) in order that he may fully understand the position.

The disabled, of course, get much more than our sympathy. They also get our understanding.

Humbug.

The hon. Member should contain himself. What is happening in the tax system is—

Order. I must ask the Minister to address the Chair, not the Paymaster-General. [Interruption.] Hon. Members should address the Chair. It leads to less trouble if they do.

I am not sure that you understand the reason for my turning towards my hon. Friend the Member for Stoke-on-Trent, South, Mr. Deputy Speaker.

In the circumstances, I sincerely apologise to the Minister.

There is a particular problem, Mr. Deputy Speaker, and I am grateful for your understanding.

The justification for giving assistance to the over-65s through the tax system is not that they are worthy of our sympathy and understanding. That sympathy and understanding must apply to a greater extent to many of the cases that have been mentioned by my hon. Friends the Members for Stoke-on-Trent, South and Eccles. The over-65s are dependent for a large element of their income on the savings they have made throughout their lives. Taxation is levied on the basis of capacity to pay. In the case of the disabled we have to consider how we can channel most money to those most in need. That is the whole basis of the social security approach to the matter.

Many of the disabled persons referred to by my hon. Friends are living on savings accumulated when they were at work. Why should they not be treated the same as someone 65 years old who is also living on accumulated savings?

I have listened to the hon. Member with great respect on many occasions, but in view of the action taken by his Government on these matters his party's attitude tonight strikes me as being very close to the humbug which has been referred to on previous occasions.

I apologise for intervening once more. I am anxious not only to vote for the Government but against the Opposition, because they are making party political points. Will my hon. Friend answer the question? He has not yet drawn a satisfactory distinction between old people and disabled people. I cannot support him if the Bill does not take account of disabled people.

May I highlight the position by asking my hon. Friend whether thalidomide children will be exempt from this tax, as old people are, or will they have to pay it?

My hon. Friend will know better than most hon. Members the arrangements that are made for the disabled—arrangements of a kind that I have explained to the House. What it is important to understand is the fact that when we are talking about the problems of the disabled we also have to compare their sources of income, and the sources of income of the older people tend to be more uniform than the sources of income of the disabled.

I want to speak about the amendment concerning the combined investment income for those with incomes not greater than £3,000—Amendment No. 383. Under this there is a separate income threshold of £1,000 for each spouse. It is held that as a result there is to be double surcharge threshold for a married couple by comparison with a single person. The figures for the married couple with a total income of £3,000 will be £1,000 for the wife and £1,000 for the husband. The single person—[Interruption.] I am trying to reply to some of the points made. We all understand the difficulties, but I am trying to answer the debate. If the right hon. Member for Yeovil (Mr. Peyton) had been present he would have been aware that some of his hon. Friends put questions to me, which questions I am now trying to answer.

I intervene concisely to make the point that the current debate has been running for just over two hours and the Minister, in replying, has taken up more than 25 per cent. of that time. Quite aside from wishing to debate these matters in the limited time available, we wish to divide on the issues now before the House. We shall therefore be grateful if the Minister will contain his remarks within a matter of seconds rather than minutes.

I am happy to oblige the House in whatever it wishes, but if the right hon. and learned Gentleman had turned round he would have seen many of his colleagues rising to their feet to ask me questions.

The House has had a comprehensive debate on this matter. What we have seen is quite clear, as a result of the amendments that have been moved. What the Government have been interested in doing is to restore equity between those paying investment income surcharge and those who are earning their money day by day. We believe that we have a reasonable relationship between the two—a relationship of a kind that right hon. and hon. Gentlemen on the Opposition side of the House never sought to achieve. We believe that we have that kind of relationship and that it is in the interests of our people.

The Minister began his speech, which was an embarrassingly